Final Results for the year ended 30 April 2008
Key data
30 April 2008 30 April 2007
Total Net Asset Value ("NAV") �3,183,000 �4,116,000
Shares in issue 4,581,852 4,581,852
NAV per share 69.5p 89.8p
Share price (mid) 47.5p 57.0p
Market capitalisation �2.2m �2.6m
Share price discount to NAV 31.7% 36.5%
Chairman's Statement
I have pleasure in presenting the Annual Report and Accounts for Noble Income &
Growth VCT plc for the year ended 30 April 2008. I regret that I am unable to
report an uplift in net asset value over the twelve month period. During the
year under review, there was a fall in NAV of 20.3p or 22.6% which is a slightly
larger fall than the 17.3% fall in the FTSE AIM All-Share Index over the same
period.
Summary of Financial Highlights for the year ended 30 April 2008
* NAV per Ordinary Share was 69.5p (30 April 2007: 89.8p).
* The total fund NAV was �3.2m (30 April 2007: �4.1m).
* The Company made losses of �933,000 before tax (30 April 2007: �289,000).
* 9 new investments and 33 follow on investments were made in the period
totalling �1.7m.
* 89.0% was invested in qualifying stocks; thus the VCT has met the "70%"
rule for investing in qualifying stocks at year end.
* The VCT is now 94% invested with �95,000 cash available for investment.
* 12 partial exits and 6 full exits were achieved in the year realising gains
of �37,000 on a cost of �902,000; a gain of 4.1%.
Review of Performance
The NAV per Ordinary share at 30 April 2008 was 69.5p, a decrease of 22.6% since
30 April 2007. During the period under review there were significant
fluctuations in worldwide equity markets. The FTSE AIM All-Share Index, where
the bulk of the portfolio companies are listed, declined 17.3% over the same
period, however, the oil and gas resources sectors which now make up over 39% of
the FTSE Aim All-Share Index, have performed strongly over the past 2 years and
the Company's limited ability under the VCT rules to invest in these sectors has
exacerbated our relative performance.
Overall, a loss before tax was realised totalling �939,000 (2007: �289,000 loss
before tax). Included in this are realised capital gains of �37,000 on a cost
of �902,000; a gain of 4.1% (2007: �583,000 on a cost of �1,264,000; a gain of
46.1%). These realised gains were however offset by unrealised losses on
investments in the portfolio of �773,000 (2007: �682,000). The remainder of the
overall loss for the year was a combination of revenue losses of �132,000 (2007:
�137,000) and capitalised management fees.
Noble Fund Managers
The Directors are appreciative of the work undertaken by Noble Fund Managers
("Noble") during the year and recognise the advantages of having an investment
adviser in place that manages multiple VCTs and continues to report strong deal
flow.
Strategic Outlook
Recognising the sub-scale size of the Company and the fact that the recent
legislation changes to the VCT rules makes it less attractive for the Company to
raise further funds through fundraising, the Board of Directors has continued to
explore options for Noble Income & Growth VCT plc. In this regard it is
pleasing to be able to draw shareholders' attention to the announcement which
was made on 28 July 2008 that the Company is in discussions with Noble AIM VCT
plc regarding a possible merger. The investment adviser to both companies is
Noble Fund Managers Limited.
Your Board believes that the merger would achieve a number of benefits,
including a larger asset base, increased efficiencies and an improved spread of
risk.
The scheme of reconstruction through which the merger would be effected would,
of course, be subject to a vote by shareholders. Further announcements will be
made in due course.
A E B Wiegman
Chairman
31 July 2008
Fund Manager's Review
Performance
Over the year to 30 April 2008, the NAV of Noble Income & Growth VCT declined by
22.6%. Over the same period, the FTSE AIM All-Share Total Return Index declined
by 17.3%. These performance figures are net of all operating costs.
The requirement under the VCT rules for the Company to hold 70% of funds in
qualifying holdings leaves it vulnerable in poor markets because of the strict
limitations on the company size and industry sectors in which investments can be
made. As a protective measure, therefore, this year has seen an increased focus
on utilisation of the non-qualifying element of the fund to invest in larger-cap
stocks. As a consequence, your Company held 21 non-qualifying stocks at 30
April 2008, 20 of which had been acquired over the preceding nine months.
Recent market volatility has allowed us to take advantage of under-valued larger-
cap companies, both AIM and Full List, such as Charter, Keller Group and Kier
Group. This basket of `new', non-qualifying stocks was showing an uplift of
10.5% on cost at 30 April 2008, a pleasing result given equity market
performance.
Our largest qualifying holdings also held up well, with Fountains, Jelf Group
and Optimisa all trading above or at cost at year end. Unfortunately, the value
of Optimisa has since declined following a poor trading statement in May.
However, another of our large holdings Aquilo went into administration during
the first half and this had a material effect upon the NAV. Despite
considerable efforts by the management team at Noble, the onset of the "credit
crunch" meant that tighter lending disciplines and a weakened balance sheet left
the board of Aquilo with no option but to appoint administrations resulting in a
realised capital loss of �197,000 in the year.
With a poor outlook for the UK economy, Noble have been working hard to tailor
the portfolio to minimise exposure to particularly vulnerable sectors. The
portfolio has diversified away from consumer discretionary with the exception of
companies, such as Western & Oriental, that have strong balance sheets. It is
difficult to tell how long the problems caused by the credit crunch will
continue and, indeed, whether the economic situation will deteriorate further.
Noble is of the view that the de-leveraging process amongst institutions and
consumers will take some time. As credit has fuelled much of the growth in
corporate and consumer spending of late, this will inevitably have consequences
on growth. Furthermore, inflation, particularly in fuel and commodities, is
very evident and Noble will try to gain access to those companies that are
favourably exposed to the causes of inflation (although we have to accept that
such companies are rarely qualifying investments). The service providers to
these companies are also attractive for this very reason.
Volatility will make market timing very difficult so positions in good quality
companies at compelling valuations will continue to be sought, even though the
chances of calling the bottom of the market are remote. Making accurate
assessments of quality of earnings will be key to ensuring the success of
investments made in this environment.
The tables below show the 10 most significant risers and fallers during the
twelve month period. The qualifying holdings are marked with an asterisk.
Investee company % price movement over 12 months
Vyke Communications plc +133.66%
Earthport plc* +80.91%
Pressure Technologies plc* +68.20%
Nighthawk Energy plc +58.58%
Fountains plc* +44.44%
Craneware plc* +37.50%
CustomVis plc +30.74%
IDOX plc* +28.88%
Charter plc +22.91%
STM Group plc +20.09%
Investee company % price movement over 12 months
Aquilo plc* -100.00%
All IPO plc* -91.67%
Zenith Hygiene Group plc* -91.23%
eXpansys plc* -85.71%
Greatfleet plc* -77.26%
Dowlis Corporate Solutions plc* -70.24%
Cantano plc* -70.00%
Invocas Group plc* -65.71%
Appian Technology plc* -63.70%
Micap plc* -53.15%
* Qualifying holding
Market review
The economic outlook remains uncertain following the consequences of the credit
crunch, which began with the US sub-prime crisis. A glut of low quality
mortgages began to default as introductory `teaser' interest rates came to an
end and home-owners moved on to unaffordable standard variable rates. As
defaults continued, the value of securitised mortgage debt plummeted as
repossessions rose, flooding the market with housing stock. The syndication of
this debt made ownership extremely difficult to trace and the banks became
increasingly reluctant to lend to each other, pushing up the inter-bank lending
rates and, in turn, the rates available to the market. Lenders that have relied
on securitisation for funding, the most notable example being Northern Rock,
were left particularly exposed. The effect of the credit crisis has been felt
in stock markets on both sides of the Atlantic, with financial and construction
stocks most affected and any companies with exposure to these sectors following
closely behind.
Qualifying portfolio
Over the course of the year, the Company invested �883,000 in 22 qualifying
holdings, of which 13 were follow-on investments and 9 were new additions. The
new additions were IDOX, an information and knowledge management company,
specialising in the development and delivery of products and services for
organisations; Pressure Technologies, which offers testing and refurbishment
services for a range of speciality high pressure, seamless steel gas cylinders
for global energy and defence markets; Mount Engineering, a manufacturer and
supplier of industrial components for the oil and gas industry; Shieldtech, a
leading designer, manufacturer and distributor of body armour to UK police
forces; Craneware, a supplier of billing software to the healthcare industry;
Adventis Group, a full service marketing and advertising agency, providing
communication services to the healthcare, financial services and property
industries; Cantono, one of the leading UK providers of managed IT services;
Deltex Medical which manufactures and sells medical monitors and IS Pharma, a
specialist hospital medicines group with expertise in both pharmaceuticals and
medical devices. The second half of the Company's financial year witnessed a
marked slowdown in new issues and, as a consequence, qualifying investments were
heavily weighted towards the first half of the year.
The most material follow-ons were in Western & Oriental, into which the Company
invested �100,000 to facilitate further acquisitions and strengthen the balance
sheet; and Optimisa, into which the Company invested �41,000 to acquire a
competitor.
Opportunities to sell-down holdings in qualifying businesses can be rare given
the inherent illiquidity of companies of this size. However, Noble was able to
crystalise good gains through partial sales in Vyke Communications and
Earthport. Both companies had seen large uplifts in valuation and, as a
consequence, were accounting for a large proportion of the Company's valuation.
Noble also took the opportunity to sell down the Company's holdings in Tanfield,
ACM Shipping, Smallbone and to undertake a partial sale of Jelf Group. Tanfield
had also been a good performer and we felt the timing was opportune to take
profits. ACM Shipping had also seen an excellent uplift to cost and profits
were taken. The Company's holding in Jelf Group was looking disproportionately
large as a constituent of the fund and Smallbone was sold due to negative
sentiment in US consumer spending.
Non-qualifying portfolio
The non-qualifying portfolio has expanded considerably over the past 12 months.
A total of �783,000 was invested in 20 companies. This increase in larger, non-
qualifying holdings has improved the liquidity of the fund as a whole.
The stock market falls provided opportunities to purchase some new mid-cap
holdings, namely Charter, a global engineering business; Kier Group, a UK
construction company; and Keller Group, a global ground engineering specialist.
Exposure to oil and resources, the buoyant sectors of the FTSE, have also been
increased with the purchases of Avocet Mining, a gold miner in Malaysia and
Indonesia; Nighthawk Energy, which has interests in natural gas production; and
Valiant Petroleum, an oil and gas exploration company.
Noble Fund Managers Limited
31 July 2008
Investment Portfolio
as at 30 April 2008
Valuation
as % of
Cost Valuation shareholders'
Investment � � funds
--------------------------------------------------------------------------
Adventis Group plc 57,098 27,319 0.9
ADVFN plc* 61,000 42,700 1.3
All IPO plc 95,154 3,228 0.1
Amino Technologies plc*# 34,400 32,500 1.0
Appian Technology plc* 46,435 18,404 0.6
Aquilo plc 196,682 - -
AsianLogic Limited*# 50,950 54,179 1.7
Avocet Mining plc*# 39,658 32,800 1.0
Brady plc# 204,818 97,627 3.1
BrainJuicer Group plc 37,800 51,450 1.6
Brulines (Holdings) plc* 14,601 15,432 0.5
Business Control Solutions Group plc 37,700 20,421 0.6
Cantono plc 55,000 16,500 0.5
Capcon Holdings plc 196,115 23,301 0.7
Ceramic Fuel Cells Limited*# 46,139 52,900 1.7
Charter plc*# 55,212 67,387 2.1
Corero plc 47,075 45,980 1.4
Craneware plc* 33,664 46,288 1.5
Croma Group plc 250,000 160,000 5.0
CustomVis plc*# 17,225 19,875 0.6
Deltex Medical Group plc* 54,500 49,761 1.6
DM plc* 36,032 38,976 1.2
Dowlis Corporate Solutions plc 50,000 17,361 0.5
Earthport plc 20,654 64,670 2.0
Eco Animal Health Group plc# 50,000 52,750 1.7
eXpansys plc* 33,254 5,733 0.2
Fidessa Group plc*# 52,009 61,350 1.9
Fountains plc 80,000 91,520 2.9
Globus Maritime Limited*# 28,067 27,594 0.9
Greatfleet plc* 29,442 6,906 0.2
ID Data Group plc* 25,000 10,750 0.3
IDOX plc* 58,956 79,912 2.5
Immedia Broadcasting plc 71,940 5,232 0.2
Invocas Group plc* 108,780 47,040 1.5
IS Pharma plc (formerly Maelor plc)* 88,886 109,846 3.4
Jelf Group plc 82,421 212,479 6.7
Keller Group plc*# 34,096 34,451 1.1
Kier Group plc*# 44,123 41,335 1.3
Mattioli Woods plc 23,716 53,003 1.7
Micap plc 241,900 49,357 1.5
Mount Engineering plc 70,000 77,000 2.4
Murgitroyd Group plc# 22,783 19,411 0.6
Nighthawk Energy plc*# 28,060 50,325 1.6
Northern Bear plc 111,880 100,280 3.2
Optimisa plc* 99,110 92,102 2.9
Playtech Limited*# 22,136 25,375 0.8
Pressure Technologies plc* 32,048 57,686 1.8
Shieldtech plc* 60,000 43,200 1.4
Smart Approach Group plc 180,000 - -
Sprue Aegis plc 200,000 132,000 4.1
SQS Software Quality Systems AG# 39,445 39,249 1.2
St Helen's Capital plc 49,248 56,353 1.8
The Stanley Gibbons Group plc*# 32,257 34,909 1.1
STM Group plc# 20,000 26,000 0.8
Valiant Petroleum plc*# 21,525 23,678 0.7
Velosi Limited*# 26,833 29,166 0.9
Vicorp Group plc* 432,042 126,297 4.0
Vyke Communications plc*# 20,291 23,918 0.8
Western & Oriental plc* 202,424 129,690 4.1
Wyatt Group plc 100,000 35,000 1.1
Zenith Hygiene Group plc 60,000 6,000 0.2
Zoo Digital Group plc 63,075 54,136 1.7
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Total investments 4,683,659 3,070,092 96.4
-------------------------------------------------------------------------
Net current assets 113,099 3.6
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Shareholders' funds 4,683,659 3,183,191 100.0
-------------------------------------------------------------------------
* Investments are also held by other VCTs managed by Noble.
Part qualifying holding.
# Non qualifying holding.
Principal risks and uncertainties
The Board considers that the Company faces the following major risks and
uncertainties:
Investment risk
This is the risk of investment in poor quality assets which reduce the capital
and income returns to shareholders and negatively impacts on the Company's
reputation and value. By nature, smaller unquoted businesses, such as those that
qualify for venture capital trust purposes are more fragile than larger, long
established businesses.
To reduce the risk, the Board places reliance upon the skills and expertise of
Noble and its track record for investing in this segment of the market. In
addition, Noble itself operates a structured investment process, which includes
a formal investment committee. Investments are actively and regularly monitored
by Noble and the Board receives appropriate reports from Noble at regular board
meetings.
Venture capital trust approval risk
The current provisional approval as a venture capital trust allows investors to
take advantage of income tax reliefs on initial investment and ongoing tax free
capital gains and dividend income. Failure to meet the qualifying requirements
could result in investors losing the income tax relief on initial investment and
loss of tax relief on any tax free income or capital gains received. In
addition, failure to meet the qualifying requirements could result in a loss of
listing of the shares.
To reduce this risk, the Board has appointed Noble which has significant
experience in venture capital trust management, and is used to operating within
the requirements of the venture capital trust legislation. In addition, to
provide further formal reassurance, the Board has appointed
PricewaterhouseCoopers as its taxation advisors. PricewaterhouseCoopers report
every six months to the Board to confirm independently compliance with the
venture capital legislation, to highlight areas of risk and to inform on changes
in legislation.
Compliance risk
The Company's shares are listed on The London Stock Exchange and it is required
to comply with the rules of the UK Listing Authority, as well as with the
Companies Acts, Accounting Standards and other legislation. Failure to comply
with these regulations could result in a delisting of the Company's shares, or
other penalties under the Companies Acts or from financial reporting oversight
bodies.
Board members and Noble have considerable experience of operating at senior
levels within quoted businesses. In addition, the Board and Noble receive
regular updates on new regulation from the auditors, lawyers and professional
bodies.
Internal control risk
Failures in key controls within the Board or within Noble's business could put
assets of the Company at risk or result in reduced or inaccurate information
being passed to the Board or to shareholders.
Financial risk
By its nature, as a venture capital trust, the Company is exposed to market
price risk, credit risk, liquidity risk and interest rate risk. The Company's
policies for managing these risks are outlined in full in notes 24 to 28 to the
financial statements.
The Company is financed through equity and does not have any borrowings.
Economic risk
Events such as economic recession and movement in interest rates could affect
smaller companies' valuations.
Reputational risk
Inadequate or failed controls might result in breaches of regulations or loss of
shareholder trust.
Operational risk
Failure of Noble, or other third parties with whom the Company has a contract,
accounting systems or disruption to its business might lead to an inability to
provide accurate reporting and monitoring.
Liquidity risk
The Company's investments may be difficult to realise.
Market risk
Investment in AIM-traded, PLUS-traded and unquoted companies, by its nature,
involves a higher degree of risk than investment in companies on the main
market. In particular, smaller companies often have limited product lines,
markets or financial resources and may be dependent for their management on a
smaller number of key individuals. In addition, the market for stock in smaller
companies is often less liquid than for stock in larger companies, bringing with
it potential difficulties in acquiring, valuing and disposing of such stock.
The Board seeks to mitigate the internal risks by setting policy, regular
reviews of performance, enforcement of contractual obligations and monitoring
progress and compliance.
Income Statement
for the year ended 30 April 2008
2008 2008 2008 2007 2007 2007
Revenue Capital Total Revenue Capital Total
Notes �'000 �'000 �'000 �'000 �'000 �'000
--------------------------------------------------------------------------
Loss on investments 7 - (31) (31) - (95) (95)
Decrease in fair
value of
investments held 7 - (705) (705) - (4) (4)
Income 2 61 - 61 51 - 51
Investment 3 (22) (65) (87) (17) (53) (70)
management fee
Other expenses 4 (171) - (171) (171) - (171)
--------------------------------------------------------------------------
Loss on ordinary
activities
before taxation (132) (801) (933) (137) (152) (289)
Taxation on
ordinary
activities 5 - - - - - -
--------------------------------------------------------------------------
Loss on ordinary
activities
after taxation (132) (801) (933) (137) (152) (289)
--------------------------------------------------------------------------
Return per Ordinary 6 (2.88)p (17.48)p (20.36)p(2.99)p (3.32)p(6.31)p
share
--------------------------------------------------------------------------
The total column is the profit and loss account of the Company.
The accompanying notes are an integral part of the statement.
All revenue and capital items derive from continuing operations.
No operations were acquired or discontinued during the year.
There were no other recognised gains or losses in the year.
Dividends paid
No dividends were paid or proposed during the year ended 30 April 2008 (2007:
�nil).
Reconciliation of Movements in Shareholders' Funds
for the year ended 30 April 2008
2008 2007
�'000 �'000
------------------------------------------------------------------------
Opening shareholders' funds 4,116 4,405
Loss for the year (933) (289)
------------------------------------------------------------------------
Closing shareholders' funds 3,183 4,116
------------------------------------------------------------------------
The accompanying notes are an integral part of the statement.
Balance Sheet
as at 30 April 2008
2008 2007
Note �'000 �'000
---------------------------------------------------------------------
Fixed assets
Investments held at fair value 7 3,070 3,079
---------------------------------------------------------------------
Current assets
Debtors 8 46 41
Cash at bank and on deposit 95 59
Investments - liquidity fund 63 1,013
---------------------------------------------------------------------
204 1,113
---------------------------------------------------------------------
Total assets 3,274 4,192
Current liabilities
Creditors: amounts falling due within one 9 (91) (76)
year
---------------------------------------------------------------------
Net current assets 113 1,037
---------------------------------------------------------------------
Total assets less current liabilities 3,183 4,116
---------------------------------------------------------------------
Capital and reserves
Called up share capital 10 46 46
Share premium account 11 - -
Special distributable reserve 12 4,236 4,236
Capital reserve 13 (669) 132
Revenue reserve 14 (430) (298)
---------------------------------------------------------------------
Equity shareholders' funds 3,183 4,116
---------------------------------------------------------------------
Net asset value per share 15 69.47p 89.83p
The financial statements were approved and authorised for issue by the Board of
directors on 31 July 2008 and were signed on its behalf by
A E B Wiegman
Chairman
The accompanying notes are an integral part of the balance sheet.
Cash Flow Statement
for the year ended 30 April 2008
2008 2007
Note �'000 �'000
----------------------------------------------------------------------
Operating activities
Investment income received 50 35
Deposit interest received 3 7
Investment management fees 3 (88) (102)
Other operating costs (169) (200)
----------------------------------------------------------------------
Net cash outflow from operating activities 17 (204) (260)
----------------------------------------------------------------------
Taxation
UK corporation tax paid - (14)
----------------------------------------------------------------------
Financial investment
Purchase of investments (1,664) (1,559)
Disposal/(purchase) of liquidity fund 950 (1,013)
Disposal of investments 954 1,963
----------------------------------------------------------------------
Net cash inflow/(outflow) from financial 240 (609)
investment
----------------------------------------------------------------------
Net cash inflow/(outflow) before and after 36 (883)
financing
----------------------------------------------------------------------
Increase/(decrease) in cash during the year 36 (883)
----------------------------------------------------------------------
Reconciliation of net cash flow to movement in net
cash
Opening net cash 59 942
Closing net cash 95 59
----------------------------------------------------------------------
Increase/(decrease) in cash during the year 36 (883)
----------------------------------------------------------------------
The accompanying notes are an integral part of the statement.
Notes to the Financial Statements
1 Accounting Policies
Basis of accounting
The financial statements have been prepared under the historical cost
convention, modified to include a revaluation of fixed asset investments,
and in accordance with applicable Accounting Standards and with the
Statement of Recommended Practice, `Financial Statements of Investment Trust
Companies' ("SORP") issued in December 2005.
As a result of the directors' current intention to put a vote to
shareholders on a proposed merger and subsequent liquidation of the Company,
the accounts have not been prepared on a going concern basis. Further
details are given in note 19. Notwithstanding that the financial statements
are not prepared on a going concern basis, the remainder of the disclosed
accounting policies are still considered relevant to shareholders as a
result of the proposed terms of the transaction, save that the potential
costs of the transaction have not been provided as there was no constructive
or legal obligation to incur these costs at the balance sheet date.
Income
Dividends on quoted shares are recognised as income on the date that the
related investments are marked ex dividend and where no dividend date is
quoted, when the Company's right to receive payment is established.
Income from fixed interest securities, other investment income and deposit
income are included on an accruals basis provided there is no reasonable
doubt that payment will be received in due course.
Expenses
All expenses are accounted for on an accruals basis. In respect of the
analysis between revenue and capital items presented within the income
statement, all expenses have been prescribed as revenue items except as
follows:
* Expenses are split and presented partly as capital items where a connection
with the maintenance or enhancement of the value of the investments held can be
demonstrated, and accordingly the investment management fee is currently
allocated 25% to revenue and 75% to capital, which reflects the directors'
expected long-term view of the nature of the investment returns of the Company.
* Performance fees are paid 100% from capital.
Issue costs
Issue costs are deducted from the share premium account.
Taxation
Deferred taxation is recognised in respect of all timing differences that
have originated but not reversed at the balance sheet date. Deferred tax
assets are only recognised when they arise from timing differences where
recovery in the foreseeable future is regarded as probable. Timing
differences are differences arising between the Company's taxable profits
and its results as stated in the financial statements which are capable of
reversal in one or more subsequent periods. Deferred tax assets and
liabilities are not discounted.
Investments
Investments are classified at fair value through the income statement.
Financial assets designated at fair value through the income statement are
measured at subsequent reporting dates at fair value.
In respect of investments that are traded on AIM or PLUS, the International
Private Equity Venture Capital Valuation ("IPEVCV") guide states that
venture capital trusts should have regard to Generally Accepted Accounting
Practice in the valuation of investments and accordingly these are valued at
bid prices, in accordance with FRS 26 Financial Instruments: Measurement.
Unquoted investments are shown at fair value as assessed by the directors in
accordance with International Private Equity Venture Capital Valuation
("IPEVCV") guidelines. Valuation of unquoted investments are reviewed
monthly.
* Investments which have been made in the last 12 months are retained at cost
except where a company's performance against plan is significantly below the
expectations on which the investment was made in which case a provision against
cost is made as appropriate.
* Where a company is in the early stage of development it will normally
continue to be held at cost on the basis described above.
* Where a company is well established after one year from the date of
investment the shares may be valued by applying a suitable price-earnings ratio
to that company's historical post-tax earnings. The ratio used is based on a
comparable listed company or sector but discounted to reflect lack of
marketability. Alternative methods of valuation will include cost, provision
against cost or net asset value where such factors apply that make one of these
methods more appropriate.
* Alternatively where a value is indicated by a material arms-length
transaction by a third party in the shares of the company the valuation will
normally be based on this.
Realised surpluses or deficits on the disposal of investments and permanent
impairments in the value of investments are taken to realised capital
reserves, and unrealised surpluses and deficits on the revaluation of
investments are taken to unrealised capital reserves.
Liquidity funds
Liquidity funds are regarded as available for investment, rather than to
meet the Company's running expenses, and are valued at bid price.
Financial Instruments
The Company classifies financial instruments, or their component parts, on
initial recognition as a financial asset, a financial liability, an equity
instrument or a loan in accordance with the substance of the contractual
arrangement. Financial instruments are recognised on trade date when the
Company becomes a party to the contractual provisions of the instrument.
Financial instruments are recognised initially at fair value plus, in the
case of a financial instrument not at fair value through profit and loss,
transaction costs that are directly attributable to the acquisition or issue
of the financial instrument.
Financial instruments are derecognised on trade date when the Company is no
longer a party to the contractual provisions of the instrument.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss comprise equity
investment. Movements in fair values are taken directly to the income
statement.
Trade debtors
Trade debtors are stated at their original invoiced value, as the interest
that would be recognised from discounting future cash receipts over the
short credit period is not considered to be material. Trade debtors are
reduced by appropriate allowances for estimated irrecoverable amounts.
Interest on overdue trade debtors is recognised as it accrues.
Trade creditors
Trade creditors are stated at their original invoiced value, as the interest
that would be recognised from discounting future cash payments over the
short payment period is not considered to be material.
2 Income
2008 2007
�'000 �'000
-----------------------------------------------------------------------
Income from investments:
UK franked investment income 20 9
UK unfranked investment income 9 9
UK unfranked investment income reinvested 2 -
Liquidity fund income 27 26
Other income:
Deposit interest 3 7
----------------------------------------------------------------------
61 51
----------------------------------------------------------------------
3 Investment management fees
The management agreement between Noble and Noble Income and Growth VCT plc (29
April 2005) states that from 21 June 2006 until 21 September 2006 Noble's fee
was 0.25% of funds under management per calendar quarter and 0.5% of funds under
management per calendar quarter thereafter.
The agreement provides for a performance fee incentive to be paid, which is
calculated at 20% of the increase in the value of the Company's net assets in
excess of 8% per annum from the date when Noble took over the management of the
VCT up to the financial period end. This fee amounts to �nil (inclusive of VAT)
for the year (2007: �nil).
The net assets in any financial year shall be adjusted on a time-weighted basis
for any cash contributions or distributions during the financial period.
Noble also receives a custodian fee of 0.05% of funds under management per
quarter.
Investment management fees (including VAT) for the year were as follows:
2008 2007
�'000 �'000
----------------------------------------------------------------------
Due to Noble by the Company at 1 May 9 41
Management fee charge to revenue and capital for the 87 70
year
Fees paid to Noble during the year (88) (102)
----------------------------------------------------------------------
Due to Noble by the Company at 30 April 8 9
----------------------------------------------------------------------
4 Other expenses
2008 2007
�'000 �'000
----------------------------------------------------------------------
Directors' remuneration 43 42
Auditors' fees
- Audit 17 14
- Taxation services 2 9
- Other assurance services - 4
Legal and professional services 6 29
Registration and listing fees 38 15
Administration and secretarial services 65 58
----------------------------------------------------------------------
171 171
----------------------------------------------------------------------
The Company has no employees, other than the non-executive directors.
Charges for non audit services provided by the auditors in the year ended 30
April 2008 relates to tax compliance work. The directors consider the auditors
were best placed to provide these services. The Board reviews the nature and
extent of non audit services to ensure that independence is maintained.
5 Tax on ordinary activities
5a Analysis of credit for the year
2008 2007
�'000 �'000
----------------------------------------------------------------------
UK corporation tax - -
----------------------------------------------------------------------
The income statement shows the tax credit allocated between revenue and capital.
5b Factors affecting the tax credit for the year
The tax credit for the year is lower than the standard rate of corporation tax
in the UK (19 per cent). The differences are explained below:
2008 2007
Total Total
�'000 �'000
----------------------------------------------------------------------
Corporation tax at standard rate of 19% (2007:19%) (280) (55)
Effect of:
Non-taxable realisation (losses)/gains (1) 19
Dividends receivable (4) (2)
Excess management expenses 285 38
----------------------------------------------------------------------
Tax credit for the year (note 5a) - -
----------------------------------------------------------------------
Due to the Company's tax status as an approved venture capital trust, deferred
tax has not been provided on any net capital gains arising on the disposal of
investments as such gains are not taxable.
No deferred tax asset has been recognised on surplus expenses carried forward as
it is not envisaged that any such tax will be recovered in the foreseeable
future. The amount not recognised at the expected future rate of 20% (2007: 19%)
is �135,000 (2007: �90,000).
6 Return per share
The revenue return per share is based on the loss on ordinary activities after
taxation of �132,000 (2007: �137,000) and on 4,581,852 (2007: 4,581,852) shares,
being the weighted average number of shares in issue during the year.
The capital return per share is based on the loss on ordinary activities after
taxation of �801,000 (2007: �152,000) and on 4,581,852 (2007: 4,581,852) shares,
being the weighted average number of shares in issue during the year.
7 Investments
Quoted Unquoted
investments investments Total
�'000 �'000 �'000
-------------------------------------------------------------------------
Cost at 1 May 2007 3,403 140 3,543
Transfers in year 45 (45) -
Purchases 1,666 - 1,666
Disposal
s:
- proceeds received (939) - (939)
- realised losses on disposal (31) - (31)
- realisation of revaluation movements 68 - 68
from previous years
-------------------------------------------------------------------------
Cost at 30 April 2008 4,212 95 4,307
-------------------------------------------------------------------------
Unrealised losses at 1 May 2007 (464) - (464)
Unrealised losses on investments during (705) - (705)
the year
Realisation of revaluation movements from (68) - (68)
previous years
-------------------------------------------------------------------------
Unrealised losses at 30 April 2008 (1,237) - (1,237)
-------------------------------------------------------------------------
Valuation at 1 May 2007 2,984 95 3,079
Valuation at 30 April 2008 2,975 95 3,070
Equity shares 2,930 - 2,930
Loan stock 45 95 140
-------------------------------------------------------------------------
Total investments at valuation 2,975 95 3,070
-------------------------------------------------------------------------
2008 2007
�'000 �'000
-------------------------------------------------------------------------
Realised losses on disposal (31) (95)
Unrealised losses on investments during the year (705) (4)
-------------------------------------------------------------------------
Net losses on investments (736) (99)
-------------------------------------------------------------------------
Transaction costs
During the year, the Company incurred transaction costs of �4,000 and �2,000 on
purchases and sales of investments respectively. These amounts are included in
loss on disposals of investments and decrease in fair value of investments held
as disclosed in the income statement.
Co-investments with other Noble managed VCTs:
Noble Other % of
Income & Noble equity
Growth managed held by
Fund VCT VCTs Total funds
cost cost cost managed
by
� � � Noble
-----------------------------------------------------------------------
ADVFN plc 61,000 292,002 353,002 2.0
Amino Technologies plc 34,400 232,852 267,252 0.9
Appian Technology plc 46,435 298,575 345,010 3.5
AsianLogic Limited 50,950 473,105 524,055 0.6
Avocet Mining plc 39,658 257,772 297,430 0.1
Brulines (Holdings) plc 14,601 404,670 419,271 1.4
Ceramic Fuel Cells Limited 46,139 329,988 376,127 0.6
Charter plc 55,212 294,459 349,671 -
Craneware plc 33,664 425,648 459,312 1.4
CustomVis plc 17,225 227,101 244,326 3.8
Deltex Medical Group plc 54,500 683,500 738,000 3.7
DM plc 36,032 487,719 523,751 2.6
eXpansys plc 33,254 425,333 458,587 1.8
Fidessa Group plc 52,009 346,718 398,727 0.2
Globus Maritime Limited 28,067 196,457 224,524 0.2
Greatfleet plc 29,442 482,426 511,868 2.7
ID Data Group plc 25,000 300,000 325,000 0.4
IDOX plc 58,956 266,625 325,581 1.2
Invocas Group plc 108,780 299,700 408,480 1.3
IS Pharma plc (formerly 88,886 942,055 1,030,941 4.6
Maelor plc)
Keller Group plc 34,096 233,991 268,087 0.1
Kier Group plc 44,123 378,184 422,307 0.1
Nighthawk Energy plc 28,060 243,666 271,726 0.2
Optimisa plc 99,110 713,791 812,901 4.3
Playtech Limited 22,136 191,089 213,225 -
Pressure Technologies plc 32,048 149,762 181,810 1.1
Shieldtech plc 60,000 450,000 510,000 3.9
The Stanley Gibbons Group plc 32,257 290,304 322,561 0.7
Valiant Petroleum plc 21,525 156,795 178,320 0.1
Velosi Limited 26,833 199,339 226,172 0.5
Vicorp Group plc 432,042 350,000 782,042 8.3
Vyke Communications plc 20,291 185,994 206,285 0.6
Western & Oriental plc 202,424 618,477 820,901 3.3
-----------------------------------------------------------------------
8 Debtors
2008 2007
�'000 �'000
-----------------------------------------------------------------------
Other debtors 23 24
Prepayments and accrued income 23 17
-----------------------------------------------------------------------
Total debtors 46 41
-----------------------------------------------------------------------
9 Creditors: amounts falling due within one year
2008 2007
�'000 �'000
Other creditors 91 76
-----------------------------------------------------------------------
Total creditors 91 76
-----------------------------------------------------------------------
10 Called up share capital
2008 2007
Ordinary shares (1p shares) Number �'000 Number �'000
------------------------------------------------------------------------
Authorised 41,000,002 410 41,000,002 410
------------------------------------------------------------------------
Allotted, issued and fully paid
At 1 May and 30 April 4,581,852 46 4,581,852 46
------------------------------------------------------------------------
During the year no Ordinary shares of 1p each were purchased by the Company.
11 Share premium account
2008 2007
�'000 �'000
-----------------------------------------------------------------------
At 1 May - 1,008
Transfer to special distributable reserve - (1,008)
-----------------------------------------------------------------------
At 30 April - -
-----------------------------------------------------------------------
12 Special distributable reserve
2008 2007
�'000 �'000
------------------------------------------------------------------------
At 1 May 4,236 3,228
Transfer from share premium account - 1,008
------------------------------------------------------------------------
At 30 April 4,236 4,236
------------------------------------------------------------------------
The Company cancelled its share premium account as confirmed by an Order of the
High Court of Justice on 23 August 2006. The balance of the account was
transferred to the special distributable reserve which, subject to the
provisions of the Companies Act 1985, may be used by the Company to fund market
purchases of its own shares, to pay dividends to shareholders and for other
corporate purposes.
13 Capital reserve
2008 2007
Realised Unrealised Total Realised Unrealised Total
�'000 �'000 �'000 �'000 �'000 �'000
------------------------------------------------------------------------------
At 1 May 596 (464) 132 66 218 284
Previous unrealised gains 68 (68) - 678 (678) -
realised in year
Loss for the year (96) (705) (801) (148) (4) (152)
------------------------------------------------------------------------------
At 30 April 568 (1,237) (669) 596 (464) 132
------------------------------------------------------------------------------
14 Revenue reserve
2008 2007
�'000 �'000
------------------------------------------------------------------------
At 1 May (298) (161)
Loss for the year (132) (137)
------------------------------------------------------------------------
At 30 April (430) (298)
------------------------------------------------------------------------
15 Net asset value per Ordinary share
The calculation of net asset value per share at 30 April 2008 is based on net
assets of �3,183,000 (2007: �4,116,000) divided by the 4,581,852 (2007:
4,581,852) shares in issue at the year end.
16 Analysis of changes in cash
2008 2007
�'000 �'000
---------------------------------------------------------------------
At 1 May 59 942
Increase/(decrease) in cash during the year 36 (883)
---------------------------------------------------------------------
At 30 April 95 59
---------------------------------------------------------------------
17 Reconciliation of loss on ordinary activities before taxation to net cash
outflow from operating activities
2008 2007
�'000 �'000
----------------------------------------------------------------------
Loss on ordinary activities before taxation (933) (289)
Net loss and change in fair value of investments 736 99
Increase in other debtors (14) -
Increase in prepayments and accrued income (6) (9)
Increase/(decrease) in creditors, excluding 15 (61)
corporation tax payable
Less: fixed interest reinvested (2) -
----------------------------------------------------------------------
Net cash outflow from operating activities (204) (260)
----------------------------------------------------------------------
18 Significant interests
In addition to the significant interests (amounting to an investment of 3% or
more of the equity capital of an undertaking) which have been disclosed in the
Top Ten Investments, the Company also owned 3.8% of Capcon Holdings plc and 3.6%
of Wyatt Group plc issued ordinary share capital.
19 Post balance sheet events
The following transactions have taken place between 30 April 2008 and the date
of this report:
* An investment of �43,000 was made in Essentially Group Limited, a sports
media agency specialising in response orientated competitions and promotions
shortly after the year end; and
* An investment of �47,000 was made in MDM Engineering Group Limited, a
metallurgical engineering company undertaking mineral resources projects in the
gold, base metals, industrial metals and diamond sectors shortly after the year
end.
Potential merger with Noble AIM VCT plc
An announcement was made on 28 July 2008 that the Company is in discussions
with Noble AIM VCT plc ("Noble AIM") regarding a possible merger. If the
proposals are approved by shareholders then the merger will be effected by a
scheme of reconstruction of the Company in accordance with s110 of the
Insolvency Act 1986.
If the possible merger is approved by shareholders the terms would be as
follows:
The assets and liabilities of the Company will be transferred into Noble AIM
in consideration for the allotment of ordinary shares in Noble AIM with the
shares ranking pari passu with the existing ordinary shares of Noble AIM.
The number of Noble AIM shares to be issued to shareholders of the Company in
consideration will be calculated by reference to the net asset values of both
Noble AIM and the Company. Shareholders will receive the number of shares in
Noble AIM equivalent to the value of their investment in the Company. These
relative net asset values will be based on the unaudited net asset value of
the respective company shares, as at the close of business of the working day
immediately prior to the effective date of the Scheme, adjusted to take into
account the transaction costs allocated to each VCT and using the same
accounting policies as applied in the latest annual accounts.
Transaction costs will be paid by the respective VCTs. The apportionment of
these costs for the purposes of calculating the relative net asset values of
the VCTs will be based on the estimated costs savings per annum for each VCT.
Total transaction costs are estimated to be around �320,000 and the Company's
shares of these costs is expected to be �300,000.
20 Segmental analysis
The operations of the Company are wholly in the United Kingdom.
21 Related parties
During the year, the Company was charged sums by Noble Group companies. The
relationships and amounts charged during the year include:
Noble Fund Managers Limited charged the Company management fees of �87,000
(2007: �70,000) including irrecoverable VAT and custodian fee of �9,000 (2007:
�8,000) including irrecoverable VAT.
Noble Corporate Management Limited charged the Company administration fees of
�4,000 including irrecoverable VAT (2007: �4,000) and company secretarial fees
of �24,000 (2007: �20,000) including irrecoverable VAT.
22 Financial risk management
The Company's investing activities expose it to various types of risk that are
associated with financial instruments and markets in which it invests. The
Company's financial instruments comprise equity and fixed interest investment,
cash balances, liquidity funds, warrants and debtors and creditors that arise
from its operations.
The Company holds financial assets in accordance with its investment policy.
A risk management programme has been established to protect the Company against
the potential adverse effects of these financial risks. There has been no
significant change in these financial risks since the prior year and the risk
management policies employed by the Company are noted below.
23 Fair value of financial instruments
Financial assets 2008 2007
Carrying Fair Carrying Fair
value value value value
�'000 �'000 �'000 �'000
---------------------------------------------------------------------
Financial assets at fair value through 3,070 3,070 3,079 3,079
profit or loss
Cash at bank and on deposit 95 95 59 59
Investments - liquidity fund 63 63 1,013 1,013
---------------------------------------------------------------------
3,228 3,228 4,151 4,151
---------------------------------------------------------------------
It is the directors' opinion that the carrying value of debtors and creditors
approximates their fair value.
24 Credit risk
Credit risk is the risk that a counterparty to a financial instrument will fail
to discharge an obligation or commitment that it has entered into with the
Company.
Noble has in place a monitoring procedure in respect of counterparty risk which
is monitored on an ongoing basis.
The Company's maximum exposure to credit risk, without taking into account any
collateral held or other credit enhancements are:
2008 2007
Financial assets �'000 �'000
--------------------------------------------------------------------
Financial assets at fair value through profit or loss 140 189
- loan stocks (all mature in 2011) (2007: 2007 and
2011)
Debtors 46 41
Cash at bank and on deposit 95 59
Investments - liquidity fund 63 1,013
--------------------------------------------------------------------
344 1,302
--------------------------------------------------------------------
The debtors' age analysis is also evaluated as necessary for potential doubtful
debts. As at 30 April 2008 there were no debtors that were impaired or past due
(2007: none). It is the Directors' opinion that no provision for doubtful debts
is required.
25 Market risk
Market risk is the risk that the fair value or future cash flows of our
financial instruments will fluctuate because of changes in market prices. The
Company is exposed to the following market risks: interest rate risk and equity
price risk.
26 Interest rate risk
Interest rate risk is the risk that the value of a financial instrument or cash
flows associated with the instrument will fluctuate due to changes in market
interest rates. Interest rate risk arises from interest bearing financial
assets and liabilities that we use. Interest bearing assets comprise debtors,
other financial assets at fair value through profit or loss, cash at bank and on
deposit and liquidity funds. It is the Company's policy to settle creditors
within the credit terms allowed and the Company does therefore not incur
interest on overdue balances. The Company does not have any borrowings.
If interest If interest
rates rates
2008 were 1% were 1%
Average higher lower
Carrying interest Net Net
Financial assets amount rate % profit Equity profit Equity
----------------------------------------------------------------------------
Cash at bank and on deposit 95 5.8 1 1 (1) (1)
Investments - liquidity fund 63 5.8 1 1 (1) (1)
----------------------------------------------------------------------------
If interest If interest
rates rates 2007
were 1% were 1%
Average higher lower
Carrying interest Net Net
Financial assets amount rate % profit Equity profit Equity
----------------------------------------------------------------------------
Cash at bank and on deposit 59 5.0 1 1 (1) (1)
Investments - liquidity fund 1,013 5.0 10 10 (10) (10)
----------------------------------------------------------------------------
The average rate is calculated as the weighted average effective interest rate.
The rate on cash at bank balances represents average rate earned on cash
balances after taking into account bank set-off arrangements.
The tables above show the effect on profit and equity after tax if interest
rates at that date had been 1% higher or lower with all other variables held
constant. A sensitivity of 1% has been selected as this is considered
reasonable given the current level of both short-term and long-term interest
rates. When applied to short-term interest rates this would represent two to
three rate increases which is reasonably possible in the current environment
with the bias coming from the reserve bank and confirmed by market expectations
that interest rates in the UK are more likely to move up than down in the coming
period. The Company's sensitivity to interest rates has not changed
significantly from the prior year.
27 Equity price risk
Investments by the Company in fair value financial assets expose the Company to
equity price risk. This risk is managed by diversifying the Company's
investment portfolio. There is no impact on profit and loss until the
investments are disposed of as fluctuations in fair value for the year of
�705,000 (2007: �4,000) are recorded directly in the fair value reserve.
Fluctuations in the fair value of investments are not hedged.
Profit/(loss) Equity
2008 2007 2008 2007
Equity price risk sensitivity analysis �'000 �'000 �'000 �'000
-------------------------------------------------------------------------
If there was a 10% decrease in
equity prices with
all other variables held constant (307) (308) (307) (308)
If there was a 10% increase in
equity prices with
all other variables held constant 307 308 307 308
-------------------------------------------------------------------------
The impact of a change of 10% has been selected as this is considered reasonable
given the current level of volatility observed both on a historical basis and
market expectations for future movement. The range in equity prices is
considered reasonable given the historic changes that have been observed. The
Company's sensitivity to equity prices has not changed significantly from the
prior year.
28 Liquidity risk
The funds raised since incorporation are being used to fund the Company's
primary objective of investing in venture capital opportunities. By their
nature, unquoted investments may not be readily realisable. The Company
maintains sufficient cash to pay creditors. The Board reviews cashflow
forecasts on a regular basis to determine whether the Company has sufficient
cash reserves to meet future working capital requirements and to take advantage
of investment opportunities.
The financial information set out above has been extracted from the Company's
audited statutory accounts for the year ended 30 April 2008. Statutory accounts
for the year ended 30 April 2008 will be delivered to Companies House following
the Annual General Meeting on 4 September 2008. The auditors have reported on
those accounts: their report was unqualified and did not contain a statement
under Section 237 (2) or (3) of the Companies Act 1985.
The Annual Report was circulated by post to all shareholders on 5 August 2008
and copies will be available to members of the public from the Company's
registered office 120 Old Broad Street, London EC2N 1AR.
Further information regarding the Company can be found at Noble Group's website
www.noblegp.com.
For further information please contact
Doreen Nic 0131 225 9677
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