Announcements

Northern Venture Trust PLC.

9 MAY 2011

NORTHERN VENTURE TRUST PLC

UNAUDITED HALF-YEARLY FINANCIAL REPORT
FOR THE SIX MONTHS ENDED 31 MARCH 2011

Northern Venture Trust PLC is a Venture Capital Trust (VCT) managed by NVM Private Equity.  The trust was one of the first VCTs launched on the London Stock Exchange in 1995.  It 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 for the six months ended 31 March 2010 in italics)

          2011          2010 

Net assets
      £61.8m     £46.8m

Net asset value per share
 88.6p 78.9p

Return per share
    
Revenue   0.5p 0.7p
Capital   7.9p 1.0p
Total 8.4p 1.7p

Interim dividend per share in respect of the period
    
Revenue   0.5p 1.0p
Capital   2.5p 2.0p
Total 3.0p 3.0p

Cumulative return to shareholders since launch
    
Net asset value per share 88.6p 78.9p
Dividends paid per share* 93.5p 89.0p
Net asset value plus dividends paid per share 182.1p 167.9p

Share price at end of period
 74p 65.75p

 

*Excluding proposed interim dividend


For further information, please contact:

NVM Private Equity Limited
Alastair Conn/Christopher Mellor  
Website:  www.nvm.co.uk

0191 244 6000

 

NORTHERN VENTURE TRUST PLC

HALF-YEARLY MANAGEMENT REPORT
FOR THE SIX MONTHS ENDED 31 MARCH 2011

Your directors are pleased to report that Northern Venture Trust has made good progress in the six month period to 31 March 2011.  Strong investment performance and a successful £15 million public share offer combined to take the company's net assets past the £60 million mark for the first time, whilst almost £5 million was returned to shareholders through a tender offer.

Results and dividend
The net asset value (NAV) per ordinary share at 31 March 2011, after deducting the 2009/10 final dividend of 4.5p per share paid in December 2010, was 88.6p, compared with 85.2p at 30 September 2010.  The return per share for the period before dividends as shown in the income statement was 8.4p, equivalent to 9.9% of the NAV at the start of the period.  Low interest rates continued to affect the company's investment income, although the income statement benefitted from an additional recovery in relation to VAT paid on management fees in previous years.  There were no significant investment sales during the period, but strong trading performance from a number of our investee companies has been reflected in a portfolio valuation uplift of £4.8 million.

An interim dividend of 3.0p per share, unchanged from last year, has been declared and this will be paid on 24 June 2011 to shareholders on the register on 3 June 2011.  It remains our objective to maintain the annual dividend at not less than 6.0p per share.

Investments
The period saw a healthy level of new investment activity, with six new investments totalling £4.9 million added to the venture capital portfolio:

Brady (£142,000) - AIM-quoted developer of commodity trading and risk management software, Cambridge

Altacor (£477,000) - developer of specialist ophthalmic products, Cambridge

Cawood Scientific (£1,073,000) - laboratory services for land-based industries, Bracknell/Cawood

Closer2 Investments (£888,000)- business-to-business exhibition management (sister company to Closerstill Holdings), London

Control Risks Group Holdings (£746,000)- international specialist risk consultancy, London

Kitwave One (£1,582,000) - wholesaler of confectionery, soft drinks, snacks, beers, wines and tobacco, North Shields

The unquoted venture capital portfolio at 31 March 2011 consisted of 32 companies with an aggregate value of £35.0 million.  Despite the continuing difficulties experienced by the UK economy and financial markets, many of our companies have made good progress over the past six months.  Interestingly, our managers estimate that exports represent over half of the aggregate annual sales of our current top fifteen companies.  Kerridge Commercial Systems and Alaric Systems recorded the largest individual increases in valuation.  Kerridge is a relatively recent investment (March 2010) which has exceeded our expectations at an early stage;  Alaric by contrast has been in the portfolio since 2000 and has received several rounds of funding, providing a good example of the patient long-term approach often required when backing technology businesses.  The only significant disappointment was the failure of the food manufacturer Frontier Foods, a start-up investment in 2007, but this had only a small impact on the half-yearly results as the investment was written down to nil value last year.  There was an encouraging contribution from the AIM portfolio, currently comprising 12 holdings, which increased in value by £0.6 million, with Tikit Group and IDOX doing particularly well.

A number of the holdings in the listed fixed-interest portfolio are reaching maturity, and the low returns currently available on gilts and corporate bonds have led the board to review its approach to investment of the company's non-VCT qualifying assets.  As a result we have decided to invest a limited proportion of our funds in income-yielding FTSE 350 listed equities as well as maintaining an exposure to the fixed-income sector.

Shareholder issues
In August 2010 the company announced proposals for a tender offer to purchase 10% of the issued share capital at a 3% discount to NAV, accompanied by a public offer of new ordinary shares to raise up to £15 million before expenses.  The tender offer proved popular with shareholders and was completed in December, with 5,913,941 shares re-purchased at a cost of £4.7 million.  The public offer prospectus was published in November and was one of the most successful VCT fund-raisings launched in the 2010/11 tax year, closing fully subscribed in mid-February.  I would like to welcome our new investors and thank them and our existing shareholders, many of whom also subscribed for new shares in the recent offer, for their support and encouragement.

We also announced in August 2010 that the company would provide liquidity to shareholders by following a policy of buying back its shares in the market at a 15% discount to NAV.  In the event it has not been necessary for the company to make any purchases, partly no doubt because of the tender offer but also because there continues to be a steady demand for shares in the secondary market.  This is unsurprising given the very attractive and consistent tax-free dividend yield, the company having paid an annual dividend of at least 7.5p in each of the past seven financial years.  Since its establishment in 1995, our company has distributed over £36 million in dividend payments and has returned a further £11 million to shareholders through tender offers and share buy-backs, whilst achieving our long-term objective of maintaining an NAV per share of at least 80p.

VCT qualifying status
The company has maintained its approved venture capital trust status with HM Revenue & Customs.  Continuing compliance is carefully monitored by the board with assistance from our managers and from our independent VCT taxation advisers at PricewaterhouseCoopers LLP.

Risk management
The board carries out a regular review of the risk environment in which the company operates.  There has been no significant change to the key risks discussed on page 10 of the annual report for the year ended 30 September 2010, including those resulting from the size and relative illiquidity of the unquoted and AIM-quoted investments held by the company.

Outlook
Northern Venture Trust was one of the first three VCTs launched in 1995 and has to date invested almost £100 million in over 130 UK companies, creating or protecting several thousand jobs and generating considerable tax and other revenues for the Exchequer as well as providing good investment returns to its shareholders.  It is unlikely that there are many better examples of how VCTs should work in practice and it is to be hoped that any changes resulting from the impending Government review of the VCT scheme, announced at the time of the March 2011 Budget, will be measured and constructive.

Whilst not underestimating the difficulties facing the UK economy in the aftermath of the financial crisis and arising from the planned public sector spending cuts, we continue to believe that our company is well positioned for the future, with a diverse portfolio of well-managed businesses which should be capable of maintaining investment returns comparable with those achieved in recent years.  As a result of the recent share issue we also have a very strong balance sheet with an ample reserve of cash for future investment.

On behalf of the Board

JOHN HUSTLER
Chairman


The unaudited half-yearly financial statements for the six months ended 31 March 2011 are set out below.


INCOME STATEMENT
(unaudited) for the six months ended 31 March 2011

 Six months ended
31 March 2011
Six months ended
31 March 2010 
 Revenue
£000
Capital
£000
Total
£000
Revenue
£000
Capital
£000
Total
£000
Gain on disposal of investments 367  367  428  428 
Movements in fair value of investments 4,757  4,757  458  458 
  ----------  ----------  ----------  ----------  ----------  ---------- 
  5,124  5,124  886  886 
Income 624  624  720  720 
Investment management fee (130) (389) (519) (124) (372) (496)
Recoverable VAT 33  99  132 
Other expenses (179) (179) (169) (169)
  ----------  ----------  ----------  ----------  ----------  ---------- 
Return on ordinary activities            
  before tax 348  4,834  5,182  427  514  941 
Tax on return on ordinary activities (70) 70  (16) 16 
  ----------  ----------  ----------  ----------  ----------  ---------- 
Return on ordinary activities            
  after tax 278  4,904  5,182  411  530  941 
  ----------  ----------  ----------  ----------  ----------  ---------- 
Return per share 0.5p 7.9p 8.4p 0.7p 1.0p 1.7p

 


 
 Year ended 30 September 2010 
 





Revenue
£000
Capital
£000
Total
£000
Gain on disposal of investments       3,119  3,119 
Movements in fair value of investments       1,493  1,493 
        ----------  ----------  ---------- 
        4,612  4,612 
Income       1,350  1,350 
Investment management fee       (244) (733) (977)
Recoverable VAT      
Other expenses       (326) (326)
        ----------  ----------  ---------- 
Return on ordinary activities            
  before tax       780  3,879  4,659 
Tax on return on ordinary activities       (95) 95 
        ----------  ----------  ---------- 
Return on ordinary activities            
  after tax       685  3,974  4,659 
        ----------  ----------  ---------- 
Return per share       1.2p 6.8p 8.0p

 

RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
(unaudited) for the six months ended 31 March 2011

 Six months ended
31 March 2011
Six months ended
31 March 2010
Year ended
30 September 2010
 £000£000£000
Equity shareholders' funds at      
  1 October 2010 50,414  47,875  47,875 
Return on ordinary activities after tax 5,182  941  4,659 
Dividends recognised in the period (2,661) (1,784) (1,781)
Net proceeds of share issues 13,523  (35) (35)
Shares purchased for cancellation (4,679) (168) (304)
  ----------  ----------  ---------- 
Equity shareholders' funds at      
  31 March 2011 61,779  46,829  50,414 
  ----------  ----------  ---------- 

 

BALANCE SHEET
(unaudited) as at 31 March 2011

 31 March
2011
31 March
2010
30 September
2010
 £000£000£000
Fixed asset investments held at fair value:      
Venture capital investments      
  Unquoted 35,016  25,872  26,308 
  Quoted 3,462  2,560  2,566 
  ----------  ----------  ---------- 
Total venture capital investments 38,478  28,432  28,874 
Listed equity investments 1,954 
Listed fixed-interest investments 3,788  6,869  6,222 
  ----------  ----------  ---------- 
Total fixed asset investments 44,220  35,301  35,096 
  ----------  ----------  ---------- 
Current assets:      
  Debtors 1,093  1,751  1,063 
  Cash and deposits 17,198  10,138  14,323 
  ----------  ----------  ---------- 
  18,291  11,889  15,386 
Creditors (amounts falling due within one year) (732) (361) (68)
  ----------  ----------  ---------- 
Net current assets 17,559  11,528  15,318 
  ----------  ----------  ---------- 
       
Net assets 61,779  46,829  50,414 
  ----------  ----------  ---------- 
       
Capital and reserves:      
Called-up equity share capital 17,440  14,835  14,785 
Share premium 21,611  12,222  12,222 
Capital redemption reserve 14,353  12,825  12,875 
Capital reserve 6,433  7,701  14,280 
Revaluation reserve 392  (1,751) (5,020)
Revenue reserve 1,550  997  1,272 
  ----------  ----------  ---------- 
Total equity shareholders' funds 61,779  46,829  50,414 
  ----------  ----------  ---------- 
Net asset value per share 88.6p 78.9p 85.2p

 

CASH FLOW STATEMENT
(unaudited) for the six months ended 31 March 2011

 Six months ended
31 March 2011
Six months ended
31 March 2010
Year ended
30 September 2010
 £000£000£000£000£000£000
Net cash inflow from            
  operating activities   625    947    1,595 
Taxation:            
Corporation tax paid       (261)
Financial investment:            
Purchase of investments (7,593)   (6,906)   (8,688)  
Sale/repayment of investments 3,660    4,411    10,124   
  ----------    ----------    ----------   
Net cash inflow/(outflow)            
  from financial investment   (3,933)   (2,495)   1,436 
Equity dividends paid   (2,661)   (1,784)   (1,781)
    ----------    ----------    ---------- 
Net cash inflow/(outflow)            
  before financing   (5,969)   (3,332)   989 
Financing:            
Issue of shares 14,302       
Share issue expenses (779)   (35)   (35)  
Purchase of shares for cancellation (4,679)   (168)   (304)  
  ----------    ----------    ----------   
Net cash inflow/(outflow) from financing   8,844    (203)   (339)
    ----------    ----------    ---------- 
Increase/(decrease) in cash and deposits 2,875    (3,535)   650 
    ----------    ----------    ---------- 
             
Reconciliation of return before tax      
to net cash flow from operating      
Activities      
Return on ordinary activities      
  before tax   5,182    941    4,659 
Gain on disposal of investments   (367)   (428)   (3,119)
Movements in fair value            
  of investments   (4,757)   (458)   (1,493)
(Increase)/decrease in debtors   (98)   934    1,622 
Increase/(decrease) in creditors   665    (42)   (74)
    ----------    ----------    ---------- 
Net cash inflow from            
  operating activities   625    947    1,595 
    ----------    ----------    ---------- 
             
Analysis of movement in net funds      
 1 October 2010Cash flows31 March 2011
 £000£000£000
Cash and deposits   14,323    2,875    17,198 
    ----------    ----------    ---------- 

 

INVESTMENT PORTFOLIO SUMMARY
as at 31 March 2011

 Cost
£000
Valuation
£000
% of net assets
by valuation
Venture capital investments:      
Weldex (International) Offshore Holdings 3,262 3,262 5.3
Kerridge Commercial Systems 1,740 3,042 4.9
CloserStill Holdings 1,750 2,271 3.7
Promanex Group Holdings 1,695 2,139 3.5
CGI Group Holdings 3,449 2,128 3.4
Alaric Systems 2,175 2,059 3.3
Kitwave One 1,582 1,582 2.6
Paladin Group 1,452 1,344 2.2
Arleigh International 775 1,205 2.0
Promatic Group 1,229 1,229 2.0
Envirotec 813 1,191 1.9
Axial Systems Holdings 1,004 1,143 1.9
Cawood Scientific 1,073 1,073 1.7
Evolve Investments 995 995 1.6
KPJ Software Services 995 995 1.6
  ---------- ---------- --------
Fifteen largest venture capital investments 23,989 25,658 41.6
       
RCC Lifesciences 995 995 1.6
Wear Inns 979 979 1.6
Closer2 Investments 888 888 1.4
Tikit Group* 752 846 1.4
Lanner Group 832 832 1.3
Advanced Computer Software Group* 381 783 1.3
Control Risks Group Holdings 746 746 1.2
IG Doors 372 726 1.2
IDOX* 298 705 1.1
S&P Coil Products 243 698 1.1
Direct Valeting 485 639 1.0
Mantis Deposition Holdings 613 613 1.0
Optilan Group 1,000 500 0.8
IS Pharma* 425 479 0.8
Altacor 477 477 0.8
e-know.net 360 420 0.7
Interlube Systems 88 314 0.5
Vectura Group** 211 266 0.4
Gentronix 535 243 0.4
Brady* 142 181 0.3
Brulines Group* 184 137 0.2
Astbury Marsden Holdings 1,120 120 0.2
Warmseal Windows (Newcastle) 400 100 0.2
Other investments each valued at less than £100,000 1,377 133 0.2
  ---------- ---------- --------
Total venture capital investments 37,892 38,478 62.3
Listed equity investments 2,000 1,954 3.2
Listed fixed-interest investments 3,936 3,788 6.1
  ---------- ---------- --------
Total fixed asset investments 43,828 44,220 71.6
  ----------    
Net current assets   17,559 28.4
    ---------- --------
Net assets   61,779 100.0
    ---------- --------

 

* Quoted on AIM
**Listed on London Stock Exchange


The above summary of results for the six months ended 31 March 2011 does not constitute statutory financial statements within the meaning of Section 434 of the Companies Act 2006, has not been audited or reviewed by the company's independent auditors and has not been delivered to the Registrar of Companies.  The figures for the year ended 30 September 2010 have been extracted from the audited financial statements for that year, which have been delivered to the Registrar of Companies;  the independent auditors' report on those financial statements was unqualified and did not contain a statement under Section 498(2) or (3) of the Companies Act 2006.  The half-yearly financial statements have been prepared on the basis of the accounting policies set out in the annual financial statements for the year ended 30 September 2010.

Each of the directors confirms that to the best of his knowledge the half-yearly financial statements have been prepared in accordance with the Statement "Half-yearly financial reports" issued by the UK Accounting Standards Board and the half-yearly financial report includes a fair review of the information required by (a) DTR 4.2.7R of the Disclosure Rules and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the year, and (b) DTR 4.2.8R of the Disclosure Rules and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period, and any changes in the related party transactions described in the last annual report that could do so.

The directors of the company at the date of this statement were Mr J R Hustler (Chairman), Mr N J Beer, Mr E M P Denny, Mr R S Peters and Mr H P Younger.

The calculation of the revenue and capital return per share is based on the return on ordinary activities after tax for the period and on 61,845,403 (2010 56,584,163) ordinary shares, being the weighted average number of shares in issue during the period.

The calculation of the net asset value per share is based on the net assets at 31 March 2011 divided by the 69,759,719 (2010 59,339,418) ordinary shares in issue at that date.

The proposed interim dividend of 3.0p per share for the year ending 30 September 2011 will be paid on 24 June 2011 to shareholders on the register at the close of business on 3 June 2011.

A copy of the half-yearly financial report for the six months ended 31 March 2011 is expected to be posted to shareholders by 27 May 2011 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.




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(ii) they are solely responsible for the content, accuracy and originality of the
information contained therein.

Source: Northern Venture Trust PLC via Thomson Reuters ONE

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