Northern Venture Trust PLC.

18 MAY 2012



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 as at 31 March 2011)

        2012         2011 
Net assets£63.8m£61.8m
Net asset value per share89.4p88.6p
Return per share 
Revenue 0.5p 0.5p
Capital 4.1p 7.9p
Interim dividend per share declared 
in respect of the period3.0p3.0p
Cumulative return to 
shareholders since launch 
Net asset value per share 89.4p88.6p
Dividends paid per share* 99.5p93.5p
Net asset value plus dividends 
paid per share188.9p182.1p
Share price at end of period73.6p74.0p
Share price discount to net asset value17.7%16.5%

*Excluding interim dividend not yet paid

For further information, please contact:

NVM Private Equity Limited
Alastair Conn/Christopher Mellor
0191 244 6000



Your directors are pleased to report on a half year of continuing steady progress for Northern Venture Trust.

Results and dividend
The net asset value (NAV) per ordinary share at 31 March 2012, after deducting the 2010/11 final dividend of 3.0p per share paid in December 2011, was 89.4p, compared with 87.8p at 30 September 2011.  The return per share before dividends for the six month period as shown in the income statement was 4.6p (six months ended 31 March 2011 8.4p), equivalent to 5.2% of the NAV at the start of the period.  Income from the company's investments was higher than in the corresponding period last year, reflecting the benefit of the income on the additional funds raised in the public share offer in late 2010 and early 2011.  The revenue element of the return for the period was unchanged at 0.5p per share.  There were no significant realised gains on investment disposals during the half year, but good performance from the investment portfolio resulted in a net valuation gain of £3.0 million.

An interim dividend of 3.0p per share, unchanged from last year, has been declared and this will be paid on 29 June 2012 to shareholders on the register on 8 June 2012.  It remains our objective to maintain the annual dividend at not less than 6.0p per share.

During the period a further £1,000,000 was invested in Evolve Investments to help fund the acquisition of Volumatic, which manufactures intelligent cash handling equipment, and £244,000 was invested in a new share placing by Brady, the AIM-quoted developer of commodity trading and risk management software.  A new investment of £974,000 was completed in Lineup Systems, which develops software solutions for multi-channel media businesses.  Since 31 March we have also committed to invest a further £661,000 in Wear Inns as part of a £10 million funding package for the acquisition of a number of additional pubs.

The unquoted venture capital portfolio at 31 March 2012 consisted of 34 companies with an aggregate value of £37.8 million.  Although the state of the UK economy continues to present stiff challenges, the majority of our companies have made satisfactory progress with our three largest holdings by value, Kerridge Commercial Systems, Alaric Systems and Closerstill Holdings, reporting excellent results.  Our managers are currently working on several potential exits, at least one of which we hope will come to fruition in the second half of the financial year.

In the AIM quoted portfolio there has been strong share price performance from Advanced Computer Software Group, IDOX and Tikit Group.

As previously reported, your board has decided to invest part of the company's funds in income-yielding FTSE 350 listed equities and funds as well as maintaining an exposure to the fixed-income sector and this has produced a useful enhancement to the overall portfolio yield.

Shareholder issues
There continues to be a steady demand for the company's shares in the secondary market.  In addition the company facilitates shareholder liquidity by maintaining a policy of buying back its shares in the market at a 15% discount to NAV, and 230,000 shares were re-purchased in March 2012 as the end of the tax year approached.  We continue to believe that our shares offer good value to those seeking high tax free income returns and we hope that the impending introduction of the Retail Distribution Review will educate a wider market to the benefits of buying second hand VCT shares as well as subscribing for new issues.

Since 1995 the company has paid dividends totalling over £40 million (following payment of the interim dividend our original subscribers will have received over 100p per share) and has returned a further £11 million to shareholders through tender offers and share buy-backs, whilst exceeding 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.

VCT legislation
The Government announced at the time of the 2011 Budget over a year ago that the VCT rules would be changed with effect from April 2012, so as to relax the limits on the size of qualifying companies and increase the amount of funding which companies can raise from VCTs.  In July 2011 HM Treasury published a consultation paper confirming its intention to implement these reforms, with a new annual limit of £10 million on the amount any qualifying company could raise from VCTs, and also to refocus VCT investment on "genuine risk capital investments".

However some uncertainty has been created by the draft legislation contained in the 2012 Finance Bill, published on 29 March, which included some significant changes to what had previously been proposed.  The VCT industry is awaiting clarification from HM Treasury and the European Commission in relation to several specific issues, which in the short term has led to a number of investments by VCTs having to be postponed despite in some cases having been previously approved by HM Revenue & Customs.  Research published recently by the Association of Investment Companies (AIC) supports the view that VCTs such as Northern Venture Trust have been a highly effective catalyst to economic growth, corporate development, technological innovation, job creation and the generation of tax and other revenues for the Treasury and it is to be hoped that the future legislative framework will reflect this.

In the light of the progress made over the past six months we remain cautiously optimistic about future prospects for the company.  With net assets of over £60 million our company is among the largest VCTs;  the company has a strong reserve of liquidity for future investment, and we should be able to maintain a well-diversified portfolio which will be capable of generating income and capital gains for distribution by way of dividend whilst allowing a measure of capital growth.

On behalf of the Board


The unaudited half-yearly financial statements for the six months ended 31 March 2012 are set out below.

(unaudited) for the six months ended 31 March 2012

Six months ended 31 March 2012 Six months ended 31 March 2011 
Gain on disposal of investments 294  294  367  367 
Movements in fair value of investments 3,045  3,045  4,757  4,757 
----------  ----------  ----------  ----------  ----------  ---------- 
3,339  3,339  5,124  5,124 
Income 774  774  624  624 
Investment management fee (161) (483) (644) (130) (389) (519)
Recoverable VAT 33  99  132 
Other expenses (187) (187) (179) (179)
----------  ----------  ----------  ----------  ----------  ---------- 
Return on ordinary activities before tax 426  2,856  3,282  348  4,834  5,182 
Tax on return on ordinary activities (53) 53  (70) 70 
----------  ----------  ----------  ----------  ----------  ---------- 
Return on ordinary activities after tax 373  2,909  3,282  278  4,904  5,182 
----------  ----------  ----------  ----------  ----------  ---------- 
Return per share 0.5p 4.1p 4.6p 0.5p 7.9p 8.4p

Year ended 30 September 2011 
Gain on disposal of investments 1,277  1,277 
Movements in fair value of investments 5,125  5,125 
----------  ----------  ---------- 
6,402  6,402 
Income 1,845  1,845 
Investment management fee (289) (867) (1,156)
Recoverable VAT 33  99  132 
Other expenses (350) (14) (364)
----------  ----------  ---------- 
Return on ordinary activities before tax 1,239  5,620  6,859 
Tax on return on ordinary activities (264) 264 
----------  ----------  ---------- 
Return on ordinary activities after tax 975  5,884  6,859 
----------  ----------  ---------- 
Return per share 1.5p 8.8p 10.3p

(unaudited) for the six months ended 31 March 2012

Six months ended 
31 March 2012 
Six months ended 
31 March 2011 
Year ended 
30 September 2011 
£000 £000 £000 
Equity shareholders' funds at 1 October 2011 62,570  50,414  50,414 
Return on ordinary activities after tax 3,282  5,182  6,859 
Dividends recognised in the period (2,138) (2,661) (4,789)
Net proceeds of share issues 258  13,523  14,782 
Shares purchased for cancellation (168) (4,679) (4,696)
----------  ----------  ---------- 
Equity shareholders' funds at 31 March 2012 63,804  61,779  62,570 
----------  ----------  ---------- 

(unaudited) as at 31 March 2012

31 March 2012 31 March 2011 30 September 2011 
£000 £000 £000 
Fixed asset investments 50,176  44,220  44,148 
----------  ----------  ---------- 
Current assets:
  Debtors 548  1,093  218 
  Cash and deposits 13,175  17,198  18,294 
----------  ----------  ---------- 
13,723  18,291  18,512 
Creditors (amounts falling due within one year) (95) (732) (90)
----------  ----------  ---------- 
Net current assets 13,628  17,559  18,422 
----------  ----------  ---------- 
Net assets 63,804  61,779  62,570 
----------  ----------  ---------- 
Capital and reserves:
Called-up equity share capital 17,840  17,440  17,820 
Share premium 10,672  21,611  10,491 
Capital redemption reserve 14,411  14,353  14,353 
Capital reserve 15,152  6,433  17,053 
Revaluation reserve 3,963  392  961 
Revenue reserve 1,766  1,550  1,892 
----------  ----------  ---------- 
Total equity shareholders' funds 63,804  61,779  62,570 
----------  ----------  ---------- 
Net asset value per share 89.4p 88.6p 87.8p

(unaudited) for the six months ended 31 March 2012

Six months ended 
31 March 2012 
Six months ended 
31 March 2011 
Year ended 
30 September 2011 
£000 £000 £000 £000 £000 £000 
Net cash inflow/(outflow) from
  operating activities (382) 625  1,324 
Corporation tax paid
Financial investment:
Purchase of investments (4,330) (7,593) (10,925)
Sale/repayment of investments 1,641  3,660  8,275 
----------  ----------  ---------- 
Net cash outflow
  from financial investment (2,689) (3,933) (2,650)
Equity dividends paid (2,138) (2,661) (4,789)
----------  ----------  ---------- 
Net cash outflow before financing (5,209) (5,969) (6,115)
Issue of shares 263  14,302  15,618 
Share issue expenses (5) (779) (836)
Purchase of shares for cancellation (168) (4,679) (4,696)
----------  ----------  ---------- 
Net cash inflow from financing 90  8,844  10,086 
----------  ----------  ---------- 
Increase/(decrease) in cash and deposits (5,119) 2,875  3,971 
----------  ----------  ---------- 
Reconciliation of return before tax
to net cash flow from operating activities
Return on ordinary activities
  before tax 3,282  5,182  6,859 
Gain on disposal of investments (294) (367) (1,277)
Movements in fair value
  of investments (3,045) (4,757) (5,125)
(Increase)/decrease in debtors (330) (98) 845 
Increase/(decrease) in creditors 665  22 
----------  ----------  ---------- 
Net cash inflow/(outflow) from
  operating activities (382) 625  1,324 
----------  ----------  ---------- 
Analysis of movement in net funds
1 October 2011 Cash flows 31 March 2012 
£000 £000 £000 
Cash and deposits 18,294  (5,119) 13,175
----------  ----------  ---------- 

as at 31 March 2012

% of net assets
by valuation
Venture capital investments
Kerridge Commercial Systems 1,741 4,464 7.0
Alaric Systems 2,175 2,831 4.5
CloserStill Holdings 1,001 2,747 4.3
Weldex (International) Offshore Holdings 3,262 2,408 3.8
Paladin Group 1,709 2,173 3.4
CGI Group Holdings 3,449 2,063 3.2
Volumatic 1,995 1,995 3.1
Kitwave One 1,582 1,607 2.5
Arleigh International 775 1,228 1.9
Wear Inns 979 1,206 1.9
Advanced Computer Software Group* 381 1,164 1.8
Axial Systems Holdings 1,004 1,140 1.8
Promatic Group 1,230 1,126 1.8
Cawood Scientific 1,073 1,094 1.7
IDOX* 269 1,055 1.7
------------ ------------ ------------
Fifteen largest venture capital investments 22,625 28,301 44.4
Control Risks Group Holdings 746 1,037 1.6
Tinglobal Holdings 988 988 1.5
Lineup Systems 974 974 1.5
RCC Lifesciences 995 965 1.5
KPJ Software Services 995 898 1.4
Closer2 Investments 888 888 1.4
Lanner Group 832 783 1.2
Mantis Deposition Holdings 747 747 1.2
IG Doors 244 601 0.9
Direct Valeting 403 597 0.9
Interlube Systems 88 560 0.9
Tikit Group* 377 556 0.9 360 540 0.9
Optilan Group 1,000 500 0.8
Brady* 386 491 0.8
Altacor 477 477 0.7
Envirotec 314 444 0.7
S&P Coil Products 180 410 0.6
Sinclair IS Pharma* 425 383 0.6
Gentronix 535 239 0.4
Vectura Group** 211 235 0.4
Brulines Group* 184 158 0.2
Other investments each valued at less than £100,000 2,483 114 0.2
------------ ------------ ------------
Total venture capital investments 37,457 41,886 65.6
Listed equity investments 5,970 5,783 9.1
Listed fixed-interest investments 2,786 2,507 3.9
------------ ------------ ------------
Total fixed asset investments 46,213 50,176 78.6
Net current assets 13,628 21.4
------------ ------------
Net assets 63,804 100.0
------------ ------------
* Quoted on AIM
**Listed on London Stock Exchange


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 unquoted and 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, by carrying out rigorous due diligence procedures and by maintaining a wide spread of holdings in terms of financing stage and industry sector.  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.  Accordingly they seek to maintain a proportion of the company's assets in cash or cash equivalents in order to be in a position to take advantage of new unquoted investment opportunities.  The company has very little exposure to foreign currency risk and does not enter into derivative transactions.

Economic risk:  Events such as economic recession or general fluctuations in stock markets and interest rates may affect the valuation of investee companies and their ability to access adequate financial resources, as well as affecting the company's own share price and discount to net asset value.

Stock market risk:  Some of the company's investments are quoted on the London Stock Exchange or 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 demand for shares in the smaller companies quoted on AIM.

Credit risk:  the company holds a number of financial instruments and cash deposits and is dependent on the counterparties discharging their commitment.  The directors review the creditworthiness of the counterparties to these instruments and cash deposits in addition to ensuring no significant concentration of credit risk is with any one counterparty.

Liquidity risk:  The company's investments may be difficult to realise.  The fact that a stock is quoted on AIM does not guarantee its liquidity and there may be a large spread between bid and offer prices.  Unquoted investments are not traded on a recognised stock exchange and are inherently illiquid.

Political risk:  in order to maintain its approval as a VCT, the company is required to comply with current VCT legislation in the UK as well as the European Commission's State Aid rules.  Politically motivated changes to the UK legislation or the State Aid rules in the future could have an adverse effect on the company's ability to achieve satisfactory investment returns whilst retaining its VCT approval.  The board and the manager monitor political developments and where appropriate seek to make representations either directly or through the relevant trade bodies

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.


The above summary of results for the six months ended 31 March 2012 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 2011 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 2011.

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 71,457,128 (2011 61,845,403) 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 2012 divided by the 71,358,388 (2011 69,759,719) ordinary shares in issue at that date.

The proposed interim dividend of 3.0p per share for the year ending 30 September 2012 will be paid on 29 June 2012 to shareholders on the register at the close of business on 8 June 2012.

A copy of the half-yearly financial report for the six months ended 31 March 2012 is expected to be posted to shareholders by 1 June 2012 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,

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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Source: Northern Venture Trust PLC via Thomson Reuters ONE