Northern Venture Trust PLC.




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 30 September 2011):

      2012     2011
Net assets£63.5m£62.6m
Net asset value per share88.9p87.8p
Return per share after tax: 
Dividend per share declared in respect of the year6.0p6.0p
Cumulative return to shareholders since launch: 
  Net asset value per share
  Dividends paid per share*
  Net asset value plus dividends paid per share
Mid-market share price at end of year75.0p77.0p
Share price discount to net asset value15.6%12.3%

*Excluding proposed final dividend

For further information, please contact:

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



I am glad to report that your company's annual results once again disclose a positive outcome despite the difficult economic environment.  NAV per share has increased for the fourth successive year, whilst the dividend has been maintained at our target level of 6.0p per annum.  The portfolio of unquoted and AIM-quoted investments continues to perform well overall, and the company's strong long-term performance record was recognised when it was named Best Venture Capital Trust in the What Investment Investment Trust Awards for 2012.

Results and dividend
The NAV per ordinary share at 30 September 2012 was 88.9p, compared with 87.8p at 30 September 2011.  The return per share before dividends as shown in the income statement was 7.1p, equivalent to 8.1% of the opening net asset value, which represents a reduction from the return of 10.3p achieved a year earlier.  Several factors contributed to this fall.  Investment income was down by approximately 5% from the preceding year, reflecting one particularly large non-recurring receipt in 2011.  The total expense ratio increased marginally to 2.62% of average net assets, but remains well below the sector average for generalist VCTs.  Finally, whilst the net realised gain on investment disposals increased from £1.3 million last year to £1.9 million, the annual increase in the unrealised revaluation surplus fell from £5.1 million to £3.0 million.  Nevertheless we believe that in the prevailing economic conditions the results are creditable.

Shareholders will recall that it is the board's stated objective to declare an annual dividend of at least 6.0p per share.  An interim dividend of 3.0p per share for the year ended 30 September 2012 was paid in June 2012 and we are now recommending a final dividend also of 3.0p, making a total of 6.0p for the year.  This represents an effective yield on the company's current NAV of 6.8%, which of course is tax-free to shareholders.

Investment portfolio
The business review in the annual report gives details of movements in the venture capital portfolio during the year.  New investment activity was at a normal level, with three new holdings acquired at a cost of £3.8 million and an additional £2.3 million invested in existing portfolio companies.  The recent removal of the long-standing £1 million annual limit on qualifying investments is already leading to an increase in the average size of new investments.  The portfolio generated sale proceeds of £6.7 million, of which the largest single component was the £3.0 million received on the successful sale of Closerstill Holdings in May 2012.  As we begin our new financial year several other companies are in active sale processes which it is hoped will lead in due course to satisfactory exits.  However it is clear that any recovery in the UK economy will be gradual, and in taking our usual cautious approach to the valuation of our unquoted investments we have reduced the carrying value of a number of individual holdings.

In the light of the continuing low interest rates available from bank deposits and the bond market, we have continued to hold part of the company's surplus liquidity in a portfolio of higher-yielding FTSE 350 listed equities and funds, which has produced a satisfactory yield as well as a modest capital appreciation over the year.

Shareholder issues
During the year 610,627 new ordinary shares were issued through the company's dividend investment scheme and 449,175 shares were re-purchased in the market for cancellation.  The latter figure represents well under 1% of the issued share capital, and reflects the fact that such shares as do come onto the market tend to be taken up by secondary investors rather than being left to be bought back by the company.  The company's established policy is to re-purchase shares at a 15% discount to NAV, which we believe provides suitable support to the secondary market whilst balancing the interests of would-be sellers with those of continuing shareholders.

As the company presently has ample funds available for investment, we do not intend to undertake any large-scale fund-raising in the 2012/13 tax year.  The board is considering the possibility of a small top-up issue of new shares in response to shareholder demand and it is expected that a further announcement will be made in due course.

VCT qualifying status
The company has maintained its approved venture capital trust status with HM Revenue & Customs.  The company's compliance with the VCT qualifying conditions is closely monitored by the board, who receive regular reports from our managers and from our VCT taxation advisers, PricewaterhouseCoopers LLP.

Board of directors
Michael Denny and Ross Peters have both indicated that they will be retiring from the board at the close of the annual general meeting in December 2012.  Michael was one of the founding directors of the company in 1995 and was executive chairman of NVM Private Equity from 1988 to 2008 as well as serving a term as chairman of the British Venture Capital Association.  Ross joined the board in 2001 after a successful career in venture capital with Murray Johnstone.  I would like to thank both Michael and Ross for the significant contribution they have made to the success of our company and we wish them well for the future.

A number of potential new directors have been interviewed, as a result of which I am delighted to report that Simon Constantine accepted an invitation to join the board and was appointed as a director on 31 October 2012.  Simon is an experienced non-executive director with a strong financial background in public and private markets and we look forward to working with him.

Legislative and regulatory developments
Your board has spent much time in recent months considering the impact of a number of legislative and regulatory issues.

We reported at the half-year stage on the uncertainty created by the 2012 Finance Bill, which purported to relax the limits on the size of qualifying companies and to increase the amount of funding which companies can raise from VCTs to £10 million per annum.  Disappointingly, the European Commission subsequently imposed a reduced limit of £5 million on the amount a qualifying company can raise in any 12 month period from state-aided sources, including VCTs.  There are also draconian penalties for any VCT which invests in a company which exceeds the fund-raising limit.  However your board and managers have learned over many years to work within the changing legislative framework and I have no doubt we will continue to do so.

On the regulatory front we are still evaluating the potential effects of the FSA's Retail Distribution Review, which is likely to bring about significant changes in the way VCTs raise funds through new share issues.  The position has been further clouded by the publication in August 2012 of the FSA's consultation paper on the retail distribution of unregulated collective investment schemes, apparently designed inter alia to restrict the population of retail investors to whom financial advisers can promote VCT share issues.  We are perplexed by this proposal and do not believe that our shareholders would encourage it.  The strength of demand for our shares in the secondary market, which would not be affected by this change to the regulations, would seem to support our view.  Therefore, together with the other Northern VCTs we have made vigorous representations against this proposal and are now awaiting the FSA's next move.

Annual general meeting and shareholder presentation
The 2012 annual general meeting will take place in Edinburgh on Friday 14 December 2012.  Details of the formal business of the meeting are set out in a separate circular which is being sent to shareholders with the annual report.  We look forward to meeting shareholders on that occasion and also at NVM Private Equity's VCT seminar in London on Friday 18 January 2013.

Northern Venture Trust has grown to become a substantial company with over £60 million of assets and some 3,500 shareholders, many of whom have made a significant investment whether by subscribing for new shares or by purchasing in the market.  Your directors are aware of the importance which you as investors attach to the maintenance of a consistent performance record, especially in relation to the dividend, and despite the distractions already referred to we have a strong focus on keeping your company where it belongs among the leading performers in the VCT sector.

John Hustler

The audited financial statements for the year ended 30 September 2012 are set out below.

for the year ended 30 September 2012

Year ended 30 September 2012Year ended 30 September 2011
Gain on disposal of investments 1,941  1,941  1,277  1,277 
Movements in fair value of investments 3,010  3,010  5,125  5,125 
----------  ----------  ----------  ----------  ----------  ---------- 
4,951  4,951  6,402  6,402 
Income 1,761  1,761  1,845  1,845 
Investment management fee (325) (976) (1,301) (289) (867) (1,156)
Recoverable VAT 33  99  132 
Other expenses (360) (360) (350) (14) (364)
----------  ----------  ----------  ----------  ----------  ---------- 
Return on ordinary activities before tax 1,076  3,975  5,051  1,239  5,620  6,859 
Tax on return on ordinary activities (136) 136  (264) 264 
----------  ----------  ----------  ----------  ----------  ---------- 
Return on ordinary activities after tax 940  4,111  5,051  975  5,884  6,859 
----------  ----------  ----------  ----------  ----------  ---------- 
Return per share 1.3p 5.8p 7.1p 1.5p 8.8p 10.3p

for the year ended 30 September 2012

Year ended 
30 September 2012 
Year ended 
30 September 2011 
Equity shareholders' funds at 1 October 2011 62,570  50,414 
Return on ordinary activities after tax 5,051  6,859 
Dividends recognised in the year (4,277) (4,789)
Net proceeds of share issues 512  14,782 
Shares re-purchased for cancellation (331) (4,696)
----------  ---------- 
Equity shareholders' funds at 30 September 2012 63,525  62,570 
----------  ---------- 

as at 30 September 2012

30 September 2012 
30 September 2011 
Fixed asset investments 50,310  44,148 
----------  ---------- 
Current assets:
  Debtors 248  218 
  Cash and deposits 13,109  18,294 
----------  ---------- 
13,357  18,512 
Creditors (amounts falling due within one year) (142) (90)
----------  ---------- 
Net current assets 13,215  18,422 
----------  ---------- 
Net assets 63,525  62,570 
----------  ---------- 
Capital and reserves
Called-up equity share capital 17,860  17,820 
Share premium 10,850  10,491 
Capital redemption reserve 14,466  14,353 
Capital reserve 15,050  17,053 
Revaluation reserve 3,321  961 
Revenue reserve 1,978  1,892 
----------  ---------- 
Total equity shareholders' funds 63,525  62,570 
----------  ---------- 
Net asset value per share 88.9p 87.8p

for the year ended 30 September 2012

Year ended 
30 September 2012 
Year ended 
30 September 2011 
£000 £000 £000 £000 
Cash flow statement
Net cash inflow from operating activities 122  1,324 
Corporation tax paid
Financial investment:
Purchase of investments (8,673) (10,925)
Sale/repayment of investments 7,462  8,275 
----------  ---------- 
Net cash outflow from financial investment (1,211) (2,650)
Equity dividends paid (4,277) (4,789)
----------  ---------- 
Net cash outflow before financing (5,366) (6,115)
Issue of shares 523  15,618 
Share issue expenses (11) (836)
Re-purchase of shares for cancellation (331) (4,696)
----------  ---------- 
Net cash inflow from financing 181  10,086 
----------  ---------- 
Increase/(decrease) in cash and deposits (5,185) 3,971 
----------  ---------- 
Reconciliation of return before tax
to net cash flow from operating activities
Return on ordinary activities before tax 5,051  6,859 
Gain on disposal of investments (1,941) (1,277)
Movements in fair value of investments (3,010) (5,125)
(Increase)/decrease in debtors (30) 845 
Increase in creditors 52  22 
----------  ---------- 
Net cash inflow from operating activities 122  1,324 
----------  ---------- 
Analysis of movement in net funds
1 October 2011 
Cash flows 
30 September 2012 
Cash and deposits 18,294  (5,185) 13,109 
----------  ----------  ---------- 

as at 30 September 2012

% of net assets
by valuation
Fifteen largest venture capital investments:
Kerridge Commercial Systems 1,741 4,808 7.6
Paladin Group 1,709 3,147 5.0
Alaric Systems 2,119 3,055 4.8
Volumatic 2,095 2,095 3.3
Weldex (International) Offshore Holdings 3,262 2,087 3.3
Wear Inns 1,640 2,076 3.3
Silverwing 1,773 1,773 2.8
Tinglobal Holdings 1,988 1,672 2.6
CGI Group Holdings 3,597 1,608 2.5
Kitwave One 1,582 1,606 2.5
IDOX* 268 1,359 2.1
Advanced Computer Software Group* 381 1,343 2.1
Promatic Group 1,229 1,296 2.0
Cawood Scientific 1,073 1,191 1.9
Arleigh Group 704 1,179 1.9
---------- ---------- -------
25,161 30,295 47.7
Other venture capital investments 13,232 11,889 18.7
---------- ---------- -------
Total venture capital investments 38,393 42,184 66.4
Listed equity investments 6,527 6,393 10.1
Listed fixed-interest investments 2,069 1,733 2.7
---------- ---------- -------
Total fixed asset investments 46,989 50,310 79.2
Net current assets 13,215 20.8
---------- -------
Net assets 63,525 100.0
---------- -------
*Quoted on AIM


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:  Many 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, close monitoring 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 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 venture capital 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 can be very little, if any, market demand for shares in 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 party.

Liquidity risk:  The company's investments may be difficult to realise.  The fact that a stock is quoted on a recognised stock exchange 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 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 directors are responsible for preparing the annual financial report in accordance with applicable law and regulations.  Company law requires the directors to prepare financial statements for each financial year.  Under that law the directors have elected to prepare the financial statements in accordance with UK Accounting Standards.  The financial statements are required by law to give a true and fair view of the state of affairs of the company at the end of the financial period and of the return of the company for that period.  In preparing these financial statements, the directors are required to (i) select suitable accounting policies and then apply them consistently;  (ii) make judgements and estimates that are reasonable and prudent;  (iii) state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;  and (iv) prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

In relation to the financial statements for the year ended 30 September 2012 each of the directors has confirmed that to the best of his knowledge (i) the financial statements, which have been prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the company;  and (ii) the directors' report includes a fair review of the development and performance of the business and the position of the company together with a description of the principal risks and uncertainties which it faces.

The directors are also responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that its financial statements comply with the Companies Act 2006.  They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the company and to prevent and detect fraud and other irregularities.

Under applicable law and regulations, the directors are also responsible for preparing a directors' report, directors' remuneration report and corporate governance statement that comply with that law and those regulations.

The company's financial statements are published on the NVM Private Equity Limited website,  The maintenance and integrity of this website is the responsibility of NVM and not of the company.  Visitors to the website should be aware that legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

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


The above summary of results for the year ended 30 September 2012 does not constitute statutory financial statements within the meaning of Section 435 of the Companies Act 2006 and has not been delivered to the Registrar of Companies.  Statutory financial statements will be filed with the Registrar of Companies in due course;  the independent auditor's report on those financial statements under Section 495 of the Companies Act 2006 is unqualified and does not contain a statement under Section 498(2) or (3) of the Companies Act 2006.

The proposed final dividend of 3.0p per share for the year ended 30 September 2012 will, if approved by shareholders, be paid on 21 December 2012 to shareholders on the register at the close of business on 30 November 2012.

The full annual report including financial statements for the year ended 30 September 2012 is expected to be posted to shareholders on 16 November 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