Northern Venture Trust PLC.

16 MAY 2013



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 2012)

        2013         2012 
Net assets£72.3m£63.8m
Net asset value per share96.0p89.4p
Return per share 
Revenue 0.6p 0.5p
Capital 9.7p 4.1p
Interim dividend per share declared 
in respect of the period3.0p3.0p
Cumulative return to 
shareholders since launch 
Net asset value per share 96.0p89.4p
Dividends paid per share* 105.5p99.5p
Net asset value plus dividends 
paid per share201.5p188.9p
Share price at end of period80.25p73.6p
Share price discount to net asset value16.4%17.7%

*Excluding interim dividend not yet paid

For further information, please contact:

NVM Private Equity Limited
Alastair Conn/Christopher Mellor

0191 244 6000


Northern Venture Trust has continued to make encouraging progress.  The total return to shareholders since the company was launched, comprising net asset value plus cumulative dividends per share, passed the landmark figure of 200p per share during the period and now stands at 201.5p.  The company's excellent record and that of the two other Northern VCTs was recognised when they jointly won the Best VCT category at the Investment Week Investment Company of the Year Awards for 2012, sponsored by the Association of Investment Companies and Trustnet.

Results and dividend
The net asset value (NAV) per share at 31 March 2013 was 96.0p, compared with 88.9p at 30 September 2012.  Despite the challenging economic background, the company has achieved a steady upward trend in NAV per share over the past five years whilst maintaining an annual dividend of at least 6.0p per share.

The return per share before dividends for the six month period as shown in the income statement was 10.3p (six months ended 31 March 2012 4.6p), equivalent to 11.6% of the NAV at the start of the period.  Income from the company's investments was, at £0.9 million, 18% higher than in the corresponding period last year, and the revenue return per share rose from 0.5p to 0.6p despite the downward trend in market interest rates on cash and near-cash investments.  Realised and unrealised gains on investments contributed £7.4 million to the result.

An interim dividend of 3.0p per share, unchanged from last year, has been declared and this will be paid on 28 June 2013 to shareholders on the register on 7 June 2013.  This will take the total dividends paid since launch to 108.5p per share, representing a cumulative tax-free distribution of £47 million.

The unquoted portfolio has seen an active half year, with new investments completed in Haystack Dryers, which manufactures body dryers for theme parks and healthcare establishments (£1.3 million), and Intuitive, developer of the iVector online platform for managing travel bookings (£1.7 million).  A further £0.2 million was invested in CGI Group Holdings to help finance a strategic acquisition.  Since 31 March 2013 the board has approved three more investments totalling £3.9 million which are currently in due diligence.

Two highly satisfactory exits were achieved, the investment in Paladin Group being sold to Places For People Group in November for £3.5 million (an overall return of 2.3 times the amount invested) whilst Interlube Systems was sold to Timken UK for £1.3 million (overall return of 3.0 times).  Other disposals took the total sale proceeds from the unquoted portfolio in the half year to £5.9 million, at a surplus of £0.9 million over the September 2012 carrying values.  The remaining holdings comprise 31 investments with an aggregate valuation of £40.5 million, among which Alaric Systems, Kerridge Commercial Systems and Volumatic reported particularly good results.

A strong performance from the AIM-quoted portfolio was led by IDOX and Advanced Computer Software Group, with value gains of £0.4 million and £0.6 million respectively.  £0.5 million was realised in cash following a recommended bid by BT Group for Tikit Group, an increase of £0.1 million over the September 2012 carrying value.

Shareholder issues
Your directors were pleased to meet a good number of shareholders at the annual general meeting in Edinburgh in December and at the NVM Private Equity VCT investor seminar in London in January.

In January we announced that following a review by the board, the company would join the other Northern VCTs in being prepared to buy back its own shares in the market at a reduced discount of 10% (previously 15%).  We believe it is important that shareholders should be confident they can sell their shares, although in fact the secondary market demand for shares has remained healthy and only 487,000 shares were re-purchased by the company during the half year.

Also in January we launched a top-up offer of new ordinary shares to raise up to £4 million of additional funds, in conjunction with a similar offer by Northern 2 VCT.  The offer was very popular with investors and was fully subscribed in less than two weeks.  We would like to thank both old and new shareholders for their support.  Your directors are considering the possibility of a public share offer for the 2013/14 tax year and we expect to be writing to shareholders about this in the near future.

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 and regulation
We expressed our concern in the last annual report about the impact of various legislative and regulatory developments.  In particular the FSA (now the FCA) had begun a consultation process on the retail distribution of unregulated collective investment schemes, which raised the possibility that restrictions might be placed on the categories of retail investors to whom VCT share offers can be promoted.  VCTs are of course subject to the regulatory regime (with its associated costs) applying to all listed companies, and  their shares are freely tradeable in the secondary market.  The rationale for the proposed restrictions was therefore difficult to understand.  We joined other VCTs and the Association of Investment Companies in making strong representations against the proposals, and we were pleased to learn that the latest indications are that VCTs will not be caught by the new restrictions.

The UK economy is now showing some encouraging signs and many energetic young companies backed by VCT funding have come through the difficult times in good shape, which is reflected in the rise in our NAV.  We are seeing a reasonable flow of attractive potential investments and so we are cautiously optimistic about prospects for the next 12 months.

On behalf of the Board


The unaudited half-yearly financial statements for the six months ended 31 March 2013 are set out below.

(unaudited) for the six months ended 31 March 2013

Six months ended 31 March 2013 Six months ended 31 March 2012 
Gain on disposal of investments 1,258  1,258  294  294 
Movements in fair value of investments 6,162  6,162  3,045  3,045 
----------  ----------  ----------  ----------  ----------  ---------- 
7,420  7,420  3,339  3,339 
Income 914  914  774  774 
Investment management fee (164) (491) (655) (161) (483) (644)
Other expenses (194) (194) (187) (187)
----------  ----------  ----------  ----------  ----------  ---------- 
Return on ordinary activities before tax 556  6,929  7,485  426  2,856  3,282 
Tax on return on ordinary activities (88) 88  (53) 53 
----------  ----------  ----------  ----------  ----------  ---------- 
Return on ordinary activities after tax 468  7,017  7,485  373  2,909  3,282 
----------  ----------  ----------  ----------  ----------  ---------- 
Return per share 0.6p 9.7p 10.3p 0.5p 4.1p 4.6p

Year ended 30 September 2012 
Gain on disposal of investments 1,941  1,941 
Movements in fair value of investments 3,010  3,010 
----------  ----------  ---------- 
4,951  4,951 
Income 1,761  1,761 
Investment management fee (325) (976) (1,301)
Other expenses (360) (360)
----------  ----------  ---------- 
Return on ordinary activities before tax 1,076  3,975  5,051 
Tax on return on ordinary activities (136) 136 
----------  ----------  ---------- 
Return on ordinary activities after tax 940  4,111  5,051 
----------  ----------  ---------- 
Return per share 1.3p 5.8p 7.1p

(unaudited) for the six months ended 31 March 2013

Six months ended 
31 March 2013 
Six months ended 
31 March 2012 
Year ended 
30 September 2012 
£000 £000 £000 
Equity shareholders' funds at 1 October 2012 63,525  62,570  62,570 
Return on ordinary activities after tax 7,485  3,282  5,051 
Dividends recognised in the period (2,143) (2,138) (4,277)
Net proceeds of share issues 3,768  258  512 
Shares purchased for cancellation (373) (168) (331)
----------  ----------  ---------- 
Equity shareholders' funds at 31 March 2013 72,262  63,804  63,525 
----------  ----------  ---------- 

(unaudited) as at 31 March 2013

31 March 2013 31 March 2012 30 September 2012 
£000 £000 £000 
Fixed asset investments 53,876  50,176 50,310 
----------  ----------  ---------- 
Current assets:
  Debtors 262  548  248 
  Cash and deposits 18,665  13,175  13,109 
----------  ----------  ---------- 
18,927  13,723  13,357 
Creditors (amounts falling due within one year) (541) (95) (142)
----------  ----------  ---------- 
Net current assets 18,386  13,628  13,215 
----------  ----------  ---------- 
Net assets 72,262  63,804  63,525 
----------  ----------  ---------- 
Capital and reserves:
Called-up equity share capital 18,814  17,840  17,860 
Share premium 13,542  10,672  10,850 
Capital redemption reserve 14,588  14,411  14,466 
Capital reserve 15,965  15,152  15,050 
Revaluation reserve 7,477  3,963  3,321 
Revenue reserve 1,876  1,766  1,978 
----------  ----------  ---------- 
Total equity shareholders' funds 72,262  63,804  63,525 
----------  ----------  ---------- 
Net asset value per share 96.0p 89.4p 88.9p

(unaudited) for the six months ended 31 March 2013

Six months ended 
31 March 2013 
Six months ended 
31 March 2012 
Year ended 
30 September 2012 
£000 £000 £000 £000 £000 £000 
Net cash inflow/(outflow) from
  operating activities 451  (382) 122 
Corporation tax paid
Financial investment:
Purchase of investments (6,793) (4,330) (8,673)
Sale/repayment of investments 10,646  1,641  7,462 
----------  ----------  ---------- 
Net cash inflow/(outflow)
  from financial investment 3,853  (2,689) (1,211)
Equity dividends paid (2,143) (2,138) (4,277)
----------  ----------  ---------- 
Net cash inflow/(outflow) before financing 2,161  (5,209) (5,366)
Issue of shares 3,876  263  523 
Share issue expenses (108) (5) (11)
Purchase of shares for cancellation (373) (168) (331)
----------  ----------  ---------- 
Net cash inflow from financing 3,395  90  181 
----------  ----------  ---------- 
Increase/(decrease) in cash and deposits 5,556  (5,119) (5,185)
----------  ----------  ---------- 
Reconciliation of return before tax
to net cash flow from operating activities
Return on ordinary activities
  before tax 7,485  3,282  5,051 
Gain on disposal of investments (1,258) (294) (1,941)
Movements in fair value
  of investments (6,162) (3,045) (3,010)
Increase in debtors (14) (330) (30)
Increase in creditors 400  52 
----------  ----------  ---------- 
Net cash inflow/(outflow) from
  operating activities 451  (382) 122 
----------  ----------  ---------- 
Analysis of movement in net funds
1 October 2012 Cash flows 31 March 2013 
£000 £000 £000 
Cash and deposits 13,109  5,556  18,665 
----------  ----------  ---------- 

as at 31 March 2013

% of net assets 
by valuation 
Venture capital investments
Kerridge Commercial Systems 1,741 5,616  7.8 
Alaric Systems 2,119 4,321  6.0 
Volumatic 2,095 3,617  5.0 
CGI Group Holdings 3,818 2,405  3.3 
Wear Inns 1,640 2,076  2.9 
Advanced Computer Software Group* 382 1,942  2.7 
Weldex (International) Offshore Holdings 3,262 1,927  2.7 
IDOX* 269 1,788  2.5 
Silverwing 1,773 1,773  2.4 
Tinglobal Holdings 1,988 1,750  2.4 
Intuitive 1,674 1,674  2.3 
Kitwave One 1,582 1,595  2.2 
Arleigh Group 636 1,326  1.8 
Control Risks Group Holdings 746 1,315  1.8 
Cawood Scientific 1,073 1,289  1.8 
------------ ------------  ------------ 
Fifteen largest venture capital investments 24,798 34,414  47.6 
Haystack Dryers 1,284 1,284  1.8 
Promatic Group 1,230 1,223  1.7 
Lineup Systems 974 974  1.3 
Closerstill Group 888 888  1.2 
Lanner Group 832 821  1.1 
Mantis Deposition Holdings 747 812  1.1 360 780  1.1 
Optilan Group 1,000 632  0.9 
IG Doors 51 560  0.8 
Vectura Group** 315 526  0.7 
Gentronix 616 475  0.7 
Brady* 386 468  0.6 
Sinclair IS Pharma* 425 409  0.6 
Envirotec 314 350  0.5 
Direct Valeting 253 350  0.5 
Altacor 477 239  0.3 
Axial Systems Holdings 1,004 215  0.3 
Vianet Group* 184 127  0.2 
S&P Coil Products 120 121  0.2 
Other investments each valued at less than £100,000 2,306 129  0.2 
------------ ------------  ------------ 
Total venture capital investments 38,564 45,797  63.4 
Listed equity investments 5,224 5,676  7.9 
Listed fixed-interest investments 2,611 2,403  3.3 
------------ ------------  ------------ 
Total fixed asset investments 46,399 53,876  74.6 
Net current assets
Cash and deposits 18,665  25.8 
Debtors less creditors (279) (0.4)
------------  ------------ 
Net assets 72,262  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.

Legislative and regulatory 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.  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 2013 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 auditor and has not been delivered to the Registrar of Companies.  The figures for the year ended 30 September 2012 have been extracted from the audited financial statements for that year, which have been delivered to the Registrar of Companies;  the independent auditor's 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 2012.

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 S J Constantine, Mr T R Levett 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 72,618,565 (2012 71,457,128) 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 2013 divided by the 75,257,340 (2012 71,358,388) ordinary shares in issue at that date.

The proposed interim dividend of 3.0p per share for the year ending 30 September 2013 will be paid on 28 June 2013 to shareholders on the register at the close of business on 7 June 2013.

A copy of the half-yearly financial report for the six months ended 31 March 2013 is expected to be posted to shareholders by 31 May 2013 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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(ii) they are solely responsible for the content, accuracy and originality of the
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Source: Northern Venture Trust PLC via Thomson Reuters ONE