Northern Venture Trust PLC.

12 NOVEMBER 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 30 September 2012):

            2013           2012
Net assets£67.4m£63.5m
Net asset value per share87.3p88.9p
Return per share after tax: 
Dividend per share declared in respect of the year
  (2013 includes 9.0p special dividend)
Cumulative return to shareholders since launch: 
  Net asset value per share
  Dividends paid per share
  Net asset value plus dividends paid per share

  (Dividends paid exclude proposed final dividend)
Mid-market share price at end of year77.75p75.00p
Share price discount to net asset value10.9%15.6%
Tax-free dividend yield (based on mid-market share price at end of year): 
  Excluding special dividend
  Including special dividend

For further information, please contact:

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



Your directors are pleased to report on another encouraging year for Northern Venture Trust.  The investment portfolio has produced good returns, a special dividend of 9.0p per share was paid in addition to our usual 6.0p distribution and further funds have been raised through the issue of new shares.  Our company is widely recognised as one of the leading generalist VCTs.  We aim to continue building on these achievements.

Results and dividend
In the year ended 30 September 2013 the company achieved a return of 13.6p per share, before deducting dividends paid - equivalent to 15.3% of the opening net asset value (NAV).  The return per share for the preceding year was 7.1p.  The improved performance this year is attributable not only to realised and unrealised capital gains across the investment portfolio, but also to an increase in the income yield from our venture capital investments.

The NAV per share at 30 September 2013, after deducting dividends totalling 15.0p paid during the year, was 87.3p, compared with 88.9p at 30 September 2012.  Over the five year period since 30 September 2008 the company has reported a net increase of 7.2p in NAV per share after having paid a total of 43.5p in dividends, an average distribution of 8.7p per year.

The board has previously stated its objective of maintaining an annual dividend of at least 6.0p per share, whilst if possible avoiding erosion of the underlying NAV.  This approach is designed to provide shareholders with a reasonable degree of visibility in the medium term as to the prospective yield on their investment.  The year ended 30 September 2013 is the tenth successive year in which the minimum objective has been met or exceeded.  Having paid the scheduled interim dividend of 3.0p per share in June 2013, we announced that in the light of the strong investment performance in recent years, an additional special dividend of 9.0p per share would be paid in September 2013.  We now propose a final dividend of 3.0p per share, which will be paid on 20 December 2013 to shareholders on the register on 29 November 2013, making a total of 15.0p for the year.  At a time of continuing low interest rates, we believe that this tax-free yield - 7.7% based on an annual dividend of 6.0p and the 30 September 2013 share price of 77.75p - is very attractive to investors.

Investment portfolio
Additions to the venture capital portfolio in the year totalled £7.4 million, the highest level since 2008.  Five new unquoted holdings were acquired at a cost of £6.9 million and an additional £0.5 million was invested in existing portfolio companies.  The portfolio generated sale proceeds of £8.3 million, of which £3.5 million related to the exit from Paladin Group in November 2012.  The majority of our companies are making satisfactory progress and our managers believe there are good prospects of further realisations in the new financial year.

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
In January 2013 we launched a £4 million top-up offer of new ordinary shares for the 2012/13 and 2013/14 tax years, which was quickly subscribed.  This was followed in July 2013 by a £15 million top-up offer for the 2013/14 and 2014/15 tax years which was fully subscribed by mid-September, although the new 2013/14 shares were not allotted until 4 October 2013 and so do not form part of the issued share capital and shareholders' funds as shown in the 30 September 2013 balance sheet.  We estimate that the company's net assets have increased to over £80 million as a result of the October allotment.  It is encouraging to note that approximately half of the funds raised came from existing shareholders in the company;  we welcome our new investors and thank all our shareholders for their support.  The company now has a strong reserve of liquidity for future investment which we envisage will preclude any need for further significant fund-raising in the foreseeable future.

Your directors are keen to see an active secondary market maintained in the company's shares, and seek to encourage this primarily through good performance and a clearly stated dividend policy.  We believe there is a steady demand for the shares in the market, as a result of which the company has itself bought back relatively few shares during the year.  However we have kept our buy-back policy under regular review and in January 2013 it was announced that the discount to NAV at which the company aims to re-purchase shares would be reduced from 15% to 10%.  Subsequently the shares have generally traded at a discount of between 5% and 10% to NAV.  Following a review by the board we have also appointed Panmure Gordon as the company's corporate broker.

At the general meeting on 18 July 2013 we sought shareholders' approval for the introduction of a performance-related element to NVM Private Equity's management fee, taking effect for the new financial year which began on 1 October 2013.  The resulting management fee structure is very similar to those already operated for a number of years by Northern 2 VCT and Northern 3 VCT.  The reasons for this proposal, which was made after careful consideration by the board having regard to the best interests of the company and its shareholders, were set out in detail in the shareholder circular dated 24 June 2013.  Although the proposal was approved at the general meeting, the directors are conscious that shareholder acceptance of the underlying principle was not unanimous and we will monitor the future impact of the fee carefully.  A summary of the performance criteria which will determine whether and to what extent a fee is payable in respect of a given financial year is set out in the notes to the financial statements in the annual report.

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 both retired from the board at the annual general meeting in December 2012 and we thanked them for their significant contribution to our company over many years.  Simon Constantine, an experienced non-executive director with a strong financial background in public and private markets, joined the board in October 2012.  Tim Levett, the chairman of NVM Private Equity, was appointed as a director in February 2013.  We will continue to review the composition of the board on a regular basis.

Legislative and regulatory developments
There has been a continuing flow of proposed legislation and regulation relevant to VCTs.  HM Treasury and HM Revenue & Customs have issued a consultation document setting out proposals to prohibit "enhanced" share buy-backs, where a VCT re-purchases existing shares from shareholders on favourable terms on condition that the proceeds are re-invested in new shares.  This is a sensible move although, as is often the case, there is some danger of unintended effects on other aspects of VCT operations and we are monitoring the position closely as well as making appropriate representations through our managers.  Meanwhile the European Commission has begun a periodic re-examination of its rules relating to state aid for businesses in member countries, which in the UK includes VCTs, a process whose outcome will not be known until sometime in 2014.

The Commission's Alternative Investment Fund Managers Directive (AIFMD) became part of UK law in July 2013, with a 12 month transitional period to July 2014.  The Directive regulates the management of alternative investment funds, including venture capital funds such as VCTs.  The directors are in the process of considering the options open to the company but it appears likely that, given the nature of the company's business and NVM Private Equity's non-discretionary mandate, it will be appropriate for the purposes of the new legislation that the company should appoint itself as its own AIFM, whilst retaining the existing agreement with NVM for the provision of investment advisory and administrative services.  We do not expect the Directive to have any significant impact on the company's operations.

The FCA's Retail Distribution Review has brought about significant changes in the way VCTs raise funds through new share issues, as readers of our recent prospectus will be well aware.  The FCA also concluded a consultation on the retail distribution of unregulated collective investment schemes, as a result of which we were pleased to learn that VCTs had been excluded from a list of investment products whose distribution to retail investors is to be severely restricted.

The European Commission has recently announced changes to its Transparency Directive which will remove the requirement for listed companies to publish quarterly interim management statements.  However your company will continue to announce the NAV per share on a quarterly basis.

Annual general meeting
The 2013 annual general meeting will take place in London on Thursday 12 December 2013.  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.

Northern Venture Trust has maintained a consistently good performance record over a period of several years during which conditions in the UK economy and financial markets have been relatively unhelpful.  Now that there are increasing signs of economic recovery, our managers and investee companies must adapt to a changing environment which will undoubtedly present new challenges.  The combination of a maturing venture capital portfolio, substantial cash balances and a proven investment process gives us a strong base from which to work.

John Hustler

The audited financial statements for the year ended 30 September 2013 are set out below.

for the year ended 30 September 2013

Year ended 30 September 2013Year ended 30 September 2012
Gain on disposal of investments 2,012  2,012  1,941  1,941 
Movements in fair value of investments 7,668  7,668  3,010  3,010 
----------  ----------  ----------  ----------  ----------  ---------- 
9,680  9,680  4,951  4,951 
Income 2,190  2,190  1,761  1,761 
Investment management fee (350) (1,049) (1,399) (325) (976) (1,301)
Other expenses (404) (404) (360) (360)
----------  ----------  ----------  ----------  ----------  ---------- 
Return on ordinary activities before tax 1,436  8,631  10,067  1,076  3,975  5,051 
Tax on return on ordinary activities (237) 237  (136) 136 
----------  ----------  ----------  ----------  ----------  ---------- 
Return on ordinary activities after tax 1,199  8,868  10,067  940  4,111  5,051 
----------  ----------  ----------  ----------  ----------  ---------- 
Return per share 1.6p 12.0p 13.6p 1.3p 5.8p 7.1p

for the year ended 30 September 2013

Year ended 
30 September 2013 
Year ended 
30 September 2012 
Equity shareholders' funds at 1 October 2012 63,525  62,570 
Return on ordinary activities after tax 10,067  5,051 
Dividends recognised in the year (11,241) (4,277)
Net proceeds of share issues 5,464  512 
Shares re-purchased for cancellation (454) (331)
----------  ---------- 
Equity shareholders' funds at 30 September 2013 67,361  63,525 
----------  ---------- 

as at 30 September 2013

30 September 2013 
30 September 2012 
Fixed asset investments 61,252  50,310 
----------  ---------- 
Current assets:
  Debtors 314  248 
  Cash and deposits 21,294  13,109 
----------  ---------- 
21,608  13,357 
Creditors (amounts falling due within one year) (15,499) (142)
----------  ---------- 
Net current assets 6,109  13,215 
----------  ---------- 
Net assets 67,361  63,525 
----------  ---------- 
Capital and reserves
Called-up equity share capital 19,289  17,860 
Share premium 14,739  10,850 
Capital redemption reserve 14,612  14,466 
Capital reserve 7,016  15,050 
Revaluation reserve 9,666  3,321 
Revenue reserve 2,039  1,978 
----------  ---------- 
Total equity shareholders' funds 67,361  63,525 
----------  ---------- 
Net asset value per share 87.3p 88.9p

for the year ended 30 September 2013

Year ended 
30 September 2013 
Year ended 
30 September 2012 
£000 £000 £000 £000 
Cash flow statement
Net cash inflow from operating activities 1,468  122 
Corporation tax paid
Financial investment:
Purchase of investments (14,148) (8,673)
Sale/repayment of investments 12,886  7,462 
----------  ---------- 
Net cash outflow from financial investment (1,262) (1,211)
Equity dividends paid (11,241) (4,277)
----------  ---------- 
Net cash outflow before financing (11,035) (5,366)
Issue of shares 5,609  523 
Share issue expenses (145) (11)
Share subscriptions held pending allotment 14,210 
Re-purchase of shares for cancellation (454) (331)
----------  ---------- 
Net cash inflow from financing 19,220  181 
----------  ---------- 
Increase/(decrease) in cash and deposits 8,185  (5,185)
----------  ---------- 
Reconciliation of return before tax
to net cash flow from operating activities
Return on ordinary activities before tax 10,067  5,051 
Gain on disposal of investments (2,012) (1,941)
Movements in fair value of investments (7,668) (3,010)
Increase in debtors (66) (30)
Increase in creditors 1,147  52 
----------  ---------- 
Net cash inflow from operating activities 1,468  122 
----------  ---------- 
Analysis of movement in net funds
1 October 2012 
Cash flows 
30 September 2013 
Cash and deposits 13,109  8,185 21,294 
----------  ----------  ---------- 

as at 30 September 2013

% of net assets
by valuation
Fifteen largest venture capital investments:
Kerridge Commercial Systems 1,741 5,697 8.5
Alaric Systems 2,056 5,559 8.2
Volumatic Holdings 2,095 3,617 5.4
Silverwing 1,773 2,362 3.5
Weldex (International) Offshore Holdings 3,262 2,119 3.1
CGI Group Holdings 3,818 2,004 3.0
Advanced Computer Software Group* 382 1,942 2.9
Tinglobal Holdings 1,812 1,828 2.7
Wear Inns 1,640 1,798 2.7
Kitwave One 1,582 1,712 2.5
Intuitive Holding 1,674 1,674 2.5
Buoyant Upholstery 1,674 1,674 2.5
IDOX* 268 1,394 2.1
Control Risks Group Holdings 746 1,315 2.0
Promatic Group 1,230 1,314 1.9
---------- ---------- -------
25,753 36,009 53.5
Other venture capital investments 14,991 14,163 21.0
---------- ---------- -------
Total venture capital investments 40,744 50,172 74.5
Listed equity investments 7,469 7,897 11.7
Listed fixed-interest investments 3,373 3,183 4.7
---------- ---------- -------
Total fixed asset investments 51,586 61,252 90.9
Net current assets 6,109 9.1
---------- -------
Net assets 67,361 100.0
---------- -------
*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 and seek to ensure there is no undue concentration of credit risk 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.

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 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 report and the financial statements 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 and applicable law (UK Generally Accepted Accounting Practice).  Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for the year.

In preparing the 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.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and 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 (NVM) website,  The maintenance and integrity of this website is the responsibility of NVM and not of the company.  The work carried out by KPMG Audit Plc as independent auditor of the company does not involve consideration of the maintenance and integrity of the website and accordingly they accept no responsibility for any changes that have occurred to the financial statements since they were initially presented on the website.  Visitors to the website should be aware that legislation in the United Kingdom governing the preparation and dissemination of the financial statements may differ from legislation in their jurisdiction.

In relation to the financial statements for the year ended 30 September 2013 each of the directors has confirmed that, to the best of his knowledge, (i) the financial statements, prepared in accordance with the applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit of the company;  (ii) the annual report and financial statements, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the company's performance, business model and strategy;  and (iii) 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 that the company faces.

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 T R Levett and Mr H P Younger.


The above summary of results for the year ended 30 September 2013 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 calculation of the revenue and capital return per share is based on the return on ordinary activities after tax for the year and on 74,237,558 (2012 71,445,352) ordinary shares, being the weighted average number of shares in issue during the year.

The calculation of the net asset value per share is based on the net assets at 30 September 2013 divided by the 77,156,276 (2012 71,439,472) ordinary shares in issue at that date.

The proposed final dividend of 3.0p per share for the year ended 30 September 2013 will, if approved by shareholders, be paid on 20 December 2013 to shareholders on the register at the close of business on 29 November 2013.

The full annual report including financial statements for the year ended 30 September 2013 is expected to be posted to shareholders on 14 November 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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(i) the releases contained herein are protected by copyright and other applicable laws; and
(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