Northern Venture Trust PLC.

30 MAY 2014



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 2013 and 30 September 2013)

Six months to
31 March
Six months to
31 March
Year to
30 September
Net assets£83.5m £72.3m £67.4m
Net asset value per share89.1p 96.0p 87.3p
Return per share:



Dividend per share declared
in respect of the period
(30 September 2013 includes 9.0p special dividend)



Cumulative returns 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 period80.75p 80.25p 77.75p
Share price discount to net asset value9.4% 16.4% 10.9%
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 a productive half year for Northern Venture Trust.  Our company continues to head the AIC performance table for generalist VCTs based on NAV total return over five years, and now has net assets of over £80 million following the successful 2013/14 public share offer.

Results and dividend
The NAV per share at 31 March 2014 was 89.1p, compared with 87.3p at 30 September 2013.  We have continued to achieve our objective of at least maintaining NAV whilst paying an annual dividend of not less than 6.0p per share.  Over the five years since 31 March 2009, NAV has risen from 76.2p to 89.1p after taking account of the payment of dividends totalling 42.0p per share.

The return per share before dividends for the six months ended 31 March 2014 as shown in the income statement was 5.3p (six months ended 31 March 2013 10.3p), equivalent to 6.1% of the NAV at the start of the period.  Income increased from £0.9 million to £1.7 million, including a non-recurring receipt of £0.5 million on the sale of Alaric Systems, and the revenue return per share rose from 0.6p to 1.1p.  No provision has been made in the half-yearly financial statements for any payment which may become due at the year end in respect of the performance fee arrangement approved by shareholders in July 2013, as the outcome for the full year cannot be predicted at this stage.

An interim dividend of 3.0p per share, unchanged from last year, has been declared and this will be paid on 2 June 2014 to shareholders on the register on 16 May 2014.  In the absence of unforeseen circumstances, it is intended that a final dividend of not less than 3.0p will be proposed at the annual general meeting in December 2014.

During the half year new venture capital investments were made in It's All Good (£1.2 million), which manufactures premium savoury snacks, and No 1 Traveller (£1.7 million), which operates passenger lounges and related services at a number of UK airports.  Additional investments were made in Mantis Deposition Holdings (£0.6 million) and Haystack Dryers (£0.4 million).  Since 31 March 2014 the board has approved four investments totalling £6.1 million, and the flow of potential new investments is currently strong.

Two significant exits from investments were announced during the period.  In December 2013 we completed the sale of Alaric Systems to NCR Corporation for £6.7 million in cash, realising a gain of £4.6 million over the original cost, and in January 2014 was acquired by the AIM-quoted Nasstar for £1.3m (£1.0 million in cash and £0.3 million in Nasstar shares), a realised gain of £0.9 million.

The companies in the unquoted portfolio have, with a small number of exceptions, made satisfactory progress and some promising exit opportunities are being developed.  The AIM-quoted holdings performed well, with Advanced Computer Software Group again prominent.

The receipt of proceeds from the public share offer and the sale of investments during the half year has resulted in the company holding a relatively high level of cash.  Our intention is that over a period of time a large part of this will be invested in VCT-qualifying holdings.  In the meantime, with interest rates remaining at an all-time low, we continue to hold a proportion of our liquid funds in listed fixed-income and equity securities with a view to producing a better return than is available on bank deposits.

Shareholder issues
16.1 million new shares were issued in October 2013 as a result of the 2013/14 public offer launched in July 2013, producing net proceeds of £13.6 million.  This offer was fully subscribed in only six weeks, demonstrating the positive market perception of our company's shares.  A further 1.2 million shares were allotted on 13 May 2014, representing the 2014/15 element of the offer.

Demand for the company's shares in the secondary market has remained strong and it was not necessary for the company to re-purchase any shares during the half year.  The share price discount to NAV has fluctuated between zero and 10%.  It remains our policy to buy back shares at a 10% discount to NAV should this be necessary to provide market liquidity.

The company's dividend investment scheme continues to operate, providing shareholders with the opportunity to re-invest their dividends in new ordinary shares free of dealing costs and with the benefit of the tax reliefs available on new VCT share subscriptions.  Details of the scheme can be obtained from the company secretary.

Following a review of the company's method of communicating with its shareholders, your board has decided to make available an option to receive information from the company electronically rather than by paper copy.  Details are set out in a separate letter which shareholders will be receiving with the half-yearly report.

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
The 2014 Finance Bill published following the Chancellor's Budget announcement in March contains two measures of particular interest to VCT shareholders.  As expected, the government has introduced legislation to prevent "enhanced" share buy-backs, where a VCT offers to buy back shares from investors at a narrow discount on condition that the proceeds are applied in subscribing for a fresh issue of shares.  This is a sensible step which your board supports.  The second change is that where new VCT shares are allotted on or after 6 April 2014, VCTs will be prevented for a specified period from paying dividends to shareholders out of distributable reserves created by cancelling the share premium account arising on that allotment of shares.  Our company's distributable reserves at 31 March 2014 were in excess of £50 million, and we do not expect the new rules to have any impact on our company's future dividend distributions, including those payable on the shares most recently allotted.

The European Commission is in the process of reviewing the rules relating to state aid for businesses in member countries, which in the UK includes VCTs.  There is no reason to expect any significant change in the positioning of VCTs as an important part of the UK government's strategy for supporting small and medium-sized enterprises;  Northern Venture Trust and the other VCTs managed by NVM Private Equity have played a significant role in supporting this strategy over a period of almost 20 years.  We would however like to see some relaxation of the present restriction on investment in management buy-outs, having seen many instances where such transactions have generated change and growth in neglected businesses.

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.  Having reviewed the available options, your directors have applied to have the company registered under the AIFMD as a small UK AIFM, which is consistent with the long-standing and proven arrangement whereby the board retains discretion over investment decisions with NVM providing investment advisory and administrative services.

Board of directors
I have informed the board that, having served as a director since the company was launched in 1995 and as chairman since 2009, I intend to retire at the close of the annual general meeting in December 2014.  I am very pleased to report that Simon Constantine has accepted the directors' invitation to succeed me as chairman.  Simon is an experienced company director with a background of involvement in venture-backed businesses and has made an excellent contribution since joining the board in 2012, as well as being a long-standing investor in our company.

In view of my retirement, the board is actively seeking to appoint an additional independent director and it is expected that a further announcement will be made in due course.

Our company has a strong reserve of liquidity for future investment and we are currently seeing a healthy flow of new opportunities.  The investment portfolio is in good shape and we believe the company is well placed to continue delivering good returns to investors.

On behalf of the Board


The unaudited half-yearly financial statements for the six months ended 31 March 2014 are set out below.

(unaudited) for the six months ended 31 March 2014

Six months ended 31 March 2014 Six months ended 31 March 2013 
Gain on disposal of investments 1,526  1,526  1,258  1,258 
Movements in fair value of investments 2,709  2,709  6,162  6,162 
----------  ----------  ----------  ----------  ----------  ---------- 
4,235  4,235  7,420  7,420 
Income 1,717  1,717  914  914 
Investment management fee (191) (573) (764) (164) (491) (655)
Other expenses (223) (15) (238) (194) (194)
----------  ----------  ----------  ----------  ----------  ---------- 
Return on ordinary activities before tax 1,303  3,647  4,950  556  6,929  7,485 
Tax on return on ordinary activities (240) 240  (88) 88 
----------  ----------  ----------  ----------  ----------  ---------- 
Return on ordinary activities after tax 1,063  3,887  4,950  468  7,017  7,485 
----------  ----------  ----------  ----------  ----------  ---------- 
Return per share 1.1p 4.2p 5.3p 0.6p 9.7p 10.3p

Year ended 30 September 2013 
Gain on disposal of investments 2,012  2,012 
Movements in fair value of investments 7,668  7,668 
----------  ----------  ---------- 
9,680  9,680 
Income 2,190  2,190 
Investment management fee (350) (1,049) (1,399)
Other expenses (404) (404)
----------  ----------  ---------- 
Return on ordinary activities before tax 1,436  8,631  10,067 
Tax on return on ordinary activities (237) 237 
----------  ----------  ---------- 
Return on ordinary activities after tax 1,199  8,868  10,067 
----------  ----------  ---------- 
Return per share 1.6p 12.0p 13.6p

(unaudited) for the six months ended 31 March 2014

Six months ended 
31 March 2014 
Six months ended 
31 March 2013 
Year ended 
30 September 2013 
£000 £000 £000 
Equity shareholders' funds at 1 October 2013 67,361  63,525  63,525 
Return on ordinary activities after tax 4,950  7,485  10,067 
Dividends recognised in the period (2,796) (2,143) (11,241)
Net proceeds of share issues 13,992  3,768  5,464 
Shares purchased for cancellation (373) (454)
----------  ----------  ---------- 
Equity shareholders' funds at 31 March 2014 83,507  72,262  67,361 
----------  ----------  ---------- 

(unaudited) as at 31 March 2014

31 March 2014 31 March 2013 30 September 2013 
£000 £000 £000 
Fixed asset investments 66,363  53,876 61,252 
----------  ----------  ---------- 
Current assets:
  Debtors 400  262  314 
  Cash and deposits 17,274  18,665  21,294 
----------  ----------  ---------- 
17,674  18,927  21,608 
Creditors (amounts falling due within one year) (530) (541) (15,499)
----------  ----------  ---------- 
Net current assets 17,144  18,386  6,109 
----------  ----------  ---------- 
Net assets 83,507  72,262  67,361 
----------  ----------  ---------- 
Capital and reserves:
Called-up equity share capital 23,438  18,814  19,289 
Share premium 13,542  14,739 
Capital redemption reserve 14,588  14,612 
Capital reserve 49,349  15,965  7,016 
Revaluation reserve 8,270  7,477  9,666 
Revenue reserve 2,450  1,876  2,039 
----------  ----------  ---------- 
Total equity shareholders' funds 83,507  72,262  67,361 
----------  ----------  ---------- 
Net asset value per share 89.1p 96.0p 87.3p

(unaudited) for the six months ended 31 March 2014

Six months ended 
31 March 2014 
Six months ended 
31 March 2013 
Year ended 
30 September 2013 
£000 £000 £000 £000 £000 £000 
Net cash inflow/(outflow) from
  operating activities (528) 451  1,468 
Corporation tax paid
Financial investment:
Purchase of investments (9,711) (6,793) (14,148)
Sale/repayment of investments 8,835  10,646  12,886 
----------  ----------  ---------- 
Net cash inflow/(outflow)
  from financial investment (876) 3,853  (1,262)
Equity dividends paid (2,796) (2,143) (11,241)
----------  ----------  ---------- 
Net cash inflow/(outflow) before financing (4,200) 2,161  (11,035)
Issue of shares 14,283  3,876  5,609 
Share issue expenses (291) (108) (145)
Share subscriptions held pending allotment (13,812) 14,210 
Purchase of shares for cancellation (373) (454)
----------  ----------  ---------- 
Net cash inflow from financing 180  3,395  19,220 
----------  ----------  ---------- 
Increase/(decrease) in cash and deposits (4,020) 5,556  8,185 
----------  ----------  ---------- 
Reconciliation of return before tax
to net cash flow from operating activities
Return on ordinary activities
  before tax 4,950  7,485  10,067 
Gain on disposal of investments (1,526) (1,258) (2,012)
Movements in fair value
  of investments (2,709) (6,162) (7,668)
Increase in debtors (86) (14) (66)
Increase in creditors (1,157) 400  1,147 
----------  ----------  ---------- 
Net cash inflow/(outflow) from
  operating activities (528) 451  1,468 
----------  ----------  ---------- 
Analysis of movement in net funds
1 October 2013 Cash flows 31 March 2014 
£000 £000 £000 
Cash and deposits 21,294  (4,020) 17,274 
----------  ----------  ---------- 

as at 31 March 2014

% of net assets 
by valuation 
Venture capital investments:
Kerridge Commercial Systems 1,593 7,610  9.1 
Volumatic Holdings 2,095 3,187  3.8 
Advanced Computer Software Group* 382 2,692  3.2 
CGI Group Holdings 3,818 2,660  3.2 
Silverwing 1,773 2,588  3.1 
Wear Inns 1,640 2,094  2.5 
Tinglobal Holdings 1,812 1,941  2.3 
Intuitive Holding 1,674 1,701  2.1 
Buoyant Upholstery 1,674 1,674  2.0 
No 1 Traveller 1,653 1,653  2.0 
Kitwave One 1,582 1,639  2.0 
Weldex (International) Offshore Holdings 3,262 1,478  1.8 
Cawood Scientific 1,073 1,403  1.7 
Control Risks Group Holdings 746 1,363  1.6 
IDOX* 269 1,359  1.6 
------------ ------------  ------------ 
Fifteen largest venture capital investments 25,046 35,042  42.0 
Arleigh Group 533 1,352  1.6 
Promatic Group 1,230 1,292  1.5 
Haystack Dryers 1,661 1,224  1.5 
It's All Good 1,205 1,205  1.4 
Kirton Group 1,155 1,155  1.4 
Cleveland Biotech (Holdings) 1,116 1,116  1.3 
Lineup Systems 974 974  1.2 
Closerstill Group 888 888  1.1 
Vectura Group** 315 886  1.1 
Axial Systems Holdings 1,004 791  0.9 
Lanner Group 832 761  0.9 
Optilan Group 1,000 525  0.6 
Sinclair IS Pharma* 425 505  0.6 
Nasstar* 323 500  0.6 
Brady* 386 460  0.5 
Direct Valeting 73 383  0.5 
Mantis Deposition Holdings 1,392 348  0.4 
Gentronix 616 308  0.4 
Envirotec 314 225  0.3 
Other investments each valued at less than £100,000 1,655 181  0.2 
------------ ------------  ------------ 
Total venture capital investments 42,143 50,121  60.0 
Listed equity investments 8,146 8,487  10.2 
Listed interest-bearing investments 7,804 7,755  9.3 
------------ ------------  ------------ 
Total fixed asset investments 58,093 66,363  79.5 
Net current assets:
Cash and deposits 17,274  20.7 
Debtors less creditors (130) (0.2)
------------  ------------ 
Net assets 83,507  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 2014 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 2013 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 2013.

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 92,748,388 (2013 72,618,565) 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 2014 divided by the 93,750,215 (2013 75,257,340) ordinary shares in issue at that date.

The interim dividend of 3.0p per share for the year ending 30 September 2014 will be paid on 2 June 2014 to shareholders on the register at the close of business on 16 May 2014.

A copy of the half-yearly financial report for the six months ended 31 March 2014 is expected to be posted to shareholders by 18 June 2014 and will be available to the public at the registered office of the company at St Ann's Wharf, 112 Quayside, Newcastle upon Tyne NE1 3DX 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.

This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Northern Venture Trust PLC via Globenewswire