Northern Venture Trust PLC.

11 NOVEMBER 2014



Northern Venture Trust PLC is a Venture Capital Trust (VCT) managed by NVM Private Equity Limited.  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 2013):


 2014 2013
Net assets

Net asset value per share

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 year

Share price discount to net asset value

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



I am pleased to report on a year in which Northern Venture Trust has continued to make good progress.  The £15 million public offer of new shares launched in July 2013 was completed during the year, more than £10 million was invested in the venture capital portfolio and two significant exits were completed.  The annual dividend was maintained at the target figure of 6.0p per share whilst a modest increase in the net asset value per share (NAV) was achieved.

Results and dividend
In the year ended 30 September 2014 the company achieved a return of £6,638,000, or 7.1p per share, before deducting dividends paid - equivalent to 8.1% of the opening net asset value per share (NAV).  The return per share for the preceding year was 13.6p.  This good performance in the year under review gives rise to a fee of £206,000, equivalent to 0.2p per share, under the performance incentive scheme approved by shareholders in 2013 and which came into effect for the first time this year.  The revenue return per share increased from 1.6p in the previous year to 2.1p this year, assisted by a one-off income receipt equivalent to 0.5p per share on the sale of Alaric Systems.

The NAV per share at 30 September 2014 (after deducting dividends totalling 6.0 pence paid during the year) was 87.8 pence, compared with 87.3 pence at 30 September 2013.  Over the past five years the NAV has risen from 80.3p to 87.8p while dividends totalling 37.5p have been paid, thus achieving our standing objective of maintaining the annual dividend at not less than 6.0 pence, whilst achieving an increase in the underlying NAV over the cycle.

An interim dividend of 3.0p per share was paid in June 2014 and we now propose a final dividend also of 3.0p per share, which will be paid on 23 December 2014 to shareholders on the register on 28 November 2014, making a total of 6.0p for the year.  The directors are very much aware of the importance which shareholders place on the receipt of a consistent dividend yield, and this is the eleventh consecutive year in which a dividend at least equal to our 6.0p target has been paid.  In addition we paid a special dividend of 9.0p last year.

Investment portfolio
Additions to the venture capital portfolio in the year amounted to £10.4 million, the highest ever total.  Six new unquoted holdings and one AIM-quoted holding were acquired at a cost of £9.3 million and an additional £1.1 million was invested in existing portfolio companies.  The most significant exit saw Alaric Systems sold to NCR Corporation in a transaction which produced a capital profit of £4.6 million and an overall cash multiple of 4.0 times our investment.  A further £1.2 million has been held in escrow in case of warranty claims and is potentially receivable over the next three years, and accordingly has not been recognised in our financial statements.  This investment, first acquired in 2000, has been an excellent example of the returns which can be earned by taking a patient long-term view of a business with a distinctive technological product or service. was sold to the AIM-quoted Nasstar for a mixture of cash and shares, realising a profit of £0.9 million.  Disappointingly, however, the investment in Mantis Deposition Holdings had to be written off during the year at a net cost of £1.0 million after the company was unable to commercialise its intellectual property in the field of nanotechnology.  NVM continue to work closely with our portfolio companies and several promising exit prospects are currently being developed.

Following the strong inflow of cash 12 months ago as a result of the successful share issue, and recognising the poor returns still applying to cash deposits, we have increased the allocation of funds to our portfolio of listed fixed-income and equity securities which for the time being represents some 20% of the company's total assets.  During the year this portfolio generated a yield well in excess of that available on bank deposits whilst preserving capital value.  We expect that over the next two to three years the amount committed to listed assets will reduce as cash is drawn down for investment in the venture capital portfolio.  In addition to the funds held in the listed portfolio, cash balances at 30 September 2014 totalled £12.5 million.

Shareholder issues
As I have previously mentioned, a £15 million share issue was completed during the year, adding significantly to our funds available for investment.  Launched in July 2013, the offer was fully subscribed in only six weeks although the new shares were not issued until after 30 September 2013.  In the light of this highly successful funding exercise, the board has recently reviewed future cash requirements bearing in mind the level of new investment activity and potential realisations of existing investments.  We feel it is unnecessary and inappropriate to raise further funds at the present time, and accordingly we have decided that the company will not be launching a share offer in the 2014/15 tax year.

The level of secondary market demand for the company's shares has remained healthy.  We have maintained our readiness to buy back shares at a 10% discount to NAV should this be necessary to provide market liquidity.  In total 425,000 shares, equivalent to approximately 0.5% of the issued capital, were re-purchased during the year.

Some shareholders have commented that they would prefer an increase in the capital value of their shares to the high dividend yield which they currently receive.  I would draw attention to the fact that re-investing dividends through the company's dividend investment scheme provides shareholders with a convenient means of achieving this, since new ordinary shares can be obtained 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.

In June 2014 we wrote to shareholders about our plans to make available an option to receive information from the company electronically rather than by paper copy.  This is subject to the passing of the resolution at the forthcoming annual general meeting to give effect to the necessary changes to the articles of association.

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 NVM and from our VCT taxation advisers, PricewaterhouseCoopers LLP.

Board of directors
As previously indicated, I will retire from the board at the close of the annual general meeting on 18 December, having served as a director since the company was launched in 1995 and as chairman since 2009.  I am delighted that Simon Constantine has accepted the board's invitation to succeed me as chairman.  Our recent recruitment process resulted in the appointment of Richard Green and David Mayes as new directors on 5 November 2014, bringing considerable experience of investment in both the listed and venture capital sectors.  This completes the re-shaping of the board following several retirements in recent years, and I am confident that the future governance of the company is in excellent hands.

On a personal note, I have greatly appreciated the support and encouragement of all my current and former board colleagues and our shareholders during my time as a director and latterly as chairman;  I would also like to thank NVM for their contribution to the company's excellent long-term performance.  I will be following the company's future progress with interest and am sure that its position as one of the best and most consistently performing VCTs over the past 19 years will be maintained.

Legislative and regulatory developments
The 2014 Finance Act contained 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.  In future shareholders will be prevented from selling shares in a VCT within the period six months before and after subscribing for shares in the same VCT.  This will require some careful management on the part of active VCT investors, although new shares acquired through dividend investment schemes such as our own are specifically excepted from the new measures.

Also as a result of the 2014 Finance Act, 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 or buying back shares out of distributable reserves created by cancelling the share premium account arising on that allotment of shares.  Our company's policy is to pay dividends out of available income surpluses or realised capital gains, in accordance with the spirit of the VCT legislation, and we do not expect the new rules to have any impact on our company's future dividend payments.

The Government has recently undertaken a consultation exercise on the future of VCTs and other tax-advantaged investment schemes, against the background of a European Commission review of the rules relating to state aid for businesses in member countries, which in the UK includes VCTs.  It is to be hoped that there will be no significant change in the positioning of VCTs as an important part of the UK government's strategy for supporting small and medium-sized enterprises, within which our company has worked for almost 20 years.

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.  Your directors have registered Northern Venture Trust under the AIFMD as a small UK AIFM, in line with our long-standing arrangement whereby the board has discretion over investment decisions with NVM providing investment advisory and administrative services.

Annual general meeting
The 2014 annual general meeting will take place in Edinburgh on Thursday 18 December 2014.  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.

Our company is now in its 20th year of operation as a venture capital trust and has achieved a good long-term performance record despite some challenging periods for smaller businesses in the UK, with a cumulative total return to shareholders (net asset value plus dividends) of 211.3p.  We have a strong balance sheet with substantial funds available for investment, and the challenge facing the board and NVM is to invest these funds well whilst also maintaining the momentum of the existing investment portfolio.  The coming year will be subject to some uncertainties, with an impending election in the UK and concerns about the impact of global events, but we believe that our company is well positioned to continue producing the above-average returns to which shareholders are accustomed.

John Hustler

The audited financial statements for the year ended 30 September 2014 are set out below.

for the year ended 30 September 2014

 Year ended 30 September 2014Year ended 30 September 2013
Gain on disposal of investments 781  781  2,012  2,012 
Movements in fair value of investments 4,858  4,858  7,668  7,668 
  ----------  ----------  ----------  ----------  ----------  ---------- 
  5,639  5,639  9,680  9,680 
Income 3,266  3,266  2,190  2,190 
Investment management fee (406) (1,424) (1,830) (350) (1,049) (1,399)
Other expenses (422) (15) (437) (404) (404)
  ----------  ----------  ----------  ----------  ----------  ---------- 
Return on ordinary activities before tax 2,438  4,200  6,638  1,436  8,631  10,067 
Tax on return on ordinary activities (438) 438  (237) 237 
  ----------  ----------  ----------  ----------  ----------  ---------- 
Return on ordinary activities after tax 2,000  4,638  6,638  1,199  8,868  10,067 
  ----------  ----------  ----------  ----------  ----------  ---------- 
Return per share 2.1p 5.0p 7.1p 1.6p 12.0p 13.6p

for the year ended 30 September 2014

 Year ended 
30 September 2014 
Year ended 
30 September 2013 
Equity shareholders' funds at 1 October 2013 67,361  63,525 
Return on ordinary activities after tax 6,638  10,067 
Dividends recognised in the year (5,647) (11,241)
Net proceeds of share issues 15,504  5,464 
Shares re-purchased for cancellation (335) (454)
  ----------  ---------- 
Equity shareholders' funds at 30 September 2014 83,521  67,361 
  ----------  ---------- 

as at 30 September 2014

 30 September 2014 
30 September 2013 
Fixed asset investments 71,054  61,252 
  ----------  ---------- 
Current assets:    
 Debtors 358  314 
 Cash and deposits 12,511  21,294 
  ----------  ---------- 
  12,869  21,608 
Creditors (amounts falling due within one year) (402) (15,499)
  ----------  ---------- 
Net current assets 12,467  6,109 
  ----------  ---------- 
Net assets 83,521  67,361 
  ----------  ---------- 
Capital and reserves    
Called-up equity share capital 23,770  19,289 
Share premium 1,073  14,739 
Capital redemption reserve 106  14,612 
Capital reserve 45,348  7,016 
Revaluation reserve 10,788  9,666 
Revenue reserve 2,436  2,039 
  ----------  ---------- 
Total equity shareholders' funds 83,521  67,361 
  ----------  ---------- 
Net asset value per share 87.8p 87.3p

for the year ended 30 September 2014

 Year ended 
30 September 2014 
Year ended 
30 September 2013 
 £000 £000 £000 £000 
Cash flow statement    
Net cash inflow from operating activities   68    1,468 
Corporation tax paid    
Financial investment:        
Purchase of investments (16,137)   (14,148)  
Sale/repayment of investments 11,974    12,886   
  ----------    ----------   
Net cash outflow from financial investment   (4,163)   (1,262)
Equity dividends paid   (5,647)   (11,241)
    ----------    ---------- 
Net cash outflow before financing   (9,742)   (11,035)
Issue of shares 15,829    5,609   
Share issue expenses (325)   (145)  
Share subscriptions held pending allotment (14,210)   14,210   
Re-purchase of shares for cancellation (335)   (454)  
  ----------    ----------   
Net cash inflow from financing   959    19,220 
    ----------    ---------- 
Increase/(decrease) in cash and deposits   (8,783)   8,185 
    ----------    ---------- 
Reconciliation of return before tax    
to net cash flow from operating activities    
Return on ordinary activities before tax   6,638    10,067 
Gain on disposal of investments   (781)   (2,012)
Movements in fair value of investments   (4,858)   (7,668)
Increase in debtors   (44)   (66)
Increase/(decrease) in creditors   (887)   1,147 
    ----------    ---------- 
Net cash inflow from operating activities   68    1,468 
    ----------    ---------- 
Analysis of movement in net funds   
 1 October 2013 
Cash flows 
30 September 2014 
Cash and deposits 21,294  (8,783) 12,511 
  ----------  ----------  ---------- 

as at 30 September 2014

% of net assets
by valuation
Fifteen largest venture capital investments:      
Kerridge Commercial Systems 1,593 7,879 9.4
CGI Group Holdings 3,818 2,951 3.5
Advanced Computer Software Group* 382 2,586 3.1
Silverwing 1,773 2,580 3.1
Weldex (International) Offshore Holdings 3,262 2,505 3.0
Volumatic Holdings 2,095 2,307 2.8
Wear Inns 1,640 2,061 2.5
Buoyant Upholstery 1,674 2,026 2.4
Kitwave One 1,582 1,774 2.1
MSQ Partners 1,695 1,695 2.0
Agilitas Holdings 1,662 1,662 2.0
No 1 Traveller 1,653 1,653 2.0
Control Risks Group Holdings 746 1,534 1.8
Intuitive Holding 1,674 1,500 1.8
Arleigh Group 435 1,482 1.8
  ---------- ---------- -------
  25,684 36,195 43.3
Other venture capital investments 18,807 18,853 22.6
  ---------- ---------- -------
Total venture capital investments 44,491 55,048 65.9
Listed equity investments 8,193 8,479 10.2
Listed fixed-interest investments 7,582 7,527 9.0
  ---------- ---------- -------
Total fixed asset investments 60,266 71,054 85.1
Net current assets   12,467 14.9
    ---------- -------
Net assets   83,521 100.0
    ---------- -------
*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 investment adviser 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 and seek to ensure there is no undue concentration of credit risk 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 investment adviser monitor legislative and regulatory 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 investment adviser.  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 investment adviser 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, strategic 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 LLP 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 2014 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 and strategic report include 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 R J Green, Mr T R Levett, Mr D A Mayes and Mr H P Younger.


The above summary of results for the year ended 30 September 2014 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, does not include any reference to matters to which the auditor drew attention by way of emphasis without qualifying the report 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 94,107,861 (2013 74,237,558) 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 2014 divided by the 95,081,480 (2013 77,156,276) ordinary shares in issue at that date.

The proposed final dividend of 3.0p per share for the year ended 30 September 2014 will, if approved by shareholders, be paid on 23 December 2014 to shareholders on the register at the close of business on 28 November 2014.

The full annual report including financial statements for the year ended 30 September 2014 is expected to be posted to shareholders on 19 November 2014 and will be available to the public at the registered office of the company at Time Central, 32 Gallowgate, Newcastle upon Tyne NE1 4SN 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