Northern Venture Trust PLC.

12 NOVEMBER 2015



Northern Venture Trust PLC is a Venture Capital Trust (VCT) whose investment adviser is NVM Private Equity LLP.  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 2014):


 2015 2014
Net assets

Net asset value per share

Return per share after tax:  

Dividend per share declared in respect of the year
 (2015 includes 6.0p 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 LLP
Alastair Conn/Christopher Mellor                  0191 244 6000



Northern Venture Trust has had an eventful year.  A number of excellent exits were achieved from venture capital investments, contributing to a record total of over £20 million of cash proceeds from the portfolio.  As a result your directors were able to declare a special interim dividend of 6.0p per share during the year, as well as maintaining the regular dividend at the established level of 6.0p, making a total distribution of 12.0p per share, or over £11 million.  However in July the Government published its Summer Finance Bill, proposing radical changes to the legislation relating to the operation and investment activities of VCTs.

Results and dividend
In the year ended 30 September 2015 the company achieved a return of £6,825,000 (2014: £6,638,000), or 7.2p (2014: 7.1p) per share, before deducting dividends paid - equivalent to 8.2% of the opening net asset value per share (NAV).  This strong overall result meant that our investment adviser, NVM Private Equity, earned a performance-related management fee of £319,000 (2014: £206,000), equivalent to 0.3p (2014: 0.2p) per share.

The NAV per share at 30 September 2015 (after deducting the dividends totalling 12.0p paid during the year) was 83.0p, compared with 87.8 pence at 30 September 2014.  An interim dividend of 3.0p per share was paid in July 2015, together with a special dividend of 6.0p in recognition of the profitable investment realisations achieved during the year.  The directors propose a final dividend also of 3.0p per share, which will be paid on 22 December 2015 to shareholders on the register on 27 November 2015, making a total of 12.0p in respect of the year.  This is the twelfth consecutive year in which a dividend of at least 6.0p has been paid.

In July we suspended the dividend investment scheme (DRIS) under which shareholders had been able to re-invest their dividends in new ordinary shares in the company.  We reluctantly took this step because of the uncertainty caused by the Government's proposed changes to the VCT legislation.  Although we are making progress in absorbing the implications of these changes, we do not yet feel that it is appropriate to re-instate the DRIS and so it remains suspended until further notice.

Investment portfolio
Total additions to the venture capital portfolio in the year amounted to £17.1 million.  Four new holdings in unquoted trading companies and three AIM-quoted holdings were acquired at a cost of £7.5 million, and £9.5 million was invested in six companies formed with a view to acquiring trading businesses.

The total proceeds from venture capital investments sold or repaid were £20.4 million, representing a surplus of £13.8 million over original cost.  The investment realisations are detailed in the annual report, but it is worth highlighting the sales of Kerridge Commercial Systems, which returned £8.6 million from an original investment of £1.6 million, and the holding in AIM-quoted Advanced Computer Software Group, which was sold for £3.1 million compared with an original cost of £0.4 million.

Share issues and buy-backs
Following the success of the £15 million share issue in the 2013/14 tax year, and in the light of the strong inflow of cash from investment sales, your directors decided not to launch a share issue in the 2014/15 year.  Funds available for future investment at 30 September 2015, in the form of cash and readily realisable listed investments, amounted to just over £20 million and at this stage we do not envisage raising additional funds in the 2015/16 tax year.

In May 2015 we announced that the discount to NAV at which the company buys back shares in the market would be reduced from 10% to 5%.  In total 485,000 shares, equivalent to approximately 0.5% of the issued capital, were re-purchased during the year at a cost of £373,000.  This was a similar level of buy-backs to that experienced in the three preceding years.

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, Robertson Hare LLP, who were appointed during the year.

VCT legislation
The Government introduced new legislation in the Summer Finance Bill 2015 which will have a significant impact on the investment activities of most VCTs.  I wrote to shareholders in July 2015 to inform you that the directors were assessing the effect of the new provisions, which at the time were subject to further clarification and amendment by the Government.

The Finance Bill is expected to receive Royal Assent shortly and it is clear that the range of potential investments open to generalist VCTs such as Northern Venture Trust will be reduced as the Government seeks to implement the European Commission's State aid guidelines, which require VCTs to focus more sharply on the provision of growth capital to younger companies.

NVM has a long record of making, and successfully exiting, earlier stage and growth capital investments of the type which the Government is now seeking to encourage.  Alaric Systems and DxS are good examples of such investments which have delivered outstanding returns to shareholders in recent years.  Your directors are working closely with NVM and our other professional advisers to understand the full implications of the new rules for our future investment activities, and to adapt our approach to the requirements of the new regime as we seek to maintain our strong long-term investment performance.  We will report the outcome of our review to shareholders in due course.

Board of directors
John Hustler retired from the board at the close of the annual general meeting in December 2014, when tributes were paid to his distinguished service to the company, and I was delighted to accept the directors' invitation to succeed John as chairman.  Richard Green and David Mayes were appointed as directors in November 2014 and have made an excellent contribution based on their extensive knowledge of investment in both the listed and venture capital sectors.

Annual general meeting
The 2015 annual general meeting will take place in London on Thursday 17 December 2015.  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.

Over the past 20 years our company has produced excellent returns to shareholders through a variety of economic climates and against a background of regular changes in the legislative and regulatory environment.  Whilst the most recent changes in the VCT legislation are perhaps the most profound in our history, we believe that we are well positioned to achieve further growth from the existing portfolio and to identify new opportunities for future investment.

Simon Constantine

The audited financial statements for the year ended 30 September 2015 are set out below.

for the year ended 30 September 2015

 Year ended 30 September 2015Year ended 30 September 2014
Gain on disposal of investments 5,019  5,019  781  781 
Movements in fair value of investments 1,189  1,189  4,858  4,858 
  ----------  ----------  ----------  ----------  ----------  ---------- 
  6,208  6,208  5,639  5,639 
Income 3,123  3,123  3,266  3,266 
Investment management fee (433) (1,617) (2,050) (406) (1,424) (1,830)
Other expenses (456) (456) (422) (15) (437)
  ----------  ----------  ----------  ----------  ----------  ---------- 
Return on ordinary activities before tax 2,234  4,591  6,825  2,438  4,200  6,638 
Tax on return on ordinary activities (333) 333  (438) 438 
  ----------  ----------  ----------  ----------  ----------  ---------- 
Return on ordinary activities after tax 1,901  4,924  6,825  2,000  4,638  6,638 
  ----------  ----------  ----------  ----------  ----------  ---------- 
Return per share 2.0p 5.2p 7.2p 2.1p 5.0p 7.1p

for the year ended 30 September 2015

 Year ended 
30 September 2015 
Year ended 
30 September 2014 
Equity shareholders' funds at 1 October 2014 83,521  67,361 
Return on ordinary activities after tax 6,825  6,638 
Dividends recognised in the year (11,438) (5,647)
Net proceeds of share issues 413  15,504 
Shares re-purchased for cancellation (373) (335)
  ----------  ---------- 
Equity shareholders' funds at 30 September 2015 78,948  83,521 
  ----------  ---------- 

as at 30 September 2015

 30 September 2015 
30 September 2014 
Fixed asset investments 72,680  71,054 
  ----------  ---------- 
Current assets:    
 Debtors 302  358 
 Cash and deposits 6,418  12,511 
  ----------  ---------- 
  6,720  12,869 
Creditors (amounts falling due within one year) (452) (402)
  ----------  ---------- 
Net current assets 6,268  12,467 
  ----------  ---------- 
Net assets 78,948  83,521 
  ----------  ---------- 
Capital and reserves    
Called-up equity share capital 23,775  23,770 
Share premium 1,359  1,073 
Capital redemption reserve 228  106 
Capital reserve 47,787  45,348 
Revaluation reserve 3,367  10,788 
Revenue reserve 2,432  2,436 
  ----------  ---------- 
Total equity shareholders' funds 78,948  83,521 
  ----------  ---------- 
Net asset value per share 83.0p 87.8p

for the year ended 30 September 2015

 Year ended 
30 September 2015 
Year ended 
30 September 2014 
 £000 £000 £000 £000 
Cash flow statement    
Net cash inflow from operating activities   723    68 
Corporation tax paid    
Financial investment:        
Purchase of investments (18,300)   (16,137)  
Sale/repayment of investments 22,882    11,974   
  ----------    ----------   
Net cash inflow/(outflow) from financial investment   4,582    (4,163)
Equity dividends paid   (11,438)   (5,647)
    ----------    ---------- 
Net cash outflow before financing   (6,133)   (9,742)
Issue of shares 428    15,829   
Share issue expenses (15)   (325)  
Share subscriptions held pending allotment   (14,210)  
Re-purchase of shares for cancellation (373)   (335)  
  ----------    ----------   
Net cash inflow from financing   40    959 
    ----------    ---------- 
Increase/(decrease) in cash and deposits   (6,093)   (8,783)
    ----------    ---------- 
Reconciliation of return before tax    
to net cash flow from operating activities    
Return on ordinary activities before tax   6,825    6,638 
Gain on disposal of investments   (5,019)   (781)
Movements in fair value of investments   (1,189)   (4,858)
(Increase)/decrease in debtors   56    (44)
Increase/(decrease) in creditors   50    (887)
    ----------    ---------- 
Net cash inflow from operating activities   723    68 
    ----------    ---------- 
Analysis of movement in net funds   
 1 October 2014 
Cash flows 
30 September 2015 
Cash and deposits 12,511  (6,093) 6,418 
  ----------  ----------  ---------- 

as at 30 September 2015

% of net assets
by valuation
Fifteen largest private equity investments:      
Buoyant Upholstery 1,674 3,526 4.5
Kitwave One 1,583 3,085 3.9
MSQ Partners Group 1,695 2,637 3.3
Lineup Systems 974 2,467 3.1
Biological Preparations Group 2,366 2,366 3.0
Silverwing 1,773 2,331 3.0
Weldex (International) Offshore Holdings 3,262 2,280 2.9
Volumatic Holdings 1,929 1,901 2.4
CGI Group Holdings 3,818 1,895 2.4
Closerstill Group 1,747 1,747 2.2
Wear Inns 1,640 1,705 2.2
No 1 Traveller 1,653 1,666 2.1
Agilitas IT Holdings 1,662 1,666 2.1
Entertainment Magpie Group 1,610 1,610 2.0
Graza 1,581 1,581 2.0
  ---------- ---------- -------
  28,967 32,463 41.1
Other private equity investments:      
Hunley 1,581 1,581 2.0
Oceanos 1,581 1,581 2.0
Saluda 1,580 1,580 2.0
Seawise 1,580 1,580 2.0
Turbinia 1,580 1,580 2.0
It's All Good 1,205 1,501 1.9
Control Risks Group Holdings 746 1,461 1.9
Arleigh Group 238 1,449 1.9
IDOX* 269 1,448 1.8
Cawood Scientific 1,073 1,299 1.7
Axial Systems Holdings 1,004 1,259 1.6
Love Energy Savings 1,204 1,204 1.5
Optilan Group 1,000 1,127 1.4
Haystack Dryers 1,661 1,044 1.3
Intuitive Holding 1,674 885 1.1
Vectura Group** 247 797 1.0
Lanner Group 719 664 0.9
Arnlea Holdings 1,306 585 0.8
Sinclair IS Pharma 425 574 0.7
Collagen Solutions* 321 540 0.7
Nasstar* 323 532 0.7
Other investments each valued at less than £500,000 4,640 2,038 2.5
  ---------- ---------- -------
Total private equity investments 54,924 58,772 74.5
Listed equity investments 8,152 7,793 9.9
Listed interest-bearing investments 6,237 6,115 7.7
  ---------- ---------- -------
Total fixed asset investments 69,313 72,680 92.1
Net current assets   6,268 7.9
    ---------- -------
Net assets   78,948 100.0
    ---------- -------
* Quoted on AIM      
**Listed on London Stock Exchange      


The board carries out a regular and robust review of the risk environment in which the company operates.  The principal risks and uncertainties identified by the board which might affect the company's business model and future performance, and the steps taken with a view to their mitigation, are as follows:

Investment and liquidity 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.  Mitigation: 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 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: most of the company's investments involve a medium- to long-term commitment and many are relatively illiquid.  Mitigation: 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 direct exposure to foreign currency risk and does not enter into derivative transactions.

Economic risk: events such as economic recession or general fluctuation 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.  Mitigation: the company invests in a diversified portfolio of investments spanning various industry sectors, and maintains sufficient cash reserves to be able to provide additional funding to investee companies where appropriate.

Stock market risk: some of the company's investments are quoted on the London Stock Exchange or AIM and will be subject to market fluctuations upwards and downwards.  External factors such as terrorist activity can negatively impact stock markets worldwide.  In times of adverse sentiment there can be very little, if any, market demand for shares in smaller companies quoted on AIM.  Mitigation: the company's quoted investments are actively managed by specialist managers and the board keeps the portfolio under ongoing review.

Credit risk: the company holds a number of financial instruments and cash deposits and is dependent on the counterparties discharging their commitment.  Mitigation: 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.

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, which reflects 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.  Mitigation: The board and the investment adviser monitor political developments and where appropriate seek to make representations either directly or through relevant trade bodies.

Internal control risk: the company's assets could be at risk in the absence of an appropriate internal control regime.  Mitigation: 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.  Mitigation: the investment adviser keeps the company's VCT qualifying status under continual review and its reports are reviewed by the board on a quarterly basis.  The board has also retained Robertson Hare 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 LLP (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 2015 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 S J Constantine (Chairman), Mr N J Beer, 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 2015 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 95,302,650 (2014 94,107,861) 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 2015 divided by the 95,099,820 (2014 95,081,480) ordinary shares in issue at that date.

The proposed final dividend of 3.0p per share for the year ended 30 September 2015 will, if approved by shareholders, be paid on 22 December 2015 to shareholders on the register at the close of business on 27 November 2015.

The full annual report including financial statements for the year ended 30 September 2015 is expected to be posted to shareholders on 20 November 2015 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 LLP website,

Neither the contents of the NVM Private Equity LLP website nor the contents of any website accessible from hyperlinks on the NVM Private Equity LLP 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