Announcements

Northern Venture Trust PLC.

RNS Number : 1952I
Northern Venture Trust PLC
14 November 2008
 

14 NOVEMBER 2008


NORTHERN VENTURE TRUST PLC


RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2008


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 2007 in italics)


   2008

   2007

ORDINARY SHARES



  • Net assets

£31.1m

£33.6m

  • Net asset value per share

80.1p

87.6p

  • Return per share



Revenue

2.3p

2.4p

Capital

(0.9)p

8.4p

Total

1.4p

10.8p

  • Dividend per share declared



in respect of the year



Revenue

2.0p

2.0p

Capital

5.5p

7.0p

Total

7.5p

9.0p

  • Cumulative return to



shareholders since launch



Net asset value per share

80.1p

87.6p

Dividends paid per share*

74.0p

65.0p

Net asset value plus dividends



paid per share

154.1p

152.6p

  • Share price at end of year

63.0p

76.0p

C SHARES



  • Net assets

£17.5m

£18.9m

  • Net asset value per share

84.7p

91.5p

  • Return per share



Revenue

2.3p

2.3p

Capital

(7.1)p

(3.5)p

Total

(4.8)p

(1.2)p

  • Dividend per share declared



in respect of the year



Revenue

2.0p

2.0p

Capital

2.0p

Total

4.0p

2.0p

  • Cumulative return to 



shareholders since launch



Net asset value per share

84.7p

91.5p

Dividends paid per share*

4.0p

2.0p

Net asset value plus dividends



paid per share

88.7p

93.5p

  • Share price at end of year

79.5p

83.0p

*Excluding second interim and proposed final dividend



For further information, please contact:


NVM Private Equity Limited

Alastair Conn/Christopher Mellor

Website:  www.nvm.co.uk


0191 244 6000

Lansons Communications

Karen Mignon


020 7294 3685



CHAIRMAN'S STATEMENT


Recent developments in the global financial markets have cast a shadow over companies large and small. This has inevitably had an effect on your company's results for the past year, and the outlook for the immediate future is subject to greater uncertainty than at any time in our corporate lifetime.


Results and dividend - ordinary shares

The net asset value per ordinary share at 30 September 2008 was 80.1p, compared with 87.6p a year earlier. Dividends of 9.0p per share were paid and charged to reserves during the year. The return per share for the year as shown in the income statement fell to 1.4p (2007 10.8p). This was still a positive result but the unfavourable comparison with the previous year illustrates the very difficult market conditions in which the company has had to operate.


A year ago we reviewed our ordinary share dividend policy with a view to establishing a target level of maintainable dividend yield as a basis for attracting secondary market purchasers. As a result of this review we stated that our objective was to maintain an annual dividend of at least 6.0p per ordinary share. In fulfilment of this, two interim dividends totalling 6.0p per share have already been paid in respect of the year ended 30 September 2008. Despite the adverse conditions currently prevailing, which have caused a marked slowdown in investment realisation activity, we propose to pay a final dividend of 1.5p, making a total of 7.5p for the year compared with 9.0p last year. The final dividend will, subject to approval by shareholders, be paid on 23 January 2009 to shareholders on the register on 19 December 2008. This will take the cumulative ordinary dividends paid by the company since launch to 78.5p per share.


Results and dividend - C shares

The net asset value per C share at 30 September 2008, after deducting dividends of 2.0p paid during the year, was 84.7p, down from 91.5p a year ago. The return per share for the year was minus 4.8p compared with minus 1.2p last year. This reflects the relative immaturity of the C share portfolio.


The directors propose a final dividend of 1.0p per C share (last year 1.0p), which when added to the first and second interim dividends already paid, makes a total in respect of the year of 4.0p (last year 2.0p). The final dividend will, subject to approval by shareholders, be paid on 23 January 2009 to shareholders on the register on 19 December 2008.


Investment portfolio

The Business Review in the annual report gives details of movements in the investment portfolio during the year. In the ordinary share fund, additions to venture capital investments during the year amounted to £6.0 million and sales proceeds were £11.8 million. Significant realisations during the year included Barony Universal ProductsKCS Global Holdings and TFB Group, and CGI Group was re-structured so as to release cash to shareholders. The C share fund completed new investments totalling £3.0 million and achieved a satisfactory exit from Product Support (Holdings). We have as ever taken a conservative approach to the valuation of unquoted investments, against a background this year of falling price-earnings ratios in the quoted markets and pressure on profitability at an individual company level. With the clearing banks intent on reducing their exposure wherever possible, it is likely that some of our investments will need additional financial support and our strong balance sheet will enable us to respond positively in those cases where the long-term prospects can be demonstrated.


Shareholder issues

Twelve months ago we announced, after a careful review, that the company would cease its practice of buying back ordinary shares for cancellation at a fixed 10% discount to net asset value. It was felt that in the long term there was a danger of a gradual diminution of the company's capital base, which could increase the ratio of annual running costs to assets and reduce the diversity of the investment portfolio. We also wished to encourage demand from secondary purchasers, believing that it was in the interests of both the company and its shareholders that there should be a more active market in the company's shares as investors came to appreciate the benefits of a sustainable flow of tax-free dividend income. It was acknowledged that in the short term the change in buy-back policy would lead to a fall in the quoted market price, and over the past year the discount to net asset value has indeed widened. However there has undoubtedly been an increase in secondary market trading in the shares and we remain of the view that a more active market, supported by a consistent dividend policy, is the right way forward.


It was also announced last year that the directors had appointed Landsbanki Securities (formerly Teather & Greenwood) as brokers to the company, on the basis that they would also act as market-makers in the company's ordinary and C shares. This arrangement has generally worked well, but during the past two months Landsbanki Securities has been affected by the financial difficulties of its Icelandic parent and in October 2008 was obliged to cease its market-making activities. As a result there was only one remaining market-maker in the company's ordinary and C shares, and the quoted share prices fell substantially.


Following a further review of broking and market-making arrangements, the directors have decided to appoint Teathers, a new firm established by former Landsbanki Securities personnel, as brokers to the company. We expect that this will facilitate the resumption of an orderly market in the company's shares and we regret any irritation or concern which has been caused to shareholders by the recent uncertainty.


The directors are considering the possibility of launching a small "top-up" issue of new ordinary shares in the first quarter of 2009 in response to enquiries from shareholders wishing to make a further investment in the company. An announcement concerning this will be made in due course.


Conversion of C shares

I would like to remind shareholders that the C shares issued by the company in the 2005/06 tax year are due, in accordance with the articles of association, to be converted into new ordinary shares no later than 30 October 2009. The number of new ordinary shares to be issued on conversion will be determined by reference to the respective net asset values per share attributable to the ordinary shares and the C shares at the calculation date, which is expected to be 30 September 2009.


VAT on management fees

The Government announced in the 2008 Budget that, with effect from 1 October 2008, investment management fees paid by VCTs would be exempt from VAT. The resulting saving in the financial year ending 30 September 2009 is estimated at approximately £100,000 for the ordinary share fund and £60,000 for the C share fund.


HM Revenue & Customs has accepted that under European Union VAT law the exemption of management fees from VAT should have applied from 1 January 1990 onwards, and has indicated that claims may be made for repayment of VAT previously paid by VCTs, subject to certain restrictive time limits. At this stage the directors are reasonably certain that the amount of past VAT recoverable by the company will be at least £371,000 for the ordinary share pool and £100,000 for the C share pool, and these amounts have been recognised in the accounts as a separate credit in the income statement.


VCT qualifying status

The directors are satisfied that the qualifying conditions laid down by HM Revenue & Customs for VCT approval have continued to be met by the company and we believe that this will continue to be the case.


Board of directors

As I indicated in my half-yearly statement, I will be retiring as chairman and as a director at the close of the annual general meeting on 14 January 2009. It has been a great privilege to serve our company and I would like to thank shareholders, my board colleagues and our managers for their support and encouragement over the past 13 years. I am delighted that John Hustler has accepted the board's invitation to take over the chair and I am sure that the company's future is in good hands.


Clive Williams retired from the board in May 2008 due to the pressure of his other personal commitments and I thank him for his contribution to our business. It is likely that an additional director will be appointed during the next few months.


Prospects

The outlook for the UK economy in the short to medium term is poor and recovery is likely to be slow. This is bound to be reflected in the performance of our investments over the next 12 months. The portfolio remains well diversified and our managers will continue to monitor each company closely, with a view to putting us in the best possible position to benefit when the eventual upturn comes. Opportunities will undoubtedly arise for further cautious investment.


Professor Sir Frederick Holliday

Chairman



The audited results for the year ended 30 September 2008 are set out below.


INCOME STATEMENT

for the year ended 30 September 2008



Ordinary shares

C shares


---------------------------

----------------------------


Revenue 

£000 

Capital 

£000 

Total 

£000 

Revenue 

£000 

Capital 

£000 

Total 

£000 

Gain/(loss) on disposal of investments

(110)

(110)

566 

566 

Movements in fair value of investments

(56)

(56)

(1,870)

(1,870)


------ 

------ 

------ 

------ 

------ 

------ 


(166)

(166)

(1,304)

(1,304)

Income

1,477 

1,477 

912 

912 

Investment management fee

(186)

(556)

(742)

(107)

(322)

(429)

Recoverable VAT

93 

278 

371 

25 

75 

100 

Other expenses

(199)

(199)

(177)

(177)


------ 

------ 

------ 

------ 

------ 

------ 

Return on ordinary activities







  before tax

1,185 

(444)

741 

653 

(1,551)

(898)

Tax on return on ordinary activities

(270)

82 

(188)

(169)

73 

(96)


------ 

------ 

------ 

------ 

------ 

------ 

Return on ordinary activities







  after tax 

915 

(362)

553 

484 

(1,478)

(994)


------ 

------ 

------ 

------ 

------ 

------ 








Return per share

2.3p

(0.9)p

1.4p

2.3p

(7.1)p

(4.8)p




Company



---------------------------








Revenue 

£000 

Capital 

£000 

Total 

£000 

Gain/(loss) on disposal of investments




456 

456 

Movements in fair value of investments




(1,926)

(1,926)





------ 

------ 

------ 





(1,470)

(1,470)

Income




2,389 

2,389 

Investment management fee




(293)

(878)

(1,171)

Recoverable VAT




118 

353 

471 

Other expenses




(376)

(376)





------ 

------ 

------ 

Return on ordinary activities







  before tax




1,838 

(1,995)

(157)

Tax on return on ordinary activities




(439)

155 

(284)





------ 

------ 

------ 

Return on ordinary activities







  after tax 




1,399 

(1,840)

(441)





------ 

------ 

------ 



INCOME STATEMENT

for the year ended 30 September 2007



Ordinary shares

C shares


---------------------------

---------------------------


Revenue 

£000 

Capital 

£000 

Total 

£000 

Revenue 

£000 

Capital 

£000 

Total 

£000 

Gain/(loss) on disposal of investments

- 

1,188 

1,188 

(98)

(98)

Movements in fair value of investments

2,474 

2,474 

(382)

(382)


------ 

------ 

------ 

------ 

------ 

------ 


3,662 

3,662 

(480)

(480)

Income

1,535 

1,535 

974 

974 

Investment management fee

(195)

(585)

(780)

(114)

(342)

(456)

Recoverable VAT

Other expenses

(176)

(176)

(166)

(166)


------

------ 

------ 

------ 

------ 

------ 

Return on ordinary activities







  before tax

1,164 

3,077 

4,241 

694 

(822)

(128)

Tax on return on ordinary activities

(251)

178 

(73)

(222)

108 

(114)


------ 

------ 

------ 

------ 

------ 

------ 

Return on ordinary activities







  after tax 

913 

3,255 

4,168 

472 

(714)

(242)


------ 

------ 

------ 

------ 

------ 

------ 








Return per share

2.4p

8.4p

10.8p

2.3p

(3.5)p

(1.2)p




Company



----------------------------








Revenue 

£000 

Capital 

£000 

Total 

£000 

Gain/(loss) on disposal of investments




1,090 

1,090 

Movements in fair value of investments




2,092 

2,092 





------ 

------ 

------ 





3,182 

3,182 

Income




2,509 

2,509 

Investment management fee




(309)

(927)

(1,236)

Recoverable VAT




Other expenses




(342)

(342)





------ 

------ 

------ 

Return on ordinary activities







  before tax




1,858 

2,255 

4,113 

Tax on return on ordinary activities




(473)

286 

(187)





------ 

------ 

------ 

Return on ordinary activities







  after tax 




1,385 

2,541 

3,926 





------ 

------ 

------ 



RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS

for the year ended 30 September 2008



Ordinary shares 

C shares 

Company 


£000 

£000 

£000 

Equity shareholders' funds at




  1 October 2007

33,632 

18,883 

52,515 

Return on ordinary activities after tax

553 

(994)

(441)

Dividends recognised in the year

(3,465)

(413)

(3,878)

Net proceeds of share issues

463 

- 

463 

Shares purchased for cancellation

(65)

(15)

(80)


------ 

------ 

------ 

Equity shareholders' funds at




  30 September 2008

31,118 

17,461 

48,579 


------ 

------ 

------ 



RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS

for the year ended 30 September 2007



Ordinary shares 

C shares 

Company 


£000 

£000 

£000 

Equity shareholders' funds at




  1 October 2006

33,118 

19,571 

52,689 

Return on ordinary activities after tax

4,168 

(242)

3,926 

Dividends recognised in the year

(3,477)

(414)

(3,891)

Net proceeds of share issues

417 

417 

Shares purchased for cancellation

(594)

(32)

(626)


------ 

------ 

------ 

Equity shareholders' funds at




  30 September 2007

33,632 

18,883 

52,515 


------ 

------ 

------ 



BALANCE SHEET

as at 30 September 2008



Ordinary shares 

£000 

shares 

£000 

Company 

£000 

Fixed asset investments:




Venture capital investments




  Unquoted

19,956 

6,643 

26,599 

  Quoted

1,567 

1,158 

2,725 


------ 

------ 

------ 

Total venture capital investments

21,523 

7,801 

29,324 

Listed fixed-interest investments

8,535 

8,535 


------ 

------ 

------ 

Total fixed asset investments

21,523 

16,336 

37,859 


------ 

------ 

------ 

Current assets:




  Debtors

787 

166 

953 

  Cash at bank

9,098 

1,100 

10,198 


------ 

------ 

------ 


9,885 

1,266 

11,151 

Creditors (amounts falling due within one year)

(290)

(141)

(431)


------ 

------ 

------ 

Net current assets

9,595 

1,125 

10,720 


------ 

------ 

------ 





Net assets

31,118 

17,461 

48,579 


------ 

------ 

------ 





Capital and reserves:




Called-up equity share capital

9,715 

15,459 

25,174 

Share premium

9,418 

2,030 

11,448 

Capital redemption reserve

1,996 

41 

2,037 

Capital reserve - realised

7,152 

860 

8,012 

Capital reserve - unrealised

1,673 

(1,309)

364 

Revenue reserve

1,164 

380 

1,544 


------ 

------ 

------ 





Total equity shareholders' funds

31,118 

17,461 

48,579 


------ 

------ 

--------- 

Net asset value per share

80.1p

84.7p




BALANCE SHEET

as at 30 September 2007



Ordinary shares 

£000 

shares 

£000 

Company 

£000 

Fixed asset investments:




Venture capital investments




  Unquoted

24,996  

6,054 

31,050 

  Quoted

2,452 

1,389 

3,841 


------ 

------ 

------ 

Total venture capital investments

27,448

7,443 

34,891 

Listed fixed-interest investments

10,845 

10,845 


------ 

------ 

------ 

Total fixed asset investments

27,448 

18,288 

45,736 


------ 

------ 

------ 

Current assets:




  Debtors

350 

371 

721 

  Cash at bank

6,008 

364 

6,372 


------ 

------ 

------ 


6,358 

735 

7,093 

Creditors (amounts falling due within one year)

(174)

(140)

(314)


------ 

------ 

------ 

Net current assets

6,184 

595 

6,779 


------ 

------ 

------ 





Net assets

33,632 

18,883 

52,515 


------ 

------ 

------ 





Capital and reserves:




Called-up equity share capital

9,596 

15,472 

25,068 

Share premium

9,099 

2,030 

11,129 

Capital redemption reserve

1,971 

28 

1,999 

Capital reserve - realised

4,174 

1,513 

5,687 

Capital reserve - unrealised

7,772 

(469)

7,303 

Revenue reserve

1,020 

309 

1,329 


------ 

------ 

------ 





Total equity shareholders' funds

33,632 

18,883 

52,515 


------ 

------ 

------ 

Net asset value per share

87.6p

91.5p




CASH FLOW STATEMENT

for the year ended 30 September 2008



Ordinary shares 

shares 

Company 


£000 

£000 

£000 

Net cash inflow from operating activities

471 

613 

1,084 

Taxation:




Corporation tax paid

(73)

(97)

(170)

Financial investment:




Purchase of investments

(6,036)

(3,937)

(9,973)

Sale/repayment of investments

11,795 

4,585 

16,380 

Net cash inflow from




  financial investment

5,759 

648 

6,407 

Equity dividends paid

(3,465)

(413)

(3,878)


------ 

------ 

------ 

Net cash inflow before financing

2,692 

751 

3,443 

Financing:




Issue of shares

464 

464 

Share issue expenses

(1)

(1)

Purchase of ordinary shares for cancellation

(65)

(15)

(80)

Net cash inflow/(outflow) from financing

398 

(15)

383 


------ 

------ 

------ 

Increase in cash at bank

3,090 

736 

3,826 


------ 

------ 

------ 





Reconciliation of return before tax to




net cash flow from operating activities




Return on ordinary activities before tax

741 

(898)

(157)





(Gain)/loss on disposal of investments

110 

(566)

(456)

Movements in fair value of investments

56 

1,870 

1,926 

(Increase)/decrease in debtors

(437)

205 

(232)

Increase in creditors

1 

2 

3 


------ 

------ 

------ 

Net cash inflow from operating activities

471 

613 

1,084 


------ 

------ 

------ 





Analysis of movement in net funds





1 October 

2007 


Cash flows 

30 September 

2008 


£000 

£000 

£000 

Cash at bank

6,372 

3,826 

10,198 


------ 

------ 

------ 



CASH FLOW STATEMENT

for the year ended 30 September 2007



Ordinary shares 

shares 

Company 


£000 

£000 

£000 

Net cash inflow from operating activities

689 

448 

1,137 

Taxation:




Corporation tax paid

(112)

(48)

(160)

Financial investment:




Purchase of investments

(1,828)

(11,544)

(13,372)

Sale/repayment of investments

6,390 

8,553 

14,943 

Net cash inflow/(outflow) from




  financial investment

4,562 

(2,991)

1,571 

Equity dividends paid

(3,477)

(414)

(3,891)


------ 

------ 

------ 

Net cash inflow/(outflow) before financing

1,662 

(3,005)

(1,343)

Financing:




Issue of shares

429 

429 

Share issue expenses

(12)

(12)

Purchase of ordinary shares for cancellation

(594)

(32)

(626)

Net cash outflow from financing

(177)

(32)

(209)


------ 

------ 

------ 

Increase/(decrease) in cash at bank

1,485 

(3,037)

(1,552)


------ 

------ 

------ 





Reconciliation of return before tax to




net cash flow from operating activities




Return on ordinary activities before tax

4,241 

(128)

4,113 





(Gain)/loss on disposal of investments

(1,188)

98 

(1,090)

Movements in fair value of investments

(2,474)

382 

(2,092)

Decrease in debtors

67 

96 

163 

Increase in creditors

43 

- 

43 


------ 

------ 

------ 

Net cash inflow from operating activities

689 

448 

1,137 


------ 

------ 

------ 





Analysis of movement in net funds





1 October 

2006 


Cash flows 

30 September 

2007 


£000 

£000 

£000 

Cash at bank

7,924 

(1,552)

6,372 


------ 

------ 

------ 







INVESTMENT PORTFOLIO SUMMARY

as at 30 September 2008



Cost

£000

Valuation

£000

% of net assets

by valuation

ORDINARY SHARES




Weldex (International) Offshore

205

3,832

12.3

CGI Group Holdings

3,449

3,449

11.1

Envirotec

812

1,754

5.6

DxS

1,105

1,670

5.4

Pivotal Laboratories Holdings

714

1,195

3.9

Arleigh International

375

846

2.7

Abermed

600

804

2.6

S&P Coil Products

480

756

2.4

Tikit Group*

752

681

2.2

Direct Valeting

591

591

1.9

Interlube Systems

88

542

1.7

Stainton Metal Company

250

490

1.6

Paladin Group

291

384

1.2

Liquidlogic

94

382

1.2

e-know.net

360

360

1.2


------

------

------

Fifteen largest venture capital investments

10,166

17,736

57.0

Other venture capital investments

9,684

3,787

12.2


------

------

------

Total fixed asset investments

19,850

21,523

69.2


------



Net current assets


9,595

30.8



------

------

Net assets


31,118

100.0



------

------

C SHARES




Paladin Group

1,161

1,527

8.8

Promatic Group

797

797

4.6

Axial Systems Holdings

700

700

4.0

CloserStill Holdings

700

700

4.0

Optilan Group

700

700

4.0

Frontier Foods

542

542

3.1

Gentronix

406

406

2.3

Promanex Group Holdings

801

401

2.3

Astbury Marsden Holdings

800

400

2.3

IDOX*

298

397

2.3

Wear Inns

270

270

1.6

IS Pharma*

276

250

1.4

Brulines (Holdings)*

184

216

1.2

Foreman Roberts Group

800

200

1.1

Advanced Computer Software*

229

189

1.1


------

------

-----

Fifteen largest venture capital investments

8,664

7,695

44.1

Other venture capital investments

446

106

0.6


------

------

-----

Total venture capital investments

9,110

7,801

44.7

Listed fixed-interest investments

8,917

8,535

48.9


------

------

-----

Total fixed asset investments

18,027

16,336

93.6


------



Net current assets


1,125

6.4



------

-----

Net assets


17,461

100.0



------

-----

*Quoted on AIM






The above summary of results for the year ended 30 September 2008 does not constitute statutory financial statements within the meaning of Section 240 of the Companies Act 1985 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 auditors' report on those financial statements under Section 235 of the Companies Act 1985 is unqualified and does not contain a statement under Section 237(2) or (3) of the Companies Act 1985.


The proposed final ordinary share dividend of 1.5p per share for the year ended 30 September 2008 will, if approved by shareholders, be paid on 23 January 2009 to shareholders on the register at the close of business on 19 December 2008.


The proposed final C share dividend of 1.0p per share for the year ended 30 September 2008 will, if approved by shareholders, be paid on 23 January 2009 to shareholders on the register at the close of business on 19 December 2008.


The full annual report including financial statements for the year ended 30 September 2008 is expected to be posted to shareholders on 5 December 2008 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, www.nvm.co.uk.


ENDS


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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