Final Results
Northern Venture Trust PLC
12 November 2007
12 NOVEMBER 2007
NORTHERN VENTURE TRUST PLC
RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2007
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 UK unquoted companies 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 2006 in italics)
2007 2006
ORDINARY SHARES
• Net assets £33.6m £33.1m
• Net asset value per share 87.6p 85.7p
• Return per share
Revenue 2.4p 2.8p
Capital 8.4p 5.8p
Total 10.8p 8.6p
• Dividend per share declared
in respect of the year
Revenue 2.0p 2.5p
Capital 7.0p 6.5p
Total 9.0p 9.0p
• Cumulative return to
shareholders since launch
Net asset value per share 87.6p 85.7p
Dividends paid per share* 65.0p 56.0p
Net asset value plus dividends
paid per share 152.6p 141.7p
• Share price at end of year 76.0p 70.0p
*Excluding proposed final dividend
2007 2006
C SHARES
• Net assets £18.9m £19.6m
• Net asset value per share 91.5p 94.7p
• Return/(loss) per share
Revenue 2.3p 1.6p
Capital (3.5)p (1.3)p
Total (1.2)p 0.3p
• Dividend per share declared
in respect of the year
Revenue 2.0p 1.0p
Capital - -
Total 2.0p 1.0p
• Cumulative return to
shareholders since launch
Net asset value per share 91.5p 94.7p
Dividends paid per share* 2.0p -
Net asset value plus dividends
paid per share 93.5p 94.7p
• Share price at end of year 83.0p 95.0p
*Excluding proposed final dividend
For further information, please contact:
NVM Private Equity Limited
Christopher Mellor, Director 0191 244 6000
Website: www.nvm.co.uk
Lansons Communications
Karen Mignon 020 7294 3685
CHAIRMAN'S STATEMENT
The Chairman of Northern Venture Trust PLC, Professor Sir Frederick Holliday CBE
FRSE, included the following points in his statement to shareholders:
Results and dividend - ordinary shares
The net asset value (NAV) per ordinary share at 30 September 2007 was 87.6p
compared with 85.7p 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 was
10.8p (2006 8.6p), equivalent to 12.6% (2006 10.1%) of opening NAV. This is
once again a satisfactory result.
The directors propose an unchanged final dividend of 6.0p per ordinary share,
this year comprising 1.0p revenue and 5.0p capital distribution, maintaining the
total for the year at last year's level of 9.0p. The final dividend will,
subject to approval by shareholders, be paid on 14 December 2007 to shareholders
on the register on 23 November 2007. This will take the cumulative ordinary
dividends paid by the company since launch to 71p per share.
Results and dividend - C shares
The net asset value per C share at 30 September 2007, after deducting dividends
of 2.0p paid during the year, was 91.5p, down from 94.7p a year ago. The return
per share for the year was minus 1.2p compared with plus 0.3p last year. This
reflects a provision against one of the fund's investments which at this
relatively early stage has not been offset by valuation gains elsewhere in the
portfolio.
The directors propose a final dividend of 1.0p per C share (last year 1.0p),
which when added to the interim dividend already paid of 1.0p makes a total in
respect of the year of 2.0p (last year 1.0p). The final dividend will, subject
to approval by shareholders, be paid on 14 December 2007 to shareholders on the
register on 23 November 2007.
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 £1.8 million and sales
proceeds were £6.4 million. Significant realisations during the year included
Union Snack, Computer Software Group and Ithaca Holdings. The C share fund,
still in its initial investment phase, completed new investments totalling £5.9
million and there were no realisations.
Share buybacks and secondary market liquidity
The company has continued to buy back shares in the market for cancellation,
generally at a 10% discount to net asset value. During the year to 30 September
2007 a total of 797,247 ordinary shares, representing approximately 2.1% of the
issued ordinary capital at the beginning of the year, were re-purchased at a
cost of £594,000 - an average price of 74.5p per share. In addition, for the
first time 37,725 C shares were re-purchased for £32,000, an average price of
84.8p per share.
Your directors believe that it is in the interests of both the company and its
shareholders that there should be a more active secondary market in the
company's shares - particularly the ordinary shares, which have been quoted on
the London Stock Exchange since 1995. It is interesting to note that for a six
month period in late 2003 and early 2004 the company's ordinary shares were
quite actively traded and none were re-purchased by the company. This came to
an abrupt end with the introduction of 40% income tax relief on new VCT
investment with effect from 6 April 2004, which coincided with the move by a
number of VCTs to a policy of buying back shares at a fixed 10% discount to NAV
rather than allowing the share price to find its own market level.
Subsequently the company has continued to provide liquidity to shareholders by
purchasing ordinary shares in the market at a 10% discount to NAV. As the
directors do not expect to raise significant new funds from investors in the
short to medium term we are concerned that a continuation of this rigid approach
to buy-backs will lead to a gradual diminution of the company's capital base -
which in turn could increase the expense ratio and reduce the diversity of the
investment portfolio. We also wish to encourage demand from secondary market
purchasers who recognise the unique ability of VCTs to distribute income and
capital gains to their shareholders free of tax.
We have therefore decided that whilst retaining the flexibility to buy back
shares in the market at the board's discretion, we will no longer seek to use
our buy-back authority to maintain a fixed 10% discount to NAV; market supply
and demand will be allowed to set the share price, against the background of our
dividend policy as set out below. Shareholders should be aware that in the
short term this may lead to a fall in the quoted market price. However it is
our belief that by achieving a strong return to shareholders through both
dividends and NAV growth, demand for the shares is likely to be increased and
the discount to net asset value may be reduced.
The directors have also reviewed the provision of corporate broking services to
the company, as a result of which we have announced the appointment of
Landsbanki Securities (UK) Limited (formerly Teather & Greenwood Limited) as
brokers to the company. Landsbanki will also act as market-makers in the
company's ordinary and C shares.
We do not expect an active market to develop in the company's C shares in the
foreseeable future given that under the VCT rules most subscribers will be
subject to a three year holding period from March or April 2006, and also
because of the relative immaturity of the investment portfolio and consequent
lower dividends. However as the C shares are due to be converted into ordinary
shares in the final quarter of 2009 an increase in ordinary share marketability
will clearly be in the interests of C shareholders in the medium term. In the
meantime the company remains willing to re-purchase C shares in the market at a
10% discount as before.
Future dividend policy
Ordinary shareholders will be aware that our company has established an
excellent dividend record, with dividends totalling 71p per share declared over
a 12 year period - an average of 5.9p per year. A dividend of at least 9p per
share has been declared in respect of each of the past four financial years.
The directors have recently reviewed the company's dividend policy with a view
to establishing a target level of maintainable dividend yield as a basis for
attracting secondary market purchasers, and as a result of this review we intend
in future to pay a dividend each year of at least 6p per ordinary share, subject
to the availability of profits. Based on the recent mid-market share price of
75p this would represent an annual tax-free dividend yield of 8.0%, equivalent
to an 11.9% gross dividend yield to a higher-rate taxpayer.
We wish to emphasise that the target dividend of 6p is not a maximum and the
board will seek to increase the distribution by up to a further 3p per share
where the investment disposals and profits in a given year make this possible -
as has been the case for the past four years.
The company's dividend investment scheme will continue to operate, enabling
shareholders to re-invest their dividends in new ordinary shares in the company
with the benefit of VCT tax reliefs at the current rates.
Annual general meetings
In line with our policy of alternating annual meetings between Edinburgh and
London the forthcoming annual general meeting for 2007 will be held in London on
13 December and your directors look forward to meeting as many shareholders as
possible on that occasion.
Following a review of the year-end reporting timetable, which has become
difficult to achieve due to the continuing increase in disclosure requirements,
it is intended that the next annual general meeting will take place in January
2009 - a month later than would previously have been the case. In order to
avoid any delay in distributions to shareholders, dividends in respect of the
financial year ending 30 September 2008 will take the form of a first interim in
June 2008 and a second interim in December 2008, with no final dividend
envisaged.
VCT qualifying status
The company retains PricewaterhouseCoopers LLP as advisers on matters relating
to VCT 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 expect this to continue to be the case.
Prospects
The UK economy has achieved a respectable level of growth over the past 12
months, but recent events on both sides of the Atlantic have introduced a note
of caution which will no doubt persist into 2008. Your company has continued to
maintain a well-diversified portfolio and although adverse sentiment in the
financial markets will inevitably impact on some of our investments, we believe
the company is well placed to achieve satisfactory performance over the coming
year.
PROFESSOR SIR FREDERICK HOLLIDAY
Chairman
The audited financial statements for the year ended 30 September 2007 are set
out below.
INCOME STATEMENT
for the year ended 30 September 2007
Ordinary shares C shares
---------------------------- ----------------------------
Revenue Capital Total Revenue Capital Total
£000 £000 £000 £000 £000 £000
Gain/(loss) on disposal
of investments - 1,188 1,188 - (98) (98)
Unrealised adjustments to 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)
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 Capital Total
£000 £000 £000
Gain on disposal of investments - 1,090 1,090
Unrealised adjustments to fair value
of investments - 2,092 2,092
-------- -------- --------
- 3,182 3,182
Income 2,509 - 2,509
Investment management fee (309) (927) (1,236)
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
-------- -------- --------
INCOME STATEMENT
for the year ended 30 September 2006
Ordinary shares C shares
---------------------------- ----------------------------
Revenue Capital Total Revenue Capital Total
£000 £000 £000 £000 £000 £000
Loss on disposal
of investments - (431) (431) - - -
Unrealised adjustments to fair value
of investments - 3,065 3,065 - (78) (78)
-------- -------- -------- -------- -------- --------
- 2,634 2,634 - (78) (78)
Income 1,754 - 1,754 512 - 512
Investment management fee (183) (548) (731) (64) (191) (255)
Other expenses (200) - (200) (90) - (90)
-------- -------- -------- -------- -------- --------
Return on ordinary activities
before tax 1,371 2,086 3,457 358 (269) 89
Tax on return on ordinary activities (281) 169 (112) (107) 59 (48)
-------- -------- -------- -------- -------- --------
Return on ordinary activities
after tax 1,090 2,255 3,345 251 (210) 41
-------- -------- -------- -------- -------- --------
Return per share 2.8p 5.8p 8.6p 1.6p (1.3)p 0.3p
Company
----------------------------
Revenue Capital Total
£000 £000 £000
Loss on disposal of investments - (431) (431)
Unrealised adjustments to fair value
of investments - 2,987 2,987
-------- -------- --------
- 2,556 2,556
Income 2,266 - 2,266
Investment management fee (247) (739) (986)
Other expenses (290) - (290)
-------- -------- --------
Return on ordinary activities
before tax 1,729 1,817 3,546
Tax on return on ordinary activities (388) 228 (160)
-------- -------- --------
Return on ordinary activities
after tax 1,341 2,045 3,386
-------- -------- --------
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
---------- ---------- ----------
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the year ended 30 September 2006
Ordinary shares C shares Company
£000 £000 £000
Equity shareholders' funds at
1 October 2005 33,532 - 33,532
Return on ordinary activities after tax 3,345 41 3,386
Dividends recognised in the year (3,492) - (3,492)
Net proceeds of share issues 371 19,530 19,901
Shares purchased for cancellation (623) - (623)
Expenses charged to capital reserve (15) - (15)
---------- ---------- ----------
Equity shareholders' funds at
30 September 2006 33,118 19,571 52,689
---------- ---------- ----------
BALANCE SHEET
as at 30 September 2007
Ordinary shares C shares Company
£000 £000 £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
Other quoted 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
BALANCE SHEET
as at 30 September 2006
Ordinary shares C shares Company
£000 £000 £000
Fixed asset investments:
Venture capital investments
Unquoted 24,577 1,593 26,170
Quoted 3,771 299 4,070
---------- ---------- ----------
Total venture capital investments 28,348 1,892 30,240
Other quoted investments - 13,885 13,885
---------- ---------- ----------
Total fixed asset investments 28,348 15,777 44,125
---------- ---------- ----------
Current assets:
Debtors 417 467 884
Cash at bank 4,523 3,401 7,924
---------- ---------- ----------
4,940 3,868 8,808
Creditors (amounts falling due within one year) (170) (74) (244)
---------- ---------- ----------
Net current assets 4,770 3,794 8,564
---------- ---------- ----------
Net assets 33,118 19,571 52,689
---------- ---------- ----------
Capital and reserves:
Called-up equity share capital 9,663 15,500 25,163
Share premium 8,814 2,030 10,844
Capital redemption reserve 1,772 - 1,772
Capital reserve - realised 6,946 1,868 8,814
Capital reserve - unrealised 4,850 (78) 4,772
Revenue reserve 1,073 251 1,324
---------- ---------- ----------
Total equity shareholders' funds 33,118 19,571 52,689
---------- ---------- ----------
Net asset value per share 85.7p 94.7p
CASH FLOW STATEMENT
for the year ended 30 September 2007
Ordinary shares C 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 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)
Unrealised adjustments to 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 30 September
2006 Cash flows 2007
£000 £000 £000
Cash at bank 7,924 (1,552) 6,372
---------- ---------- ----------
CASH FLOW STATEMENT
for the year ended 30 September 2006
Ordinary shares C shares Company
£000 £000 £000
Net cash inflow/(outflow) from operating activities 662 (274) 388
Taxation:
Corporation tax paid (11) - (11)
Financial investment:
Purchase of investments (1,654) (15,855) (17,509)
Sale/repayment of investments 6,214 - 6,214
Net cash inflow/(outflow) from
financial investment 4,560 (15,855) (11,295)
Equity dividends paid (3,492) - (3,492)
---------- ---------- ----------
Net cash inflow/(outflow) before financing 1,719 (16,129) (14,410)
Financing:
Issue of shares 385 20,667 21,052
Share issue expenses (14) (1,137) (1,151)
Purchase of shares for cancellation (623) - (623)
Net cash (outflow)/inflow from financing (252) 19,530 19,278
---------- ---------- ----------
Increase in cash at bank 1,467 3,401 4,868
---------- ---------- ----------
Reconciliation of return before tax to
net cash flow from operating activities
Return on ordinary activities before tax 3,457 89 3,546
Loss on disposal of investments 431 - 431
Unrealised adjustments to fair value
of investments (3,065) 78 (2,987)
Increase in debtors (141) (467) (608)
(Decrease)/increase in creditors (5) 26 21
Expenses charged to capital reserve (15) - (15)
---------- ---------- ----------
Net cash inflow/(outflow) from operating activities 662 (274) 388
---------- ---------- ----------
Analysis of movement in net funds
1 October 30 September
2005 Cash flows 2006
£000 £000 £000
Cash at bank 3,056 4,868 7,924
---------- ---------- ----------
INVESTMENT PORTFOLIO SUMMARY
as at 30 September 2007
ORDINARY SHARES
Cost Valuation % of net assets
£000 £000 by valuation
CGI Group 2,325 5,119 15.2
TFB Group 886 1,885 5.6
Envirotec 812 1,801 5.4
Weldex (International) Offshore 200 1,673 5.0
KCS Global Holdings 572 1,519 4.5
Barony Universal Products 157 1,287 3.8
DxS 1,105 1,070 3.2
John Laing Partnership 356 1,069 3.2
Alaric Systems 1,867 934 2.8
Pivotal Laboratories Holdings 714 837 2.5
Abermed 600 781 2.3
Arleigh International 375 753 2.2
ComputerLand UK* 396 730 2.2
Direct Valeting 679 679 2.0
Interlube Systems 88 655 1.9
-------- --------- ----------
Fifteen largest venture capital investments 11,132 20,792 61.8
Other venture capital investments 8,544 6,656 19.8
-------- --------- ----------
Total fixed asset investments 19,676 27,448 81.6
--------
Net current assets 6,184 18.4
--------- ----------
Net assets 33,632 100.0
--------- ----------
*Quoted on Alternative Investment Market
C SHARES
Cost Valuation % of net assets
£000 £000 by valuation
Paladin Group 800 1,041 5.5
Promanex Group Holdings 801 801 4.3
Astbury Marsden Holdings 800 800 4.2
Foreman Roberts Group 800 800 4.2
Product Support (Holdings) 800 800 4.2
Promatic Group 797 797 4.2
Frontier Foods 542 542 2.9
IDOX* 298 377 2.0
Wear Inns 270 270 1.4
Maelor* 199 253 1.3
Hat Pin* 149 219 1.2
Shieldtech* 248 208 1.1
Gentronix 203 203 1.1
Brulines (Holdings)* 184 198 1.1
Twenty* 198 134 0.7
Nightingales Holdings 714 - -
-------- --------- ----------
Total venture capital investments 7,803 7,443 39.4
Listed fixed-interest investments 10,954 10,845 57.4
-------- --------- ----------
Total fixed asset investments 18,757 18,288 96.8
--------
Net current assets 595 3.2
--------- ----------
Net assets 18,883 100.0
--------- ----------
*Quoted on Alternative Investment Market
The above summary of results for the year ended 30 September 2007 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 6.0p per share for the year ended
30 September 2007 will, if approved by shareholders, be paid on 14 December 2007
to shareholders on the register at the close of business on 23 November 2007.
The proposed final C share dividend of 1.0p per share for the year ended 30
September 2007 will, if approved by shareholders, be paid on 14 December 2007 to
shareholders on the register at the close of business on 23 November 2007.
The full annual report including financial statements for the year ended 30
September 2007 is expected to be posted to shareholders on 15 November 2007 and
will be available to the public at the registered office of the company at
Northumberland House, Princess Square, Newcastle upon Tyne NE1 8ER.
ENDS
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