Final Results

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 Products, KCS 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	C 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	C 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	C 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	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 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

 

END

 

 

FR FFUFFLSASEIF