Final Results
Northern Venture Trust PLC
16 November 2006
16 NOVEMBER 2006
NORTHERN VENTURE TRUST PLC
PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2006
Northern Venture Trust PLC is a Venture Capital Trust (VCT) managed by Northern
Venture Managers, and was one of the first VCTs launched on the London Stock
Exchange in 1995. The trust 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. A successful public offer of
new C shares in the 2005/06 tax year took the company's total assets to
over £50 million, making it one of the largest funds in the VCT sector.
Financial highlights - year ended 30 September 2006:
(comparative figures as at 30 September 2005, re-stated where appropriate, in
italics)
Ordinary shares C shares
2006 2005 2006 2005
• Net assets £33.1m £33.5m £19.6m -
• Net asset value per share 85.7p 86.0p 94.7p -
• Return per share:
Revenue 2.8p 2.3p 1.6p -
Capital 5.8p (3.4)p (1.3)p -
Total 8.6p (1.1)p 0.3p -
• Dividend per share declared
in respect of the year:
Revenue 2.5p 2.0p 1.0p -
Capital 6.5p 7.0p - -
Total 9.0p 9.0p 1.0p -
• Cumulative return to
shareholders since launch:
Net asset value per share 85.7p 86.0p 94.7p -
Dividends paid per share* 56.0p 47.0p - -
Net asset value plus
dividends paid per share 141.7p 133.0p 94.7p -
• Share price at end of year 70.0p 78.0p 95.0p -
* Excluding proposed final dividend
For further information, please contact:
Northern Venture Managers Limited
Alastair Conn, Managing Director 0191 244 6000
Website: www.nvm.co.uk
Lansons Communications
Alison Boucher 020 7294 3616
NORTHERN VENTURE TRUST PLC
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:
I would like to begin by thanking shareholders for their continuing support for
Northern Venture Trust during another busy year. As a result of the C share
issue completed in April 2006, the company's total assets are now over
£52 million - making it one of the largest funds in the venture capital trust
sector. It is particularly pleasing that we have been able to maintain the
ordinary share dividend payable in respect of the year at last year's
level of 9p per share, taking the cumulative total of ordinary dividends
declared to over £22 million.
C share issue
The C share issue launched in November 2005 raised a total of £20.7 million
before expenses. The proceeds of the issue are being managed and accounted for
as a separate pool of funds within Northern Venture Trust until the scheduled
date of conversion into ordinary shares in 2009. This necessitates a period of
dual reporting of financial information, which inevitably makes the annual
report more complicated in certain respects, but our company is already showing
the benefits of the inflow of new funds.
Financial results
The presentation of the results for the year has been affected by recent changes
in accounting standards. In particular, quoted investments are now valued at
bid price rather than mid-market price, and proposed dividends are no longer
included in the year-end balance sheet. The comparative figures for the year
ended 30 September 2005 have been re-stated on the new basis, and a detailed
explanation of the effect of the changes is included in the financial
statements.
The net asset value per ordinary share at 30 September 2006 was 85.7p, slightly
down by comparison with the re-stated figure of 86.0p as at 30 September 2005.
However after taking account of dividends totalling 9.0p charged to reserves
during the year, the company achieved a total return of 8.7p per ordinary share
- equivalent to 10.1% of opening net asset value. That is a satisfactory
result.
The revenue return per ordinary share for the year was 2.8p, compared with 2.3p
in the previous year. The improvement reflects not only an increase in
investment income but also a reduction in running expenses, the latter resulting
from the spreading of fixed costs across both the ordinary and C share pools.
Your board is recommending an increased revenue dividend for the year of 2.5p
per ordinary share (last year 2.0p per share), plus a capital dividend of 6.5p
per ordinary share (last year 7.0p) out of profits made on the realisation of
investments. This enables us to maintain the total ordinary share dividend for
the year at 9.0p, of which 3.0p was paid at the interim stage leaving a proposed
final dividend of 6.0p which will, subject to shareholders' approval, be
paid on 15 December 2006 to shareholders on the register on 24 November 2006.
As a result ordinary shareholders will have received tax-free dividends
totalling 30p per share in respect of the past three years and a cumulative
total of 62p since the company was launched in 1995.
The new C shares were in issue for only a part of the financial year and a
revenue return of 1.6p per share was achieved. No interim dividend was paid, as
indicated in the prospectus, and the directors recommend a final dividend of
1.0p per C share which will, again subject to shareholders'7 approval, be
paid on 15 December 2006 to shareholders on the register on 24 November 2006.
Investment portfolio
The Business Review in the annual report gives details of movements in the
investment portfolio during the year. Total additions to venture capital
investments during the year amounted to £3.6 million and sales proceeds were
£6.3 million.
The net proceeds of the C share issue were invested in a portfolio of listed
fixed-interest securities managed by Sarasin Chiswell, valued at £13.9 million
at 30 September 2006, from which funds will progressively be drawn down in order
to finance the acquisition of new VCT-qualifying holdings.
Shareholder issues
The company has continued to buy back shares in the market for cancellation at a
10% discount to net asset value. During the year to 30 September 2006 a total
of 837,434 ordinary shares, representing approximately 2.2% of the issued
ordinary share capital at the beginning of the year, were re-purchased at a cost
of £623,000 - an average of 74.4p per share.
The introduction of 40% income tax relief on new VCT investment in the 2004/05
tax year, whilst providing a welcome fillip to fund-raising, had the side effect
of reducing secondary market demand for VCT shares. We believe that in the
longer term it is important that an active market in VCT shares should be
encouraged, and with a view to improving the way in which the benefits of VCT
investment are communicated to the investing public we have recently (together
with approximately 70 other VCTs) joined the Association of Investment
Companies.
The dividend investment scheme introduced two years ago has continued to
operate, enabling shareholders to re-invest their dividend in new ordinary
shares with the benefit of VCT tax reliefs at the current rates. A number of
VCTs have announced the suspension of dividend schemes in response to VCT rule
changes in the Finance Act 2006, but your board believes that the scheme remains
viable under the new legislation and intends to continue it. Shareholders
interested in joining the scheme should contact the company secretary for
further information.
The informal shareholder meeting in London in May 2006 was notable for a good
attendance, a wide-ranging presentation and a lively discussion. The 2006
annual general meeting on 14 December will take place in Edinburgh and we plan
to hold the December 2007 meeting in London. Our managers have continued to
publish their half-yearly newsletter which is sent to all shareholders.
Management performance incentive
At the annual general meeting in December 2005 shareholders gave approval to the
new performance incentive scheme recommended by the directors. The scheme,
under which executives of Northern Venture Managers co-invest in venture capital
investments made by the company, commenced in April 2006 and its operation will
be reviewed regularly by the board.
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 in
respect of the funds attributable to ordinary shareholders. The company has
until 30 September 2008 to meet the qualifying requirements in relation to the
proceeds of the recent C share issue.
Prospects
Despite the prospect of further interest rate rises, the outlook for the UK
economy appears broadly positive. We have a maturing portfolio from which we
expect to harvest further gains, and a strong reserve of liquidity for future
investment. These factors augur well for a continuation of good returns to
shareholders.
Professor Sir Frederick Holliday
Chairman
The audited financial statements for the year ended 30 September 2006 will show
the results set out below.
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)/gain 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
Total
Revenue Capital Total
£000 £000 £000
(Loss)/gain 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
------ ------ ------
Return per share 2.5p 3.7p 6.2p
INCOME STATEMENT
for the year ended 30 September 2005
Ordinary shares
Re-stated
Revenue Capital Total
£000 £000 £000
(Loss)/gain on disposal of
investments - 626 626
Unrealised adjustments to fair value
of investments - (1,638) (1,638)
------ ------ ------
- (1,012) (1,012)
Income 1,601 - 1,601
Investment management fee (200) (599) (799)
Other expenses (230) - (230)
------ ------ ------
Return on ordinary activities
before tax 1,171 (1,611) (440)
Tax on return on ordinary activities (289) 278 (11)
------ ------ ------
Return on ordinary activities
after tax 882 (1,333) (451)
------ ------ ------
Return per share 2.3p (3.4)p (1.1)p
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the year ended 30 September 2006
Year ended Year ended
30 September 2006 30 September 2005
Re-stated
Ordinary Ordinary
shares C shares Total shares
£000 £000 £000 £000
Equity shareholders' funds
at 1 October 2005
As previously reported 31,285 - 31,285 35,345
Prior year adjustment 2,247 - 2,247 3,936
------- ------- ------- -------
As re-stated 33,532 - 33,532 39,281
Return on ordinary activities after tax 3,345 41 3,386 (451)
Dividends recognised in the year (3,492) - (3,492) (5,110)
Net proceeds of share issues 371 19,530 19,901 2,901
Shares purchased for cancellation (623) - (623) (3,089)
Expenses charged to capital reserve (15) - (15) -
------- ------- ------- -------
Equity shareholders' funds
at 30 September 2006 33,118 19,571 52,689 33,532
------- ------- ------- -------
BALANCE SHEET
as at 30 September 2006
30 September 2006 30 September 2005
Ordinary Ordinary shares
shares C shares Total Re-stated
£000 £000 £000 £000
Venture capital investments:
Unquoted 24,577 1,593 26,170 25,446
Quoted 3,771 299 4,070 4,939
------- ------- ------- -------
28,348 1,892 30,240 30,385
Listed fixed-interest investments - 13,885 13,885 -
------- ------- ------- -------
Total fixed asset investments 28,348 15,777 44,125 30,385
------- ------- ------- -------
Current assets:
Debtors 417 467 884 165
Cash at bank 4,523 3,401 7,924 3,056
------- ------- ------- -------
4,940 3,868 8,808 3,221
Creditors (amounts falling due
within one year) (170) (74) (244) (74)
------- ------- ------- -------
Net current assets 4,770 3,794 8,564 3,147
------- ------- ------- -------
Net assets 33,118 19,571 52,689 33,532
------- ------- ------- -------
Capital and reserves:
Called-up equity share capital 9,663 15,500 25,163 9,752
Share premium 8,814 2,030 10,844 16,564
Capital redemption reserve 1,772 - 1,772 1,562
Capital reserve:
Realised 6,946 1,868 8,814 4,353
Unrealised 4,850 (78) 4,772 542
Revenue reserve 1,073 251 1,324 759
------- ------- ------- -------
Total equity shareholders' funds 33,118 19,571 52,689 33,532
------- ------- ------- -------
Net asset value per share 85.7p 94.7p 88.8p 86.0p
CASH FLOW STATEMENT
for the year ended 30 September 2006
Ordinary shares C shares Total
£000 £000 £000 £000 £000 £000
Cash flow statement
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 6,214 - 6,214
investments
------- ------- -------
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 (623) - (623)
cancellation
------- ------- -------
Net cash inflow/(outflow)
from financing (252) 19,530 19,278
------- ------- -------
Increase/(decrease) in 1,467 3,401 4,868
cash at bank
------- ------- -------
Reconciliation of return
before
tax to net cash flow from
operating activities
Return on ordinary
activities before tax 3,457 89 3,546
Loss/(gain) on disposal
of investments 431 - 431
Unrealised adjustments to
fair value of investments (3,065) 78 (2,987)
(Increase)/decrease in (141) (467) (608)
debtors
Increase/(decrease) in (5) 26 21
creditors
Expenses charged to (15) - (15)
capital reserve
------- ------- -------
Net cash inflow/(outflow)
from operating activities 662 (274) 388
------- ------- -------
Analysis of movement
in net funds
Cash at bank at 1 October 3,056 - 3,056
2005
Increase in cash at bank 1,467 3,401 4,868
------- ------- -------
Cash at bank at 30 4,523 3,401 7,924
September 2006
------- ------- -------
CASH FLOW STATEMENT
for the year ended 30 September 2005
Ordinary shares
As re-stated
£000 £000
Cash flow statement
Net cash inflow/(outflow)
from operating activities 565
Taxation:
Corporation tax paid -
Financial investment:
Purchase of investments (7,114)
Sale/repayment of 5,450
investments
-------
Net cash inflow/(outflow)
from financial investment (1,664)
Equity dividends paid (5,110)
-------
Net cash inflow/(outflow)
before financing (6,209)
Financing:
Issue of shares 3,000
Share issue expenses (99)
Purchase of shares for (3,089)
cancellation
-------
Net cash inflow/(outflow)
From financing (188)
-------
Increase/(decrease) in (6,397)
cash at bank
-------
Reconciliation of return
before
tax to net cash flow from
operating activities
Return on ordinary
activities
before tax (440)
Loss/(gain) on disposal
of investments (626)
Unrealised adjustments to
fair value of 1,638
investments
(Increase)/decrease in (12)
debtors
Increase/(decrease) in 5
creditors
Expenses charged to -
capital reserve
-------
Net cash inflow/(outflow)
from
operating activities 565
-------
Analysis of movement
in net funds
Cash at bank at 1 October 9,453
2004
Increase in cash at bank (6,397)
-------
Cash at bank at 30 3,056
September 2005
-------
INVESTMENT PORTFOLIO SUMMARY
as at 30 September 2006
Valuation
Ordinary
shares C shares Total % of net assets
£000 £000 £000 by valuation
Fifteen largest venture capital investments:
CGI Group 4,299 - 4,299 8.2
Alaric Systems 1,578 - 1,578 3.0
TFB Group 1,422 - 1,422 2.7
Union Snack 1,294 - 1,294 2.4
Weldex (International) Offshore 1,291 - 1,291 2.4
John Laing Partnership 1,268 - 1,268 2.4
Envirotec 1,171 - 1,171 2.2
Computer Software Group* 1,111 - 1,111 2.1
Barony Universal Products 1,107 - 1,107 2.1
Touchstone Asset Management 200 800 1,000 1.9
Nightingales Holdings 397 596 993 1.9
DxS 940 - 940 1.8
Pivotal Laboratories Holdings 714 - 714 1.3
IG Doors 683 - 683 1.3
Interlube Systems 660 - 660 1.3
------- ------- ------- ------
18,135 1,396 19,531 37.0
Other venture capital investments 10,213 496 10,709 20.4
------- ------- ------- ------
Total venture capital investments 28,348 1,892 30,240 57.4
Listed fixed-interest investments - 13,885 13,885 26.3
------- ------- ------- ------
Total fixed asset investments 28,348 15,777 44,125 83.7
Net current assets 4,770 3,794 8,564 16.3
------- ------- ------- ------
Net assets 33,118 19,571 52,689 100.0
------- ------- ------- ------
*Quoted on Alternative Investment Market
The above summary of results for the year ended 30 September 2006 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 company is required to comply with a number of new UK Financial Reporting
Standards (FRS), which now represent UK Generally Accepted Accounting Practice
(UK GAAP), in presenting its financial statements for the year ended 30
September 2006. These Standards have been introduced as part of the process of
aligning UK accounting principles with International Accounting Standards.
The revised accounting policies differ from those used in preparing the annual
financial statements for the year ended 30 September 2005 in the following
respects:
• The unrealised gain or loss resulting from the revaluation of fixed
asset investments held at fair value is now recognised in the income statement,
as required by FRS 26 'Financial Instruments: Measurement';
• Quoted investments are valued at bid price rather than mid-market
price, as required by FRS 26 'Financial instruments: Measurement'; and
• Dividends to shareholders are accounted for in the period in which
the company is liable to pay them, rather than in the period in respect of which
they are declared, as required by FRS 21 *****?c=8220Events after the Balance Sheet
Date*****?c=8221. Dividends payable are treated as a charge on reserves and
accounted for through the reconciliation of movements in shareholders'
funds rather than in the profit and loss account as previously.
The comparative figures for the year ended 30 September 2005 have been re-stated
accordingly.
The effect of the above changes on the reported net assets and net asset value
per ordinary share of the company is as follows:
30 September 2005 1 October 2004
Net asset Net asset
Net value per Net value per
assets share assets share
£000 p £000 p
As reported under previous UK GAAP 31,285 80.2 35,345 89.6
Less: adjustment in valuation of quoted investments to (93) (0.2) (7) -
bid price
Add: proposed dividends not accounted for until declared 2,340 6.0 3,943 10.0
and paid
------- ------- ------- -------
As reported under revised UK GAAP 33,532 86.0 39,281 99.6
------- ------- ------- -------
The proposed final ordinary share dividend of 6.0p per share for the year ended
30 September 2006 will, if approved by shareholders, be paid on 15 December 2006
to shareholders on the register at the close of business on 24 November 2006.
The proposed final C share dividend of 1.0p per share for the year ended 30
September 2006 will, if approved by shareholders, be paid on 15 December 2006 to
shareholders on the register at the close of business on 24 November 2006.
The full annual report including financial statements for the year ended 30
September 2006 is expected to be posted to shareholders on 23 November 2006 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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