Interim Results
Northern Venture Trust PLC
10 May 2006
10 MAY 2006
NORTHERN VENTURE TRUST PLC
UNAUDITED INTERIM RESULTS
FOR THE SIX MONTHS ENDED 31 MARCH 2006
Northern Venture Trust PLC is a Venture Capital Trust (VCT) managed by Northern
Venture Managers. 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 returns to shareholders through a combination
of dividend yield and capital growth.
Financial highlights:
(comparative figures as at 31 March 2005, where applicable, in italics)
2006 2005
As re-stated
ORDINARY SHARES
• Net assets* £32,053,000 £33,680,000
• Net asset value per share* 82.4p 89.7p
• Return per share
Revenue 1.2p 1.1p
Capital 1.2p (1.3)p
Total 2.4p (0.2)p
• Interim dividend per share
proposed in respect of the period
Revenue 1.0p 1.0p
Capital 2.0p 2.0p
Total 3.0p 3.0p
• Cumulative return to
shareholders since launch
Dividends per share** 56.0p 47.0p
Net asset value plus dividends 135.4p 133.7p
C SHARES
• Net assets £15,020,000
• Net asset value per share 94.5p
• Return per share
Revenue 0.2p
Capital (0.3)p
Total (0.1)p
• Interim dividend per share
proposed in respect of the period Nil
* Before deducting proposed interim dividend
**Including proposed interim 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 am delighted to report a successful outcome to our company's offer of new C
shares for subscription in the 2005/06 tax year, launched in November 2005. A
total of £20.7 million was raised by the closing date on 5 April 2006, and I
would like to take this opportunity to welcome new shareholders and thank them
for their support. The proceeds of the issue will be managed and accounted for
as a separate pool of funds until the scheduled date for conversion of the C
shares into ordinary shares in 2009.
The timing of the C share issue was opportune, as the Government has announced
proposals to make some radical changes to the VCT legislation relating to funds
raised after 6 April 2006 - including a reduction in initial income tax relief
from 40% to 30%, a minimum investment holding period of five years and new
restrictions on the size of company which can be treated as a VCT-qualifying
investment.
As a result of the increase in share capital our company now has total assets in
excess of £50 million, which gives us a very strong foundation for the future.
Results
The results for the six months ended 31 March 2006 have been affected by two
changes in accounting standards. Quoted investments are now valued at bid price
rather than mid-market price, and proposed dividends are not deducted from
reported net assets until either payment has been made or there is a firm
commitment to make payment (eg approval by the shareholders in general meeting).
The comparative results for earlier periods have been re-stated on the new
basis.
The net asset value (NAV) per ordinary share at 31 March 2006 was 82.4p,
compared with the re-stated year-end figure of 86.0p at 30 September 2005. The
movement of 3.6p over the half year comprised a positive return per share of
2.4p as shown in the income statement, less the final dividend of 6.0p declared
in respect of the year ended 30 September 2005 and approved by shareholders in
December 2005.
The revenue return per ordinary share for the half year was 1.2p, slightly up
from the corresponding period. The directors propose an unchanged interim
dividend of 3.0p per ordinary share, comprising 1.0p revenue and 2.0p capital
distribution, which will be paid on 9 June 2006 to shareholders on the register
on 19 May 2006. This takes the cumulative ordinary dividends paid by the
company to 56p per share.
15.9 million of the new C shares were issued in the period up to 31 March 2006
and are reflected in the balance sheet at that date. The net asset value per C
share, after deducting issue expenses, was 94.5p. As indicated in the
prospectus, no interim dividend will be paid in respect of the C shares in the
current financial year.
Investments
During the six months to 31 March 2006 the ordinary and C share funds invested a
total of £329,000 in Wear Inns, a new company formed to acquire an estate of
managed public houses in the North East of England, and the C share fund
invested £198,000 in Twenty, an Aim-quoted marketing services company. The
unusually low number of completions in the period does not reflect our managers'
continuing activity aimed at identifying and progressing suitable opportunities,
and we expect to report an increased level of new investment in the second half
of the year. Since the end of March an investment of £993,000 in Nightingales,
the women's clothing retailer, has been completed and two other investments have
been approved.
Proceeds of disposals from the ordinary share venture capital portfolio during
the half year totalled £3.7 million. The company's shareholding in Omnico
Plastics was sold to SIG plc for £1.3 million in cash and a surplus over cost of
£649,000, and £1.7 million was raised from the quoted portfolio by selling BBI
Holdings and BioFocus and reducing Alizyme and Computer Software Group - all
realising at least twice their original cost.
The unquoted portfolio has generally made good progress but there were two
significant and disappointing failures in the period. As reported at the last
year end, VPTA went into administration in October 2005 after the discovery of
apparent financial reporting irregularities which led to withdrawal of bank
support. Investigations into the circumstances are continuing. SMS Agencies,
the vehicle for a management buy-out/buy-in of a recruitment business in 2004,
was unable to achieve planned levels of performance and suffered mounting
liquidity problems which led to the appointment of administrators in February
2006. The cost of these investments, totalling £2.3 million, has been fully
written off - £1.9 million was provided for in the accounts at 30 September 2005
and the balance of £0.4 million in the half year to 31 March 2006.
Shareholder issues
Following the successful tender offer to ordinary shareholders in 2005, the
company has continued to promote shareholder liquidity by purchasing its shares
in the market for cancellation. In the half year to 31 March 2006 a total of
456,141 ordinary shares, representing approximately 1.2% of the issued ordinary
capital, were re-purchased at a cost of £344,000.
The dividend investment scheme introduced in 2004 will continue to operate in
the current financial year. A number of VCTs have recently announced the
suspension of such schemes in response to the recent Budget changes, but your
board wishes to keep this facility available to shareholders and believes that
it remains potentially attractive under the new legislation. Shareholders
interested in joining the scheme should contact the company secretary for
further information.
I recently wrote to shareholders with details of a shareholder presentation to
be held in London on 16 May 2006. The annual general meeting this year will be
held in Edinburgh on 14 December 2006. Your directors look forward to meeting
as many shareholders as possible on these occasions.
Management performance incentive
At the annual general meeting in December 2005 shareholders gave approval to the
new performance incentive scheme recommended by the directors, whereby
executives of Northern Venture Managers will co-invest in venture capital
investments made by the company. The scheme has recently begun to operate and
will be kept under close review by the board. Our managers have continued to
strengthen their investment team.
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.
Outlook
The past 18 months have been a busy period for our company on several fronts,
particularly through the C share issue which has secured a good supply of funds
for future investment. Our managers are continuing to identify attractive new
opportunities as well as seeking to generate further cash from disposals to fund
dividend distributions. Economic conditions in the UK remain broadly favourable
and we believe that the long-term prospects for our enlarged business are good.
PROFESSOR SIR FREDERICK HOLLIDAY
Chairman
The unaudited interim financial statements for the six months ended 31 March
2006 are set out below.
INCOME STATEMENT - Ordinary Shares
(unaudited) for the six months ended 31 March 2006
Six months ended 31 March 2006 Six months ended 31 March 2005
As re-stated
Revenue Capital Total Revenue Capital Total
£000 £000 £000 £000 £000 £000
(Loss)/gain on disposal of
investments held at fair value - (490) (490) - 590 590
Unrealised adjustments to fair value
of investments - 1,164 1,164 - (952) (952)
Income 806 - 806 813 - 813
Investment management fee (92) (276) (368) (104) (311) (415)
Other expenses (113) - (113) (121) - (121)
------ ------ ------ ------ ------ ------
Return on ordinary activities
before tax 601 398 999 588 (673) (85)
Tax on return on ordinary activities (134) 86 (48) (151) 151 -
------ ------ ------ ------ ------ ------
Return on ordinary activities
after tax 467 484 951 437 (522) (85)
------ ------ ------ ------ ------ ------
Return per share 1.2p 1.2p 2.4p 1.1p (1.3)p (0.2)p
Year ended 30 September 2005
As re-stated
Revenue Capital Total
£000 £000 £000
Gain on disposal of investments
held at fair value - 626 626
Unrealised adjustments to fair value
of investments - (1,638) (1,638)
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
INCOME STATEMENT - C Shares
(unaudited) for the six months ended 31 March 2006
Six months ended 31 March 2006
Revenue Capital Total
£000 £000 £000
Gain on disposal of investments
held at fair value - - -
Unrealised adjustments to fair value
of investments - - -
Income 37 - 37
Investment management fee (7) (21) (28)
Other expenses (15) - (15)
------ ------ ------
Return on ordinary activities
before tax 15 (21) (6)
Tax on return on ordinary activities (5) 5 -
------ ------ ------
Return on ordinary activities
after tax 10 (16) (6)
------ ------ ------
Return per share 0.2p (0.3)p (0.1)p
INCOME STATEMENT - Company
(unaudited) for the six months ended 31 March 2006
Six months ended 31 March 2006 Six months ended 31 March 2005
As re-stated
Revenue Capital Total Revenue Capital Total
£000 £000 £000 £000 £000 £000
(Loss)/gain on disposal of
investments held at fair value - (490) (490) - 590 590
Unrealised adjustments to fair value
of investments - 1,164 1,164 - (952) (952)
Income 843 - 843 813 - 813
Investment management fee (99) (297) (396) (104) (311) (415)
Other expenses (128) - (128) (121) - (121)
------ ------ ------ ------ ------ ------
Return on ordinary activities
before tax 616 377 993 588 (673) (85)
Tax on return on ordinary activities (139) 91 (48) (151) 151 -
------ ------ ------ ------ ------ ------
Return on ordinary activities
after tax 477 468 945 437 (522) (85)
------ ------ ------ ------ ------ ------
Return per share 1.1p 1.0p 2.1p 1.1p (1.3)p (0.2)p
Year ended 30 September 2005
As re-stated
Revenue Capital Total
£000 £000 £000
Gain on disposal of investments
held at fair value - 626 626
Unrealised adjustments to fair value
of investments - (1,638) (1,638)
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 - Ordinary Shares
(unaudited) for the six months ended 31 March 2006
Six months ended Six months ended Year ended
31 March 2006 31 March 2005 30 September
2005
As re-stated As re-stated
£000 £000 £000
Ordinary shareholders' funds at
1 October 2005
As previously reported 31,285 35,345 35,345
Prior year adjustment 2,247 3,936 3,936
------- ------- -------
As re-stated 33,532 39,281 39,281
Return on ordinary activities 951 (85) (451)
after tax
Dividends recognised in the (2,340) (3,943) (5,110)
period
Net proceeds of share issues 254 1,386 2,901
Shares purchased for (344) (2,959) (3,089)
cancellation
------- ------- -------
Ordinary shareholders' funds at
31 March 2006 32,053 33,680 33,532
------- ------- -------
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS - C Shares
(unaudited) for the six months ended 31 March 2006
Six months ended
31 March 2006
£000
C shareholders' funds at
1 October 2005 -
Return on ordinary activities after tax (6)
Net proceeds of share issues 15,026
-------
C shareholders' funds at
31 March 2006 15,020
-------
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS - Company
(unaudited) for the six months ended 31 March 2006
Six months Six months Year ended
ended ended 30 September
31 March 2006 31 March 2005 2005
As re-stated As re-stated
£000 £000 £000
Total equity shareholders' funds at
1 October 2005
As previously reported 31,285 35,345 35,345
Prior year adjustment 2,247 3,936 3,936
------- ------- -------
As re-stated 33,532 39,281 39,281
Return on ordinary activities 945 (85) (451)
after tax
Dividends recognised in the period (2,340) (3,943) (5,110)
Net proceeds of share issues 15,280 1,386 2,901
Shares purchased for cancellation (344) (2,959) (3,089)
------- ------- -------
Total equity shareholders' funds at
31 March 2006 47,073 33,680 33,352
------- ------- -------
BALANCE SHEET
(unaudited) as at 31 March 2006
31 March 2006
Ordinary Shares C Shares Company
£000 £000 £000
Fixed asset investments held at fair
value:
Venture capital investments
Unquoted 23,736 198 23,934
Quoted 4,467 198 4,665
------- ------- -------
Total venture capital investments 28,203 396 28,599
Other quoted investments - 3,074 3,074
------- ------- -------
Total fixed asset investments 28,203 3,470 31,673
------- ------- -------
Current assets:
Debtors 250 47 283
Cash at bank 3,815 11,945 15,760
------- ------- -------
4,065 11,992 16,043
Creditors (amounts falling due within (215) (442) (643)
one year)
------- ------- -------
Net current assets 3,850 11,550 15,400
------- ------- -------
Net assets 32,053 15,020 47,073
------- ------- -------
Capital and reserves:
Called-up equity share capital 9,720 11,926 21,646
Share premium 16,736 3,100 19,836
Capital redemption reserve 1,676 - 1,676
Capital reserve - realised 515 (16) 499
Capital reserve - unrealised 2,570 - 2,570
Revenue reserve 836 10 846
------- ------- -------
Total equity shareholders' funds 32,053 15,020 47,073
------- ------- -------
Net asset value per share 82.4p 94.5p 85.9p
31 March 2005 30 September 2005
Company Company
As re-stated As re-stated
£000 £000
Fixed asset investments held at fair
value:
Venture capital investments
Unquoted 24,288 25,446
Quoted 4,871 4,939
------- -------
Total venture capital investments 29,159 30,385
Other quoted investments - -
------- -------
Total fixed asset investments 29,159 30,385
------- -------
Current assets:
Debtors 315 165
Cash at bank 6,852 3,056
------- -------
7,167 3,221
Creditors (amounts falling due within (2,646) (74)
one year)
------- -------
Net current assets 4,521 3,147
------- -------
Net assets 33,680 33,532
------- -------
Capital and reserves:
Called-up equity share capital 9,384 9,752
Share premium 15,462 16,564
Capital redemption reserve 1,517 1,562
Capital reserve - realised 5,145 4,353
Capital reserve - unrealised 1,468 542
Revenue reserve 704 759
------- -------
Total equity shareholders' funds 33,680 33,532
------- -------
Net asset value per share 89.7p 86.0p
CASH FLOW STATEMENT
(unaudited) for the six months ended 31 March 2006
Six months ended 31 March 2006
Ordinary Shares C Shares Company
£000 £000 £000
Net cash inflow from operating 250 389 639
activities
Taxation:
Corporation tax paid - - -
Financial investment:
Purchase of investments (765) (3,470) (4,235)
Sale/repayment of investments 3,704 - 3,704
Net cash inflow/(outflow) from
financial investment 2,939 (3,470) (531)
Equity dividends paid (2,340) - (2,340)
------ ------ ------
Net cash inflow/(outflow) before 849 (3,081) (2,232)
financing
Financing:
Issue of shares 264 15,901 16,165
Share issue expenses (10) (875) (885)
Purchase of ordinary shares for (344) - (344)
cancellation
Net cash inflow/(outflow) from (90) 15,026 14,936
financing
------ ------ ------
Increase/(decrease) in cash at bank 759 11,945 12,704
------ ------ ------
Reconciliation of return before tax
to
net cash flow from operating
activities
Return on ordinary activities before 999 (6) 993
tax
Loss/(gain) on disposal of
investments held at fair value 490 - 490
Unrealised adjustments to fair value
of investments (1,164) - (1,164)
Increase in debtors (85) (47) (132)
Increase in creditors 10 442 452
------ ------ ------
Net cash inflow from operating 250 389 639
activities
------ ------ ------
Analysis of movement in net funds
1 October 31 March
2005 Cash flows 2006
£000 £000 £000
Cash at bank 3,056 12,704 15,760
------ ------ ------
Six months ended Year ended
31 March 2005 30 September 2005
Company Company
As re-stated As re-stated
£000 £000
Net cash inflow from operating 2,745 565
activities
Taxation:
Corporation tax paid - -
Financial investment:
Purchase of investments (4,391) (7,114)
Sale/repayment of investments 4,561 5,450
Net cash inflow/(outflow) from
financial investment 170 (1,664)
Equity dividends paid (3,943) (5,110)
------ ------
Net cash inflow/(outflow) before (1,028) (6,209)
financing
Financing:
Issue of shares 1,438 3,000
Share issue expenses (52) (99)
Purchase of ordinary shares for (2,959) (3,089)
cancellation
Net cash inflow/(outflow) from (1,573) (188)
financing
------ ------
Increase/(decrease) in cash at bank (2,601) (6,397)
------ ------
Reconciliation of return before tax to
net cash flow from operating
activities
Return on ordinary activities before (85) (440)
tax
Loss/(gain) on disposal of
investments held at fair value (590) (626)
Unrealised adjustments to fair value
of investments 952 1,638
Increase in debtors (120) (12)
Increase in creditors 2,588 5
------ ------
Net cash inflow from operating 2,745 565
activities
------ ------
INVESTMENT PORTFOLIO SUMMARY
as at 31 March 2006
ORDINARY SHARES
Cost Valuation % of net assets
£000 £000 by valuation
Fifteen largest venture capital investments:
CGI Group 2,325 3,237 10.1
Alaric Systems 1,578 1,578 4.9
Weldex (International) Offshore 200 1,242 3.9
Interlube Systems 880 1,190 3.7
Envirotec 812 1,167 3.6
TFB Group 1,000 1,000 3.1
DxS 975 940 2.9
Barony Universal Products 236 918 2.9
Union Snack 119 915 2.9
Computer Software Group** 329 903 2.8
Alizyme* 187 856 2.7
IRIS Technology 850 850 2.7
John Laing Partnership 355 729 2.3
Pivotal Laboratories Holdings 714 714 2.2
LEDA Holdings 688 688 2.1
------- ------- ------
11,248 16,927 52.8
Other venture capital investments 14,385 11,276 35.2
------- ------- ------
Total fixed asset investments 25,633 28,203 88.0
-------
Net current assets 3,850 12.0
------- ------
Net assets 32,053 100.0
------- ------
C SHARES
Cost Valuation % of net assets
£000 £000 by valuation
Wear Inns 198 198 1.3
Twenty** 198 198 1.3
------- ------- ------
Total venture capital investments 396 396 2.6
Listed fixed interest investments 3,074 3,074 20.5
------- ------- ------
Total fixed asset investments 3,470 3,470 23.1
-------
Net current assets 11,550 76.9
------- ------
Net assets 15,020 100.0
------- ------
* Listed on London Stock Exchange
**Quoted on Alternative Investment Market
The above summary of results for the six months ended 31 March 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.
The figures for the year ended 30 September 2005 have been extracted from the
financial statements for that year, which have been delivered to the Registrar
of Companies, adjusted in respect of the changes in accounting policies as
stated below; the independent auditors' report on those financial statements
under Section 235 of the Companies Act 1985 was unqualified.
The company is required to comply with a number of new UK Financial Reporting
Standards (FRS), which now represent UK Generally Accepted Accounting Principles
(UK GAAP), in presenting its financial statements for the year ending 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 company's investments have been designated as fair value through profit
and loss and accordingly the unrealised gain or loss resulting from the
revaluation of 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'.
• 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 'Events after the Balance
Sheet Date'.
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 and the six months
ended 31 March 2005 have been re-stated accordingly.
The effect of the above changes on the reported net assets and net asset value
per share of the company is as follows:
30 September 2005 31 March 2005
Net asset Net asset
value value
Net assets per share Net assets per share
£000 p £000 p
As reported under previous 31,285 80.2 32,614 86.9
UK GAAP
Less: adjustment in valuation of (93) (0.2) (101) (0.2)
quoted investments to bid price
Add: proposed dividends not 2,340 6.0 1,167 3.0
accounted for until declared
and paid
------- ------- ------- -------
As reported under revised 33,532 86.0 33,680 89.7
UK GAAP
------- ------- ------- -------
The proposed interim ordinary share dividend of 3.0p per share for the year
ending 30 September 2006 will be paid on 9 June 2006 to ordinary shareholders on
the register at the close of business on 19 May 2006.
A copy of the interim report for the six months ended 31 March 2006 is expected
to be posted to shareholders on 12 May 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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