Half-yearly report
9 MAY 2011
NORTHERN VENTURE TRUST PLC
UNAUDITED HALF-YEARLY FINANCIAL REPORT
FOR THE SIX MONTHS ENDED 31 MARCH 2011
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 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 for the six months ended 31 March 2010 in italics)
          2011          2010
Net assets £61.8m £46.8m
Net asset value per share 88.6p 78.9p
Return per share
Revenue  0.5p  0.7p
Capital  7.9p  1.0p
Total  8.4p  1.7p
Interim dividend per share in respect of
the period
Revenue  0.5p  1.0p
Capital  2.5p  2.0p
Total  3.0p  3.0p
Cumulative return to shareholders since
launch
Net asset value per share  88.6p  78.9p
Dividends paid per share*  93.5p  89.0p
Net asset value plus dividends paid per
share 182.1p 167.9p
Share price at end of period 74p 65.75p
*Excluding proposed interim dividend
For further information, please contact:
NVM Private Equity Limited
Alastair Conn/Christopher Mellor  0191 244 6000
Website: Â www.nvm.co.uk
NORTHERN VENTURE TRUST PLC
HALF-YEARLY MANAGEMENT REPORT
FOR THE SIX MONTHS ENDED 31 MARCH 2011
Your directors are pleased to report that Northern Venture Trust has made good
progress in the six month period to 31 March 2011. Strong investment
performance and a successful £15 million public share offer combined to take the
company's net assets past the £60 million mark for the first time, whilst almost
£5 million was returned to shareholders through a tender offer.
Results and dividend
The net asset value (NAV) per ordinary share at 31 March 2011, after deducting
the 2009/10 final dividend of 4.5p per share paid in December 2010, was 88.6p,
compared with 85.2p at 30 September 2010. The return per share for the period
before dividends as shown in the income statement was 8.4p, equivalent to 9.9%
of the NAV at the start of the period. Low interest rates continued to affect
the company's investment income, although the income statement benefitted from
an additional recovery in relation to VAT paid on management fees in previous
years. There were no significant investment sales during the period, but strong
trading performance from a number of our investee companies has been reflected
in a portfolio valuation uplift of £4.8 million.
An interim dividend of 3.0p per share, unchanged from last year, has been
declared and this will be paid on 24 June 2011 to shareholders on the register
on 3 June 2011. It remains our objective to maintain the annual dividend at not
less than 6.0p per share.
Investments
The period saw a healthy level of new investment activity, with six new
investments totalling £4.9 million added to the venture capital portfolio:
Brady (£142,000) - AIM-quoted developer of commodity trading and risk management
software, Cambridge
Altacor (£477,000) - developer of specialist ophthalmic products, Cambridge
Cawood Scientific (£1,073,000) - laboratory services for land-based industries,
Bracknell/Cawood
Closer2 Investments (£888,000) - business-to-business exhibition management
(sister company to Closerstill Holdings), London
Control Risks Group Holdings (£746,000) - international specialist risk
consultancy, London
Kitwave One (£1,582,000) - wholesaler of confectionery, soft drinks, snacks,
beers, wines and tobacco, North Shields
The unquoted venture capital portfolio at 31 March 2011 consisted of 32
companies with an aggregate value of £35.0 million. Despite the continuing
difficulties experienced by the UK economy and financial markets, many of our
companies have made good progress over the past six months. Interestingly, our
managers estimate that exports represent over half of the aggregate annual sales
of our current top fifteen companies. Kerridge Commercial Systems and Alaric
Systems recorded the largest individual increases in valuation. Kerridge is a
relatively recent investment (March 2010) which has exceeded our expectations at
an early stage;Â Alaric by contrast has been in the portfolio since 2000 and has
received several rounds of funding, providing a good example of the patient
long-term approach often required when backing technology businesses. The only
significant disappointment was the failure of the food manufacturer Frontier
Foods, a start-up investment in 2007, but this had only a small impact on the
half-yearly results as the investment was written down to nil value last year.
There was an encouraging contribution from the AIM portfolio, currently
comprising 12 holdings, which increased in value by £0.6 million, with Tikit
Group and IDOX doing particularly well.
A number of the holdings in the listed fixed-interest portfolio are reaching
maturity, and the low returns currently available on gilts and corporate bonds
have led the board to review its approach to investment of the company's non-VCT
qualifying assets. As a result we have decided to invest a limited proportion
of our funds in income-yielding FTSE 350 listed equities as well as maintaining
an exposure to the fixed-income sector.
Shareholder issues
In August 2010 the company announced proposals for a tender offer to purchase
10% of the issued share capital at a 3% discount to NAV, accompanied by a public
offer of new ordinary shares to raise up to £15 million before expenses. The
tender offer proved popular with shareholders and was completed in December,
with 5,913,941 shares re-purchased at a cost of £4.7 million. The public offer
prospectus was published in November and was one of the most successful VCT
fund-raisings launched in the 2010/11 tax year, closing fully subscribed in mid-
February. I would like to welcome our new investors and thank them and our
existing shareholders, many of whom also subscribed for new shares in the recent
offer, for their support and encouragement.
We also announced in August 2010 that the company would provide liquidity to
shareholders by following a policy of buying back its shares in the market at a
15% discount to NAV. In the event it has not been necessary for the company to
make any purchases, partly no doubt because of the tender offer but also because
there continues to be a steady demand for shares in the secondary market. This
is unsurprising given the very attractive and consistent tax-free dividend
yield, the company having paid an annual dividend of at least 7.5p in each of
the past seven financial years. Since its establishment in 1995, our company
has distributed over £36 million in dividend payments and has returned a further
£11 million to shareholders through tender offers and share buy-backs, whilst
achieving our long-term objective of maintaining an NAV per share of at least
80p.
VCT qualifying status
The company has maintained its approved venture capital trust status with HM
Revenue & Customs. Continuing compliance is carefully monitored by the board
with assistance from our managers and from our independent VCT taxation advisers
at PricewaterhouseCoopers LLP.
Risk management
The board carries out a regular review of the risk environment in which the
company operates. There has been no significant change to the key risks
discussed on page 10 of the annual report for the year ended 30 September 2010,
including those resulting from the size and relative illiquidity of the unquoted
and AIM-quoted investments held by the company.
Outlook
Northern Venture Trust was one of the first three VCTs launched in 1995 and has
to date invested almost £100 million in over 130 UK companies, creating or
protecting several thousand jobs and generating considerable tax and other
revenues for the Exchequer as well as providing good investment returns to its
shareholders. It is unlikely that there are many better examples of how VCTs
should work in practice and it is to be hoped that any changes resulting from
the impending Government review of the VCT scheme, announced at the time of the
March 2011 Budget, will be measured and constructive.
Whilst not underestimating the difficulties facing the UK economy in the
aftermath of the financial crisis and arising from the planned public sector
spending cuts, we continue to believe that our company is well positioned for
the future, with a diverse portfolio of well-managed businesses which should be
capable of maintaining investment returns comparable with those achieved in
recent years. As a result of the recent share issue we also have a very strong
balance sheet with an ample reserve of cash for future investment.
On behalf of the Board
JOHN HUSTLER
Chairman
The unaudited half-yearly financial statements for the six months ended 31 March
2011 are set out below.
INCOME STATEMENT
(unaudited) for the six months ended 31 March 2011
Six months ended Six months ended
 31 March 2011 31 March 2010
Revenue Capital Total Revenue Capital Total
 £000 £000 £000 £000 £000 £000
Gain on
disposal of
investments -Â 367Â 367Â -Â 428Â 428
Movements
in fair
value of
investments -Â 4,757Â 4,757Â -Â 458Â 458
 ---------- ---------- ---------- ---------- ---------- ----------
 - 5,124 5,124 - 886 886
Income 624Â -Â 624Â 720Â -Â 720
Investment
management
fee (130) (389) (519) (124) (372) (496)
Recoverable
VAT 33Â 99Â 132Â -Â -Â -
Other
expenses (179) -Â (179) (169) -Â (169)
 ---------- ---------- ---------- ---------- ---------- ----------
Return on
ordinary
activities
  before
tax 348Â 4,834Â 5,182Â 427Â 514Â 941
Tax on
return on
ordinary
activities (70) 70Â -Â (16) 16Â -
 ---------- ---------- ---------- ---------- ---------- ----------
Return on
ordinary
activities
  after tax 278 4,904 5,182 411 530 941
 ---------- ---------- ---------- ---------- ---------- ----------
Return per
share 0.5p 7.9p 8.4p 0.7p 1.0p 1.7p
  Year ended 30 September 2010
Revenue Capital Total
 £000 £000 £000
Gain on disposal of investments    - 3,119 3,119
Movements in fair value of investments    - 1,493 1,493
    ---------- ---------- ----------
    - 4,612 4,612
Income    1,350 - 1,350
Investment management fee    (244) (733) (977)
Recoverable VAT Â Â Â -Â -Â -
Other expenses    (326) - (326)
    ---------- ---------- ----------
Return on ordinary activities
  before tax    780 3,879 4,659
Tax on return on ordinary activities    (95) 95 -
    ---------- ---------- ----------
Return on ordinary activities
  after tax    685 3,974 4,659
    ---------- ---------- ----------
Return per share    1.2p 6.8p 8.0p
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
(unaudited) for the six months ended 31 March 2011
Six months ended Six months ended Year ended
 31 March 2011 31 March 2010 30 September 2010
 £000 £000 £000
Equity shareholders' funds
at
  1 October 2010 50,414 47,875 47,875
Return on ordinary
activities after tax 5,182Â 941Â 4,659
Dividends recognised in the
period (2,661) (1,784) (1,781)
Net proceeds of share issues 13,523Â (35) (35)
Shares purchased for
cancellation (4,679) (168) (304)
 ---------- ---------- ----------
Equity shareholders' funds
at
  31 March 2011 61,779 46,829 50,414
 ---------- ---------- ----------
BALANCE SHEET
(unaudited) as at 31 March 2011
31 March 31 March 30 September
 2011 2010 2010
 £000 £000 £000
Fixed asset investments held at fair value:
Venture capital investments
  Unquoted 35,016 25,872 26,308
  Quoted 3,462 2,560 2,566
 ---------- ---------- ----------
Total venture capital investments 38,478Â 28,432Â 28,874
Listed equity investments 1,954Â -Â -
Listed fixed-interest investments 3,788Â 6,869Â 6,222
 ---------- ---------- ----------
Total fixed asset investments 44,220Â 35,301Â 35,096
 ---------- ---------- ----------
Current assets:
  Debtors 1,093 1,751 1,063
  Cash and deposits 17,198 10,138 14,323
 ---------- ---------- ----------
 18,291 11,889 15,386
Creditors (amounts falling due within one
year) (732) (361) (68)
 ---------- ---------- ----------
Net current assets 17,559Â 11,528Â 15,318
 ---------- ---------- ----------
Net assets 61,779Â 46,829Â 50,414
 ---------- ---------- ----------
Capital and reserves:
Called-up equity share capital 17,440Â 14,835Â 14,785
Share premium 21,611Â 12,222Â 12,222
Capital redemption reserve 14,353Â 12,825Â 12,875
Capital reserve 6,433Â 7,701Â 14,280
Revaluation reserve 392Â (1,751) (5,020)
Revenue reserve 1,550Â 997Â 1,272
 ---------- ---------- ----------
Total equity shareholders' funds 61,779Â 46,829Â 50,414
 ---------- ---------- ----------
Net asset value per share 88.6p 78.9p 85.2p
CASH FLOW STATEMENT
(unaudited) for the six months ended 31 March 2011
Six months ended Six months ended Year ended
 31 March 2011 31 March 2010 30 September 2010
 £000 £000 £000 £000 £000 £000
Net cash inflow
from
  operating
activities  625  947  1,595
Taxation:
Corporation tax
paid  -  -  (261)
Financial
investment:
Purchase of
investments (7,593) Â (6,906) Â (8,688)
Sale/repayment of
investments 3,660Â Â 4,411Â Â 10,124
 ----------  ----------  ----------
Net cash
inflow/(outflow)
  from financial
investment  (3,933)  (2,495)  1,436
Equity dividends
paid  (2,661)  (1,784)  (1,781)
  ----------  ----------  ----------
Net cash
inflow/(outflow)
  before financing  (5,969)  (3,332)  989
Financing:
Issue of shares 14,302Â Â -Â Â -
Share issue
expenses (779) Â (35) Â (35)
Purchase of shares
for cancellation (4,679) Â (168) Â (304)
 ----------  ----------  ----------
Net cash
inflow/(outflow)
from financing  8,844  (203)  (339)
  ----------  ----------  ----------
Increase/(decrease) in cash and
deposits 2,875Â Â (3,535) Â 650
  ----------  ----------  ----------
Reconciliation of
return before tax
to net cash flow
from operating
Activities
Return on ordinary
activities
  before tax  5,182  941  4,659
Gain on disposal of
investments (367) Â (428) Â (3,119)
Movements in fair
value
  of investments  (4,757)  (458)  (1,493)
(Increase)/decrease
in debtors (98) Â 934Â Â 1,622
Increase/(decrease)
in creditors 665Â Â (42) Â (74)
  ----------  ----------  ----------
Net cash inflow
from
  operating
activities 625Â Â 947Â Â 1,595
  ----------  ----------  ----------
Analysis of
movement in net
funds
 1 October 2010 Cash flows 31 March 2011
 £000 £000 £000
Cash and deposits  14,323  2,875  17,198
  ----------  ----------  ----------
INVESTMENT PORTFOLIO SUMMARY
as at 31 March 2011
Cost Valuation % of net assets
 £000 £000 by valuation
Venture capital investments:
Weldex (International) Offshore Holdings 3,262 3,262 5.3
Kerridge Commercial Systems 1,740 3,042 4.9
CloserStill Holdings 1,750 2,271 3.7
Promanex Group Holdings 1,695 2,139 3.5
CGI Group Holdings 3,449 2,128 3.4
Alaric Systems 2,175 2,059 3.3
Kitwave One 1,582 1,582 2.6
Paladin Group 1,452 1,344 2.2
Arleigh International 775 1,205 2.0
Promatic Group 1,229 1,229 2.0
Envirotec 813 1,191 1.9
Axial Systems Holdings 1,004 1,143 1.9
Cawood Scientific 1,073 1,073 1.7
Evolve Investments 995 995 1.6
KPJ Software Services 995 995 1.6
 ---------- ---------- --------
Fifteen largest venture capital
investments 23,989 25,658 41.6
RCC Lifesciences 995 995 1.6
Wear Inns 979 979 1.6
Closer2 Investments 888 888 1.4
Tikit Group* 752 846 1.4
Lanner Group 832 832 1.3
Advanced Computer Software Group* 381 783 1.3
Control Risks Group Holdings 746 746 1.2
IG Doors 372 726 1.2
IDOX* 298 705 1.1
S&P Coil Products 243 698 1.1
Direct Valeting 485 639 1.0
Mantis Deposition Holdings 613 613 1.0
Optilan Group 1,000 500 0.8
IS Pharma* 425 479 0.8
Altacor 477 477 0.8
e-know.net 360 420 0.7
Interlube Systems 88 314 0.5
Vectura Group** 211 266 0.4
Gentronix 535 243 0.4
Brady* 142 181 0.3
Brulines Group* 184 137 0.2
Astbury Marsden Holdings 1,120 120 0.2
Warmseal Windows (Newcastle) 400 100 0.2
Other investments each valued at less than
£100,000 1,377 133 0.2
 ---------- ---------- --------
Total venture capital investments 37,892 38,478 62.3
Listed equity investments 2,000 1,954 3.2
Listed fixed-interest investments 3,936 3,788 6.1
 ---------- ---------- --------
Total fixed asset investments 43,828 44,220 71.6
 ----------
Net current assets  17,559 28.4
  ---------- --------
Net assets  61,779 100.0
  ---------- --------
*Â Quoted on AIM
**Listed on London Stock Exchange
The above summary of results for the six months ended 31 March 2011 does not
constitute statutory financial statements within the meaning of Section 434 of
the Companies Act 2006, has not been audited or reviewed by the company's
independent auditors and has not been delivered to the Registrar of Companies.
The figures for the year ended 30 September 2010 have been extracted from the
audited financial statements for that year, which have been delivered to the
Registrar of Companies;Â the independent auditors' report on those financial
statements was unqualified and did not contain a statement under Section 498(2)
or (3) of the Companies Act 2006. The half-yearly financial statements have
been prepared on the basis of the accounting policies set out in the annual
financial statements for the year ended 30 September 2010.
Each of the directors confirms that to the best of his knowledge the half-yearly
financial statements have been prepared in accordance with the Statement "Half-
yearly financial reports" issued by the UK Accounting Standards Board and the
half-yearly financial report includes a fair review of the information required
by (a) DTR 4.2.7R of the Disclosure Rules and Transparency Rules, being an
indication of important events that have occurred during the first six months of
the financial year and their impact on the condensed set of financial
statements, and a description of the principal risks and uncertainties for the
remaining six months of the year, and (b) DTR 4.2.8R of the Disclosure Rules and
Transparency Rules, being related party transactions that have taken place in
the first six months of the current financial year and that have materially
affected the financial position or performance of the entity during that period,
and any changes in the related party transactions described in the last annual
report that could do so.
The directors of the company at the date of this statement were Mr J R Hustler
(Chairman), Mr N J Beer, Mr E M P Denny, Mr R S Peters and Mr H P Younger.
The calculation of the revenue and capital return per share is based on the
return on ordinary activities after tax for the period and on 61,845,403 (2010
56,584,163) ordinary shares, being the weighted average number of shares in
issue during the period.
The calculation of the net asset value per share is based on the net assets at
31 March 2011 divided by the 69,759,719 (2010 59,339,418) ordinary shares in
issue at that date.
The proposed interim dividend of 3.0p per share for the year ending 30 September
2011 will be paid on 24 June 2011 to shareholders on the register at the close
of business on 3 June 2011.
A copy of the half-yearly financial report for the six months ended 31 March
2011 is expected to be posted to shareholders by 27 May 2011 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.
Neither the contents of the NVM Private Equity Limited website nor the contents
of any website accessible from hyperlinks on the NVM Private Equity Limited
website (or any other website) is incorporated into, or forms part of, this
announcement.
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Northern Venture Trust PLC via Thomson Reuters ONE
[HUG#1513791]
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