Final Results
Northern Venture Trust PLC
17 November 2004
17 NOVEMBER 2004
NORTHERN VENTURE TRUST PLC
PRELIMINARY RESULTS
FOR THE YEAR ENDED 30 SEPTEMBER 2004
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 and has to date raised a total of £44 million from
private investors. 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 - year ended 30 September 2004:
(comparative figures as at 30 September 2003 in italics)
2004 2003
• Net assets £35,345,000 £34,000,000
• Net asset value per share 89.6p 85.7p
• Investment income £1,671,000 £1,269,000
• Profit on ordinary activities
before tax:
Revenue £1,240,000 £823,000
Capital £3,956,000 £97,000
Total £5,196,000 £920,000
• Earnings per share:
Revenue 2.5p 1.8p
Capital 10.5p 0.5p
Total 13.0p 2.3p
• Dividend per share:
Revenue 2.0p 1.7p
Capital 10.0p 3.3p
Total 12.0p 5.0p
• Cumulative return to shareholders
since launch:
Dividends per share 44.0p 32.0p
Net asset value plus dividends
per share 133.6p 117.7p
• Share price 82.5p 63.5p
For further information, please contact:
Alastair Conn, Managing Director
Northern Venture Managers Limited 0191 244 6000
Website: www.nvm.co.uk
Lucy Copeman/Marlene Scott
Polhill Communications 020 7655 0540
CHAIRMAN'S STATEMENT
The Chairman of Northern Venture Trust PLC, Professor Sir Frederick Holliday
CBE, included the following points in his statement to shareholders:
I am pleased to report on a busy and successful year for our company. The net
asset value per share at 30 September 2004, after providing for dividends paid
or proposed for the year totalling a record 12.0p, was 89.6p - an increase of
4.6% from the corresponding figure of 85.7p a year ago. Over the five years to
September 2004 the company has achieved a net asset value total return of 32.5%,
compared with a negative total return of 7.1% from the FTSE All-Share index. A
number of significant and profitable investment disposals have been achieved;
the investment portfolio is progressing well and the level of new investment
completions was satisfactory, with ample liquidity in hand for further
development of the portfolio.
Earnings and dividend
Total earnings per share for the year amounted to 13.0p, compared with 2.3p in
the corresponding year to 30 September 2003. I have previously reminded
shareholders that earnings per share will tend to fluctuate from year to year as
realised investment gains, adjusted to exclude previous revaluation adjustments,
are included under the accounting rules we follow because our company is no
longer an investment company for Companies Act purposes.
Investment income at £1,671,000 was 31.7% higher than in the preceding year, and
the revenue surplus before tax increased by more than 50% from £823,000 to
£1,240,000. The revenue element of earnings per share rose from 1.8p to 2.5p.
Your directors recommend a revenue dividend of 2.0p per share (last year 1.7p)
and a capital dividend of 10.0p per share (last year 3.3p). This makes a total
dividend for the year of 12.0p, of which 2.0p was paid at the interim stage
leaving a proposed final dividend of 10.0p which will, subject to shareholders'
approval, be paid on 24 December 2004 to shareholders on the register on 26
November 2004.
Following a number of enquiries from shareholders about the possibility of
re-investing their dividends in new ordinary shares in the company, so
benefiting from the new investment tax reliefs announced in the 2004 Budget, we
have decided to introduce a dividend investment scheme. Shareholders will
receive a separate letter giving further details at the same time as they
receive the annual report.
Including the proposed final dividend, subscribers in the original share issue
nine years ago will have received cash dividends (including repayable tax
credits) of 44p per share. An investor claiming initial income tax relief at
20% and capital gains tax deferral at 40% will therefore have received more than
his/her 40p net investment back by way of tax-free cash dividends. The company
has now distributed a total of over £15 million to shareholders through dividend
payments.
Investment portfolio
The Manager's Review in the annual report gives details of developments in the
investment portfolio during the year. Additions to venture capital investments
during the year amounted to £6.3 million and sale proceeds were £11.5 million.
Profits were taken on a number of quoted investment holdings and in the unquoted
portfolio there were successful exits from T J Brent, CGI International and
Keith Prowse. After setting aside cash for the final dividend referred to
above, there remains a good reserve of liquidity for investment in the new
financial year.
VCT qualifying status
The company has continued to retain PricewaterhouseCoopers LLP as advisers on
VCT taxation matters, and has throughout the year met the qualifying conditions
laid down by the Inland Revenue for its formal approval as a VCT.
Shareholder issues
During the year the mid-market share price rose from 63.5p to 82.5p, an increase
of 29.9%. This had the effect of reducing the discount to the year-end net
asset value to 7.9%. The company bought back and cancelled just over 520,000
ordinary shares, equivalent to 1.3% of the issued share capital at the start of
the year. This was approximately half the number of shares bought back in the
preceding year, reflecting the fact that from October 2003 to March 2004 there
was a welcome increase in secondary trading in the company's shares. However
the secondary market in VCT shares generally is now at a low ebb: the
combination of 40% income tax relief on new VCT subscriptions with the move by
certain VCT management groups to buy back shares at a fixed 10% discount has led
to secondary demand virtually disappearing. This is not necessarily a bad
thing, but does perhaps call into question the value of a stock market listing
for VCTs.
We will be seeking shareholders' approval at the annual general meeting to a
renewal of the directors' authorities to issue new shares up to 10% of the
present issued capital and to buy back up to 10% of the company's shares in the
market for cancellation.
Northern Venture Managers
As I reported at the interim stage, in December 2003 the staff of Northern
Venture Managers completed a management buy-out of the company following the
acquisition of their parent, Edinburgh Fund Managers Group, by Aberdeen Asset
Management. The independent directors of Northern Venture Trust encouraged this
move and consider that the outcome has been highly satisfactory for Northern
Venture Trust and its shareholders.
Prospects
The company's articles of association require that in 2005 shareholders should
be invited to vote on the question of future continuation. Your board has kept
this matter under regular review and, as I have previously indicated to
shareholders, it is our intention to recommend at a specially convened
extraordinary general meeting that the company continue its active operations
for at least another five years. We believe that Northern Venture Trust has
achieved the happy result of producing good returns for shareholders whilst
achieving the end for which VCTs were created, namely to provide essential
funding for small unquoted companies at the grass roots of the UK economy, and
that the company is well placed to achieve more of the same in the future. We
are conscious that at this stage in the company's development there will be some
shareholders who would like to have a means of exiting from their investment,
whilst others may wish to increase their investment (particularly in the current
two-year period of enhanced VCT tax reliefs), and we are actively considering
how best to satisfy the aspirations of both groups.
Professor Sir Frederick Holliday
Chairman
The audited financial statements for the year ended 30 September 2004 will show
the results set out below.
PROFIT AND LOSS ACCOUNT
for the year ended 30 September 2004
Year ended 30 September 2004 Year ended 30 September 2003
Revenue Capital Total Revenue Capital Total
£000 £000 £000 £000 £000 £000
Profits recognised in the year
on realisation of investments - 4,578 4,578 - 653 653
Income 1,671 - 1,671 1,269 - 1,269
Investment management fee (207) (622) (829) (185) (556) (741)
Other expenses (224) - (224) (214) - (214)
------ ------ ------ ------ ------ ------
Profit on ordinary activities
before interest and tax 1,240 3,956 5,196 870 97 967
Interest payable - - - (47) - (47)
------ ------ ------ ------ ------ ------
Profit on ordinary activities
before tax 1,240 3,956 5,196 823 97 920
Tax on ordinary activities (246) 239 (7) (118) 118 -
------ ------ ------ ------ ------ ------
Profit on ordinary activities
after tax 994 4,195 5,189 705 215 920
Dividends (791) (3,946) (4,737) (678) (1,309) (1,987)
------ ------ ------ ------ ------ ------
Retained profit/(loss) for the year 203 249 452 27 (1,094) (1,067)
------ ------ ------ ------ ------ ------
Earnings per share 2.5p 10.5p 13.0p 1.8p 0.5p 2.3p
Dividend per share 2.0p 10.0p 12.0p 1.7p 3.3p 5.0p
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the year ended 30 September 2004
Year ended 30 September 2004 Year ended 30 September 2003
Revenue Capital Total Revenue Capital Total
£000 £000 £000 £000 £000 £000
Profit on ordinary activities
after tax 994 4,195 5,189 705 215 920
Unrealised gains on revaluation
of investments - 1,012 1,012 - 3,015 3,015
------ ------ ------ ------ ------ ------
Total recognised gains and losses
during the year 994 5,207 6,201 705 3,230 3,935
------ ------ ------ ------ ------ ------
NOTE OF HISTORICAL COST PROFITS AND LOSSES
for the year ended 30 September 2004
Year ended 30 September 2004 Year ended 30 September 2003
Revenue Capital Total Revenue Capital Total
£000 £000 £000 £000 £000 £000
Reported profit on ordinary activities
before tax 1,240 3,956 5,196 823 97 920
Realisation of investment revaluation
gains/(losses) of prior years - 2,113 2,113 - (2,113) (2,113)
------ ------ ------ ------ ------ ------
Historical cost profit/(loss) for the
year before tax 1,240 6,069 7,309 823 (2,016) (1,193)
------ ------ ------ ------ ------ ------
Historical cost profit/(loss) for the
year after taxation and dividends 203 2,362 2,565 27 (3,207) (3,180)
------ ------ ------ ------ ------ ------
BALANCE SHEET
as at 30 September 2004
30 30
September September
2004 2003
£000 £000
Venture capital
investments:
Unquoted 22,301 22,359
Quoted 4,993 4,867
------- -------
27,294 27,226
Other listed 2,446 3,750
investments
------- -------
Total fixed asset 29,740 30,976
investments
------- -------
Current assets:
Debtors 153 313
Cash at bank 9,453 4,500
------- -------
9,606 4,813
Creditors (amounts
falling due
within one year) (4,001) (1,789)
------- -------
Net current assets 5,605 3,024
------- -------
Net assets 35,345 34,000
------- -------
Capital and reserves:
Called-up equity share 9,860 9,922
capital
Share premium 14,463 14,286
Capital redemption 654 524
reserve
Revaluation reserve (299) 802
Profit and loss 10,667 8,466
account
------- -------
Total equity 35,345 34,000
shareholders' funds
------- -------
Net asset value per 89.6p 85.7p
share
CASH FLOW STATEMENT
for the year ended 30 September 2004
Year ended Year
30 September ended
2004 30
September
2003
£000 £000 £000 £000
Cash flow
statement
Net cash inflow
from
operating 746 383
activities
Taxation:
Corporation tax - -
paid
Financial
investment:
Purchase of (6,259) (3,063)
investments
Sale/repayment of 13,085 9,165
investments
------ ------
Net cash inflow
from
financial 6,826 6,102
investment
Equity dividends (2,500) (688)
paid
------ -----
-
Net cash inflow 5,072 5,797
before financing
Financing:
Issue of ordinary 258 -
shares
Share issue (13) -
expenses
Purchase of
ordinary shares
for cancellation (364) (580)
------ ------
Net cash outflow
from
financing (119) (580)
------ -----
-
Increase in cash 4,953 5,217
at bank
------ -----
-
Reconciliation of
profit before
tax to net cash
flow from
operating
activities
Profit on ordinary
activities
before tax 5,196 920
Decrease in 153 123
debtors
Decrease in (25) (7)
creditors
Profit recognised
on
realisation of (4,578) (653)
investments
------ -----
-
Net cash inflow
from
operating 746 383
activities
------ -----
-
Reconciliation of
movement
in net funds
1 Cash flows 30
October September
2003 2004
£000 £000 £000
Cash at bank 4,500 4,953 9,453
----- ------ ------
INVESTMENT PORTFOLIO SUMMARY
as at 30 September 2004
Valuation % of net assets
£000 by valuation
Fifteen largest venture capital investments:
CGI Group 2,325 6.6
TFB Group 2,211 6.3
John Fredericks Plastics 1,356 3.8
Computer Software Group** 1,354 3.8
Alaric Systems 1,184 3.3
Weldex (International) Offshore 1,124 3.2
Cyclacel Group 1,051 3.0
Alizyme* 973 2.8
DxS 940 2.7
Interlube Systems 920 2.6
Remsdaq 770 2.2
Tolwood 750 2.1
IRIS Technology 685 1.9
Omnico Plastics 665 1.9
Union Snack 648 1.8
------- ------
16,956 48.0
Other venture capital investments 10,338 29.2
------- ------
Total venture capital investments 27,294 77.2
Other listed investments 2,446 6.9
------- ------
Total fixed asset investments 29,740 84.1
Net current assets 5,605 15.9
------- ------
Net assets 35,345 100.0
------- ------
* Listed on the London Stock Exchange
**Traded on the Alternative Investment Market
The above summary of results for the year ended 30 September 2004 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 dividend of 10.0p per share for the year ended 30 September
2004 will, if approved by shareholders, be paid on 24 December 2004 to
shareholders on the register at the close of business on 26 November 2004.
The full annual report including financial statements for the year ended 30
September 2004 is expected to be posted to shareholders on 22 November 2004 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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