Final Results
Northern Venture Trust PLC
07 November 2005
7 NOVEMBER 2005
NORTHERN VENTURE TRUST PLC
PRELIMINARY RESULTS
FOR THE YEAR ENDED 30 SEPTEMBER 2005
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 - year ended 30 September 2005:
(comparative figures as at 30 September 2004 in italics)
2005 2004
• Net assets £31,285,000 £35,345,000
• Net asset value per share 80.2p 89.6p
• Investment income £1,601,000 £1,671,000
• Profit on ordinary activities before tax:
Revenue £1,171,000 £1,240,000
Capital £82,000 £3,956,000
Total £1,253,000 £5,196,000
• Earnings per share:
Revenue 2.3p 2.5p
Capital 0.9p 10.5p
Total 3.2p 13.0p
• Dividend per share:
Revenue 2.0p 2.0p
Capital 7.0p 10.0p
Total 9.0p 12.0p
• Cumulative return to shareholders since launch:
Dividends per share 53.0p 44.0p
Net asset value plus dividends per share 133.2p 133.6p
• Share price 78.0p 82.5p
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 pleased to report to shareholders on Northern Venture Trust's tenth year of
operation. During the past 12 months shareholders have voted overwhelmingly for
the continuation of the company for a further five years; some £7.6 million has
been returned by the company to shareholders through a successful tender offer
and two dividend payments; 12 new venture capital investments have been
completed at a cost of £6.6 million; and proposals have been announced for an
issue of new C shares to raise up to £30 million to finance our continuing
investment programme.
Financial results
The net asset value per share at 30 September 2005, after providing for
dividends totalling 9.0p in respect of the year, was 80.2p. The corresponding
figure a year ago was 89.6p, which means that before taking account of dividends
the company achieved a negative total return of 0.4p per share after reporting a
positive return of 15.9p in the preceding year. These contrasting results
reflect the fact that the year to 30 September 2004 saw a much higher level of
investment disposals, whilst in the past 12 months some of our portfolio
companies have had their progress slowed by difficult trading conditions.
The reported earnings per share for the year as shown in the profit and loss
account amounted to 3.2p, compared with 13.0p in the previous year. I remind
shareholders that earnings per share tend to fluctuate widely from year to year
as realised investment gains, adjusted to exclude previous revaluation
adjustments, are included under the accounting rules applicable to our company.
Investment income at £1,601,000 was down by 4.2% given that several investments
were sold in the previous year. The revenue element of pre-tax profits
consequently fell from £1,240,000 to £1,171,000 and revenue earnings per share
from 2.5p to 2.3p. Your directors recommend an unchanged revenue dividend for
the year of 2.0p per share and a capital dividend of 7.0p per share (last year
10.0p). This makes a total dividend for the year of 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 16 December 2005 to shareholders
on the register on 25 November 2005.
Including the proposed final dividend, subscribers in the original share issue
in 1995 will have received cash dividends (including repayable tax credits) of
53p per share - an average of 5.3p per year. 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 £18 million to
shareholders through tax-free dividend payments.
Investment portfolio
The manager's 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, including £0.5 million of follow-on finance for
existing investments, amounted to £7.1 million and sale proceeds were £2.8
million.
The remaining portfolio of quoted equity investments managed by Sarasin
Chiswell, valued at £2.4 million at 30 September 2004, was liquidated during the
year in order to release funds for the tender offer to shareholders.
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
At an extraordinary general meeting in February 2005 shareholders approved
proposals to extend the life of the company for a further five years; to make a
tender offer to buy back up to 10% of the company's issued capital; and to
raise new funds through a top-up issue of ordinary shares. We subsequently made
a tender offer to acquire up to 3,950,490 shares at a price of 85.6p per share
(a 5% discount to net asset value); shareholders tendered 2,965,751 shares,
approximately 75% of the maximum, and these were purchased in full by the
company at a cost of just over £2.5 million. The top-up issue of new shares
priced at a 5% premium to net asset value, which closed in June 2005, raised a
total of £2.5 million. On behalf of the board I would like to thank
shareholders for their continuing support for the company.
The dividend investment scheme introduced in November 2004 was taken up by 14%
of shareholders, representing approximately 10% of the company's issued capital.
£526,000 was reinvested in ordinary shares during the period, with subscribers
benefiting from the attractive tax reliefs currently available on new VCT
investments. Shareholders interested in joining the scheme should contact the
company secretary for further information.
During the year the company continued to buy back shares in the market for
cancellation. We will be seeking shareholders' approval at the annual general
meeting to a renewal of the directors' authority to buy back up to 10% of the
company's shares in the market for cancellation. In line with common market
practice we will seek, subject to market conditions, to re-purchase shares at a
discount of 10% to net asset value.
At an extraordinary general meeting on 27 October 2005, shareholders approved a
resolution paving the way for a public offer of new C shares to raise up to £30
million in the 2005/06 tax year. Given the strong flow of new investment
opportunities over the past year and the attractive 40% income tax relief
currently available on VCT subscriptions, your directors believe that the
current tax year presents an excellent opportunity to raise substantial
additional funds through the C share issue. The proceeds will be managed as a
completely separate pool of funds, alongside the existing ordinary shareholders'
funds, until conversion into ordinary shares in 2009. If the issue is fully
subscribed, the funds raised will take the company's total assets to
approximately £60 million, making it one of the largest VCTs. It is expected
that the prospectus will be published during November.
Management performance incentive
The independent directors have recently reviewed the performance incentive
arrangements applicable to Northern Venture Managers' investment executives. We
believe it is of great importance to the future prospects of our company that
NVM should be able to recruit and retain high-calibre executives in a market
environment where such individuals are much sought after by competitors. We
therefore propose to establish new incentive arrangements in the form of a
co-investment scheme whereby investment executives employed by NVM will be
required to invest personally, and on the same terms as Northern Venture Trust,
in the ordinary shares of new investee companies. The management share option
scheme established at the inception of the company in 1995 will be terminated.
Further information will be provided to shareholders in the near future.
Board of directors
After ten years of service as a board member of Northern Venture Trust, Tim
Levett has decided to concentrate on his role as investment director of Northern
Venture Managers and will not be seeking re-election at the annual general
meeting. We have greatly appreciated Tim's sound judgement and objectivity as a
director of the company and we are delighted that he will continue to
participate in our meetings as investment manager.
We are very pleased that Clive Williams, who was a managing partner of Ernst &
Young and then chief executive of Capgemini UK plc, agreed to join the board in
September 2005 and we look forward to working with him in the future.
Prospects
Economic conditions ahead look as challenging as ever but we have a maturing,
well-diversified investment portfolio and a good flow of new opportunities. Our
managers have a clear remit and incentive to manage our holdings so as to
realise further capital gains for distribution to shareholders by way of
dividend. We believe that Northern Venture Trust is well placed to make further
progress over the next five years of its extended life.
The audited financial statements for the year ended 30 September 2005 will show
the results set out below.
PROFIT AND LOSS ACCOUNT
for the year ended 30 September 2005
Year ended 30 September 2005 Year ended 30 September 2004
Revenue Capital Total Revenue Capital Total
£000 £000 £000 £000 £000 £000
Profits recognised in the year
on realisation of investments - 681 681 - 4,578 4,578
Income 1,601 - 1,601 1,671 - 1,671
Investment management fee (200) (599) (799) (207) (622) (829)
Other expenses (230) - (230) (224) - (224)
------ ------ ------ ------ ------ ------
Profit on ordinary activities
before tax 1,171 82 1,253 1,240 3,956 5,196
Tax on ordinary activities (289) 278 (11) (246) 239 (7)
------ ------ ------ ------ ------ ------
Profit on ordinary activities
after tax 882 360 1,242 994 4,195 5,189
Dividends (779) (2,728) (3,507) (791) (3,946) (4,737)
------ ------ ------ ------ ------ ------
Retained profit/(loss) for the year 103 (2,368) (2,265) 203 249 452
------ ------ ------ ------ ------ ------
Earnings per share 2.3p 0.9p 3.2p 2.5p 10.5p 13.0p
Dividend per share 2.0p 7.0p 9.0p 2.0p 10.0p 12.0p
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the year ended 30 September 2005
Year ended 30 September 2005 Year ended 30 September 2004
Revenue Capital Total Revenue Capital Total
£000 £000 £000 £000 £000 £000
Profit on ordinary activities
after tax 882 360 1,242 994 4,195 5,189
Unrealised gains/(losses) on
revaluation of investments - (1,607) (1,607) - 1,012 1,012
------ ------ ------ ------ ------ ------
Total recognised gains and losses
during the year 882 (1,247) (365) 994 5,207 6,201
------ ------ ------ ------ ------ ------
NOTE OF HISTORICAL COST PROFITS AND LOSSES
for the year ended 30 September 2005
Year ended 30 September 2005 Year ended 30 September 2004
Revenue Capital Total Revenue Capital Total
£000 £000 £000 £000 £000 £000
Reported profit on ordinary activities
before tax 1,171 82 1,253 1,240 3,956 5,196
Realisation of investment revaluation
gains/(losses) of prior years - (2,541) (2,541) - 2,113 2,113
------ ------ ------ ------ ------ ------
Historical cost profit/(loss) for the
year before tax 1,171 (2,459) (1,288) 1,240 6,069 7,309
------ ------ ------ ------ ------ ------
Historical cost profit/(loss) for the
year after taxation and dividends 103 (4,909) (4,806) 203 2,362 2,565
------ ------ ------ ------ ------ ------
BALANCE SHEET
as at 30 September 2005
30 September 2005 30 September 2004
£000 £000
Venture capital investments:
Unquoted 25,446 22,301
Quoted 5,032 4,993
------- -------
30,478 27,294
Other quoted investments - 2,446
------- -------
Total fixed asset investments 30,478 29,740
------- -------
Current assets:
Debtors 165 153
Cash at bank 3,056 9,453
------- -------
3,221 9,606
Creditors (amounts falling due
within one year) (2,414) (4,001)
------- -------
Net current assets 807 5,605
------- -------
Net assets 31,285 35,345
------- -------
Capital and reserves:
Called-up equity share capital 9,752 9,860
Share premium 16,564 14,463
Capital redemption reserve 1,562 654
Revaluation reserve 635 (299)
Profit and loss account 2,772 10,667
------- -------
Total equity shareholders' funds 31,285 35,345
------- -------
Net asset value per share 80.2p 89.6p
CASH FLOW STATEMENT
for the year ended 30 September 2005
Year ended Year ended
30 September 2005 30 September 2004
£000 £000 £000 £000
Cash flow statement
Net cash inflow from
operating activities 565 746
Taxation:
Corporation tax paid - -
Financial investment:
Purchase of investments (7,114) (6,259)
Sale/repayment of 5,450 13,085
investments
------ ------
Net cash inflow/(outflow)
from
financial investment (1,664) 6,826
Equity dividends paid (5,110) (2,500)
------ ------
Net cash inflow/(outflow)
before financing (6,209) 5,072
Financing:
Issue of ordinary shares 3,000 258
Share issue expenses (99) (13)
Purchase of ordinary shares
for cancellation (3,089) (364)
------ ------
Net cash outflow from (188) (119)
financing
------ ------
Increase/(decrease) in cash (6,397) 4,953
at bank
------ ------
Reconciliation of profit
before
tax to net cash flow from
operating activities
Profit on ordinary
activities
before tax 1,253 5,196
(Increase)/decrease in (12) 153
debtors
Increase/(decrease) in 5 (25)
creditors
Profit recognised on
realisation of investments (681) (4,578)
------ ------
Net cash inflow from
operating activities 565 746
------ ------
Reconciliation of movement
in net funds
1 October 2004 Cash flows 30 September 2005
£000 £000 £000
Cash at bank 9,453 (6,397) 3,056
------ ------ ------
INVESTMENT PORTFOLIO SUMMARY
as at 30 September 2005
Valuation % of net assets
£000 by valuation
Fifteen largest venture capital investments:
CGI Group 2,963 9.5
Alaric Systems 1,578 5.0
Interlube Systems 1,396 4.5
Computer Software Group** 1,311 4.2
Omnico Plastics 1,264 4.0
Weldex (International) Offshore 1,230 3.9
TFB Group 1,000 3.2
Union Snack 966 3.1
DxS 940 3.0
Envirotec 812 2.6
Alizyme* 781 2.5
Barony Universal Products 762 2.4
Cyclacel Group 734 2.4
Direct Valeting 732 2.3
Pivotal Laboratories 714 2.3
------- ------
17,183 54.9
Other venture capital investments 13,295 42.5
------- ------
Total fixed asset investments 30,478 97.4
Net current assets 807 2.6
------- ------
Net assets 31,285 100.0
------- ------
* Listed on the London Stock Exchange
**Quoted on the Alternative Investment Market
The above summary of results for the year ended 30 September 2005 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 6.0p per share for the year ended 30 September
2005 will, if approved by shareholders, be paid on 16 December 2005 to
shareholders on the register at the close of business on 25 November 2005.
The full annual report including financial statements for the year ended 30
September 2005 is expected to be posted to shareholders on 16 November 2005 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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