Half-yearly report

20 MAY 2015

NORTHERN VENTURE TRUST PLC

UNAUDITED HALF-YEARLY FINANCIAL REPORT FOR THE SIX MONTHS ENDED 31 MARCH 2015

Northern Venture Trust PLC is a Venture Capital Trust (VCT) whose investment adviser is NVM Private Equity.  The trust was one of the first VCTs launched on the London Stock Exchange in 1995.  It invests mainly in UK unquoted companies 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 as at 31 March 2014 and 30 September 2014)

	Six months to 31 March  2015	Six months to 31 March  2014	Year to 30 September  2014
Net assets	£84.5m	£83.5m	£83.5m
Net asset value per share	88.6p	89.1p	87.8p
Return per share: Revenue Capital Total	1.1p 2.7p 3.8p	1.1p 4.2p 5.3p	2.1p 5.0p 7.1p
Dividend per share declared/paid in respect of the period  (31 March 2015 includes 6.0p special dividend)	9.0p	3.0p	6.0p
Cumulative returns to shareholders since launch: Net asset value per share Dividends paid per share* Net asset value plus dividends paid per share  *Excluding interim dividends payable on 17 July 2015	88.6p 126.5p 215.1p	89.1p 120.5p 209.6p	87.8p 123.5p 211.3p
Mid-market share price at end of period	80.0p	80.8p	79.5p
Share price discount to net asset value	9.7%	9.4%	9.5%
Tax-free dividend yield (based on mid-market share price at end of period):
Excluding special dividend  Including special dividend	7.5% 15.0%	7.4% N/A	7.5% N/A

For further information, please contact:

NVM Private Equity LLP
Alastair Conn/Christopher Mellor                  0191 244 6000

Website:  www.nvm.co.uk

NORTHERN VENTURE TRUST PLC

HALF-YEARLY MANAGEMENT REPORT FOR THE SIX MONTHS ENDED 31 MARCH 2015

Results and dividend
The unaudited net asset value per share (NAV) at 31 March 2015 was 88.6p, compared with the audited figure of 87.8p at 30 September 2014.  The overall return per share before dividends for the six months ended 31 March 2015 as shown in the income statement was 3.8p (six months ended 31 March 2014 5.3p), equivalent to 4.3% of the NAV at the start of the period.  Investment income and management expenses were marginally higher than in the corresponding period, but the revenue return per share was unchanged at 1.1p.

The venture capital portfolio saw a number of excellent realisations in the half year, generating £18.7 million in cash proceeds from investments originally acquired at a cost of £5.5 million.  The bulk of this gain had already been recognised in the valuations incorporated in previous years' results, but approximately £4.5 million of the total was recognised in the income statement in the current period.  The effect of this was partly offset by a £1.5 million reduction in the valuation of the continuing portfolio, reflecting a small number of cases where progress is behind expectations.

The directors have declared an unchanged interim dividend of 3.0p per share in respect of the year ending 30 September 2015.  In view of the successful investment realisations achieved during the period, the directors are also pleased to declare a special dividend of 6.0p per share, which will be paid as a second interim dividend for the current year.  Both dividends, totalling 9.0p per share, will be paid on 17 July 2015 to shareholders on the register on 19 June 2015.

For those existing shareholders who wish to increase their investment in the company, the dividend investment scheme continues to operate, providing shareholders with the opportunity to re-invest their dividends in new ordinary shares free of dealing costs and with the benefit of the tax reliefs available on new VCT share subscriptions.  Shareholders may elect to join the scheme on a continuing basis or in respect of the special dividend only.  Details of the scheme can be obtained from the company secretary.

Investments
The most significant event in the unquoted venture capital portfolio during the period was the sale of Kerridge Commercial Systems in a secondary management buy-out transaction for £8.6 million, realising a gain of £7.0 million over original cost.  We also exited from CloserStill Group via a management buy-out for proceeds of £3.3 million, realising a gain of £2.4 million.  The opportunity was taken to re-invest £1.7 million of the proceeds in the successor company CloserStill Media, alongside the new investors.  Other disposals included Promatic Group and Envirotec.  A further £0.6 million of deferred sale proceeds from the 2013 sale of Alaric Systems was received and recognised during the period.

In the AIM-quoted portfolio, an agreed cash bid for Advanced Computer Software Group produced proceeds of £3.1 million from our original investment of £0.4 million.

New venture capital investments in the period totalled £4.6 million, of which £0.4 million related to two new AIM-quoted holdings.  It is important that we continue to maintain a healthy rate of new investments in the portfolio, both to replace exited holdings and to invest the funds raised through the 2013/14 share issue, whilst maintaining high quality investment standards.  Market conditions are currently highly competitive, with valuations being driven upwards by the weight of money available for investment by venture capital and private equity funds and providers of debt at low interest rates.

The companies in the unquoted portfolio have, with a small number of exceptions as mentioned above, continued to make satisfactory progress.  We have as usual taken a prudent approach to the valuation of our holdings and this has involved recognising some downward adjustments where companies are progressing less well than expected in the short term.

Shareholder issues
Following the success of the 2013/14 public share offer, which raised £15 million of new funds for investment, your directors decided not to launch a share offer in the 2014/15 tax year.  The company has recently benefitted from a strong inflow of cash from investment realisations, and has ample funds available for new investment in the short term after taking into account the imminent payment of the interim dividends totalling £8.6 million.  The directors will in due course be considering whether it is appropriate to raise additional funds in the 2015/16 tax year having regard to longer-term investment requirements.

The company has continued to buy back shares in the market, when necessary in order to maintain liquidity, at a 10% discount to NAV.  There is a small but steady demand for shares in the secondary market, with an average of approximately 300,000 shares traded per month over the past year.  During the six months ended 31 March 2015 a total of 185,000 shares were repurchased by the company for cancellation, at an average price of 78p.  The board reviews the buy-back policy regularly in the light of the company's cash position and general market factors, and we have decided to reduce the discount at which shares are bought back from 10% to 5% with immediate effect.

The annual general meeting in December 2015 will be held in London and we look forward to meeting as many shareholders as possible on that occasion.  In recent years the AGM venue has alternated between London and Edinburgh but we intend in future to hold meetings in Edinburgh only once every three years, recognising that a large proportion of shareholders are based in the South East of England.

The company continues to provide shareholders with the option to receive communications from the company electronically rather than by paper copy.  Shareholders who wish to join the scheme, which is operated by the company's registrars, Equiniti Limited, should visit www.shareview.co.uk, register for a Shareview portfolio and select "Email" as their preferred method of delivery of company communications.

Management
As previously reported, Northern Venture Trust acts as its own Alternative Investment Fund Manager for the purposes of the Alternative Investment Fund Managers Directive, with NVM Private Equity providing investment advisory and administrative services.  With effect from 2 February 2015 NVM transferred its business activities from NVM Private Equity Limited to NVM Private Equity LLP, a new limited liability partnership, and the company's investment advisory agreement with NVM was novated to NVM Private Equity LLP on the same terms as before.

VCT qualifying status
The company has continued to meet the qualifying conditions laid down by HM Revenue & Customs for maintaining its approval as a VCT.  Our investment adviser monitors the position closely and reports regularly to the board.  During the period the board reviewed the provision of independent VCT taxation advisory services and appointed Robertson Hare LLP to take over as independent adviser to the company on VCT taxation matters.

VCT legislation and regulation
The Chancellor of the Exchequer's Budget announcement in March 2015 set out proposals for further changes to the VCT legislation, designed to secure continuing approval of VCT investments within the European Commission's state aid guidelines.  These proposals have yet to be agreed with the Commission and in the meantime new investments made by VCTs on or after 6 April 2015 are subject to some uncertainty as to whether they will be VCT-qualifying.  After taking advice your board therefore decided, in conjunction with the other Northern VCTs, to invest in six new companies on 2 April 2015 each of which intends to acquire a trading business in the coming months.  These new qualifying investments were made under the pre-6 April 2015 regulations and Northern Venture Trust has invested a total of £9,483,000 in the six companies.

The Government's continuing support for the VCT sector is not in doubt, but your directors are concerned that the investment rules are becoming steadily more restrictive, influenced by the European Commission's views as to the type of business which should be eligible for investment by state-aided funds such as VCTs.  We agree that financing should be readily available for start-up and early stage companies, particularly in knowledge-based industry sectors; however the increasing focus on such companies means that the VCT rules are becoming less friendly to many of the small and medium-sized businesses which have formed an important part of our investment activities in the past, and which have demonstrably made a substantial contribution to the economic well-being and growth of the UK.

Board of directors
Richard Green and David Mayes joined the board in November 2014 and have already made a significant contribution to our business.  John Hustler retired as chairman and as a director at the annual general meeting in December 2014, after 19 years of distinguished service to the company, and I was delighted to accept the directors' invitation to succeed John as chairman.  On behalf of the whole board as well as shareholders I would like to thank John for his wise counsel and leadership over these many years.  The board has been substantially restructured in recent years and has an excellent mixture of skills and experience.

Outlook
The recent reminder by the Governor of the Bank of England of the challenges currently facing the UK economy was timely.  The definitive outcome of the UK general election was welcome in terms of reducing political uncertainty, but it is clear that further economic growth will be hard-won and that small unquoted companies are unlikely to enjoy an easy ride.  We will have to maintain a strong rate of new investment in a competitive marketplace, whilst ensuring that existing investee companies are as well placed as possible to grow and succeed.  Set against this background, and with our past record of coming through periods of challenge in good shape, I believe we are well placed to make continued progress as we approach our 20th anniversary later this year.

On behalf of the Board

SIMON CONSTANTINE
Chairman

The unaudited half-yearly financial statements for the six months ended 31 March 2015 are set out below.

INCOME STATEMENT
(unaudited) for the six months ended 31 March 2015

	Six months ended 31 March 2015			Six months ended 31 March 2014
	Revenue  £000	Capital  £000	Total  £000	Revenue  £000	Capital  £000	Total  £000
Gain on disposal of investments	-	4,490	4,490	-	1,526	1,526
Movements in fair value of investments	-	(1,476)	(1,476)	-	2,709	2,709
	----------	----------	----------	----------	----------	----------
	-	3,014	3,014	-	4,235	4,235
Income	1,753	-	1,753	1,717	-	1,717
Investment management fee	(215)	(645)	(860)	(191)	(573)	(764)
Other expenses	(259)	-	(259)	(223)	(15)	(238)
	----------	----------	----------	----------	----------	----------
Return on ordinary activities before tax	1,279	2,369	3,648	1,303	3,647	4,950
Tax on return on ordinary activities	(202)	137	(65)	(240)	240	-
	----------	----------	----------	----------	----------	----------
Return on ordinary activities after tax	1,077	2,506	3,583	1,063	3,887	4,950
	----------	----------	----------	----------	----------	----------
Return per share	1.1p	2.7p	3.8p	1.1p	4.2p	5.3p

				Year ended 30 September 2014
				Revenue  £000	Capital  £000	Total  £000
Gain on disposal of investments				-	781	781
Movements in fair value of investments				-	4,858	4,858
				----------	----------	----------
				-	5,639	5,639
Income				3,266	-	3,266
Investment management fee				(406)	(1,424)	(1,830)
Other expenses				(422)	(15)	(437)
				----------	----------	----------
Return on ordinary activities before tax				2,438	4,200	6,638
Tax on return on ordinary activities				(438)	438	-
				----------	----------	----------
Return on ordinary activities after tax				2,000	4,638	6,638
				----------	----------	----------
Return per share				2.1p	5.0p	7.1p

RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
(unaudited) for the six months ended 31 March 2015

	Six months ended  31 March 2015	Six months ended  31 March 2014	Year ended  30 September 2014
	£000	£000	£000
Equity shareholders' funds at 1 October 2014	83,521	67,361	67,361
Return on ordinary activities after tax	3,583	4,950	6,638
Dividends recognised in the period	(2,852)	(2,796)	(5,647)
Net proceeds of share issues	412	13,992	15,504
Shares purchased for cancellation	(145)	-	(335)
	----------	----------	----------
Equity shareholders' funds at 31 March 2015	84,519	83,507	83,521
	----------	----------	----------

BALANCE SHEET
(unaudited) as at 31 March 2015

	31 March 2015	31 March 2014	30 September 2014
	£000	£000	£000
Fixed asset investments	58,995	66,363	71,054
	----------	----------	----------
Current assets:
Debtors	283	400	358
Cash and deposits	25,479	17,274	12,511
	----------	----------	----------
	25,762	17,674	12,869
Creditors (amounts falling due within one year)	(238)	(530)	(402)
	----------	----------	----------
Net current assets	25,524	17,144	12,467
	----------	----------	----------
Net assets	84,519	83,507	83,521
	----------	----------	----------
Capital and reserves:
Called-up equity share capital	23,850	23,438	23,770
Share premium	1,359	-	1,073
Capital redemption reserve	152	-	106
Capital reserve	55,772	49,349	45,348
Revaluation reserve	823	8,270	10,788
Revenue reserve	2,563	2,450	2,436
	----------	----------	----------
Total equity shareholders' funds	84,519	83,507	83,521
	----------	----------	----------
Net asset value per share	88.6p	89.1p	87.8p

CASH FLOW STATEMENT
(unaudited) for the six months ended 31 March 2015

	Six months ended  31 March 2015		Six months ended  31 March 2014		Year ended  30 September 2014
	£000	£000	£000	£000	£000	£000
Net cash inflow/(outflow) from
operating activities		479		(528)		68
Taxation:
Corporation tax paid		-		-		-
Financial investment:
Purchase of investments	(5,508)		(9,711)		(16,137)
Sale/repayment of investments	20,582		8,835		11,974
	----------		----------		----------
Net cash inflow/(outflow)
from financial investment		15,074		(876)		(4,163)
Equity dividends paid		(2,852)		(2,796)		(5,647)
		----------		----------		----------
Net cash inflow/(outflow) before financing		12,701		(4,200)		(9,742)
Financing:
Issue of shares	427		14,283		15,829
Share issue expenses	(15)		(291)		(325)
Share subscriptions held pending allotment	-		(13,812)		(14,210)
Purchase of shares for cancellation	(145)		-		(335)
	----------		----------		----------
Net cash inflow from financing		267		180		959
		----------		----------		----------
Increase/(decrease) in cash and deposits		12,968		(4,020)		(8,783)
		----------		----------		----------
Reconciliation of return before tax
to net cash flow from operating activities
Return on ordinary activities
before tax		3,648		4,950		6,638
Gain on disposal of investments		(4,490)		(1,526)		(781)
Movements in fair value
of investments		1,476		(2,709)		(4,858)
(Increase)/decrease in debtors		75		(86)		(44)
Increase/(decrease) in creditors		(230)		(1,157)		(887)
		----------		----------		----------
Net cash inflow/(outflow) from
operating activities		479		(528)		68
		----------		----------		----------
Analysis of movement in net funds
	1 October 2014		Cash flows		31 March 2015
	£000		£000		£000
Cash and deposits		12,511		12,968		25,479
		----------		----------		----------

INVESTMENT PORTFOLIO SUMMARY
as at 31 March 2015

	Cost £000	Valuation £000	% of net assets by valuation
Venture capital investments:
CGI Group Holdings	3,818	2,696	3.2
Buoyant Upholstery	1,674	2,549	3.0
Weldex (International) Offshore Holdings	3,262	2,537	3.0
Silverwing	1,774	2,393	2.8
Biological Preparations Group	2,366	2,366	2.8
Volumatic Holdings	2,095	2,027	2.4
MSQ Partners Group	1,695	2,008	2.4
Kitwave One	1,583	1,961	2.3
Wear Inns	1,640	1,818	2.1
CloserStill Media	1,747	1,747	2.1
Agilitas Holdings	1,662	1,662	2.0
Control Risks Group Holdings	746	1,534	1.8
IDOX*	269	1,412	1.7
Arleigh Group	324	1,409	1.7
Intuitive Holding	1,674	1,290	1.5
	------------	------------	------------
Fifteen largest venture capital investments	26,329	29,409	34.8
It's All Good	1,205	1,261	1.5
No 1 Traveller	1,653	1,237	1.5
Cawood Scientific	1,073	1,199	1.4
Lineup Systems	974	974	1.2
Arnlea Holdings	1,305	948	1.1
Optilan Group	1,000	939	1.1
Haystack Dryers	1,661	910	1.1
Axial Systems Holdings	1,004	756	0.9
Fresh Approach (UK) Holdings	1,475	717	0.8
Vectura Group**	247	663	0.8
Lanner Group	832	652	0.8
Sinclair IS Pharma*	425	593	0.7
Brady*	386	558	0.7
Nasstar*	323	548	0.6
Kirton Group	1,155	546	0.6
Direct Valeting	73	497	0.6
Collagen Solutions*	321	425	0.5
Gentronix	678	339	0.4
Tinglobal Holdings	260	330	0.4
RTC Group*	436	261	0.3
Other investments each valued at less than £100,000	733	107	0.1
	------------	------------	------------
Total venture capital investments	43,548	43,869	51.9
Listed equity investments	8,124	8,580	10.2
Listed interest-bearing investments	6,500	6,546	7.7
	------------	------------	------------
Total fixed asset investments	58,172	58,995	69.8
	------------
Net current assets:
Cash and deposits		25,479	30.1
Debtors less creditors		45	0.1
		------------	------------
Net assets		84,519	100.0
		------------	------------
*  Quoted on AIM
**Listed on London Stock Exchange

BUSINESS RISKS

The board carries out a regular and robust review of the risk environment in which the company operates.  The principal risks and uncertainties identified by the board which might affect the company's business model and future performance, and the steps taken with a view to their mitigation, are as follows:

Investment and liquidity risk: many of the company's investments are in small and medium-sized unquoted and AIM-quoted companies which are VCT qualifying holdings, and which by their nature entail a higher level of risk and lower liquidity than investments in large quoted companies.  Mitigation: the directors aim to limit the risk attaching to the portfolio as a whole by careful selection, close monitoring and timely realisation of investments, by carrying out rigorous due diligence procedures and maintaining a wide spread of holdings in terms of financing stage and industry sector.  The board reviews the investment portfolio with the investment adviser on a regular basis.

Financial risk: most of the company's investments involve a medium- to long-term commitment and many are relatively illiquid.  Mitigation: the directors consider that it is inappropriate to finance the company's activities through borrowing except on an occasional short-term basis.  Accordingly they seek to maintain a proportion of the company's assets in cash or cash equivalents in order to be in a position to take advantage of new unquoted investment opportunities.  The company has very little direct exposure to foreign currency risk and does not enter into derivative transactions.

Economic risk: events such as economic recession or general fluctuation in stock markets and interest rates may affect the valuation of investee companies and their ability to access adequate financial resources, as well as affecting the company's own share price and discount to net asset value.  Mitigation: the company invests in a diversified portfolio of investments spanning various industry sectors, and maintains sufficient cash reserves to be able to provide additional funding to investee companies where appropriate.

Stock market risk: some of the company's investments are quoted on the London Stock Exchange or AIM and will be subject to market fluctuations upwards and downwards.  External factors such as terrorist activity can negatively impact stock markets worldwide.  In times of adverse sentiment there can be very little, if any, market demand for shares in smaller companies quoted on AIM.  Mitigation: the company's quoted investments are actively managed by specialist managers and the board keeps the portfolio under ongoing review.

Credit risk: the company holds a number of financial instruments and cash deposits and is dependent on the counterparties discharging their commitment.  Mitigation: the directors review the creditworthiness of the counterparties to these instruments and cash deposits and seek to ensure there is no undue concentration of credit risk with any one party.

Legislative and regulatory risk: in order to maintain its approval as a VCT, the company is required to comply with current VCT legislation in the UK, which reflects the European Commission's state aid rules.  Changes to the UK legislation or the state aid rules in the future could have an adverse effect on the company's ability to achieve satisfactory investment returns whilst retaining its VCT approval.  Mitigation: The board and the investment adviser monitor political developments and where appropriate seek to make representations either directly or through relevant trade bodies.

Internal control risk: the company's assets could be at risk in the absence of an appropriate internal control regime.  Mitigation: the board regularly reviews the system of internal controls, both financial and non-financial, operated by the company and the investment adviser.  These include controls designed to ensure that the company's assets are safeguarded and that proper accounting records are maintained.

VCT qualifying status risk: the company is required at all times to observe the conditions laid down in the Income Tax Act 2007 for the maintenance of approved VCT status.  The loss of such approval could lead to the company losing its exemption from corporation tax on capital gains, to investors being liable to pay income tax on dividends received from the company and, in certain circumstances, to investors being required to repay the initial income tax relief on their investment.  Mitigation: the investment adviser keeps the company's VCT qualifying status under continual review and its reports are reviewed by the board on a quarterly basis.  The board has also retained Robertson Hare LLP to undertake an independent VCT status monitoring role.

OTHER MATTERS

The unaudited half-yearly financial statements for the six months ended 31 March 2015 do not constitute statutory financial statements within the meaning of Section 434 of the Companies Act 2006, have not been reviewed or audited by the company's independent auditor and have not been delivered to the Registrar of Companies.  The comparative figures for the year ended 30 September 2014 have been extracted from the audited financial statements for that year, which have been delivered to the Registrar of Companies.  The auditor's report on those financial statements (i) was unqualified, (ii) did not include any reference to matters to which the auditor drew attention by way of emphasis without qualifying the report and (iii) 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 2014.

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 S J Constantine (Chairman), Mr N J Beer, Mr R J Green, Mr T R Levett, Mr D A Mayes 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 94,798,353 (2014 92,748,388) 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 2015 divided by the 95,399,820 (2014 93,750,215) ordinary shares in issue at that date.

The first interim dividend of 3.0p per share and the second interim dividend of 6.0p per share for the year ending 30 September 2015 will be paid on 17 July 2015 to shareholders on the register at the close of business on 19 June 2015.

A copy of the half-yearly financial report for the six months ended 31 March 2015 is expected to be posted to shareholders by 5 June 2015 and will be available to the public at the registered office of the company at Time Central, 32 Gallowgate, Newcastle upon Tyne NE1 4SN and on the NVM Private Equity LLP website, www.nvm.co.uk.

Neither the contents of the NVM Private Equity LLP website nor the contents of any website accessible from hyperlinks on the NVM Private Equity LLP website (or any other website) is incorporated into, or forms part of, this announcement.

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This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Northern Venture Trust PLC via Globenewswire

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