Northern Venture Trust PLC : Correction - Annua...
9 NOVEMBER 2011
NORTHERN VENTURE TRUST PLC
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 30 SEPTEMBER 2011 (CORRECTION)
The announcement released by the Company at 11.36 on 9 November 2011 as
HUG1562430 incorrectly stated that the proposed final dividend of 3.0p per share
for the year ended 30 September 2011 will, if approved by shareholders, be paid
on 17 December 2011 to shareholders on the register at the close of business on
26 November 2011. The final dividend will, if approved by shareholders, be paid
on 16 December 2011 to shareholders on the register at the close of business on
25 November 2011.
The full corrected text of the announcement is as follows:
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 as at 30 September 2010):
             2011            2010
Net assets £62.6m £50.4m
Net asset value per share 87.8p 85.2p
Return per share after tax:
  Revenue 1.5p 1.2p
  Capital 8.8p 6.8p
  Total 10.3p 8.0p
Dividend per share declared in respect of the 6.0p 7.5p
year
Cumulative return to shareholders since launch:
  Net asset value per share 87.8p 85.2p
  Dividends paid per share* 96.5p 89.0p
  Net asset value plus dividends paid per share 184.3p 174.2p
Mid-market share price at end of year 77.0p 72.5p
Share price discount to net asset value 12.3% 14.9%
*Excluding proposed final dividend
For further information, please contact:
NVM Private Equity Limited
Alastair Conn/Christopher Mellor            0191 244 6000
Website:Â www.nvm.co.uk
CHAIRMAN'S STATEMENT
The past year has been challenging but successful for our company, once more
against a backdrop of turbulent financial markets and a struggling UK economy.
The investment portfolio has continued to make good progress, and after a well-
received tender offer and share issue the company's net assets have exceeded £60
million for the first time.
Results and dividend
The NAV per ordinary share at 30 September 2011 was 87.8p, compared with 85.2p a
year earlier. The return per share before dividends as shown in the income
statement was 10.3p, equivalent to 12.1% of the opening net asset value. We are
pleased that the increase in the size of the company has led to economies of
scale as envisaged in our November 2010 share offer prospectus, with the total
expense ratio falling to 2.54% of average net assets this year compared with
2.65% in the corresponding period. Given the challenging market conditions
prevailing over the past year, your directors believe that the outcome for the
year is satisfactory and maintains your company's position among the leading
long-term performers in the VCT market.
The board's stated objective is to pay an annual dividend to shareholders of at
least 6.0p per share, although in recent years it has been possible on a number
of occasions to exceed this target. An interim dividend of 3.0p per share for
the year ended 30 September 2011 was paid in June 2011 and after careful
consideration we have decided to recommend a final dividend also of 3.0p, making
a total of 6.0p for the year, in line with our objective. Our aim is to achieve
a balance between providing an attractive and consistent dividend yield to
shareholders and maintaining the company's capital base as a solid platform for
the future. In the current economic climate we believe that a 6.0p dividend is
the right level and one which we can realistically hope to maintain in the short
to medium term on the 71.3 million shares now in issue.
Investment portfolio
The business review in the annual report gives details of movements in the
investment portfolio during the year. Seven new venture capital holdings were
acquired at a total cost of £6.4 million. As expected, adverse market
conditions meant that exit opportunities were limited, and the only significant
sale was that of Promanex Group Holdings which brought cash proceeds of £2.1
million as well as a £0.5 million inflow of accumulated loan stock interest.
The sale price was in line with our latest carrying value and represented a gain
of 26% over cost, a good result in the current economic climate. In addition a
further £0.9 million of deferred proceeds from the September 2009 sale of DxS
was recognised in the year, bringing the cumulative receipts to £9.6 million
from an original investment of £1.1 million.
Share issue and tender offer
In November 2010 the company made a tender offer to purchase 10% of the issued
share capital at a 3% discount to NAV, along similar lines to a previous tender
offer in 2005. The tender offer was fully taken up with approximately 5.9
million shares being re-purchased at a cost of £4.7 million. Shareholder
feedback has been positive and your board will keep under review the possibility
of a further tender offer in the future.
In November 2010 a new public offer of ordinary shares was launched with a
target of raising £15 million before expenses. The offer proved popular with
investors, closing fully subscribed in mid-February, and was we believe the only
2010/11 generalist VCT offer to sell out before the end of the tax year. Many
of our existing shareholders took the opportunity to make a further investment,
and I would like to thank all of our shareholders for their continuing and
valued support.
Share buy-back policy
It was announced in August 2010 that in order to assist in the provision of
liquidity to shareholders, the company would follow a policy of buying back its
shares in the market at a 15% discount to the latest published NAV, subject to
market conditions and the availability of cash resources and distributable
reserves. In the event it has not been necessary for the company to use its
buyback powers since the completion of the tender offer in December 2010, as
secondary market demand for the shares has remained strong. This is not
surprising given the attractive tax-free yield which our current distribution
policy offers.
The mid-market share price ranged between a low of 70.25p and a high of 79p
during the year, and the discount to NAV at the end of the year was 12.3%.
VAT on management fees
During the year a further £132,000 was recovered in relation to VAT previously
paid on investment management fees, taking the cumulative total to £634,000.
Our managers continue to pursue a claim against HM Revenue & Customs for the
payment of compound rather than simple interest on VAT repayments, but we have
been advised that this will take a considerable time to resolve and in the
meantime no credit has been taken in our accounts for possible future
recoveries.
VCT qualifying status
The company has maintained its approved venture capital trust status with HM
Revenue & Customs. The company's compliance with the VCT qualifying conditions
is closely monitored by the board, who receive regular reports from our managers
and from our VCT taxation advisers, PricewaterhouseCoopers LLP.
Corporate governance
The board's detailed statement on corporate governance matters is set out in the
annual report. The company continues to comply with the provisions of the
Association of Investment Companies Code of Corporate Governance and the
directors review the role and effectiveness of the board, its committees and
individual directors annually. During the past year we have adopted the Code's
recommendation that directors who have served for more than nine years should
seek re-election at each annual general meeting. The board's remit includes
approving all investment and divestment decisions and during the year we met
seven times in person and 17 times by conference call.
Board of directors
Primrose Scott retired from the board at the close of the annual general meeting
in December 2010, at which time I expressed the board's gratitude to Primrose
for her contribution over the first 15 years of the company's life.
Annual general meeting and shareholder presentation
The 2011 annual general meeting will take place in central London on Wednesday
14 December 2011. Details of the formal business of the meeting are set out in
a separate circular which is being sent to shareholders with the annual report.
We look forward to meeting shareholders on that occasion and also at NVM Private
Equity's VCT seminar on Tuesday 24 January 2012.
Outlook
Despite the unhelpful business environment it is encouraging to note that many
of our portfolio companies have continued to make good progress. It is clear
that a return to consistent growth in the UK economy is some way off, and this
will inevitably constrain the performance of individual investments to a certain
extent. By virtue however of our fund-raising and successful realisations we
are now holding a significant amount of cash, which we plan to use selectively
over the short to medium term to take advantage of reasonably-priced private
equity opportunities - some of which we expect to result from the difficulty
which many small and medium sized companies are experiencing in obtaining
funding from UK clearing banks. We will seek to maintain the company's
excellent long-term performance record by continuing to apply the principles
developed over many years and we believe that this should continue to produce
good returns for our shareholders.
John Hustler
Chairman
The audited financial statements for the year ended 30 September 2011 are set
out below.
INCOME STATEMENT
for the year ended 30 September 2011
 Year ended 30 September 2011 Year ended 30 September 2010
 Revenue Capital Total Revenue Capital Total
£000 £000 £000 £000 £000 £000
Gain on -Â 1,277Â 1,277Â -Â 3,119Â 3,119
disposal of
investments
Movements -Â 5,125Â 5,125Â -Â 1,493Â 1,493
in fair
value of
investments
 ---------- ---------- ---------- ---------- ---------- ----------
 - 6,402 6,402 - 4,612 4,612
Income 1,845Â -Â 1,845Â 1,350Â -Â 1,350
Investment (289) (867) (1,156) (244) (733) (977)
management
fee
Recoverable 33Â 99Â 132Â -Â -Â -
VAT
Other (350) (14) (364) (326) -Â (326)
expenses
 ---------- ---------- ---------- ---------- ---------- ----------
Return on 1,239Â 5,620Â 6,859Â 780Â 3,879Â 4,659
ordinary
activities
before tax
Tax on (264) 264Â -Â (95) 95Â -
return on
ordinary
activities
 ---------- ---------- ---------- ---------- ---------- ----------
Return on 975Â 5,884Â 6,859Â 685Â 3,974Â 4,659
ordinary
activities
after tax
 ---------- ---------- ---------- ---------- ---------- ----------
Return per 1.5p 8.8p 10.3p 1.2p 6.8p 8.0p
share
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the year ended 30 September 2011
 Year ended Year ended
30 September 2011Â 30 September 2010
£000 £000
Equity shareholders' funds at 1 October 50,414Â 47,875
2010
Return on ordinary activities after tax 6,859Â 4,659
Dividends recognised in the year (4,789) (1,781)
Net proceeds of share issues 14,782Â (35)
Shares re-purchased for cancellation (4,696) (304)
 ---------- ----------
Equity shareholders' funds at 30 September 62,570Â 50,414
2011
 ---------- ----------
BALANCE SHEET
as at 30 September 2011
 30 September 2011 30 September 2010
£000 £000
Fixed asset investments 44,148Â 35,096
 ---------- ----------
Current assets:
  Debtors 218 1,063
  Cash and deposits 18,294 14,323
 ---------- ----------
 18,512 15,386
Creditors (amounts falling due within one (90) (68)
year)
 ---------- ----------
Net current assets 18,422Â 15,318
 ---------- ----------
Net assets 62,570Â 50,414
 ---------- ----------
Capital and reserves
Called-up equity share capital 17,820Â 14,785
Share premium 10,491Â 12,222
Capital redemption reserve 14,353Â 12,875
Capital reserve 17,053Â 14,280
Revaluation reserve 961Â (5,020)
Revenue reserve 1,892Â 1,272
 ---------- ----------
Total equity shareholders' funds 62,570Â 50,414
 ---------- ----------
Net asset value per share 87.8p 85.2p
CASH FLOW STATEMENT
for the year ended 30 September 2011
 Year ended Year ended
30 September 2011Â 30 September 2010
 £000 £000 £000 £000
Cash flow statement
Net cash inflow from  1,324  1,595
operating activities
Taxation:
Corporation tax paid  -  (261)
Financial investment:
Purchase of investments (10,925) Â (8,688)
Sale/repayment of 8,275Â Â 10,124
investments
 ----------  ----------
Net cash inflow/(outflow) Â (2,650) Â 1,436
from financial investment
Equity dividends paid  (4,789)  (1,781)
  ----------  ----------
Net cash inflow/(outflow) Â (6,115) Â 989
before financing
Financing:
Issue of shares 15,618Â Â -
Share issue expenses (836) Â (35)
Re-purchase of shares for (4,696) Â (304)
cancellation
 ----------  ----------
Net cash inflow/(outflow) Â 10,086Â Â (339)
from financing
  ----------  ----------
Increase in cash and  3,971  650
deposits
  ----------  ----------
Reconciliation of return
before tax
to net cash flow from
operating activities
Return on ordinary  6,859  4,659
activities before tax
Gain on disposal of  (1,277)  (3,119)
investments
Movements in fair value  (5,125)  (1,493)
of investments
Decrease in debtors  845  1,622
Increase/(decrease) in  22  (74)
creditors
  ----------  ----------
Net cash inflow from  1,324  1,595
operating activities
  ----------  ----------
Analysis of movement in
net funds
 1 October 2010 Cash flows 30 September 2011
£000 £000 £000
Cash and deposits 14,323Â 3,971Â 18,294
 ---------- ---------- ----------
INVESTMENT PORTFOLIO SUMMARY
as at 30 September 2011
Company Cost Valuation % of net assets
£000 £000 by valuation
Fifteen largest venture capital
investments:
Kerridge Commercial Systems 1,740 3,672 5.9
Weldex (International) Offshore Holdings 3,262 3,262 5.2
Alaric Systems 2,175 2,602 4.2
CGI Group Holdings 3,449 1,965 3.1
Closerstill Holdings 1,000 1,731 2.8
Paladin Group 1,709 1,601 2.6
Kitwave One 1,582 1,582 2.5
Envirotec 813 1,263 2.0
Arleigh International 775 1,210 1.9
Axial Systems Holdings 1,004 1,117 1.8
Cawood Scientific 1,073 1,073 1.7
Evolve Investments 995 995 1.6
RCC Lifesciences 995 995 1.6
Tinglobal Holdings 988 988 1.6
Wear Inns 979 979 1.5
 ---------- ---------- -------
 22,539 25,035 40.0
Other venture capital investments 13,844 13,098 21.0
 ---------- ---------- -------
Total venture capital investments 36,383 38,133 61.0
Listed equity investments 3,993 3,458 5.5
Listed fixed-interest investments 2,811 2,557 4.1
 ---------- ---------- -------
Total fixed asset investments 43,187 44,148 70.6
 ----------
Net current assets  18,422 29.4
  ---------- -------
Net assets  62,570 100.0
  ---------- -------
BUSINESS RISKS
The board carries out a regular review of the risk environment in which the
company operates. The main areas of risk identified by the board are as
follows:
Investment risk:Â The majority 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. The directors aim to limit
the risk attaching to the portfolio as a whole by careful selection and timely
realisation of investments, by carrying out rigorous due diligence procedures
and by maintaining a wide spread of holdings in terms of financing stage,
industry sector and geographical location. The board reviews the investment
portfolio with the investment managers on a regular basis.
Financial risk:Â As most of the company's investments involve a medium- to long-
term commitment and many are relatively illiquid, 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 exposure to foreign currency risk and does not enter into derivative
transactions.
Economic risk:Â events such as economic recession or general fluctuations 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.
Liquidity risk: The company's investments may be difficult to realise. The
fact that a stock is quoted on a recognised stock exchange does not guarantee
its liquidity and there may be a large spread between bid and offer prices.
Unquoted investments are not traded on a recognised stock exchange and are
inherently illiquid.
Internal control risk:Â The board regularly reviews the system of internal
controls, both financial and non-financial, operated by the company and the
manager. These include controls designed to ensure that the company's assets
are safeguarded and that proper accounting records are maintained.
VCT qualifying status risk:Â 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. The manager keeps the company's VCT qualifying
status under continual review and reports to the board on a quarterly basis.
The board has also retained PricewaterhouseCoopers LLP to undertake an
independent VCT status monitoring role.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The directors are responsible for preparing the annual financial report in
accordance with applicable law and regulations. Company law requires the
directors to prepare financial statements for each financial year. Under that
law the directors have elected to prepare the financial statements in accordance
with UK Accounting Standards. The financial statements are required by law to
give a true and fair view of the state of affairs of the company at the end of
the financial period and of the return of the company for that period. In
preparing these financial statements, the directors are required to (i) select
suitable accounting policies and then apply them consistently;Â (ii) make
judgements and estimates that are reasonable and prudent;Â (iii) state whether
applicable UK Accounting Standards have been followed, subject to any material
departures disclosed and explained in the financial statements;Â and (iv)
prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the company will continue in business.
In relation to the financial statements for the year ended 30 September 2011
each of the directors has confirmed that to the best of his knowledge (i) the
financial statements, which have been prepared in accordance with the applicable
set of accounting standards, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the company;Â and (ii) the
directors' report includes a fair review of the development and performance of
the business and the position of the company together with a description of the
principal risks and uncertainties which it faces.
The directors are also responsible for keeping proper accounting records that
disclose with reasonable accuracy at any time the financial position of the
company and enable them to ensure that its financial statements comply with the
Companies Act 2006. They have general responsibility for taking such steps as
are reasonably open to them to safeguard the assets of the company and to
prevent and detect fraud and other irregularities.
Under applicable law and regulations, the directors are also responsible for
preparing a directors' report, directors' remuneration report and corporate
governance statement that comply with that law and those regulations.
The company's financial statements are published on the NVM Private Equity
Limited website, www.nvm.co.uk. The maintenance and integrity of this website
is the responsibility of NVM and not of the company. Visitors to the website
should be aware that legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from legislation in other
jurisdictions.
The directors of the company at the date of this announcement were Mr J R
Hustler (Chairman), Mr N J Beer, Mr E M P Denny, Mr R S Peters and Mr H P
Younger.
OTHER MATTERS
The above summary of results for the year ended 30 September 2011 does not
constitute statutory financial statements within the meaning of Section 435 of
the Companies Act 2006 and has not been delivered to the Registrar of
Companies. Statutory financial statements will be filed with the Registrar of
Companies in due course;Â the independent auditors' report on those financial
statements under Section 495 of the Companies Act 2006 is unqualified and does
not contain a statement under Section 498(2) or (3) of the Companies Act 2006.
The proposed final dividend of 3.0p per share for the year ended 30 September
2011 will, if approved by shareholders, be paid on 16 December 2011 to
shareholders on the register at the close of business on 25 November 2011.
The full annual report including financial statements for the year ended 30
September 2011 is expected to be posted to shareholders on 16 November 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#1562555]
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