TIDMNVT
23 MAY 2017
NORTHERN VENTURE TRUST PLC
UNAUDITED HALF-YEARLY FINANCIAL REPORT FOR THE SIX MONTHSED 31 MARCH
2017
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 2016 and 30
September 2016)
Six months to Six months to Year to
31 March 31 March 30 September
2017 2016 2016
Net assets GBP76.9m GBP77.9m GBP77.2m
Net asset value per share 79.1p 82.9p 80.0p
Return per share:
Revenue 0.9p 0.9p 1.6p
Capital 1.2p 1.9p 8.5p
Total 2.1p 2.8p 10.1p
Dividend per share for the period:
First interim dividend 3.0p 3.0p 3.0p
Second interim (special) dividend 5.0p 7.0p 7.0p
Final dividend - - 3.0p
Total 8.0p 10.0p 13.0p
Cumulative returns to shareholders
since launch: 79.1p 82.9p 80.0p
Net asset value per share 151.5p 138.5p 148.5p
Dividends paid per share* 230.6p 221.4p 228.5p
Net asset value plus dividends paid per share
*Excluding interim dividends payable on 30 June 2017
Mid-market share price at end of period 75.50p 76.75p 70.00p
Tax-free dividend yield (based on mid-market
share price at end of period):
Excluding special dividend 7.9% 7.8% 8.6%
Including special dividend 14.6% 16.9% 18.6%
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 MONTHSED 31 MARCH 2017
The past six months have been relatively quiet in terms of portfolio
movements, but there has been considerable activity as the process of
adapting to the recent changes to the VCT rules continues. We completed
a small top-up share offer and achieved two significant investment sales,
one of which occurred just after the March period end but has been
valued at the sale price in the March balance sheet. Our cash position
remains healthy and I am pleased to report that the board has decided to
declare a special dividend of 5.0p per share in recognition of the
investment gains recorded over the past 12 months, in addition to the
normal 3.0p interim dividend. The flow of potential new investments is
currently looking strong.
Results and dividend
The unaudited net asset value (NAV) per share at 31 March 2017 was 79.1p,
compared with the audited figure of 80.0p at 30 September 2016. The
total return per share before dividends for the six months ended 31
March 2017 as shown in the income statement was 2.1p (six months ended
31 March 2016 2.8p), equivalent to 2.6% of the NAV at the start of the
period. Investment income was slightly higher than in the corresponding
period last year at GBP1.4 million, but this reflected the benefit of a
one-off receipt of GBP0.4 million from Optilan Group as mentioned below,
and across the portfolio we have seen the beginning of an inevitable
downward trend in investment income as the profile of the portfolio
changes towards earlier stage investments in response to the new VCT
rules. The revenue return per share for the period was unchanged at
0.9p.
We have declared an unchanged first interim dividend of 3.0p per share
for the year ending 30 September 2017. There has been a strong inflow
of cash from investment realisations since we last paid a special
dividend in mid-2016, and the VCT rules allow only a relatively short
six month period for re-investment of such receipts before they become
non-qualifying if retained by the company. Accordingly the directors
have also decided to declare a special dividend of 5.0p, which will be
paid as a second interim dividend for the year ending 30 September 2017.
The first and second interim dividends, totalling 8.0p per share, will
be paid on 30 June 2017 to shareholders on the register on 2 June 2017.
We will continue to keep our dividend policy under review, and
shareholders should bear in mind that in the short to medium term the
move towards earlier-stage investments may have the effect of reducing
the amounts of income and realised gains available for distribution.
Investments
One new VCT-qualifying holding was acquired during the period, when
GBP1.0 million was invested in Intelling Group, a Manchester-based
business which provides telemarketing and customer care services, mainly
in the business-to-consumer market. NVM has reported an increase
recently in the volume of work in progress on potential new investments,
and we expect to see this reflected in further investment activity in
the second half of the year.
Two significant exits have been achieved since our last report, one just
before the March period end and one just after. Cawood Scientific was
sold in March in a secondary buyout funded by Inflexion Private Equity,
generating cash proceeds of GBP2.9 million and a gain of GBP1.8 million
over the original cost; in April we sold Optilan Group to Blue Water
Energy for proceeds of GBP2.2 million and a gain of GBP1.2 million, as
well as recovering GBP0.4 million of accrued loan stock interest. These
investments, held for seven years and nine years respectively, are
excellent examples of how long-term funding from VCTs can be used by
growing companies to enhance shareholder value whilst creating increased
employment and contributing to the wider UK economy.
Our portfolio companies have generally continued to make good progress,
and we hope to see further exit activity later in the year.
Shareholder issues
In January 2017 we launched a top-up offer of new ordinary shares to
raise up to GBP4.3 million, in conjunction with similar offers by
Northern 2 VCT and Northern 3 VCT. The offer was restricted to existing
investors in the Northern VCTs and sold out almost immediately,
demonstrating the strong level of market demand for new shares in
well-established VCTs. A substantial number of applications had to be
declined and we regret the disappointment felt by unsuccessful
applicants. The possibility of future share issues will be kept under
review, and will naturally depend on the rate of new investment and
realisations from the existing portfolio.
Our dividend investment scheme, which enables shareholders 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,
continues to operate.
We have maintained our policy of being willing to buy back the company's
shares in the market at a 5% discount to NAV. During the period under
review, however, secondary market demand was sufficient to accommodate
would-be sellers without the need for buy-backs by the company.
VCT legislation
We have come through a period of rapid change in the VCT legislation,
and VCTs and HM Revenue & Customs are still coming to terms with some of
the practical implications. In November 2016 the Government announced
its Patient Capital Review, with a remit to identify barriers to access
to long-term finance for growing firms in the UK and to assess what
changes in government policy may be needed to improve the supply of
funding. In an uncertain economic climate, with the political landscape
also changing, we believe that VCTs have continued to play a significant
role in relation to this aspect of the UK economy.
VCT qualifying status
The company has continued to meet the stringent qualifying conditions
laid down by HM Revenue & Customs for maintaining its approval as a VCT.
Our investment adviser, NVM, monitors the position closely and reports
regularly to the board. Philip Hare & Associates LLP has continued to
act as independent adviser to the company on VCT taxation matters.
Outlook
The unforeseen events of the past 12 months, both in the UK and on a
global stage, have emphasised the difficulty of making statements about
what lies ahead. Your company has over the years developed the
resilience to cope with changing circumstances and still produce
satisfactory returns for shareholders, and we therefore take a broadly
positive view of the future.
On behalf of the Board
Simon Constantine
Chairman
The unaudited half-yearly financial statements for the six months ended
31 March 2017 are set out below.
INCOME STATEMENT
(unaudited) for the six months ended 31 March 2017
Six months ended 31 March 2017 Six months ended 31 March 2016
Revenue Capital Total Revenue Capital Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Gain on
disposal of
investments - 759 759 - 1,053 1,053
Movements in
fair value
of
investments - 800 800 - 1,284 1,284
---------- ---------- ---------- ---------- ---------- ----------
- 1,559 1,559 - 2,337 2,337
Income 1,431 - 1,431 1,338 - 1,338
Investment
management
fee (199) (596) (795) (207) (622) (829)
Other
expenses (204) - (204) (206) - (206)
---------- ---------- ---------- ---------- ---------- ----------
Return on
ordinary
activities
before tax 1,028 963 1,991 925 1,715 2,640
Tax on
return on
ordinary
activities (176) 176 - (104) 104 -
---------- ---------- ---------- ---------- ---------- ----------
Return on
ordinary
activities
after tax 852 1,139 1,991 821 1,819 2,640
---------- ---------- ---------- ---------- ---------- ----------
Return per 0.9p 1.2p 2.1p 0.9p 1.9p 2.8p
share
Year ended 30 September 2016
Revenue Capital Total
GBP000 GBP000 GBP000
Gain on disposal of investments - 2,398 2,398
Movements in fair value of investments - 7,458 7,458
---------- ---------- ----------
- 9,856 9,856
Income 2,570 - 2,570
Investment management fee (404) (2,054) (2,458)
Other expenses (397) - (397)
---------- ---------- ----------
Return on ordinary activities before
tax 1,769 7,802 9,571
Tax on return on ordinary activities (240) 240 -
---------- ---------- ----------
Return on ordinary activities after tax 1,529 8,042 9,571
---------- ---------- ----------
Return per share 1.6p 8.5p 10.1p
BALANCE SHEET
(unaudited) as at 31 March 2017
31 March 2017 31 March 2016 30 September 2016
GBP000 GBP000 GBP000
Fixed asset investments 66,858 69,285 73,572
---------- ---------- ----------
Current assets:
Debtors 597 330 369
Cash and cash equivalents 13,807 8,416 4,206
---------- ---------- ----------
14,404 8,746 4,575
Creditors (amounts falling
due within one year) (4,388) (169) (947)
---------- ---------- ----------
Net current assets 10,016 8,577 3,628
---------- ---------- ----------
Net assets 76,874 77,862 77,200
---------- ---------- ----------
Capital and reserves:
Called-up equity share
capital 24,302 23,490 24,110
Share premium 2,984 1,359 2,599
Capital redemption reserve 544 513 544
Capital reserve 40,805 47,521 40,514
Revaluation reserve 6,278 2,674 7,360
Revenue reserve 1,961 2,305 2,073
---------- ---------- ----------
Total equity shareholders'
funds 76,874 77,862 77,200
---------- ---------- ----------
Net asset value per share 79.1p 82.9p 80.0p
STATEMENT OF CHANGES IN EQUITY
(unaudited) for the six months ended 31 March 2017
---------------Non-distributable
reserves--------------- Distributable reserves Total
Capital
Share Share redemption Revaluation Capital Revenue
capital premium reserve reserve reserve reserve
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1
October
2016 24,110 2,599 544 7,360 40,514 2,073 77,200
Return on
ordinary
activities
after tax
for the
period - - - (1,082) 2,221 852 1,991
Dividends
paid - - - - (1,930) (964) (2,894)
Net
proceeds
of share
issues 192 385 - - - - 577
---------- ---------- ---------- ---------- ---------- ---------- ----------
At 31 March
2017 24,302 2,984 544 6,278 40,805 1,961 76,874
---------- ---------- ---------- ---------- ---------- ---------- ----------
STATEMENT OF CHANGES IN EQUITY
(unaudited) for the six months ended 31 March 2016
---------------Non-distributable
reserves--------------- Distributable reserves Total
Capital
Share Share redemption Revaluation Capital Revenue
capital premium reserve reserve reserve reserve
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 October
2015 23,775 1,359 228 3,367 47,787 2,432 78,948
Return on
ordinary
activities
after tax
for the
period - - - (693) 2,512 821 2,640
Dividends
paid - - - - (1,897) (948) (2,845)
Re-purchase
of shares (285) - 285 - (881) - (881)
---------- ---------- ---------- ---------- ---------- ---------- ----------
At 31 March
2016 23,490 1,359 513 2,674 47,521 2,305 77,862
---------- ---------- ---------- ---------- ---------- ---------- ----------
STATEMENT OF CHANGES IN EQUITY
(unaudited) for the year ended 30 September 2016
---------------Non-distributable
reserves--------------- Distributable reserves Total
Capital
Share Share redemption Revaluation Capital Revenue
capital premium reserve reserve reserve reserve
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 October
2015 23,775 1,359 228 3,367 47,787 2,432 78,948
Return on
ordinary
activities
after tax
for the
year - - - 3,993 4,049 1,529 9,571
Dividends
paid - - - - (10,354) (1,888) (12,242)
Net proceeds
of share
issues 651 1,240 - - - - 1,891
Re-purchase
of shares (316) - 316 - (968) - (968)
---------- ---------- ---------- ---------- ---------- ---------- ----------
At 30
September
2016 24,110 2,599 544 7,360 40,514 2,073 77,200
---------- ---------- ---------- ---------- ---------- ---------- ----------
STATEMENT OF CASH FLOWS
(unaudited) for the six months ended 31 March 2017
Six months ended Six months ended Year ended
31 March 2017 31 March 2016 30 September 2016
GBP000 GBP000 GBP000
Cash flows from
operating activities:
Return on ordinary
activities before tax 1,991 2,640 9,571
Adjustments for:
Gain on disposal of
investments (759) (1,053) (2,398)
Movement in fair value
of investments (800) (1,284) (7,458)
(Increase)/decrease in
debtors (266) (28) (29)
Increase/(decrease) in
creditors (856) (283) 495
---------- ---------- ----------
Net cash
inflow/(outflow) from
operating activities (690) (8) 181
---------- ---------- ----------
Cash flows from
investing activities:
Purchase of investments (2,496) (914) (10,471)
Sale/repayment of
investments 10,807 6,646 19,397
---------- ---------- ----------
Net cash inflow from
investing activities 8,311 5,732 8,926
---------- ---------- ----------
Cash flows from
financing activities:
Issue of shares 592 - 1,899
Share issue expenses (15) - (8)
Share subscriptions
held pending
allotment 4,297 - -
Repurchase of ordinary
shares for
cancellation - (881) (968)
Dividends paid on
ordinary shares (2,894) (2,845) (12,242)
---------- ---------- ----------
Net cash
inflow/(outflow) from
financing activities 1,980 (3,726) (11,319)
---------- ---------- ----------
Net increase/(decrease)
in cash/cash
equivalents 9,601 1,998 (2,212)
Cash and cash
equivalents at
beginning of period 4,206 6,418 6,418
---------- ---------- ----------
Cash and cash
equivalents at end of
period 13,807 8,416 4,206
---------- ---------- ----------
INVESTMENT PORTFOLIO SUMMARY
as at 31 March 2017
Cost Valuation % of net assets
GBP000 GBP000 by valuation
Venture capital investments:
Entertainment Magpie Group 1,610 5,516 7.2
No 1 Lounges 2,006 4,012 5.2
Buoyant Upholstery 1,674 3,263 4.2
MSQ Partners Group 1,695 2,798 3.6
Lineup Systems 974 2,468 3.2
IDOX* 238 2,210 2.9
Optilan Group 1,000 2,196 2.9
Agilitas IT Holdings 1,662 1,865 2.4
Wear Inns 1,640 1,854 2.4
Biological Preparations Group 2,366 1,759 2.3
It's All Good 1,205 1,751 2.3
Closerstill Group 1,747 1,747 2.3
Volumatic Holdings 1,595 1,677 2.2
Weldex (International) Offshore
Holdings 3,262 1,670 2.2
Graza 1,581 1,581 2.1
------------ ------------ ------------
Fifteen largest venture capital
investments 24,255 36,367 47.4
Other venture capital investments 26,311 19,247 25.0
------------ ------------ ------------
Total venture capital investments 50,566 55,614 72.4
Listed equity investments 5,183 6,373 8.3
Listed interest-bearing
investments 4,831 4,871 6.3
------------ ------------ ------------
Total fixed asset investments 60,580 66,858 87.0
------------
Net current assets:
Cash and cash equivalents 13,807 18.0
Debtors less creditors (3,791) (5.0)
------------ ------------
Net assets 76,874 100.0
------------ ------------
*Quoted on AIM
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 Philip Hare &
Associates LLP to undertake an independent VCT status monitoring role.
OTHER MATTERS
The unaudited half-yearly financial statements for the six months ended
31 March 2017 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 2016 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 2016.
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
96,859,127 (2016 94,713,918) 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 2017 divided by the 97,209,695 (2016 93,959,820)
ordinary shares in issue at that date.
The first interim dividend of 3.0p per share and the second interim
dividend of 5.0p per share for the year ending 30 September 2017 will be
paid on 30 June 2017 to shareholders on the register at the close of
business on 2 June 2017.
A copy of the half-yearly financial report for the six months ended 31
March 2017 is expected to be posted to shareholders by 2 June 2017 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.
This announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq 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
(END) Dow Jones Newswires
May 23, 2017 10:00 ET (14:00 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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