Northern Venture Trust PLC.

14 NOVEMBER 2016



Northern Venture Trust PLC is a Venture Capital Trust (VCT) whose investment adviser is NVM Private Equity LLP.  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 2015):


 2016 2015
Net assets£77.2m£78.9m
Net asset value per share80.0p83.0p
Return per share after tax:  
Revenue 1.6p2.0p
Capital 8.5p5.2p
Total 10.1p7.2p
Dividend per share for the year:  
First interim dividend 3.0p3.0p
Second interim (special) dividend 7.0p6.0p
Proposed final dividend 3.0p3.0p
Total 13.0p12.0p
Cumulative return to shareholders since launch:  
Net asset value per share 80.0p83.0p
Dividends paid per share* 148.5p135.5p
Net asset value plus dividends paid per share 228.5p218.5p
Mid-market share price at end of year70.0p76.0p
Tax-free dividend yield (based on mid-market share price at end of year):  
Excluding special dividend
Including special dividend

*Excluding proposed final dividend payable on 23 December 2016

For further information, please contact:

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



Our company has had a busy and successful year, against a backdrop of far-reaching changes to the VCT legislation as well as the economic uncertainty resulting from the unexpected outcome of the EU referendum.  Six new VCT-qualifying investments were completed under the new rules, and there were four significant investment sales.  As a result of the strong inflow of cash from these exits, the board was once again able to declare a special dividend, this time of 7.0 pence per share paid in June, taking the total for the year (including the proposed final dividend) to 13.0 pence.  We have worked closely with our investment adviser, NVM, to adapt our approach to the requirements of the new VCT rules and we believe the company is well positioned to maintain its strong performance record in the future.

Results and dividend
In the year ended 30 September 2016 the company achieved a return after tax of £9,571,000 (2015 £6,825,000), or 10.1 pence (2015 7.2 pence) per share, before deducting dividends paid, equivalent to a total return of 12.2% on the opening net asset value per share (NAV).  This is an excellent outcome and is arrived at after providing for the performance-related management fee of £844,000 (2015 £319,000) earned by NVM in respect of the year.

The NAV per share at 30 September 2016 (after deducting the dividends totalling 13.0 pence paid during the year) was 80.0 pence, compared with 83.0 pence at 30 September 2015.  An interim dividend of 3.0p per share was paid in June 2016, together with a special dividend of 7.0 pence in recognition of the profitable investment realisations achieved during the year.  The directors propose a final dividend also of 3.0 pence per share, which will be paid on 23 December 2016 to shareholders on the register on 25 November 2016, making a total of 13.0 pence in respect of the year.  This is the thirteenth consecutive year in which a dividend of at least 6.0 pence has been paid.  A 6.0 pence dividend represents a tax-free yield of 8.6% on the mid-market share price (70.0 pence) at 30 September 2016.

The company's dividend investment scheme (DRIS), under which shareholders can re-invest their dividends in new ordinary shares in the company, was reinstated in June 2016 after a period of suspension while the board considered the implications of the Government's changes to the VCT legislation.  Shareholders reinvesting their June 2016 dividends represented over 20% by value of the total dividends paid.

Investment portfolio
Total additions to the venture capital portfolio in the year amounted to £6.2 million.  Six new holdings in unquoted trading companies were acquired at a cost of £5.3 million.  In response to the amended VCT rules, the emphasis in new deal activity has moved from our traditional later stage/management buyout focus towards earlier stage businesses requiring funding for growth and development.  This is likely to involve smaller amounts being invested in more than one funding round in some of our target companies, as we seek to identify and support the significant winners in the portfolio.  NVM has taken steps to resource this change appropriately and shareholders will recall that we have had a number of past successes in backing early stage businesses, including DxS and Alaric Systems.

The cash proceeds from venture capital investments sold or repaid amounted to £11.1 million, representing a surplus of £6.3 million over original cost.  The resulting inflow of cash facilitated the declaration of the special dividend referred to above.  Momentum has been maintained subsequent to the year end and several companies are currently in discussions with a view to sale.

Share issues and buy-backs
It is now three years since our last significant fund-raising.  During this period new investments have been financed by a combination of drawing on the 2013/14 share issue proceeds and utilising cash generated from investment sales.  Having reviewed the forecast cash requirements in 2017, we do not currently envisage a significant public share offer in the 2016/17 tax year.  However in order to maintain a comfortable margin of liquidity for new investments, we intend in conjunction with Northern 2 VCT and Northern 3 VCT to launch a non-prospectus 'top-up' share issue in January 2017 which will raise approximately £4 million for each VCT.  It is intended that priority will be given to applications from existing investors.

We have continued to buy back shares in the market at a 5% discount to NAV.  During the past year 1,265,000 shares, equivalent to approximately 1.3% of the total issued capital, were re-purchased at a cost of £968,000.  For most of the year the mid-market share price discount to the latest published NAV was less than 5%, with a marked narrowing subsequent to the year end.

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 NVM and from our VCT taxation advisers, Philip Hare & Associates LLP.

VCT legislation
I wrote to shareholders in January 2016 to set out the board's initial views on the impact of the changes in the VCT rules, which were enacted in November 2015.  The main provisions affecting our company are:

  • Companies may no longer use funds invested by VCTs to acquire existing shares or businesses - in future such funds may be applied only for "growth and development" purposes;
  • In order to be eligible for VCT investment, companies must normally have made their first commercial sale within the past seven years (ten years in the case of "knowledge-intensive" businesses); and
  • Although there is no change to the existing £5 million annual limit on the amount that a company can raise from State aided sources such as VCTs, there is now also a £12 million lifetime limit (£20 million for knowledge-intensive businesses).

The board has subsequently carried out a careful review of the impact of the new legislation and of future prospects.  Clearly the Government's primary objective is to focus future VCT investment on the provision of growth capital for relatively young companies.  As previously mentioned, Northern Venture Trust has experience in this type of investment and NVM has already taken steps to augment its early-stage capability, recruiting additional executives with relevant expertise.  We have drawn up a broad profile of the type of company that we would like to focus on in the future, and the early indications are encouraging in that we have already completed six new investments which qualify under the new VCT rules.  We believe that the change in circumstances, whilst somewhat abruptly imposed, creates a market opportunity which our company is well placed to exploit.

Our existing portfolio of VCT-qualifying investments is not affected by the new legislation, except to the extent that it will no longer be possible for us to make follow-on investments in many of our companies.  These holdings will continue to be managed with a view to providing a strong investment return in the form of income yield and capital growth over the next few years.

As older investments are sold and new investments are added under the revised investment approach, the composition of the portfolio will gradually change and future investment returns may be more volatile, with potentially a greater emphasis on capital appreciation rather than income.  Nevertheless we hope to be able to continuing paying dividends at a level which will provide an attractive tax-free yield to shareholders.

In the circumstances it is appropriate to revise the wording of our formal investment policy, and we are taking the opportunity to submit an updated version for approval by shareholders at the forthcoming annual general meeting.

Professor Sir Frederick Holliday
We were very sorry to learn in September of the death of Professor Sir Frederick Holliday at the age of 80, after a long illness.  Fred was the founding chairman of Northern Venture Trust and served in that capacity for 14 years, retiring from the board in 2009.  His accomplishments across a wide range of business, academic and scientific activities are too numerous to record here, but his contribution to our company was significant and he is greatly missed.

Annual general meeting
The 2016 annual general meeting will take place in London on Thursday 15 December 2016.  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.

The past year has been a period of rapid change.  We have responded in a considered way to the challenge to adapt our investment philosophy and process, without discarding the key elements which have contributed to the company's success over the past 21 years, and we believe that there are good grounds for feeling positive about future prospects.

Simon Constantine

The audited financial statements for the year ended 30 September 2016 are set out below.

for the year ended 30 September 2016

 Year ended 30 September 2016Year ended 30 September 2015
Gain on disposal of investments 2,398  2,398  5,019  5,019 
Movements in fair value of investments 7,458  7,458  1,189  1,189 
  ----------  ----------  ----------  ----------  ----------  ---------- 
  9,856  9,856  6,208  6,208 
Income 2,570  2,570  3,123  3,123 
Investment management fee (404) (2,054) (2,458) (433) (1,617) (2,050)
Other expenses (397) (397) (456) (456)
  ----------  ----------  ----------  ----------  ----------  ---------- 
Return on ordinary activities before tax 1,769  7,802  9,571  2,234  4,591  6,825 
Tax on return on ordinary activities (240) 240  (333) 333 
  ----------  ----------  ----------  ----------  ----------  ---------- 
Return on ordinary activities after tax 1,529  8,042  9,571  1,901  4,924  6,825 
  ----------  ----------  ----------  ----------  ----------  ---------- 
Return per share 1.6p 8.5p 10.1p 2.0p 5.2p 7.2p

as at 30 September 2016

 30 September 2016 
30 September 2015 
Fixed asset investments 73,572  72,680 
  ----------  ---------- 
Current assets:    
 Debtors 369  302 
 Cash and deposits 4,206  6,418 
  ----------  ---------- 
  4,575  6,720 
Creditors (amounts falling due within one year) (947) (452)
  ----------  ---------- 
Net current assets 3,628  6,268 
  ----------  ---------- 
Net assets 77,200  78,948 
  ----------  ---------- 
Capital and reserves    
Called-up equity share capital 24,110  23,775 
Share premium 2,599  1,359 
Capital redemption reserve 544  228 
Capital reserve 40,514  47,787 
Revaluation reserve 7,360  3,367 
Revenue reserve 2,073  2,432 
  ----------  ---------- 
Total equity shareholders' funds 77,200  78,948 
  ----------  ---------- 
Net asset value per share 80.0p 83.0p

for the year ended 30 September 2016

 ---------------Non-distributable reserves---------------Distributable reservesTotal 





 £000 £000 £000 £000 £000 £000 £000 
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 
Net proceeds of share issues 651  1,240  1,891 
Shares purchased              
for cancellation (316) 316  (968) (968)
Dividends paid (10,354) (1,888) (12,242)
  ----------  ----------  ----------  ----------  ----------  ----------  ---------- 
At 30 September 2016 24,110  2,599  544  7,360  40,514  2,073  77,200 
  ----------  ----------  ----------  ----------  ----------  ----------  ---------- 

for the year ended 30 September 2015

 ---------------Non-distributable reserves---------------Distributable reservesTotal 





 £000 £000 £000 £000 £000 £000 £000 
At 1 October 2014 23,770  1,073  106  10,788  45,348 2,436  83,521 
Return on ordinary activities              
after tax for the year (7,421) 12,345  1,901  6,825 
Net proceeds of share issues 127  286  413 
Shares purchased              
for cancellation (122) 122  (373) (373)
Dividends paid (9,533) (1,905) (11,438)
  ----------  ----------  ----------  ----------  ----------  ----------  ---------- 
At 30 September 2015 23,775  1,359  228  3,367  47,787  2,432  78,948 
  ----------  ----------  ----------  ----------  ----------  ----------  ---------- 

for the year ended 30 September 2016

 Year ended Year ended 
 30 September 2016 30 September 2015 
 £000 £000 
Cash flows from operating activities:    
Return on ordinary activities before tax 9,571  6,825 
Adjustments for:    
Gain on disposal of investments (2,398) (5,019)
Movement in fair value of investments (7,458) (1,189)
(Increase)/decrease in debtors (29) 56 
Increase/(decrease) in creditors 495  50 
  ----------  ---------- 
Net cash inflow from operating activities 181  723 
  ----------  ---------- 
Cash flows from investing activities:    
Purchase of investments (10,471) (18,300)
Sale/repayment of investments 19,397  22,882 
  ----------  ---------- 
Net cash inflow from investing activities 8,926  4,582 
  ----------  ---------- 
Cash flows from financing activities:    
Issue of shares 1,899  428 
Share issue expenses (8) (15)
Shares purchased for cancellation (968) (373)
Dividends paid (12,242) (11,438)
  ----------  ---------- 
Net cash outflow from financing activities (11,319) (11,398)
  ----------  ---------- 
Net decrease in cash and cash equivalents (2,212) (6,093)
Cash and cash equivalents at beginning of year 6,418  12,511 
  ----------  ---------- 
Cash and cash equivalents at end of year 4,206  6,418 
  ----------  ---------- 

as at 30 September 2016

% of net assets
by valuation
Fifteen largest private equity investments:      
Entertainment Magpie Group 1,610 5,515 7.1
Buoyant Upholstery 1,674 3,365 4.4
No 1 Traveller 2,006 3,211 4.2
MSQ Partners Group 1,695 2,578 3.3
Cawood Scientific 1,073 2,519 3.3
Lineup Systems 974 2,468 3.2
IDOX* 269 2,432 3.1
Optilan Group 1,000 2,183 2.8
Wear Inns 1,640 2,039 2.6
It's All Good 1,205 1,841 2.4
Axial Systems Holdings 1,004 1,799 2.3
Biological Preparations Group 2,366 1,759 2.3
Closerstill Group 1,747 1,757 2.3
Volumatic Holdings 1,762 1,724 2.2
Weldex (International) Offshore Holdings 3,262 1,670 2.2
  ---------- ---------- -------
  23,287 36,860 47.7
Other private equity investments:      
Agilitas IT Holdings 1,662 1,631 2.1
Graza 1,581 1,581 2.0
Hunley 1,581 1,581 2.0
Oceanos 1,581 1,581 2.0
Saluda 1,581 1,581 2.0
Seawise 1,581 1,581 2.0
Turbinia 1,581 1,581 2.0
Customs Connect Group 1,406 1,406 1.9
Love Saving Group 1,204 1,204 1.6
Intuitive Holding 1,674 1,080 1.5
CGI Group Holdings 3,818 1,040 1.3
Vectura Group** 599 976 1.3
Myparceldelivery Holdings 905 905 1.2
Rockar 874 874 1.1
Haystack Dryers 1,661 834 1.1
Lending Works 722 722 1.0
AVID Technology Group 715 715 1.0
Lanner Group 579 702 0.9
Channel Mum 662 662 0.9
Arnlea Holdings 1,305 585 0.8
Nasstar* 323 548 0.7
Other investments each valued at less than £500,000 5,386 2,660 3.4
  ---------- ---------- -------
Total private equity investments 56,268 62,890 81.5
Listed equity investments 5,638 6,336 8.1
Listed interest-bearing investments 4,306 4,346 5.6
  ---------- ---------- -------
Total fixed asset investments 66,212 73,572 95.2
Net current assets   3,628 4.8
    ---------- -------
Net assets   77,200 100.0
    ---------- -------
* Quoted on AIM      
**Listed on London Stock Exchange      


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.


The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year.  Under that law they have elected to prepare the financial statements in accordance with UK Accounting Standards, including FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'.

Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for the year.

In preparing the financial statements, the directors are required to (i) select suitable accounting policies and then apply them consistently;  (ii) make judgements and estimates that are reasonable and prudent;  (iii) state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;  and (iv) prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the 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, strategic report, directors' remuneration report and corporate governance statement that comply with that law and those regulations.

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company's website.  Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.


The directors have confirmed that to the best of their knowledge (i) taken as a whole the financial statements, prepared in accordance with the applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the company, and (ii) the strategic report and directors' report include 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 that they face.  The directors consider that the annual report and financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the company's position and performance, business model and strategy.

The directors of the company at the date of this announcement 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 above summary of results for the year ended 30 September 2016 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;  the independent auditor's report on those financial statements under Section 495 of the Companies Act 2006 is unqualified, does not include any reference to matters to which the auditor drew attention by way of emphasis without qualifying the report and does not contain a statement under Section 498(2) or (3) of the Companies Act 2006.

The calculation of the revenue and capital return per share is based on the return on ordinary activities after tax for the year and on 95,009,513 (2015 95,302,650) ordinary shares, being the weighted average number of shares in issue during the year.

The calculation of the net asset value per share is based on the net assets at 30 September 2016 divided by the 96,440,979 (30 September 2015 95,099,820) ordinary shares in issue at that date.

The proposed final dividend of 3.0 pence per share for the year ended 30 September 2016 will, if approved by shareholders, be paid on 23 December 2016 to shareholders on the register at the close of business on 25 November 2016.

The full annual report including financial statements for the year ended 30 September 2016 is expected to be posted to shareholders on 17 November 2016 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,

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