Northern Venture Trust Regulatory News (NVT)

7 Nov 2005 16:41

Northern Venture Trust PLC07 November 2005 7 NOVEMBER 2005 NORTHERN VENTURE TRUST PLC PRELIMINARY RESULTSFOR THE YEAR ENDED 30 SEPTEMBER 2005 Northern Venture Trust PLC is a Venture Capital Trust (VCT) managed by NorthernVenture Managers. The trust was one of the first VCTs launched on the LondonStock Exchange in 1995. It invests mainly in unquoted venture capital holdingsand aims to provide high long-term returns to shareholders through a combinationof dividend yield and capital growth. Financial highlights - year ended 30 September 2005:(comparative figures as at 30 September 2004 in italics) 2005 2004• Net assets £31,285,000 £35,345,000• Net asset value per share 80.2p 89.6p• Investment income £1,601,000 £1,671,000• Profit on ordinary activities before tax: Revenue £1,171,000 £1,240,000 Capital £82,000 £3,956,000 Total £1,253,000 £5,196,000• Earnings per share: Revenue 2.3p 2.5p Capital 0.9p 10.5p Total 3.2p 13.0p• Dividend per share: Revenue 2.0p 2.0p Capital 7.0p 10.0p Total 9.0p 12.0p• Cumulative return to shareholders since launch: Dividends per share 53.0p 44.0p Net asset value plus dividends per share 133.2p 133.6p• Share price 78.0p 82.5p For further information, please contact: Northern Venture Managers LimitedAlastair Conn, Managing Director 0191 244 6000Website: www.nvm.co.ukLansons CommunicationsAlison Boucher 020 7294 3616 NORTHERN VENTURE TRUST PLC CHAIRMAN'S STATEMENT The Chairman of Northern Venture Trust PLC, Professor Sir Frederick Holliday CBEFRSE, included the following points in his statement to shareholders: I am pleased to report to shareholders on Northern Venture Trust's tenth year ofoperation. During the past 12 months shareholders have voted overwhelmingly forthe continuation of the company for a further five years; some £7.6 million hasbeen returned by the company to shareholders through a successful tender offerand two dividend payments; 12 new venture capital investments have beencompleted at a cost of £6.6 million; and proposals have been announced for anissue of new C shares to raise up to £30 million to finance our continuinginvestment programme. Financial results The net asset value per share at 30 September 2005, after providing fordividends totalling 9.0p in respect of the year, was 80.2p. The correspondingfigure a year ago was 89.6p, which means that before taking account of dividendsthe company achieved a negative total return of 0.4p per share after reporting apositive return of 15.9p in the preceding year. These contrasting resultsreflect the fact that the year to 30 September 2004 saw a much higher level ofinvestment disposals, whilst in the past 12 months some of our portfoliocompanies have had their progress slowed by difficult trading conditions. The reported earnings per share for the year as shown in the profit and lossaccount amounted to 3.2p, compared with 13.0p in the previous year. I remindshareholders that earnings per share tend to fluctuate widely from year to yearas realised investment gains, adjusted to exclude previous revaluationadjustments, are included under the accounting rules applicable to our company. Investment income at £1,601,000 was down by 4.2% given that several investmentswere sold in the previous year. The revenue element of pre-tax profitsconsequently fell from £1,240,000 to £1,171,000 and revenue earnings per sharefrom 2.5p to 2.3p. Your directors recommend an unchanged revenue dividend forthe year of 2.0p per share and a capital dividend of 7.0p per share (last year10.0p). This makes a total dividend for the year of 9.0p, of which 3.0p waspaid at the interim stage leaving a proposed final dividend of 6.0p which will,subject to shareholders' approval, be paid on 16 December 2005 to shareholderson the register on 25 November 2005. Including the proposed final dividend, subscribers in the original share issuein 1995 will have received cash dividends (including repayable tax credits) of53p per share - an average of 5.3p per year. An investor claiming initialincome tax relief at 20% and capital gains tax deferral at 40% will thereforehave received more than his/her 40p net investment back by way of tax-free cashdividends. The company has now distributed a total of over £18 million toshareholders through tax-free dividend payments. Investment portfolio The manager's review in the annual report gives details of movements in theinvestment portfolio during the year. Total additions to venture capitalinvestments during the year, including £0.5 million of follow-on finance forexisting investments, amounted to £7.1 million and sale proceeds were £2.8million. The remaining portfolio of quoted equity investments managed by SarasinChiswell, valued at £2.4 million at 30 September 2004, was liquidated during theyear in order to release funds for the tender offer to shareholders. VCT qualifying status The company has continued to retain PricewaterhouseCoopers LLP as advisers onVCT taxation matters, and has throughout the year met the qualifying conditionslaid down by the Inland Revenue for its formal approval as a VCT. Shareholder issues At an extraordinary general meeting in February 2005 shareholders approvedproposals to extend the life of the company for a further five years; to make atender offer to buy back up to 10% of the company's issued capital; and toraise new funds through a top-up issue of ordinary shares. We subsequently madea tender offer to acquire up to 3,950,490 shares at a price of 85.6p per share(a 5% discount to net asset value); shareholders tendered 2,965,751 shares,approximately 75% of the maximum, and these were purchased in full by thecompany at a cost of just over £2.5 million. The top-up issue of new sharespriced at a 5% premium to net asset value, which closed in June 2005, raised atotal of £2.5 million. On behalf of the board I would like to thankshareholders for their continuing support for the company. The dividend investment scheme introduced in November 2004 was taken up by 14%of shareholders, representing approximately 10% of the company's issued capital. £526,000 was reinvested in ordinary shares during the period, with subscribersbenefiting from the attractive tax reliefs currently available on new VCTinvestments. Shareholders interested in joining the scheme should contact thecompany secretary for further information. During the year the company continued to buy back shares in the market forcancellation. We will be seeking shareholders' approval at the annual generalmeeting to a renewal of the directors' authority to buy back up to 10% of thecompany's shares in the market for cancellation. In line with common marketpractice we will seek, subject to market conditions, to re-purchase shares at adiscount of 10% to net asset value. At an extraordinary general meeting on 27 October 2005, shareholders approved aresolution paving the way for a public offer of new C shares to raise up to £30million in the 2005/06 tax year. Given the strong flow of new investmentopportunities over the past year and the attractive 40% income tax reliefcurrently available on VCT subscriptions, your directors believe that thecurrent tax year presents an excellent opportunity to raise substantialadditional funds through the C share issue. The proceeds will be managed as acompletely separate pool of funds, alongside the existing ordinary shareholders'funds, until conversion into ordinary shares in 2009. If the issue is fullysubscribed, the funds raised will take the company's total assets toapproximately £60 million, making it one of the largest VCTs. It is expectedthat the prospectus will be published during November. Management performance incentive The independent directors have recently reviewed the performance incentivearrangements applicable to Northern Venture Managers' investment executives. Webelieve it is of great importance to the future prospects of our company thatNVM should be able to recruit and retain high-calibre executives in a marketenvironment where such individuals are much sought after by competitors. Wetherefore propose to establish new incentive arrangements in the form of aco-investment scheme whereby investment executives employed by NVM will berequired to invest personally, and on the same terms as Northern Venture Trust,in the ordinary shares of new investee companies. The management share optionscheme established at the inception of the company in 1995 will be terminated.Further information will be provided to shareholders in the near future. Board of directors After ten years of service as a board member of Northern Venture Trust, TimLevett has decided to concentrate on his role as investment director of NorthernVenture Managers and will not be seeking re-election at the annual generalmeeting. We have greatly appreciated Tim's sound judgement and objectivity as adirector of the company and we are delighted that he will continue toparticipate in our meetings as investment manager. We are very pleased that Clive Williams, who was a managing partner of Ernst &Young and then chief executive of Capgemini UK plc, agreed to join the board inSeptember 2005 and we look forward to working with him in the future. Prospects Economic conditions ahead look as challenging as ever but we have a maturing,well-diversified investment portfolio and a good flow of new opportunities. Ourmanagers have a clear remit and incentive to manage our holdings so as torealise further capital gains for distribution to shareholders by way ofdividend. We believe that Northern Venture Trust is well placed to make furtherprogress over the next five years of its extended life. The audited financial statements for the year ended 30 September 2005 will showthe results set out below. PROFIT AND LOSS ACCOUNT for the year ended 30 September 2005 Year ended 30 September 2005 Year ended 30 September 2004 Revenue Capital Total Revenue Capital Total £000 £000 £000 £000 £000 £000Profits recognised in the year on realisation of investments - 681 681 - 4,578 4,578Income 1,601 - 1,601 1,671 - 1,671Investment management fee (200) (599) (799) (207) (622) (829)Other expenses (230) - (230) (224) - (224) ------ ------ ------ ------ ------ ------Profit on ordinary activities before tax 1,171 82 1,253 1,240 3,956 5,196Tax on ordinary activities (289) 278 (11) (246) 239 (7) ------ ------ ------ ------ ------ ------Profit on ordinary activities after tax 882 360 1,242 994 4,195 5,189Dividends (779) (2,728) (3,507) (791) (3,946) (4,737) ------ ------ ------ ------ ------ ------Retained profit/(loss) for the year 103 (2,368) (2,265) 203 249 452 ------ ------ ------ ------ ------ ------Earnings per share 2.3p 0.9p 3.2p 2.5p 10.5p 13.0pDividend per share 2.0p 7.0p 9.0p 2.0p 10.0p 12.0p STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES for the year ended 30 September 2005 Year ended 30 September 2005 Year ended 30 September 2004 Revenue Capital Total Revenue Capital Total £000 £000 £000 £000 £000 £000Profit on ordinary activities after tax 882 360 1,242 994 4,195 5,189Unrealised gains/(losses) on revaluation of investments - (1,607) (1,607) - 1,012 1,012 ------ ------ ------ ------ ------ ------Total recognised gains and losses during the year 882 (1,247) (365) 994 5,207 6,201 ------ ------ ------ ------ ------ ------ NOTE OF HISTORICAL COST PROFITS AND LOSSES for the year ended 30 September 2005 Year ended 30 September 2005 Year ended 30 September 2004 Revenue Capital Total Revenue Capital Total £000 £000 £000 £000 £000 £000Reported profit on ordinary activities before tax 1,171 82 1,253 1,240 3,956 5,196Realisation of investment revaluation gains/(losses) of prior years - (2,541) (2,541) - 2,113 2,113 ------ ------ ------ ------ ------ ------Historical cost profit/(loss) for the year before tax 1,171 (2,459) (1,288) 1,240 6,069 7,309 ------ ------ ------ ------ ------ ------Historical cost profit/(loss) for the year after taxation and dividends 103 (4,909) (4,806) 203 2,362 2,565 ------ ------ ------ ------ ------ ------ BALANCE SHEET as at 30 September 2005 30 September 2005 30 September 2004 £000 £000Venture capital investments: Unquoted 25,446 22,301 Quoted 5,032 4,993 ------- ------- 30,478 27,294Other quoted investments - 2,446 ------- -------Total fixed asset investments 30,478 29,740 ------- -------Current assets: Debtors 165 153 Cash at bank 3,056 9,453 ------- ------- 3,221 9,606Creditors (amounts falling due within one year) (2,414) (4,001) ------- -------Net current assets 807 5,605 ------- ------- Net assets 31,285 35,345 ------- ------- Capital and reserves:Called-up equity share capital 9,752 9,860Share premium 16,564 14,463Capital redemption reserve 1,562 654Revaluation reserve 635 (299)Profit and loss account 2,772 10,667 ------- -------Total equity shareholders' funds 31,285 35,345 ------- -------Net asset value per share 80.2p 89.6p CASH FLOW STATEMENT for the year ended 30 September 2005 Year ended Year ended 30 September 2005 30 September 2004 £000 £000 £000 £000Cash flow statementNet cash inflow from operating activities 565 746Taxation:Corporation tax paid - -Financial investment:Purchase of investments (7,114) (6,259)Sale/repayment of 5,450 13,085investments ------ ------Net cash inflow/(outflow)from financial investment (1,664) 6,826Equity dividends paid (5,110) (2,500) ------ ------Net cash inflow/(outflow) before financing (6,209) 5,072Financing:Issue of ordinary shares 3,000 258Share issue expenses (99) (13)Purchase of ordinary shares for cancellation (3,089) (364) ------ ------Net cash outflow from (188) (119)financing ------ ------Increase/(decrease) in cash (6,397) 4,953at bank ------ ------Reconciliation of profitbeforetax to net cash flow fromoperating activitiesProfit on ordinaryactivities before tax 1,253 5,196(Increase)/decrease in (12) 153debtorsIncrease/(decrease) in 5 (25)creditorsProfit recognised on realisation of investments (681) (4,578) ------ ------Net cash inflow from operating activities 565 746 ------ ------Reconciliation of movementin net funds 1 October 2004 Cash flows 30 September 2005 £000 £000 £000Cash at bank 9,453 (6,397) 3,056 ------ ------ ------ INVESTMENT PORTFOLIO SUMMARY as at 30 September 2005 Valuation % of net assets £000 by valuationFifteen largest venture capital investments:CGI Group 2,963 9.5Alaric Systems 1,578 5.0Interlube Systems 1,396 4.5Computer Software Group** 1,311 4.2Omnico Plastics 1,264 4.0Weldex (International) Offshore 1,230 3.9TFB Group 1,000 3.2Union Snack 966 3.1DxS 940 3.0Envirotec 812 2.6Alizyme* 781 2.5Barony Universal Products 762 2.4Cyclacel Group 734 2.4Direct Valeting 732 2.3Pivotal Laboratories 714 2.3 ------- ------ 17,183 54.9Other venture capital investments 13,295 42.5 ------- ------Total fixed asset investments 30,478 97.4Net current assets 807 2.6 ------- ------Net assets 31,285 100.0 ------- ------* Listed on the London Stock Exchange**Quoted on the Alternative Investment Market The above summary of results for the year ended 30 September 2005 does notconstitute statutory financial statements within the meaning of Section 240 ofthe Companies Act 1985 and has not been delivered to the Registrar of Companies.Statutory financial statements will be filed with the Registrar of Companiesin due course; the independent auditors' report on those financial statementsunder Section 235 of the Companies Act 1985 is unqualified and does not containa statement under Section 237(2) or (3) of the Companies Act 1985. The proposed final dividend of 6.0p per share for the year ended 30 September2005 will, if approved by shareholders, be paid on 16 December 2005 toshareholders on the register at the close of business on 25 November 2005. The full annual report including financial statements for the year ended 30September 2005 is expected to be posted to shareholders on 16 November 2005 andwill be available to the public at the registered office of the company atNorthumberland House, Princess Square, Newcastle upon Tyne NE1 8ER. ENDS This information is provided by RNS The company news service from the London Stock Exchange