Northern Venture Trust Regulatory News (NVT)

16 Nov 2006 13:48

Northern Venture Trust PLC16 November 2006 16 NOVEMBER 2006 NORTHERN VENTURE TRUST PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2006 Northern Venture Trust PLC is a Venture Capital Trust (VCT) managed by NorthernVenture Managers, and was one of the first VCTs launched on the London StockExchange in 1995. The trust invests mainly in unquoted venture capital holdingsand aims to provide high long-term tax-free returns to shareholders through acombination of dividend yield and capital growth. A successful public offer ofnew C shares in the 2005/06 tax year took the company's total assets toover £50 million, making it one of the largest funds in the VCT sector. Financial highlights - year ended 30 September 2006:(comparative figures as at 30 September 2005, re-stated where appropriate, initalics) Ordinary shares C shares 2006 2005 2006 2005• Net assets £33.1m £33.5m £19.6m -• Net asset value per share 85.7p 86.0p 94.7p -• Return per share: Revenue 2.8p 2.3p 1.6p - Capital 5.8p (3.4)p (1.3)p - Total 8.6p (1.1)p 0.3p -• Dividend per share declaredin respect of the year: Revenue 2.5p 2.0p 1.0p - Capital 6.5p 7.0p - - Total 9.0p 9.0p 1.0p -• Cumulative return toshareholders since launch: Net asset value per share 85.7p 86.0p 94.7p - Dividends paid per share* 56.0p 47.0p - - Net asset value plus dividends paid per share 141.7p 133.0p 94.7p -• Share price at end of year 70.0p 78.0p 95.0p - * Excluding proposed final dividend 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 would like to begin by thanking shareholders for their continuing support forNorthern Venture Trust during another busy year. As a result of the C shareissue completed in April 2006, the company's total assets are now over£52 million - making it one of the largest funds in the venture capital trustsector. It is particularly pleasing that we have been able to maintain theordinary share dividend payable in respect of the year at last year'slevel of 9p per share, taking the cumulative total of ordinary dividendsdeclared to over £22 million. C share issue The C share issue launched in November 2005 raised a total of £20.7 millionbefore expenses. The proceeds of the issue are being managed and accounted foras a separate pool of funds within Northern Venture Trust until the scheduleddate of conversion into ordinary shares in 2009. This necessitates a period ofdual reporting of financial information, which inevitably makes the annualreport more complicated in certain respects, but our company is already showingthe benefits of the inflow of new funds. Financial results The presentation of the results for the year has been affected by recent changesin accounting standards. In particular, quoted investments are now valued atbid price rather than mid-market price, and proposed dividends are no longerincluded in the year-end balance sheet. The comparative figures for the yearended 30 September 2005 have been re-stated on the new basis, and a detailedexplanation of the effect of the changes is included in the financialstatements. The net asset value per ordinary share at 30 September 2006 was 85.7p, slightlydown by comparison with the re-stated figure of 86.0p as at 30 September 2005.However after taking account of dividends totalling 9.0p charged to reservesduring the year, the company achieved a total return of 8.7p per ordinary share- equivalent to 10.1% of opening net asset value. That is a satisfactoryresult. The revenue return per ordinary share for the year was 2.8p, compared with 2.3pin the previous year. The improvement reflects not only an increase ininvestment income but also a reduction in running expenses, the latter resultingfrom the spreading of fixed costs across both the ordinary and C share pools.Your board is recommending an increased revenue dividend for the year of 2.5pper ordinary share (last year 2.0p per share), plus a capital dividend of 6.5pper ordinary share (last year 7.0p) out of profits made on the realisation ofinvestments. This enables us to maintain the total ordinary share dividend forthe year at 9.0p, of which 3.0p was paid at the interim stage leaving a proposedfinal dividend of 6.0p which will, subject to shareholders' approval, bepaid on 15 December 2006 to shareholders on the register on 24 November 2006.As a result ordinary shareholders will have received tax-free dividendstotalling 30p per share in respect of the past three years and a cumulativetotal of 62p since the company was launched in 1995. The new C shares were in issue for only a part of the financial year and arevenue return of 1.6p per share was achieved. No interim dividend was paid, asindicated in the prospectus, and the directors recommend a final dividend of1.0p per C share which will, again subject to shareholders'7 approval, bepaid on 15 December 2006 to shareholders on the register on 24 November 2006. Investment portfolio The Business Review in the annual report gives details of movements in theinvestment portfolio during the year. Total additions to venture capitalinvestments during the year amounted to £3.6 million and sales proceeds were£6.3 million. The net proceeds of the C share issue were invested in a portfolio of listedfixed-interest securities managed by Sarasin Chiswell, valued at £13.9 millionat 30 September 2006, from which funds will progressively be drawn down in orderto finance the acquisition of new VCT-qualifying holdings. Shareholder issues The company has continued to buy back shares in the market for cancellation at a10% discount to net asset value. During the year to 30 September 2006 a totalof 837,434 ordinary shares, representing approximately 2.2% of the issuedordinary share capital at the beginning of the year, were re-purchased at a costof £623,000 - an average of 74.4p per share. The introduction of 40% income tax relief on new VCT investment in the 2004/05tax year, whilst providing a welcome fillip to fund-raising, had the side effectof reducing secondary market demand for VCT shares. We believe that in thelonger term it is important that an active market in VCT shares should beencouraged, and with a view to improving the way in which the benefits of VCTinvestment are communicated to the investing public we have recently (togetherwith approximately 70 other VCTs) joined the Association of InvestmentCompanies. The dividend investment scheme introduced two years ago has continued tooperate, enabling shareholders to re-invest their dividend in new ordinaryshares with the benefit of VCT tax reliefs at the current rates. A number ofVCTs have announced the suspension of dividend schemes in response to VCT rulechanges in the Finance Act 2006, but your board believes that the scheme remainsviable under the new legislation and intends to continue it. Shareholdersinterested in joining the scheme should contact the company secretary forfurther information. The informal shareholder meeting in London in May 2006 was notable for a goodattendance, a wide-ranging presentation and a lively discussion. The 2006annual general meeting on 14 December will take place in Edinburgh and we planto hold the December 2007 meeting in London. Our managers have continued topublish their half-yearly newsletter which is sent to all shareholders. Management performance incentive At the annual general meeting in December 2005 shareholders gave approval to thenew performance incentive scheme recommended by the directors. The scheme,under which executives of Northern Venture Managers co-invest in venture capitalinvestments made by the company, commenced in April 2006 and its operation willbe reviewed regularly by the board. VCT qualifying status The company retains PricewaterhouseCoopers LLP as advisers on matters relatingto VCT status. The directors are satisfied that the qualifying conditions laiddown by HM Revenue & Customs for VCT approval have continued to be met inrespect of the funds attributable to ordinary shareholders. The company hasuntil 30 September 2008 to meet the qualifying requirements in relation to theproceeds of the recent C share issue. Prospects Despite the prospect of further interest rate rises, the outlook for the UKeconomy appears broadly positive. We have a maturing portfolio from which weexpect to harvest further gains, and a strong reserve of liquidity for futureinvestment. These factors augur well for a continuation of good returns toshareholders. Professor Sir Frederick Holliday Chairman The audited financial statements for the year ended 30 September 2006 will showthe results set out below. INCOME STATEMENT for the year ended 30 September 2006 Ordinary shares C shares Revenue Capital Total Revenue Capital Total £000 £000 £000 £000 £000 £000(Loss)/gain on disposal of investments - (431) (431) - - -Unrealised adjustments to fair value of investments - 3,065 3,065 - (78) (78) ------ ------ ------ ------ ------ ------ - 2,634 2,634 - (78) (78)Income 1,754 - 1,754 512 - 512Investment management fee (183) (548) (731) (64) (191) (255)Other expenses (200) - (200) (90) - (90) ------ ------ ------ ------ ------ ------Return on ordinary activities before tax 1,371 2,086 3,457 358 (269) 89Tax on return on ordinary activities (281) 169 (112) (107) 59 (48) ------ ------ ------ ------ ------ ------Return on ordinary activities after tax 1,090 2,255 3,345 251 (210) 41 ------ ------ ------ ------ ------ ------Return per share 2.8p 5.8p 8.6p 1.6p (1.3)p 0.3p Total Revenue Capital Total £000 £000 £000(Loss)/gain on disposal of investments - (431) (431)Unrealised adjustments to fair value of investments - 2,987 2,987 ------ ------ ------ - 2,556 2,556Income 2,266 - 2,266Investment management fee (247) (739) (986)Other expenses (290) - (290) ------ ------ ------Return on ordinary activities before tax 1,729 1,817 3,546Tax on return on ordinary activities (388) 228 (160) ------ ------ ------Return on ordinary activities after tax 1,341 2,045 3,386 ------ ------ ------Return per share 2.5p 3.7p 6.2p INCOME STATEMENTfor the year ended 30 September 2005 Ordinary shares Re-stated Revenue Capital Total £000 £000 £000(Loss)/gain on disposal of investments - 626 626Unrealised adjustments to fair value of investments - (1,638) (1,638) ------ ------ ------ - (1,012) (1,012)Income 1,601 - 1,601Investment management fee (200) (599) (799)Other expenses (230) - (230) ------ ------ ------Return on ordinary activities before tax 1,171 (1,611) (440)Tax on return on ordinary activities (289) 278 (11) ------ ------ ------Return on ordinary activities after tax 882 (1,333) (451) ------ ------ ------Return per share 2.3p (3.4)p (1.1)p RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDSfor the year ended 30 September 2006 Year ended Year ended 30 September 2006 30 September 2005 Re-stated Ordinary Ordinary shares C shares Total shares £000 £000 £000 £000Equity shareholders' funds at 1 October 2005 As previously reported 31,285 - 31,285 35,345 Prior year adjustment 2,247 - 2,247 3,936 ------- ------- ------- ------- As re-stated 33,532 - 33,532 39,281Return on ordinary activities after tax 3,345 41 3,386 (451)Dividends recognised in the year (3,492) - (3,492) (5,110)Net proceeds of share issues 371 19,530 19,901 2,901Shares purchased for cancellation (623) - (623) (3,089)Expenses charged to capital reserve (15) - (15) - ------- ------- ------- -------Equity shareholders' funds at 30 September 2006 33,118 19,571 52,689 33,532 ------- ------- ------- ------- BALANCE SHEETas at 30 September 2006 30 September 2006 30 September 2005 Ordinary Ordinary shares shares C shares Total Re-stated £000 £000 £000 £000Venture capital investments: Unquoted 24,577 1,593 26,170 25,446 Quoted 3,771 299 4,070 4,939 ------- ------- ------- ------- 28,348 1,892 30,240 30,385Listed fixed-interest investments - 13,885 13,885 - ------- ------- ------- -------Total fixed asset investments 28,348 15,777 44,125 30,385 ------- ------- ------- -------Current assets: Debtors 417 467 884 165 Cash at bank 4,523 3,401 7,924 3,056 ------- ------- ------- ------- 4,940 3,868 8,808 3,221Creditors (amounts falling due within one year) (170) (74) (244) (74) ------- ------- ------- -------Net current assets 4,770 3,794 8,564 3,147 ------- ------- ------- ------- Net assets 33,118 19,571 52,689 33,532 ------- ------- ------- ------- Capital and reserves:Called-up equity share capital 9,663 15,500 25,163 9,752Share premium 8,814 2,030 10,844 16,564Capital redemption reserve 1,772 - 1,772 1,562Capital reserve: Realised 6,946 1,868 8,814 4,353 Unrealised 4,850 (78) 4,772 542Revenue reserve 1,073 251 1,324 759 ------- ------- ------- -------Total equity shareholders' funds 33,118 19,571 52,689 33,532 ------- ------- ------- -------Net asset value per share 85.7p 94.7p 88.8p 86.0p CASH FLOW STATEMENTfor the year ended 30 September 2006 Ordinary shares C shares Total £000 £000 £000 £000 £000 £000Cash flow statementNet cash inflow/(outflow)from operating activities 662 (274) 388Taxation:Corporation tax paid (11) - (11)Financial investment:Purchase of investments (1,654) (15,855) (17,509)Sale/repayment of 6,214 - 6,214investments ------- ------- -------Net cash inflow/(outflow)from financial investment 4,560 (15,855) (11,295)Equity dividends paid (3,492) - (3,492) ------- ------- -------Net cash inflow/(outflow) before financing 1,719 (16,129) (14,410)Financing:Issue of shares 385 20,667 21,052Share issue expenses (14) (1,137) (1,151)Purchase of shares for (623) - (623)cancellation ------- ------- -------Net cash inflow/(outflow) from financing (252) 19,530 19,278 ------- ------- -------Increase/(decrease) in 1,467 3,401 4,868cash at bank ------- ------- -------Reconciliation of returnbeforetax to net cash flow fromoperating activitiesReturn on ordinaryactivities before tax 3,457 89 3,546Loss/(gain) on disposal of investments 431 - 431Unrealised adjustments to fair value of investments (3,065) 78 (2,987)(Increase)/decrease in (141) (467) (608)debtorsIncrease/(decrease) in (5) 26 21creditorsExpenses charged to (15) - (15)capital reserve ------- ------- -------Net cash inflow/(outflow)from operating activities 662 (274) 388 ------- ------- -------Analysis of movement in net fundsCash at bank at 1 October 3,056 - 3,0562005Increase in cash at bank 1,467 3,401 4,868 ------- ------- -------Cash at bank at 30 4,523 3,401 7,924September 2006 ------- ------- ------- CASH FLOW STATEMENTfor the year ended 30 September 2005 Ordinary shares As re-stated £000 £000Cash flow statementNet cash inflow/(outflow)from operating activities 565Taxation:Corporation tax paid -Financial investment:Purchase of investments (7,114)Sale/repayment of 5,450investments -------Net cash inflow/(outflow)from financial investment (1,664)Equity dividends paid (5,110) -------Net cash inflow/(outflow) before financing (6,209)Financing:Issue of shares 3,000Share issue expenses (99)Purchase of shares for (3,089)cancellation -------Net cash inflow/(outflow) From financing (188) -------Increase/(decrease) in (6,397)cash at bank -------Reconciliation of returnbeforetax to net cash flow fromoperating activitiesReturn on ordinaryactivities before tax (440)Loss/(gain) on disposal of investments (626)Unrealised adjustments to fair value of 1,638investments(Increase)/decrease in (12)debtorsIncrease/(decrease) in 5creditorsExpenses charged to -capital reserve -------Net cash inflow/(outflow)from operating activities 565 -------Analysis of movement in net fundsCash at bank at 1 October 9,4532004Increase in cash at bank (6,397) -------Cash at bank at 30 3,056September 2005 ------- INVESTMENT PORTFOLIO SUMMARYas at 30 September 2006 Valuation Ordinary shares C shares Total % of net assets £000 £000 £000 by valuationFifteen largest venture capital investments:CGI Group 4,299 - 4,299 8.2Alaric Systems 1,578 - 1,578 3.0TFB Group 1,422 - 1,422 2.7Union Snack 1,294 - 1,294 2.4Weldex (International) Offshore 1,291 - 1,291 2.4John Laing Partnership 1,268 - 1,268 2.4Envirotec 1,171 - 1,171 2.2Computer Software Group* 1,111 - 1,111 2.1Barony Universal Products 1,107 - 1,107 2.1Touchstone Asset Management 200 800 1,000 1.9Nightingales Holdings 397 596 993 1.9DxS 940 - 940 1.8Pivotal Laboratories Holdings 714 - 714 1.3IG Doors 683 - 683 1.3Interlube Systems 660 - 660 1.3 ------- ------- ------- ------ 18,135 1,396 19,531 37.0Other venture capital investments 10,213 496 10,709 20.4 ------- ------- ------- ------Total venture capital investments 28,348 1,892 30,240 57.4Listed fixed-interest investments - 13,885 13,885 26.3 ------- ------- ------- ------Total fixed asset investments 28,348 15,777 44,125 83.7Net current assets 4,770 3,794 8,564 16.3 ------- ------- ------- ------Net assets 33,118 19,571 52,689 100.0 ------- ------- ------- ------*Quoted on Alternative Investment Market The above summary of results for the year ended 30 September 2006 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 financialstatements under Section 235 of the Companies Act 1985 is unqualified and doesnot contain a statement under Section 237(2) or (3) of the Companies Act 1985. The company is required to comply with a number of new UK Financial ReportingStandards (FRS), which now represent UK Generally Accepted Accounting Practice(UK GAAP), in presenting its financial statements for the year ended 30September 2006. These Standards have been introduced as part of the process ofaligning UK accounting principles with International Accounting Standards. The revised accounting policies differ from those used in preparing the annualfinancial statements for the year ended 30 September 2005 in the followingrespects: • The unrealised gain or loss resulting from the revaluation of fixedasset investments held at fair value is now recognised in the income statement,as required by FRS 26 "Financial Instruments: Measurement"; • Quoted investments are valued at bid price rather than mid-marketprice, as required by FRS 26 "Financial instruments: Measurement"; and • Dividends to shareholders are accounted for in the period in whichthe company is liable to pay them, rather than in the period in respect of whichthey are declared, as required by FRS 21 *****?c=8220Events after the Balance SheetDate*****?c=8221. Dividends payable are treated as a charge on reserves andaccounted for through the reconciliation of movements in shareholders'funds rather than in the profit and loss account as previously. The comparative figures for the year ended 30 September 2005 have been re-statedaccordingly. The effect of the above changes on the reported net assets and net asset valueper ordinary share of the company is as follows: 30 September 2005 1 October 2004 Net asset Net asset Net value per Net value per assets share assets share £000 p £000 pAs reported under previous UK GAAP 31,285 80.2 35,345 89.6Less: adjustment in valuation of quoted investments to (93) (0.2) (7) -bid priceAdd: proposed dividends not accounted for until declared 2,340 6.0 3,943 10.0and paid ------- ------- ------- -------As reported under revised UK GAAP 33,532 86.0 39,281 99.6 ------- ------- ------- ------- The proposed final ordinary share dividend of 6.0p per share for the year ended30 September 2006 will, if approved by shareholders, be paid on 15 December 2006to shareholders on the register at the close of business on 24 November 2006. The proposed final C share dividend of 1.0p per share for the year ended 30September 2006 will, if approved by shareholders, be paid on 15 December 2006 toshareholders on the register at the close of business on 24 November 2006. The full annual report including financial statements for the year ended 30September 2006 is expected to be posted to shareholders on 23 November 2006 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