TIDMNVT
23 NOVEMBER 2023
NORTHERN VENTURE TRUST PLC
UNAUDITED HALF-YEARLY FINANCIAL REPORT FOR THE SIX MONTH
PERIODED 30 SEPTEMBER 2023
Northern Venture Trust PLC is a Venture Capital Trust (VCT)
whose investment adviser is Mercia Fund Management Limited. 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 long-term tax-free returns to
shareholders through a combination of dividend yield and capital
growth.
Financial highlights (comparative figures as at 30 September
2022 and 31 March 2023):
Six months Six months Eighteen months
ended ended ended
30 30
September September 31 March
2023 2022 2023
Net assets GBP106.6m GBP106.2m GBP102.5m
Net asset value per share 61.4p 63.5p 62.1p
Return per share
Revenue 0.2p (0.2)p (0.3)p
Capital 1.1p (2.8)p (5.7)p
Total 1.3p (3.0)p (6.0)p
Dividend per share declared in respect
of the period 1.6p 2.0p 6.0p
Cumulative return to shareholders
since launch
Net asset value per share 61.4p 63.5p 62.1p
Dividends paid per share* 190.5p 186.5p 188.5p
Net asset value plus dividends paid
per share 251.9p 250.0p 250.6p
Mid-market share price at end
of period 56.50p 61.75p 57.50p
Share price discount to net asset
value 8.0% 2.8% 7.4%
Tax-free dividend yield (based on
the net asset value per share)** 6.3% 5.4% 5.4%
*Excluding interim dividend not yet paid.
**The annualised dividend yield is calculated by dividing the
dividends paid in respect of the 12 month period ended on each
reference date by the net asset value per share at the start of the
12 month period.
Enquiries:
James Sly, Mercia Asset Management PLC -- 0330 223 1430
Website: www.mercia.co.uk/vcts
HALF-YEARLY MANAGEMENT REPORT FOR THE SIX MONTH PERIODED 30
SEPTEMBER 2023
Over the past six months, the UK economy has faced numerous
challenges including high inflation and little growth. Despite this
backdrop, your Company has continued to provide much needed
investment into early-stage companies, support for its existing
portfolio companies and achieve returns through realisations.
Venture capital investment activity and portfolio update
Despite the macroeconomic backdrop, we are pleased to report
that a number of our venture investments have performed well over
the period, reflected in an overall increase in the valuation of
the unquoted portfolio. Where portfolio companies have struggled or
are at risk of failure, we have also made a number of reductions in
valuations to reflect our current assessment. The listed AIM
portfolio has stabilised following a decline in the previous
financial period.
Further progress has been made on the development of the
portfolio and deployment of our cash reserves, with two new venture
capital investments totalling GBP3.0 million made during the six
month period and GBP1.9 million invested in five existing portfolio
companies.
One benefit of the increased interest rate environment is the
yield that we are able to achieve on uninvested cash balances. In
the period we liquidated the Company's portfolio of listed shares
with RBC Brewin Dolphin, placing the cash in a money market fund,
and as at 30 September the blended rate achieved on uninvested cash
was 4.3%. Approximately GBP10m of our cash was held in listed
shares for almost five years and generated a compound total return
of 5.0% a year over that period, significantly exceeding the rate
of return available from interest rates.
We have continued to see positive realisations from portfolio
companies. We have sold our holding in Evotix, for initial net
proceeds of GBP12.7 million, representing 4.6 times return on the
original cost. We have also sold our holding in Weldex
(International) Offshore Holdings for proceeds of GBP1.6 million.
The original investment in Weldex was in 1996 and this final exit
represents a lifetime return (including previously received
proceeds and interest) of 9.9 times. Venture investment disposals
made in the six month period generated blended proceeds of 2.4
times original cost.
Results and dividend
The unaudited net asset value (NAV) per share at 30 September
2023 was 61.4 pence (62.1 pence (audited) on 31 March 2023). The
total return per share before dividends for the six months ended 30
September 2023 as shown in the income statement was 1.3 pence,
compared with minus 3.0 pence in the corresponding period last
year. The performance was driven by an unrealised increase of
GBP1.9 million in the valuation of investments over the last six
months, along with a realised gain on disposal of investments of
GBP0.8 million.
Five years ago, we introduced a target dividend yield of 5% of
opening NAV, which has been exceeded in each of the years since
then. On 18 August 2023 the final dividend of 2.0 pence in respect
of the period ending 31 March 2023 was paid to shareholders. After
careful consideration, and taking our target yield into account, we
have decided to declare an interim dividend of 1.6 pence per share
in respect of the year to 31 March 2024. The interim dividend will
be paid on 17 January 2024 to shareholders on the register on 15
December 2023.
Our dividend investment scheme, which enables shareholders to
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. Details on how to join the
scheme are included within the dividend section of our website,
which can be found here: mercia.co.uk/vcts/nvt/.
Shareholder issues
As a result of the fully subscribed public share offer launched
in January 2023, 9,741,182 new ordinary shares were issued in April
2023 for gross proceeds of GBP6.0 million.
We continue to experience a sustained demand for long-term
growth capital for smaller companies in the UK. In order to
continue to support our existing portfolio and invest in new
early-stage opportunities, we are currently fundraising in
conjunction with the other Northern VCTs. Full details of how to
participate in the fund raise is available on the Company's website
at http://www.mercia.co.uk/vcts/.
We have maintained our policy of being willing to buy back the
Company's shares in the market in order to maintain liquidity, at a
5% discount to NAV. During the period a total of 1,836,810 shares
were purchased by the Company for cancellation, representing around
1.1% of the opening ordinary share capital.
Change of registrar
We are pleased to report that from close of business on 10
November 2023 the Company changed its registrar to The City
Partnership (UK) Limited ("City"). You will receive a letter
confirming this change, and should you need to contact City,
contact details may be found on the Company's website.
VCT legislation and qualifying status
The Company has continued to meet the stringent and complex
qualifying conditions laid down by HM Revenue & Customs for
maintaining its approval as a VCT. Mercia 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.
The 2025 'sunset clause' was a European state aid requirement
that was introduced when the VCT scheme received state aid
approval, which meant that without small change in legislation
investors would not receive upfront tax relief when investing in
VCTs after this date. We were pleased to receive the news on 22nd
November 2023 that the Sunset Clause will be extended by 10 years
to 2035 in the Autumn Finance Bill 2023.
Outlook
While macroeconomic conditions remain challenging, the unquoted
venture portfolio remains resilient and the Company is well
capitalised, which will enable the existing portfolio to be
supported as necessary. We remain confident in the long term
prospects of your Company's diversified portfolio of
businesses.
On behalf of the Board
Simon Constantine
Chair
INVESTMENT PORTFOLIO
(Unaudited) as at 30 September 2023
Cost Valuation % of net assets
GBP000 GBP000 by value
Fifteen largest venture capital
investments
----------------------------------------- ------- --------- ---------------
Gentronix 1,362 4,317 4.0%
----------------------------------------- ------- --------- ---------------
Grip-UK (t/a Climbing Hangar) 3,885 3,885 3.6%
----------------------------------------- ------- --------- ---------------
Volumatic Holdings 216 3,037 2.8%
----------------------------------------- ------- --------- ---------------
Tutora (t/a Tutorful) 2,722 2,872 2.7%
----------------------------------------- ------- --------- ---------------
Pure Pet Food 1,774 2,722 2.6%
----------------------------------------- ------- --------- ---------------
Project Glow Topco (t/a Currentbody.com) 1,686 2,632 2.5%
----------------------------------------- ------- --------- ---------------
Newcells Biotech 2,479 2,629 2.5%
----------------------------------------- ------- --------- ---------------
Rockar 1,877 2,488 2.3%
----------------------------------------- ------- --------- ---------------
Biological Preparations Group 2,366 2,417 2.3%
----------------------------------------- ------- --------- ---------------
Netacea 2,292 2,309 2.2%
----------------------------------------- ------- --------- ---------------
Buoyant Upholstery 1,173 2,201 2.1%
----------------------------------------- ------- --------- ---------------
Adludio 2,103 2,103 2.0%
----------------------------------------- ------- --------- ---------------
Forensic Analytics 2,016 2,015 1.9%
----------------------------------------- ------- --------- ---------------
IDOX* 238 2,002 1.9%
----------------------------------------- ------- --------- ---------------
Clarilis 1,972 1,972 1.8%
----------------------------------------- ------- --------- ---------------
28,161 39,601 37.2%
----------------------------------------- ------- --------- ---------------
Other venture capital investments 49,738 33,105 31.0%
----------------------------------------- ------- --------- ---------------
Total venture capital investments 77,899 72,706 68.2%
----------------------------------------- ------- --------- ---------------
Net current assets 33,941 31.8%
----------------------------------------- ------- --------- ---------------
Net assets 106,647 100.0%
----------------------------------------- ------- --------- ---------------
*Quoted on AIM
Extracts from the unaudited half-yearly financial statements for
the six months ended 30 September 2023 are set out below.
INCOME STATEMENT
(Unaudited) for the six months ended 30 September 2023
Eighteen months
Six months ended Six months ended ended 31 March
30 September 2023 30 September 2022 2023
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Gain on disposal of
investments - 834 834 - 132 132 - 2,944 2,944
Movements in fair
value of investments - 1,922 1,922 - (3,983) (3,983) - (9,776) (9,776)
- 2,756 2,756 - (3,851) (3,851) - (6,832) (6,832)
Dividend and interest
income 873 - 873 128 - 128 948 - 948
Investment management
fee (260) (780) (1,040) (265) (796) (1,061) (811) (2,432) (3,243)
Other expenses (345) - (345) (214) - (214) (796) - (796)
Return before tax 268 1,976 2,244 (351) (4,647) (4,998) (659) (9,264) (9,923)
Tax on return 86 (86) - - - - 181 (181) -
Return after tax 354 1,890 2,244 (351) (4,647) (4,998) (478) (9,445) (9,923)
Return per share 0.2p 1.1p 1.3p (0.2)p (2.8)p (3.0)p (0.3)p (5.7)p (6.0)p
BALANCE SHEET
(Unaudited) as at 30 September 2023
30 September 2023 30 September 2022 31 March 2023
GBP000 GBP000 GBP000
Fixed assets
-------------------- ------------------ ----------------- -------------
Investments 72,706 83,625 88,609
--------------------- ------------------ ----------------- -------------
Current assets
-------------------- ------------------ ----------------- -------------
Debtors 362 50 70
--------------------- ------------------ ----------------- -------------
Cash and cash
equivalents 33,720 22,632 14,001
--------------------- ------------------ ----------------- -------------
34,082 22,682 14,071
-------------------- ------------------ ----------------- -------------
Creditors (amounts
falling due within
one year) (141) (109) (183)
--------------------- ------------------ ----------------- -------------
Net current assets 33,941 22,573 13,888
--------------------- ------------------ ----------------- -------------
Net assets 106,647 106,198 102,497
--------------------- ------------------ ----------------- -------------
Capital and reserves
-------------------- ------------------ ----------------- -------------
Called-up equity
share capital 43,457 41,781 41,230
--------------------- ------------------ ----------------- -------------
Share premium 23,159 19,069 19,394
--------------------- ------------------ ----------------- -------------
Capital redemption
reserve 5,801 4,544 5,342
--------------------- ------------------ ----------------- -------------
Capital reserve 38,668 36,160 34,433
--------------------- ------------------ ----------------- -------------
Revaluation reserve (5,192) 4,172 1,698
--------------------- ------------------ ----------------- -------------
Revenue reserve 754 472 400
--------------------- ------------------ ----------------- -------------
Total equity
shareholders' funds 106,647 106,198 102,497
--------------------- ------------------ ----------------- -------------
Net asset value per 61.4p 63.5p 62.1p
share
--------------------- ------------------ ----------------- -------------
STATEMENT OF CHANGES IN EQUITY
(Unaudited) for the six months ended 30 September 2023
Distributable
Non-distributable reserves reserves Total
Called-up Capital
share Share redemption Revaluation Capital Revenue
capital premium reserve reserve* reserve reserve
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------- --------
At 1 April 2023 41,230 19,394 5,342 1,698 34,433 400 102,497
Return after tax - - - (6,890) 8,780 354 2,244
Dividends paid - - - - (3,475) - (3,475)
Net proceeds of share
issues 2,686 3,765 - - - - 6,451
Shares purchased for
cancellation (459) - 459 - (1,070) - (1,070)
At 30 September 2023 43,457 23,159 5,801 (5,192) 38,668 754 106,647
----------- --------
Six months ended 30
September 2022
At 1 April 2022 40,143 14,969 3,833 9,904 40,220 823 109,892
Return after tax - - - (5,732) 1,085 (351) (4,998)
Dividends paid - - - - (3,369) - (3,369)
Net proceeds of share
issues 2,349 4,100 - - - - 6,449
Shares purchased for
cancellation (711) - 711 - (1,776) - (1,776)
At 30 September 2022 41,781 19,069 4,544 4,172 36,160 472 106,198
--------
Eighteen months ended
31 March 2023
At 1 October 2021 40,268 14,608 3,508 21,430 38,325 1,159 119,298
Return after tax - - - (19,732) 10,287 (478) (9,923)
Dividends paid - - - - (9,609) (281) (9,890)
Net proceeds of share
issues 2,796 4,786 - - - - 7,582
Shares purchased for
cancellation (1,834) - 1,834 - (4,570) - (4,570)
At 31 March 2023 41,230 19,394 5,342 1,698 34,433 400 102,497
--------
*The revaluation reserve is generally non-distributable other
than that part of the reserve relating to gains/losses on readily
realisable quoted investments, which are distributable.
STATEMENT OF CASH FLOWS
(Unaudited) for the six months ended 30 September 2023
Six months Six months Eighteen months
ended ended ended
30 September 30 September
2023 2022 31 March 2023
GBP000 GBP000 GBP000
Cash flows from operating
activities
Return before tax 2,244 (4,998) (9,923)
Adjustments for:
(Gain)/loss on disposal of
investments (834) (132) (2,944)
Movements in fair value of
investments (1,922) 3,983 9,776
(Increase)/decrease in debtors (292) 5 238
(Decrease)/increase in creditors (42) (12) (2,496)
Net cash (outflow)/inflow from
operating activities (846) (1,154) (5,349)
Cash flows from investing
activities
Purchase of investments (5,263) (5,543) (27,450)
Sale/repayment of investments 23,922 4,592 28,572
Net cash inflow/(outflow) from
investing activities 18,659 (951) 1,122
Cash flows from financing
activities
Issue of ordinary shares 6,603 6,480 7,796
Share issue expenses (152) (32) (214)
Purchase of ordinary shares
for cancellation (1,070) (1,776) (4,570)
Equity dividends paid (3,475) (3,368) (9,890)
Net cash inflow/(outflow) from
financing activities 1,906 1,304 (6,878)
Net increase/(decrease) in cash
and cash equivalents 19,719 (801) (11,105)
Cash and cash equivalents at
beginning of period 14,001 23,433 25,106
Cash and cash equivalents at
end of period 33,720 22,632 14,001
RISK MANAGEMENT
The Board carries out a regular and robust assessment of the
risk environment in which the Company operates and seeks to
identify new risks as they emerge. The principal and emerging 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: investment in smaller and
unquoted companies, such as those in which the Company invests,
involves a higher degree of risk than investment in larger listed
companies because they generally have limited product lines,
markets and financial resources and may be more dependent on key
individuals. The securities of smaller companies in which the
Company invests are typically unlisted, making them illiquid, and
this may cause difficulties in valuing and disposing of the
securities. The Company may invest in businesses whose shares are
quoted on AIM -- the fact that a share is quoted on AIM does not
mean that it can be readily traded and the spread between the
buying and selling prices of such shares may be wide.
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 within the rules of
the VCT scheme. 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 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 pursue new unquoted investment
opportunities and to make follow-on investments in existing
portfolio companies. 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, exchange rates 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. The
level of economic risk has been elevated most recently by
inflationary pressures and interest rate increases.
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 it is appropriate and in the interests
of the Company to do so. The adviser typically provides an
investment executive to actively support the board of each unquoted
investee company. At all times, and particularly during periods of
heightened economic uncertainty, the investment executives share
best practice from across the portfolio with investee management
teams in order to mitigate economic risk.
Stock market risk: some of the Company's investments are quoted
on AIM and will be subject to market fluctuations upwards and
downwards. External factors such as terrorist activity, political
activity or global health crises, can negatively impact stock
markets worldwide. In times of adverse sentiment there may 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 Mercia in the case of the AIM-quoted investments, and
the Board keeps the portfolio and the actions taken 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. Changes to UK legislation 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 which is able
to operate effectively even during times of disruption.
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: while it is the intention of the
directors that the Company will be managed so as to continue to
qualify as a VCT, there can be no guarantee that this status will
be maintained. A failure to continue meeting the qualifying
requirements could result in the loss of VCT tax relief, the
Company losing its exemption from corporation tax on capital gains,
to shareholders being liable to pay income tax on dividends
received from the Company and, in certain circumstances, to
shareholders 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 30 September 2023 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 eighteen
months ended 31 March 2023 have been extracted from the audited
financial statements for that period, which have been delivered to
the Registrar of Companies; the independent 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 period ended 31 March
2023.
Each of the directors confirms that to the best of their
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 R J Green, Ms D N Hudson, and Mr
D A Mayes.
The calculation of return per share is based on the return after
tax for the six months ended 30 September 2023 and on 173,914,768
(30 September 2022: 168,596,795) ordinary shares, being the
weighted average number of shares in issue during the period.
The calculation of net asset value per share is based on the net
assets at 30 September 2023 divided by the 173,828,792 (30
September 2022: 167,123,927) ordinary shares in issue at that
date.
The interim dividend of 1.6 pence per share for the year ending
31 March 2024 will be paid on 17 January 2024 to shareholders on
the register on 15 December 2023.
A copy of the half-yearly financial report for the six months
ended 30 September 2023 will be available to shareholders on the
Mercia Asset Management PLC website.
Neither the contents of the Mercia Asset Management PLC website,
nor the contents of any website accessible from hyperlinks on the
Mercia Asset Management PLC website (or any other website), are
incorporated into, or form part of, this announcement
(END) Dow Jones Newswires
November 23, 2023 09:00 ET (14:00 GMT)
Copyright (c) 2023 Dow Jones & Company, Inc.
Northern Venture (LSE:NVT)
Gráfica de Acción Histórica
De Abr 2024 a May 2024
Northern Venture (LSE:NVT)
Gráfica de Acción Histórica
De May 2023 a May 2024
