Unaudited Half-Yearly Financial Report for the Six Months Ended 30 September 2024
21/11/2024 14:00
For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20241121:nGNE4STxkg&default-theme=true
21 NOVEMBER 2024
NORTHERN VENTURE TRUST PLC
UNAUDITED HALF-YEARLY FINANCIAL REPORT
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2024
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 2023 and 31 March
2024)
Six months ended 30 September 2024 Six months ended 30 September 2023 Year ended 31 March 2024
Net assets £119.3m £106.6m £114.8m
Net asset value per share 59.9p 61.4p 60.3p
Return per share
Revenue 0.2p 0.2p 0.6p
Capital 1.0p 1.1p 1.2p
Total 1.2p 1.3p 1.8p
Dividend per share declared in respect of the period 1.6p 1.6p 3.2p
Cumulative return to shareholders since launch
Net asset value per share 59.9p 61.4p 60.3p
Dividends paid per share* 193.7p 190.5p 192.1p
Net asset value plus dividends paid per share 253.6p 251.9p 252.4p
Mid-market share price at end of period 56.5p 56.5p 57.5p
Share price discount to net asset value 5.7% 8.0% 4.6%
Tax-free dividend yield (based on the net asset value per share)** 5.2% 6.3% 5.2%
* Excluding interim dividend not yet paid.
** The dividend yield is calculated by dividing the dividends
declared in the 12 month period ended on each reference date by the net asset
value per share at the start of that period.
Enquiries:
James Sly / Sarah Williams, Mercia Asset Management PLC – 0330 223 1430
Website: www.mercia.co.uk/vcts
HALF-YEARLY MANAGEMENT REPORT TO SHAREHOLDERS
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2024
It is my pleasure to present our interim financial report. Having served on
the Board for the past three years, I have witnessed the resilience and
evolution of the Company’s portfolio and management team as we continue to
navigate a dynamic market landscape. Over the past six months, there have been
early signs of growth returning in the UK economy, with easing inflationary
pressures and some stabilisation in energy prices. While the global political
climate remains uncertain and the domestic outlook remains challenging, your
Company has continued its long term strategy of investing in promising
early-stage businesses, supporting its existing portfolio companies, and
generating cash from realisations.
Venture capital investment activity and portfolio update
We are pleased to report an overall increase in the holding value of the
unquoted portfolio, the uplifted valuations resulting from our good performers
having more than outweighed reductions we felt prudent to make in the
valuations of companies that have performed less well.
The portfolio has shown further progress. We have made three new venture
capital investments totalling £4.0 million over the six month period and
invested £1.9 million in three existing portfolio companies. The new
portfolio companies are Ski Zoom (trading as Heidi) (£1.4 million
investment), a booking platform for flexible winter mountain breaks, Culture
AI (£1.3 million), a cyber security training and monitoring platform, and
Promethean Particles (£1.3 million), a developer of carbon capture and
storage technologies.
While there has been a cyclical dip in exit confidence among UK venture
managers, we nevertheless continued to achieve favourable outcomes from our
portfolio investments and the Company received £6.9 million from exits during
the period. Notably, we sold the Company’s investment in Gentronix, a
biotechnology company that provides predictive toxicology solutions. This
delivered net proceeds of £6.1 million, representing a 4.5 times return on
the original cost. Having supported The Climbing Hangar as it re-established
itself after COVID, VCT investment limits prevented us from deploying further
capital and we therefore sold NVT’s investment for £2.8 million,
representing an uplift from the holding value of £2.6 million, equating to
73% of cost.
Results and dividend
The unaudited net asset value (NAV) per share at 30 September 2024 was 59.9
pence (60.3 pence (audited) on 31 March 2024). The total return per share
before dividends for the six months ended 30 September 2024 as shown in the
income statement was 1.2 pence, compared with 1.3 pence in the corresponding
period last year. The performance was driven by a realised gain on disposal of
investments of £1.7 million over the last six months, along with an
unrealised increase of £1.0 million in the valuation of investments.
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 23 August 2024 the
final dividend of 1.6 pence in respect of the period ending 31 March 2024 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 2025. The interim dividend will be
paid on 22 January 2025 to shareholders on the register on 20 December 2024.
We continue to operate 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. We have included details of the scheme within the dividend
section of our website, which can be found at: www.mercia.co.uk/vcts/nvt/.
Shareholder issues
In April 2024 shares related to the second allotment of the 2023/24 share
offer, totalling £20 million, were issued. The Company issued 12,234,307 new
ordinary shares, yielding gross subscriptions of £7.8 million.
We continue to observe a sustained demand for long-term growth capital for
smaller companies in the UK, and the Investment Adviser has reviewed an
increasing number of opportunities. We therefore announced in late September
2024 our intention to fundraise in the current tax year, in conjunction with
the other Northern VCTs. This will allow us to further support our existing
portfolio and selectively to invest in new early-stage opportunities. We
remain grateful for our existing shareholders’ continued support. Full
details of how to participate in the planned £15 million fundraise will be
published in January 2025.
We have maintained our policy of being willing to buy back the Company’s
shares in the market to maintain liquidity, at a 5% discount to NAV. During
the period a total of 4,445,489 shares were purchased by the Company for
cancellation, representing around 2.3% of the opening ordinary share capital.
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. The Investment Adviser 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.
We are pleased to report that the sunset date for VCTs has been extended. The
‘Sunset Clause’ is a European state aid requirement, introduced when the
VCT scheme received state aid approval, that determines the upfront tax relief
available to investors in VCTs. Following a final review by the European Union
and the issuance of the necessary statutory instrument in September 2024, the
Sunset Clause was officially extended from 2025 to 2035. This provides useful
certainty for our Company and the investment team.
Board succession
We have previously reported the retirement of previous Chair Simon
Constantine, and Richard Green, Chair of the Audit Committee. We would like to
reiterate our gratitude to Simon and Richard for their years of dedicated
service and significant contributions to the Company.
After almost 10 years of service to the Company, David Mayes has decided not
to seek re-election to the Board of Directors at the upcoming Annual General
Meeting. We would like to express our gratitude for his invaluable
contributions to the Company during his tenure. A process to identify and
appoint a successor will be undertaken in the coming months.
We are pleased to report that Brigid Sutcliffe, who joined the board in April
2024, has succeeded Richard as Chair of the Audit Committee.
Additionally, we were delighted to welcome John Milad to the Board as a
non-executive director, effective from August 2024. John brings over 25
years’ experience as an executive leader, board member, venture capital
investor and investment banker focused on the life sciences and medical
technology sector.
With these changes, we are confident the Company remains in capable hands. The
Board’s collective experience and commitment will ensure we continue to act
in the best interests of our shareholders.
Outlook
With inflation stabilising and interest rates starting to fall, there are
tentative signs of optimism returning to the UK economy. While uncertainties
in the run up to the UK budget and the impact of its fiscal measures may still
influence market dynamics, we remain confident in the prospects of our
portfolio companies. We will continue to work with our Investment Adviser to
make the most of the opportunities for value creation as they arise.
On behalf of the Board
Deborah Hudson
Chair
Investment portfolio
As at 30 September 2024 (unaudited)
Cost £000 Valuation £000 % of net assets by value
Fifteen largest venture capital investments
Pure Pet Food 1,662 4,208 3.5%
Project Glow Topco (t/a Currentbody.com) 1,686 3,854 3.2%
Pimberly 2,060 3,500 2.9%
Rockar 1,877 3,448 2.9%
Tutora (t/a Tutorful) 3,305 3,305 2.8%
Newcells Biotech 3,011 3,011 2.5%
Grip-UK (t/a The Climbing Hangar) 3,885 2,821 2.4%
Netacea 2,631 2,631 2.2%
Ridge Pharma 1,497 2,585 2.2%
Biological Preparations Group 2,366 2,222 1.9%
Broker Insights 2,076 2,118 1.8%
Administrate 2,906 2,050 1.7%
Forensic Analytics 2,016 2,016 1.7%
Clarilis 1,972 1,972 1.7%
LMC Software 1,950 1,950 1.6%
Fifteen largest venture capital investments 34,900 41,691 35.0%
Other venture capital investments 50,198 42,494 35.6%
Total venture capital investments 85,098 84,185 70.6%
Net current assets 35,119 29.4%
Net assets 119,304 100.0%
Income statement
For the six months ended 30 September 2024 (unaudited)
Six months ended 30 September 2024 Six months ended 30 September 2023 Year ended 31 March 2024
Revenue £000 Capital £000 Total £000 Revenue £000 Capital £000 Total £000 Revenue £000 Capital £000 Total £000
Gain on disposal of investments – 1,705 1,705 – 834 834 - 1,203 1,203
Movements in fair value of investments – 954 954 – 1,922 1,922 - 2,499 2,499
– 2,659 2,659 – 2,756 2,756 - 3,702 3,702
Dividend and interest income 1,020 – 1,020 873 – 873 2,220 - 2,220
Investment management fee (280) (841) (1,121) (260) (780) (1,040) (516) (1,549) (2,065)
Other expenses (320) – (320) (345) – (345) (641) - (641)
Return before tax 420 1,818 2,238 268 1,976 2,244 1,063 2,153 3,216
Tax on return (101) 101 – 86 (86) – 79 (79) -
Return after tax 319 1,919 2,238 354 1,890 2,244 1,142 2,074 3,216
Return per share 0.2p 1.0p 1.2p 0.2p 1.1p 1.3p 0.6p 1.2p 1.8p
Balance sheet
As at 30 September 2024 (unaudited)
30 September 2024 £000 30 September 2023 £000 31 March 2024 £000
Fixed assets
Investments 84,185 72,706 82,574
Current assets
Debtors 559 362 951
Cash and cash equivalents 34,727 33,720 31,497
35,286 34,082 32,448
Creditors (amounts falling due within one year) (167) (141) (191)
Net current assets 35,119 33,941 32,257
Net assets 119,304 106,647 114,831
Capital and reserves
Called-up equity share capital 49,790 43,457 47,615
Share premium 35,077 23,159 30,418
Capital redemption reserve 7,769 5,801 6,658
Capital reserve 26,805 38,668 28,099
Revaluation reserve (913) (5,192) 882
Revenue reserve 776 754 1,159
Total equity shareholders’ funds 119,304 106,647 114,831
Net asset value per share 59.9p 61.4p 60.3p
Statement of changes in equity
For the six months ended 30 September 2024 (unaudited)
Non-distributable reserves Distributable reserves Total £000
Called-up share capital £000 Share premium £000 Capital redemption reserve £000 Revaluation reserve* £000 Capital reserve £000 Revenue reserve £000
At 1 April 2024 47,615 30,418 6,658 882 28,099 1,159 114,831
Return after tax – – – (1,795) 3,714 319 2,238
Dividends paid – – – – (2,508) (702) (3,210)
Net proceeds of share issues 3,286 4,659 – – – – 7,945
Shares purchased for cancellation (1,111) – 1,111 – (2,500) – (2,500)
At 30 September 2024 49,790 35,077 7,769 (913) 26,805 776 119,304
Six months ended 30 September 2023
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
Year ended 31 March 2024
At 1 April 2023 41,230 19,394 5,342 1,698 34,433 400 102,497
Return after tax - - - (816) 2,890 1,142 3,216
Dividends paid - - - - (6,156) (383) (6,539)
Net proceeds of share issues 7,701 11,024 - - - - 18,725
Shares purchased for cancellation (1,316) - 1,316 - (3,068) - (3,068)
At 31 March 2024 47,615 30,418 6,658 882 28,099 1,159 114,831
* 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
For the six months ended 30 September 2024 (unaudited)
Six months ended 30 September 2024 £000 Six months ended 30 September 2023 £000 Year ended 31 March 2024 £000
Cash flows from operating activities
Return before tax 2,238 2,244 3,216
Adjustments for:
(Gain)/loss on disposal of investments (1,705) (834) (1,203)
(Gain)/loss in fair value of investments (954) (1,922) (2,499)
(Increase)/decrease in debtors 392 (292) (103)
(Decrease)/increase in creditors (24) (42) 8
Net cash (outflow)/inflow from operating activities (53) (846) (581)
Cash flows from investing activities
Purchase of investments (5,936) (5,263) (15,351)
Sale and repayment of investments 6,984 23,922 24,310
Net cash inflow/(outflow) from investing activities 1,048 18,659 8,959
Cash flows from financing activities
Issue of ordinary shares 8,290 6,603 19,353
Share issue expenses (345) (152) (628)
Purchase of ordinary shares for cancellation (2,500) (1,070) (3,068)
Equity dividends paid (3,210) (3,475) (6,539)
Net cash inflow/(outflow) from financing activities 2,235 1,906 9,118
Net increase/(decrease) in cash and cash equivalents 3,230 19,719 17,496
Cash and cash equivalents at beginning of period 31,497 14,001 14,001
Cash and cash equivalents at end of period 34,727 33,720 31,497
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:
Credit risk: the Company holds a number of financial instruments and cash
deposits and is dependent on the counterparties discharging their commitment.
Such balances may be held with banks or in money market funds as part of the
Company’s liquidity management.
Mitigation: the Directors review the creditworthiness of the counterparties to
these instruments including the rating of money market funds to seek to manage
and mitigate exposure to credit risk.
Economic and geopolitical 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 is assessed against
macroeconomic factors such as inflation, interest rates and the ability of
companies to raise funds in the capital and private markets.
Mitigation: the Company invests in a diversified portfolio of investments
spanning various industry sectors and which are at different stages of growth.
The Company 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 Investment Adviser’s team is
structured such that appropriate monitoring and oversight is undertaken by an
experienced investment executive. As part of this oversight, the investment
executive will guide and support the board of each unquoted investee company.
At all times, and particularly during periods of heightened economic
uncertainty, the investment team of the Investment Adviser share best practice
from across the portfolio with the investee management teams in order to help
with addressing economic challenges.
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.
Investment and liquidity risk: the Company invests in early stage companies
which may be pre-revenue at the point of investment. Portfolio companies may
also require significant funds, through multiple funding rounds to develop
their technology or the products being developed may be subject to regulatory
approvals before they can be launched into the market. This involves a higher
degree of risk and company failure compared to investment in larger companies
with established business models. Early stage companies generally have limited
product lines, markets and financial resources and may be more dependent on
key individuals. The securities of companies in which the Company invests are
typically unlisted, making them particularly illiquid and may represent
minority stakes, which may cause difficulties in valuing and disposing of the
securities. The Company may invest in businesses whose shares are quoted on
AIM however this may not mean that they 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 investment and liquidity risk
through regular monitoring of the investment portfolio and oversight of the
Investment Adviser, who is responsible for advising the Board in accordance
with the Company’s investment objective. The investment and liquidity risks
are mitigated through the 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 and liquidity with the Investment Adviser on a regular
basis.
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.
Operational risk: the Company does not have any employees and the Board relies
on a number of third party providers, including the Investment Adviser,
registrar, listed investments custodian, sponsor, receiving agent, lawyers and
tax advisers, to provide it with the necessary services to operate. Such
operations delegated to the Company’s key service providers may not be
performed in a timely or accurate manner, resulting in reputational,
regulatory, or financial damage. The risk of cyber-attack or failure of the
systems and controls at any of the Company’s third party providers may lead
to an inability to service shareholder needs adequately, to provide accurate
reporting and accounting and to ensure adherence to all VCT legislation rules.
Mitigation: the Board has appointed an Audit and Risk Committee, who monitor
the effectiveness of the system of internal controls, both financial and
non-financial, operated by the Company and the Investment Adviser. These
controls are designed to ensure that the Company’s assets are safeguarded
and that proper accounting records are maintained. Third party suppliers are
required to have in place their own risk and controls framework, business
continuity plans and the necessary expertise and resources in place to ensure
that a high quality service can be maintained even under stressed scenarios.
Stock market risk: a small proportion 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 small number of holdings of quoted investments are
actively managed by the Investment Adviser, and the Board keeps the portfolio
and the actions taken under ongoing review.
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.
The Board continually assesses and monitors emerging risks that could impact
the Company's operations and strategic objectives. As part of the risk
assessment process, the Board evaluates a wide range of potential threats and
uncertainties that may arise from evolving market dynamics, regulatory
changes, technological advancements such as artificial intelligence,
geopolitical developments, and other external factors. By remaining aware of
emerging risks, the Board ensures that the Company is better equipped to
anticipate challenges and adapt swiftly to changing circumstances.
Other Matters
The unaudited half-yearly financial statements for the six months ended 30
September 2024 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 31
March 2024 have been extracted from the audited financial statements for that
year, 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 year
ended 31 March 2024.
Each of the Directors confirm 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 Ms D N Hudson
(Chair), Mr D A Mayes, Mr J E Milad, and Ms B A Sutcliffe.
The calculation of return per share is based on the return after tax for the
six months ended 30 September 2024 and on 201,421,491 (30 September 2023:
173,914,768) 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 2024 divided by the 199,158,435 (30 September 2023: 173,828,792)
ordinary shares in issue at that date.
The interim dividend of 1.6 pence per share for the year ending 31 March 2025
will be paid on 22 January 2025 to shareholders on the register on 20 December
2024.
Copies of this half-yearly report will be available to the public at the
Company’s registered office, and on the Company’s website at
www.mercia.co.uk/vcts/nvt/.
The contents of the Mercia Asset Management PLC website and the contents of
any website accessible from hyperlinks on the Mercia Asset Management PLC
website (or any other website) are not incorporated into, nor form part of,
this announcement