Annual report and financial statements - NVM Private Equity Ltd.

Investment Manager’s Review£233,000 and a gain of £158,000. ChorusApplication Software was acquired in a share-forsharedeal by the AiM-listed Computer SoftwareGroup, whose share price subsequently more thandoubled. Two investee companies, Box Carton andCLM Building Services, went into receivership andwere written off at a total cost of £825,000.As a result of the profitable disposals during theyear, the company is able to declare a tax-freecapital dividend of 3.3p per share.Chiswell Associates portfolioAt the beginning of the year the portfolio of listedinvestments managed by Chiswell Associates wasvalued at £6.2 million, of which £2.5 million wasallocated to fixed-interest holdings (governmentstocks and corporate bonds) and £3.7 million toequities. In July 2003 the board of NorthernVenture Trust instructed Chiswell to liquidate thefixed-interest portfolio and to commence a gradualreduction in the equity portfolio so as to releaseadditional funds for investing in VCT-qualifyingholdings. At 30 September the remaining equityholdings were valued at £3.8 million.Valuation policyUnlisted investments are valued in accordance withthe accounting policy set out on page 25, whichcomplies with the revised guidelines for thevaluation of venture capital investments recentlypublished by the British Venture CapitalAssociation. Where an investee company issignificantly under-performing, its value is writtendown by between 25% and 100% as soon aspossible. Investments are not normally revaluedupwards within 12 months of acquisition, andrevaluations resulting from earnings performance areprudently based on historic figures rather than onprospective results.As at 30 September 2003 the number of venturecapital investments falling into each valuationcategory was as follows:Number ofCategoryinvestmentsListed investments at market value:London Stock Exchange 2AiM 7Unlisted investments:at cost 20at cost less provision 17at valuation based on historic earnings 9Total 55VCT qualifying statusThe company’s ongoing compliance with the InlandRevenue’s conditions for VCT approval is closelymonitored by NVM and the board, andPricewaterhouseCoopers LLP have been retained toreport regularly to the board on VCT status. Themain continuing requirement is that not less than70% of the value of the company’s investmentsshould comprise qualifying holdings. The board issatisfied that the company has continued to meet therelevant qualifying conditions and has maintainedits VCT status.Age of investmentIndustry sector5+ years26.9%Up to 1 year4.4%Other0.9%Healthcare/biotechnology17.7%Computer/electronics22.6%3-5 years31.6%1-3 years37.1%Services14.4%Industrial/manufacturing23.4%Construction18.2%Consumer2.8%PAGE 8 Northern Venture Trust PLC Annual Report and Accounts 2003