Annual report and financial statements - NVM Private Equity Ltd.

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Chairman’s Statementincome, at £1,269,000, was 2.3% lower than in thepreceding year, but a 7.2% fall in revenue expensesmeant that the revenue surplus before tax was onlyslightly lower at £823,000.Professor Sir Frederick HollidayAfter two years during which our company’s resultswere heavily influenced by economic uncertaintyand falling stock markets, it is encouraging to beable to report on a year in which better progress hasbeen made and some capital growth achieved.Whilst the level of new investment was relativelylow by comparison with previous years, there hasbeen a welcome upturn in the number of saleopportunities: several profitable disposals haveenabled us not only to pay a capital dividend for thefirst time since 2001 but also to accumulate liquidresources for new investment in the future.The revenue element of earnings per share wasunchanged at 1.8p. While the revenue dividend forthe year is, at 1.7p, slightly lower than last year(2.0p), I am pleased to report that the directors areable to propose a capital dividend of 3.3p per shareout of profits made on investment sales, making atotal dividend for the year of 5.0p.Including the proposed final dividend, subscribers inthe original share issue eight years ago will havereceived cash dividends (including repayable taxcredits) of 32p per share. An investor claiming initialincome tax relief at 20% and capital gains taxdeferral at 40% will therefore have received fourfifths of his 40p net investment back by way of taxfreecash dividends. Since 1995 the company hasdistributed a total of over £10.6 million toshareholders.Net asset valueThe net asset value per share at 30 September 2003,after providing for dividends totalling 5.0p pershare, was 85.7p. This is an increase of 7.0% fromthe corresponding figure of 80.1p a year ago. Thetable on page 19 shows the net asset value and shareprice total return to shareholders over the past fiveyears compared with the movement in the FTSE All-Share index: it will be seen that the net asset valuereturn in particular has tracked the index closely inrecent years.Earnings and dividendTotal earnings per share for the year amounted to2.3p, compared with 0.4p in the correspondingperiod. I should again remind shareholders thatreported earnings are liable to fluctuation becauserealised gains, net of previously unrealisedrevaluation adjustments, are included in the earningsfigures under the accounting rules which we follownow that our company is no longer an investmentcompany for Companies Act purposes. InvestmentInvestment portfolioThe Manager’s Review on pages 7 and 9 givesdetails of developments in the investment portfolioduring the year. Additions to venture capitalinvestments during the year amounted to£2.7 million and sale proceeds were £5.8 million, areversal of last year’s outcome where thecorresponding figures were £4.6 million and£2.8 million. As a result, and taking into accountthe reduction in the Chiswell Associates portfolioreferred to later in this report, the cash flowstatement for the year shows a net cash inflow of£5.2 million. We are particularly pleased by thesuccess of SML Technologies, which has become amarket leader in electronic vessel tracking andoffshore rig safety systems and is a fine example ofthe kind of business which VCTs were created toinvest in. Our holding in the company, thought to bethe first investment ever made by a VCT, was sold toUltra Electronics in July 2003 for £1.3 million andproduced a compound return of 20% per annumover eight years.PAGE 2 Northern Venture Trust PLC Annual Report and Accounts 2003
Chairman’s StatementAt 30 September 2003 the venture capital portfoliocomprised 55 holdings with an aggregate value of£27.2 million. The investments cover a wide rangeof industry sectors and stages of maturity and yourboard believes that there are a number of excellentprospects for future growth and profitable exit indue course.We have continued to draw funds down from thelisted fixed-interest and equity holdings managed byChiswell Associates, the total value of whichdecreased from £6.2 million to £3.8 million over thecourse of the year. Realised and unrealised gains inthis portfolio during the year totalled £497,000.VCT qualifying statusYour board and managers monitor closely thecompany’s continuing observance of the InlandRevenue’s VCT rules and the board receives annualcompliance reports from PricewaterhouseCoopersLLP, who were appointed as tax advisors to thecompany in 2002. We are satisfied that the companycontinues to meet the relevant requirements.Shareholder issuesDuring the year the company bought back andcancelled just over one million ordinary shares,equivalent to 2.6% of the issued share capital at thestart of the year. The secondary market for VCTshares generally continues to suffer from thintrading, and we will continue to re-purchase sharesas appropriate.Northern Venture ManagersIn September 2003 Edinburgh Fund ManagersGroup, the parent company of Northern VentureManagers, announced an agreed takeover byAberdeen Asset Management which hassubsequently been declared unconditional. NVMcontinues to operate as a discrete business unitunder the new group ownership and your board iscommitted to ensuring that there is no adversechange to the management of our company.Future prospectsNorthern Venture Trust has now been in operationfor eight years, during which time the company hasinvested almost £50 million in small and mediumsizedcompanies in the UK – many of which mightotherwise have been unable to raise the long-termfinance necessary to implement their business plans.Whilst building the portfolio, we have been able toachieve a return for our shareholders – before takingany account of the generous VCT tax reliefs andincentives – broadly in line with the return on a fundtracking the FTSE All-Share index. The challengefacing the company now is to build on thisfoundation and begin to out-perform the index asthe portfolio continues to mature. I believe we arewell placed to meet this challenge.Professor Sir Frederick HollidayChairmanYour directors are mindful that in two years’ time,at the 2005 annual general meeting, there will be anopportunity for shareholders to vote on the futurecontinuation of the company. While we keep thismatter under regular review, we consider it is rightto indicate to shareholders at this stage that wepresently expect to recommend continuation for afurther five years. Venture capital investment is along-term business and it takes time to realise thefull potential of unquoted investments. Manyshareholders have benefited from capital gains taxdeferral and continuation of the company willenable this position to be preserved.PAGE 3 Northern Venture Trust PLC Annual Report and Accounts 2003
Page 1 and 2: 2003Northern Venture Trust PLCAnnua
Page 3: Financial SummaryYear ended 30 Sept
Page 7: AdvisersSecretary and Registered Of
Page 10 and 11: Investment Manager’s Review£233,
Page 12 and 13: Investment Portfolioas at 30 Septem
Page 14 and 15: Fifteen Largest Venture Capital Inv
Page 16 and 17: Fifteen Largest Venture Capital Inv
Page 18 and 19: Directors’ ReportThe directors pr
Page 20 and 21: Directors’ Remuneration ReportThi
Page 22 and 23: Corporate GovernanceThe company is
Page 24 and 25: Profit and Loss Accountfor the year
Page 26 and 27: Cash Flow Statementfor the year end
Page 28 and 29: Notes to the Financial Statementsfo
Page 36 and 37: Independent Auditors’ ReportTo th
Page 38 and 39: Notice of Annual General MeetingNot

Annual report and financial statements - NVM Private Equity Ltd.

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