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% |
** 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% |
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 | ||
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