Northern Venture Tst Half-year Report

 
TIDMNVT 
 
 
   8 July 2020 
 
   NORTHERN VENTURE TRUST PLC 
 
   UNAUDITED HALF-YEARLY FINANCIAL REPORT FOR THE SIX MONTHSED 31 MARCH 
2020 
 
   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 
high long-term tax-free returns to shareholders through a combination of 
dividend yield and capital growth. 
 
   Financial highlights (comparative figures as at 31 March 2019 and 30 
September 2019) 
 
 
 
 
                                    Six months  Six months 
                                       ended       ended       Year ended 
                                     31 March    31 March     30 September 
                                       2020        2019           2019 
                                    ----------  ----------  -------------- 
Net assets                           GBP80.2m    GBP92.0m      GBP95.7m 
Net asset value per share             58.2p       70.4p         68.9p 
Return per share: 
 Revenue                               (0.1)p       0.7p          0.8p 
 Capital                               (8.6)p       0.8p          1.3p 
 Total                                 (8.7)p       1.5p          2.1p 
Dividend per share declared in 
 respect of the period 
 Interim dividend                       1.5p        2.0p          2.0p 
 Final dividend                          --          --           2.0p 
 Total                                  1.5p        2.0p          4.0p 
Cumulative return to shareholders 
 since launch: 
 Net asset value per share 
 Dividends paid per share*             58.2p       70.4p         68.9p 
 Net asset value plus dividends        170.5p      166.5p        168.5p 
 paid per share                        228.7p      236.9p        237.4p 
Mid-market share price at end of 
 period                               53.00p      64.50p        64.50p 
Tax-free dividend yield (based 
 on the net asset per share)**            5.0%        5.7%            5.6% 
 
   *Excluding interim dividend not yet paid. 
 
   **The annualised dividend yield is calculated by dividing the dividends 
in respect of the 12 month period ended on each reference date by the 
net asset value per share at the start of the period. 
 
   Enquiries: 
 
   Simon John/James Bryce, NVM Private Equity LLP -- 0191 244 6000 
 
   Website:  www.nvm.co.uk 
 
   Martin Glanfield, Chief Financial Officer, Mercia Asset Management PLC 
-- 0330 223 1430 
 
   HALF-YEARLY MANAGEMENT REPORT FOR THE SIX MONTHSED 31 MARCH 2020 
 
   The past six months have been another extremely busy period for the 
company, with four new investments completed, a change in investment 
advisor announced in December 2019 and a successful share offer launched 
in January 2020.  The latter part of the period was dominated by news of 
the evolving Coronavirus pandemic (COVID-19) which started to have a 
significant effect on the movement of people in the UK.  Our share offer 
closed to new applications in February, raising GBP12.5 million and your 
company remains well capitalised to support its growing portfolio and to 
pursue further investment opportunities. 
 
   Results and dividend 
 
   The unaudited net asset value (NAV) per share at 31 March 2020 was 58.2p, 
compared with the audited figure of 68.9p at 30 September 2019.  The 
total return per share before dividends for the six months ended 31 
March 2020 as shown in the income statement was minus 8.7p (six months 
ended 31 March 2019: positive return of 1.5p), equivalent to 12.6% of 
the NAV at the start of the period.  The negative total return was 
driven by an unrealised reduction in the valuation of the investment 
portfolio related largely to COVID-19.  Investment income of GBP0.4 
million was lower than in the corresponding period last year (six months 
to 31 March 2019: GBP1.5 million) due to a combination of prior sales of 
investments and some investee companies deferring interest payments to 
preserve cash, but also the benefit in the prior year of a one-off 
receipt of interest arrears following an investment disposal. 
 
   We announced an NAV of 54.6p per share at 24 March prior to issuing 
shares under the offer.  Whilst this was after lockdown had been 
announced, it was before the detailed guidance on certain government 
support initiatives had been released, most notably details of the 
Coronavirus Job Retention Scheme on 26 March.  Together with more up to 
date trading information from investee companies as at 31 March 2020, 
this enabled us to reconsider the prospects of a number of companies in 
the portfolio and hence the NAV increased by 3.6p or 6.6% as at the 
balance sheet date. 
 
   In 2018 we revised our dividend policy in the light of the new rules for 
investment introduced in 2015 and 2017, which we expected to result in 
more volatile returns.  We introduced a target dividend yield of 5% of 
opening NAV, which has been exceeded in each of the last two years.  A 
negative return in any period clearly puts considerable pressure on the 
payment of a dividend.  However we are aware of the importance to our 
shareholders of regular distributions and remain confident in the long 
term prospects of our portfolio.  We have therefore decided to pay an 
interim dividend for the year ending 30 September 2020 of 1.5p and hope 
to continue to smooth out the returns of the underlying portfolio to our 
shareholders in this way. 
 
   Investment advisor update 
 
   As announced previously, the Company consented to the novation of its 
existing investment advisory agreement with NVM Private Equity LLP (NVM) 
to Mercia Fund Management Limited (Mercia) which became effective on 23 
December 2019.  After careful consideration and extensive due diligence, 
your directors concluded that the change in advisory arrangements is a 
positive development for the Company and that it comes at the right time 
in the continuing evolution of the VCT sector.  The NVM VCT team, led by 
partners Tim Levett and Charlie Winward, transferred to Mercia and now 
constitute the new VCT division within the wider Mercia group. We 
believe that the combination of NVM's long established record as a 
successful investor and Mercia's venture credentials has the potential 
to create one of the leading regionally based UK venture fund management 
groups.  No material changes have been made to the terms of the 
investment advisory agreement. 
 
   Venture capital investment activity 
 
   Four new VCT-qualifying holdings were acquired during the period, for 
total consideration of GBP2.5 million.  These have all been in 
innovative earlier stage companies, developing a variety of disruptive 
products and services and requiring capital to scale up.  Most of the 
earlier stage businesses we are backing will require further capital to 
realise their growth potential fully and we will continue to channel a 
significant proportion of our investment capital into our existing 
portfolio.  We supported nine of our existing portfolio companies with 
growth capital of GBP3.5 million in aggregate during the period. 
 
   Inevitably in a portfolio of this type there will be some early losses 
of which we incurred one during the year with the sale of Primal Food 
for a nominal sum.  We also exited AIM listed Nasstar which was taken 
private as a result of an agreed takeover and Summit Therapeutics which 
had announced its intention to de-list from AIM. 
 
   Venture capital portfolio update 
 
   Following the first reports of COVID-19 in Asia, the initial effects in 
the UK principally impacted businesses with complex supply chains or 
overseas customers in certain territories.  As the spread of the virus 
has led to a global pandemic, the effect on the UK economy has become 
much more pronounced and measures taken to tackle COVID-19 have had a 
material impact on almost every business.   The evolving situation has 
presented our portfolio company management teams with considerable 
challenges that are likely to persist for some time to come.  Our 
investment adviser has always taken a hands-on approach to portfolio 
management and typically provides an investment executive to the board 
of each unquoted portfolio company.  Mercia has been working extremely 
closely with all our investee management teams to support them with the 
numerous challenges faced. 
 
   The Company benefits from holding a diversified portfolio of investments, 
with no particular concentration to any one end-market sector.  As is to 
be expected with a diverse generalist portfolio, the current situation 
has had varying effects on individual investments.  When wide reaching 
restrictions on the movement of people were announced by the UK 
Government in March, some portfolio businesses faced the prospect of an 
immediate and significant drop in revenues.  By contrast, some of our 
companies observed the early signs of an uptick in activity, 
particularly those that are involved in ecommerce. In all cases Mercia 
has been working closely with investees either to preserve cash until 
the immediate disruption subsides or to source additional working 
capital to support an increase in trading. 
 
   The worldwide impact of COVID-19 on the financial markets has been 
extreme and caused a great deal of volatility.  Although the vast 
majority of our portfolio is represented by unquoted investments, 
investors look to the quoted markets as a benchmark and the valuation 
metrics for many of the sectors in which we invest reduced during the 
first quarter of 2019.  We continue to follow the International Private 
Equity and Venture Capital Valuation (IPEV) guidelines, being the 
industry accepted best practice, when determining the fair value of our 
unquoted investments.  As usual, the directors have undertaken a full 
valuation exercise of the entire portfolio as at 31 March 2020. 
 
   Share offer and liquidity 
 
   Having considered the progress achieved to date and the likely further 

capital required to enable our investee companies to flourish, we 
announced in October 2019 our intention to launch a share offer in the 
2019-20 tax year, which opened in January 2020.  I am delighted to say 
that strong demand was again experienced and we closed the offer to new 
applications in February 2020.  I would again like to thank shareholders, 
existing and new, for their ongoing support.  The gross proceeds raised 
of GBP12.5 million were allotted on 3 April 2020 and are in addition to 
the cash held at 31 March 2020 of GBP14.5 million.  The cash and liquid 
resources available to the Company put us in a strong position to 
continue to support our growing portfolio and to add to it selectively 
as market conditions permit. 
 
   Our dividend investment scheme, which enables shareholders to re-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. 
 
   We have maintained our policy of being willing to buy back the company's 
shares in the market, when necessary in order to maintain liquidity, at 
a 5% discount to NAV.  During the six months ended 31 March 2020 a total 
of 1,708,000 shares were repurchased by the company for cancellation, 
representing around 1.2% of the opening ordinary share capital. 
 
   VCT legislation and qualifying status 
 
   The VCT scheme rules have been subject to regular legislative changes in 
recent years and whilst there were no further amendments announced by 
the Chancellor in the recent Spring Budget statement, it is possible 
that further changes will be made in the future.  We will continue to 
work closely with Mercia to maintain compliance with the scheme rules at 
all times. 
 
   The company has maintained its approved venture capital trust status 
with HM Revenue & Customs.  The company's compliance with the VCT 
qualifying conditions is closely monitored by the board and we receive 
regular reports from Mercia and from our VCT taxation advisers, Philip 
Hare & Associates LLP. 
 
   Outlook 
 
   The political and economic environment has been uncertain over the past 
few years.  The clear result of the General Election held in December 
2019 removed some of that uncertainty, only for it to be reinstated and 
increased considerably by the emergence of the COVID-19 global pandemic 
during the first quarter of the year.  Many financial indices have 
staged a significant recovery from the lows experienced in March 2020, 
however making a definitive prediction about the future path of the 
economy in the current environment is not possible.  We remain committed 
to supporting our investee companies through what are unprecedented 
challenges and have confidence in the overall diversity of the 
portfolio. 
 
   On behalf of the Board 
 
   Simon Constantine 
 
   Chairman 
 
   Extracts from the unaudited half-yearly financial statements for the six 
months ended 31 March 2020 are set out below. 
 
   INCOME STATEMENT 
 
   (unaudited) for the six months ended 31 March 2020 
 
 
 
 
                                    Six months ended 31 March       Six months ended 31 March 
                                               2020                  2019 
                                 Revenue     Capital    Total        Revenue     Capital      Total 
                                  GBP000      GBP000     GBP000       GBP000      GBP000      GBP000 
Gain on disposal of 
 investments                             -         209         209           -         511         511 
Movements in fair value of 
 investments                             -    (11,541)    (11,541)           -       1,148       1,148 
                                ----------  ----------  ----------  ----------  ----------  ---------- 
                                         -    (11,332)    (11,332)           -       1,659       1,659 
Income                                 419           -         419       1,489           -       1,489 
Investment management fee            (244)       (731)       (975)       (222)       (667)       (889) 
Other expenses                       (247)           -       (247)       (250)           -       (250) 
                                ----------  ----------  ----------  ----------  ----------  ---------- 
Return on ordinary activities 
 before tax                           (72)    (12,063)    (12,135)       1,017         992       2,009 
Tax on return on ordinary 
 activities                              -           -           -       (143)         143           - 
                                ----------  ----------  ----------  ----------  ----------  ---------- 
Return on ordinary activities 
 after tax                            (72)    (12,063)    (12,135)         874       1,135       2,009 
                                ----------  ----------  ----------  ----------  ----------  ---------- 
Return per share                    (0.1)p      (8.6)p      (8.7)p        0.7p        0.8p        1.5p 
 
 
 
 
 
 
                                        Year ended 30 September 
                                         2019 
                                         Revenue     Capital      Total 
                                          GBP000      GBP000      GBP000 
Gain on disposal of investments                  -       1,244       1,244 
Movements in fair value of 
 investments                                     -       1,673       1,673 
                                        ----------  ----------  ---------- 
                                                 -       2,917       2,917 
Income                                       2,166           -       2,166 
Investment management fee                    (445)     (1,334)     (1,779) 
Other expenses                               (456)           -       (456) 
                                        ----------  ----------  ---------- 
Return on ordinary activities 
 before tax                                  1,265       1,583       2,848 
Tax on return on ordinary 
 activities                                  (168)         168           - 
                                        ----------  ----------  ---------- 
Return on ordinary activities 
 after tax                                   1,097       1,751       2,848 
                                        ----------  ----------  ---------- 
Return per share                        0.8p        1.3p        2.1p 
 
   BALANCE SHEET 
 
   (unaudited) as at 31 March 2020 
 
 
 
 
                               31 March 2020  31 March 2019  30 September 2019 
                                  GBP000         GBP000           GBP000 
Fixed assets: 
Investments                           65,837         71,183             72,409 
                                  ----------     ----------         ---------- 
Current assets: 
 Debtors                                  23            229              1,182 
 Cash and cash equivalents            14,478         27,245             22,160 
                                  ----------     ----------         ---------- 
                                      14,501         27,474             23,342 
Creditors (amounts falling 
 due within one year)                  (110)        (6,697)               (93) 
                                  ----------     ----------         ---------- 
Net current assets                    14,391         20,777             23,249 
                                  ----------     ----------         ---------- 
 
Net assets                            80,228         91,960             95,658 
                                  ----------     ----------         ---------- 
 
Capital and reserves: 
Called-up equity share 
 capital                              34,466         32,641             34,693 
Share premium                          5,904          1,133              5,584 
Capital redemption reserve             2,532          1,576              2,106 
Capital reserve                       42,046         49,028             46,820 
Revaluation reserve                  (5,461)          5,599              4,948 
Revenue reserve                          741          1,983              1,507 
                                  ----------     ----------         ---------- 
Total equity shareholders' 
 funds                                80,228         91,960             95,658 
                               ----------     ----------     ---------- 
Net asset value per share      58.2p          70.4p          68.9p 
 
 
   STATEMENT OF CHANGES IN EQUITY 
 
   (unaudited) for the six months ended 31 March 2020 
 
 
 
 
                                 ---------------Non-distributable           Distributable 
                                      reserves---------------                reserves                 Total 
                          Called                  Capital 
                         up share      Share     redemption    Revaluation    Capital     Revenue 
                          capital     premium     reserve       reserve*      reserve     reserve 
                          GBP000      GBP000      GBP000        GBP000      GBP000      GBP000        GBP000 
At 1 October 2019           34,693       5,584        2,106          4,948      46,820       1,507      95,658 
Return on ordinary 
 activities 
after tax                        -           -            -       (10,409)     (1,654)        (72)    (12,135) 
Dividends paid                   -           -            -              -     (2,082)       (694)     (2,776) 
Net proceeds of share 
 issues                        199         320            -              -           -           -         519 
Shares purchased                                                               (1,038)           - 
 for cancellation            (426)           -          426              -                             (1,038) 
                        ----------  ----------   ----------     ----------  ----------  ----------  ---------- 

At 31 March 2020            34,466       5,904        2,532        (5,461)      42,046         741      80,228 
                        ----------  ----------  ----------   ----------     ----------  ----------  ---------- 
 
 
   STATEMENT OF CHANGES IN EQUITY 
 
   (unaudited) for the six months ended 31 March 2019 
 
 
 
 
                                 ---------------Non-distributable               Distributable 
                                      reserves---------------                      reserves           Total 
                          Called                  Capital 
                         up share      Share     redemption    Revaluation    Capital     Revenue 
                          capital     premium     reserve      reserve*       reserve     reserve 
                          GBP000      GBP000      GBP000     GBP000           GBP000      GBP000      GBP000 
At 1 October 2018           33,142         817          879          6,346      51,617       1,109      93,910 
Return on ordinary 
 activities 
after tax                        -           -            -          (747)       1,882         874       2,009 
Dividends paid                   -           -            -              -     (2,651)           -     (2,651) 
Net proceeds of share 
 issues                        196         316            -              -           -           -         512 
Shares purchased 
 for cancellation            (697)           -          697              -     (1,820)           -     (1,820) 
                        ----------  ----------   ----------     ----------  ----------  ----------  ---------- 
At 31 March 2019            32,641       1,133        1,576          5,599      49,028       1,983      91,960 
                        ----------  ----------  ----------   ----------     ----------  ----------  ---------- 
 
 
   STATEMENT OF CHANGES IN EQUITY 
 
   for the year ended 30 September 2019 
 
 
 
 
                                 ---------------Non-distributable               Distributable 
                                      reserves---------------                      reserves           Total 
                          Called                  Capital 
                         up share      Share     redemption    Revaluation    Capital     Revenue 
                          capital     premium     reserve       reserve*      reserve     reserve 
                          GBP000      GBP000      GBP000        GBP000        GBP000      GBP000      GBP000 
At 1 October 2018           33,142         817          879          6,346      51,617       1,109      93,910 
Return on ordinary 
 activities 
after tax                        -           -            -        (1,398)       3,149       1,097       2,848 
Dividends paid                   -           -            -              -     (4,749)       (699)     (5,448) 
Net proceeds of share 
 issues                      2,778       4,767            -              -           -           -       7,545 
Shares purchased 
 for cancellation          (1,227)           -        1,227              -     (3,197)           -     (3,197) 
                        ----------  ----------   ----------     ----------  ----------  ----------  ---------- 
At 30 September 2019        34,693       5,584        2,106          4,948      46,820       1,507      95,658 
                        ----------  ----------  ----------   ----------     ----------  ----------  ---------- 
 
 
   *The revaluation reserve is generally non-distributable other than that 
part of the reserve relating to gains/losses on readily realisable 
quoted investments, which is distributable. 
 
   STATEMENT OF CASH FLOWS 
 
   (unaudited) for the six months ended 31 March 2020 
 
 
 
 
                        Six months    Six months 
                          ended       ended           Year ended 
                      31 March 2020   31 March 2019   30 September 2019 
                          GBP000      GBP000          GBP000 
Cash flows from 
operating 
activities: 
Return on ordinary 
 activities before 
 tax                        (12,135)           2,009              2,848 
Adjustments for: 
Gain on disposal of 
 investments                   (209)           (511)            (1,244) 
Movement in fair 
 value of 
 investments                  11,541         (1,148)            (1,673) 
Decrease/(increase) 
 in debtors                    1,159            (89)            (1,041) 
Increase/(decrease) 
 in creditors                     16             (3)               (13) 
                          ----------      ----------         ---------- 
Net cash 
 inflow/(outflow) 
 from operating 
 activities                      372             258            (1,123) 
                          ----------      ----------         ---------- 
Cash flows from 
investing 
activities: 
Purchase of 
 investments                 (6,500)        (12,963)           (18,705) 
Sale/repayment of 
 investments                   1,741          12,757             18,531 
                          ----------      ----------         ---------- 
Net cash outflow 
 from investing 
 activities                  (4,759)           (206)              (174) 
                          ----------      ----------         ---------- 
Cash flows from 
financing 
activities: 
Issue of ordinary 
 shares                          533             540              7,692 
Share issue expenses            (15)            (26)              (147) 
Share subscriptions 
 held pending 
 allotment                         -           6,593                  - 
Purchase of ordinary 
 shares for 
 cancellation                (1,038)         (1,820)         (3,197) 
Equity dividends 
 paid                        (2,775)         (2,651)            (5,448) 
                          ----------      ----------         ---------- 
Net cash 
 (outflow)/inflow 
 from financing 
 activities                  (3,295)           2,636            (1,100) 
                          ----------      ----------         ---------- 
Net 
 (decrease)/increase 
 in cash and cash 
 equivalents                 (7,682)           2,688         (2,397) 
Cash and cash 
 equivalents at 
 beginning of 
 period                       22,160          24,557             24,557 
                          ----------      ----------         ---------- 
Cash and cash 
 equivalents at end 
 of period                    14,478          27,245             22,160 
                      ----------      ----------      ---------- 
 
   INVESTMENT PORTFOLIO SUMMARY 
 
   as at 31 March 2020 
 
 
 
 
                                                                   % of net 
                                         Cost       Valuation        assets 
                                        GBP000        GBP000      by valuation 
Fifteen largest venture capital 
investments: 
Agilitas IT Holdings                          943         5,292           6.6% 
Lineup Systems                                975         4,137           5.2% 
Currentbody.com                             1,944         3,337           4.2% 
Sorted Holdings                             3,022         3,292           4.1% 
Entertainment Magpie Group                  1,611         3,057           3.8% 
SHE Software Group                          2,412         2,988           3.7% 
Volumatic Holdings                            905         1,899           2.4% 
It's All Good                               1,205         1,791           2.2% 
Biological Preparations Group               2,366         1,759           2.2% 
GRIP-UK (t.a. Climbing Hangar)              2,118         1,672           2.1% 
Knowledgemotion                             1,903         1,669           2.1% 
Weldex (International) Offshore 
 Holdings                                   3,262         1,638           2.0% 
Medovate                                    1,593         1,593           2.0% 
Soda Software Labs (t.a. Hello 
 Soda)                                      1,472         1,366           1.7% 
Clarilis                                    1,092         1,301           1.6% 
                                     ------------  ------------   ------------ 
                                           26,823        36,791          45.9% 
Other venture capital investments          35,374        21,281          26.5% 
                                     ------------  ------------   ------------ 
Total venture capital investments          62,197        58,072          72.4% 
Listed equity investments                   9,099         7,765           9.7% 
                                     ------------  ------------   ------------ 
Total fixed asset investments              71,296        65,837          82.1% 
                                     ------------ 
Cash and cash equivalents                                14,478          18.0% 
Debtors less creditors                                     (87)         (0.1)% 
                                                   ------------   ------------ 
Net assets                                               80,228         100.0% 
                                                   ------------  ------------ 
 
 
 
   RISK MANAGEMENT 
 
   The board carries out a regular and robust assessment of the risk 
environment in which the company operates. The principal 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 adviser on a regular basis. 
 
   Financial risk: most of the company's investments involve a medium to 
long-term commitment and many are relatively 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 by the COVID-19 pandemic which is widely predicted to cause a 
global recession after the balance sheet date.  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. 
 
   Brexit risk: the implementation of the decision for the UK to withdraw 
from the European Union (EU) is a process which involves significant 
uncertainty.  The impact on the future business environment in the UK is 
therefore difficult to predict.  Mitigation: whilst we do not expect 
that Brexit will have a significant impact on the operations of Northern 
Venture Trust PLC itself, the board and the adviser follow Brexit 
developments closely with a view to identifying changes which might 
affect the company's investment portfolio.  The adviser works closely 
with investee companies in order to plan for a range of possible 
outcomes. 
 
   Stock market risk: some of the company's investments are quoted on the 
London Stock Exchange or AIM and will be subject to market fluctuations 
upwards and downwards. External factors such as terrorist activity or 
global health crises, such as the COVID-19 pandemic, 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 specialist advisers, including 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, which reflects the European Commission's State-aid rules. 
Changes to the UK legislation or the State-aid rules 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 advisers 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. Mitigation: the board 
regularly reviews the system of internal controls, both financial and 
non-financial, operated by the company and the 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 
31 March 2020 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 30 September 2019 have been extracted from the 
audited financial statements for that year, which have been delivered to 
the Registrar of Companies.  The 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 
30 September 2019. 
 
   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 N J Beer, Mr R J Green, Mr T R Levett, Mr D A 
Mayes and Mr H P Younger. 
 
   The calculation of return per share is based on the return on ordinary 
activities after tax for the six months ended 31 March 2020 and on 
138,819,494 (2019: 131,929,348) ordinary shares, being the weighted 
average number of shares in issue during the period. 
 
   The calculation of the net asset value per share is based on the net 
assets at 31 March 2020 divided by the 137,862,512 (2019: 130,562,141) 
ordinary shares in issue at that date. 
 
   The interim dividend of 1.5p per share for the year ending 30 September 
2020 will be paid on 28 August 2020 to shareholders on the register at 
the close of business on 7 August 2020. 
 
   A copy of the half-yearly financial report for the six months ended 31 
March 2020 is expected to be posted to shareholders on or around 31 July 
2020 and will be available to the public at the registered office of the 
company at Time Central, 32 Gallowgate, Newcastle upon Tyne NE1 4SN and 
on the company's website. 
 
   Neither the contents of the NVM Private Equity LLP or the Mercia Asset 
Management PLC website,  nor the contents of any website accessible from 
hyperlinks on the NVM Private Equity LLP or Mercia Asset Management PLC 
website (or any other website), are incorporated into, or forms part of, 
this announcement. 
 
 
 
 

(END) Dow Jones Newswires

July 08, 2020 11:25 ET (15:25 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.