Prospectus • Sep 22, 2017
Prospectus
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PROSPECTUS
| Contents | Page | |
|---|---|---|
| Summary | 5 | |
| Risk Factors | 12 | |
| Letter from the Chairmen of the Companies | 14 | |
| Part I | The Offers | 16 |
| The investment opportunity | 16 | |
| Reasons for the Offers and use of proceeds | 16 | |
| Summary of current portfolios | 16 | |
| Corporate objectives and investment policies | 17 | |
| Dividend policy and Dividend Investment Schemes | 17 | |
| Share buyback policies Taxation benefits to Investors |
18 18 |
|
| Track record of the Companies | 19 | |
| The Manager | 20 | |
| Directors | 25 | |
| Operation of the Companies and board practices | 27 | |
| Costs | 30 | |
| Other information | 31 | |
| Forward-looking statements | 33 | |
| Part II | Financial information on Northern Venture Trust | 34 |
| Part III | Financial information on Northern 2 VCT | 37 |
| Part IV | Financial information on Northern 3 VCT | 40 |
| Part V Part VI |
General information on the Companies Taxation considerations for Investors |
43 70 |
| Part VII | Definitions | 73 |
| Part VIII | Additional information | 76 |
| Part IX | Terms and conditions of application | 81 |
| Annex I | Terms and conditions of the Dividend Investment Schemes | 85 |
| Directors and advisers | 91 | |
| Application Form | 93 | |
| Offer statistics | ||
| Gross proceeds of the Offers, if fully subscribed (£20,000,000 per Company) | £60,000,000 | |
| Minimum investment per applicant (in all or any of the three Companies – minimum £2,000 in any | £6,000 | |
| one Company) | ||
| Maximum investment on which tax reliefs are available | £200,000 | |
| Offers open | Offers close (unless fully subscribed at an earlier date, or extended by the Directors) | 21 September 2017 3.00pm on 5 April 2018 |
| Financial calendar for Northern Venture Trust | ||
| Financial year end | 30 September | |
| Annual results announcement and annual report published | November | |
| Annual general meeting | December | |
| Dividends paid (first dividend in respect of the Offer Shares expected December 2017) Half-yearly results announcement and half-yearly report published |
June and December May |
|
| Financial calendar for Northern 2 VCT | ||
| Financial year end | 31 March | |
| Annual results announcement and annual report published | May | |
| Annual general meeting | Dividends paid (first dividend in respect of the Offer Shares expected January 2018) | July January and July |
| Half-yearly results announcement and half-yearly report published | November | |
| Financial calendar for Northern 3 VCT | ||
| Financial year end | 31 March | |
| Annual results announcement and annual report published | May | |
| Annual general meeting | July | |
| Dividends paid (first dividend in respect of the Offer Shares expected January 2018) | January and July | |
| Half-yearly results announcement and half-yearly report published | November |
This document constitutes a prospectus dated 21 September 2017 (the "Prospectus") issued by Northern Venture Trust PLC, Northern 2 VCT PLC and Northern 3 VCT PLC (the "Companies"), prepared in accordance with the Prospectus Rules made under Section 84 of the Financial Services and Markets Act 2000 ("FSMA") and has been approved by the Financial Conduct Authority ("FCA") in accordance with FSMA.
A brief summary written in non-technical language and conveying the essential characteristics and risks associated with the Companies and the ordinary shares in the capital of the Companies (the "Offer Shares") which are being offered for subscription (the "Offers") is contained in a summary on page 5 of this document. The Prospectus has been filed with the FCA in accordance with the Prospectus Rules and you are advised to read it in full.
The Companies and their Directors (whose names are set out on pages 25 and 26) each accept responsibility for the information contained in the Prospectus. To the best of the knowledge of the Companies and the Directors(who have taken all reasonable care to ensure that such is the case) the information contained in the Prospectus is in accordance with the facts and does not omit anything likely to affect the import of such information.
The Companies and the Directors consent to the use of the Prospectus and accept responsibility for the content of the Prospectus, with respect to subsequent resale or final placement of securities by financial intermediaries, from the date of the Prospectus until the close of the Offers. The Offers are expected to close no later than 5 April 2018. There are no conditions attaching to this consent. Financial intermediaries may only use the Prospectus in the UK.
Information on the terms and conditions of the Offers will be given to Investors by financial intermediaries at the time that the Offers are introduced to Investors. Any financial intermediary using the Prospectus must state on its website that it is using the Prospectus in accordance with this consent.
(Incorporated in England and Wales under the Companies Act 1985 with registered number 03090163)
(Incorporated in England and Wales under the Companies Act 1985 with registered number 03695071)
(Incorporated in England and Wales under the Companies Act 1985 with registered number 04280530)
Following the Offers, assuming full subscription and based on the illustrative Offer prices for applications through an execution only platform or broker where commission of 2.25% is waived by the intermediary, the Companies' issued and to be issued share capitals will be as follows:
| Issued and to be issued fully paid | ||
|---|---|---|
| No. of Shares | Nominal value | |
| Northern Venture Trust – Ordinary Shares of 25p each (ISIN GB0006450703) | 132,765,407 | £33,191,352 |
| Northern 2 VCT – Ordinary Shares of 5p each (ISIN GB0005356430) | 130,343,915 | £6,517,196 |
| Northern 3 VCT – Ordinary Shares of 5p each (ISIN GB0031152027) | 90,454,132 | £4,522,707 |
The existing Shares issued by the Companies are listed on the Official List of the UK Listing Authority and traded on the London Stock Exchange's main market for listed securities. Application will be made to the UK Listing Authority for all of the Offer Shares to be issued pursuant to the Offers to be listed on the Official List and will be made to the London Stock Exchange for the Offer Shares to be admitted to trading on its main market for listed securities. It is expected that Admission to the Official List will become effective and that dealings in the Offer Shares will commence three Business Days following allotment. Dealings may begin before notification of allotments is made. Revocation of the Offers cannot occur after dealings in the Offer Shares have commenced. The Offer Shares will rank pari passu with existing issued Ordinary Shares from the date of issue.
Howard Kennedy Corporate Services LLP ("Howard Kennedy"), which is authorised and regulated in the UK by the FCA, is acting as sponsor for the Companies and no-one else and will not be responsible to any other person for providing the protections afforded to customers of Howard Kennedy or for providing advice (subject to those responsibilities and liabilities arising under FSMA and the regulatory regime established thereunder).
In connection with the Offers, Downing LLP ("Downing"), the promoter of the Offers, is acting for the Companies and noone else and will not be responsible to anyone other than the Companies for providing the protections afforded to customers of Downing or for providing advice in relation to the Offers(subject to those responsibilities and liabilities arising under FSMA and the regulatory regime established thereunder). Downing is authorised and regulated in the UK by the FCA.
Copies of this document are available (and any supplementary prospectus published by the Companies will be available) free of charge from the offices of Downing, at Ergon House, Horseferry Road, London SW1P 2AL (website: www.downing.co.uk), from the offices of NVM Private Equity LLP at Time Central, 32 Gallowgate, Newcastle upon Tyne NE1 4SN (website: www.nvm.co.uk) and from the office of Howard Kennedy Corporate Services LLP at No. 1 London Bridge, London SE1 9BG (website: www.howardkennedy.com).
Your attention is drawn to the risk factors set out on pages 12 and 13 of this document. An investment in the Companies is only suitable for investors who are capable of evaluating the risks and merits of such an investment and who have sufficient resources to bear any loss which might arise. If you are in doubt as to the action you should take, you should consult an independent financial intermediary authorised under FSMA.
Summaries are made up of disclosure requirements known as "Elements". These Elements are numbered in Sections A to E.
This summary contains all the Elements required to be included in a summary for the type of shares being issued pursuant to this Prospectus. Some of the Elements are not required to be addressed and, as a result, there may be gaps in the numbering sequence of the Elements.
Even though an Element may be required to be inserted in this summary, it is possible that no relevant information can be given regarding that Element. In these instances, a short description of the Element is included, together with an appropriate 'Not applicable' statement.
In the event of an offer being made by a financial intermediary, financial intermediaries must give investors information on the terms and conditions of the Offers at the time they introduce the Offersto investors.
commercial names
this document), the Companies are not aware of any person who, directly or indirectly, has or will have an interest in the capital of any of the Companies or voting rights which are notifiable under UK law (under which, pursuant to the 2006 Act and the Listing Rules and Disclosure Guidance and Transparency Rules of the FCA, a holding of 3% or more will be notified to that Company).
| B7 | Selected financial | |
|---|---|---|
| information and | ||
| statement of any | Northern |
significant changes
Certain key historical information of the Companies is set out below:
| Northern Venture Trust |
Half-yearly reports and unaudited accounts for six months ended 31 March 2017 |
Audited year end to 30 September 2016 |
Half-yearly reports and unaudited accounts for six months ended 31 March 2016 |
Audited year end to 30 September 2015 |
Audited year end to 30 September 2014 |
|---|---|---|---|---|---|
| £ million | £ million | £ million | £ million | £ million | |
| Net Assets | 76.9 | 77.2 | 77.9 | 78.9 | 83.5 |
| Return on activities before tax |
2.0 | 9.6 | 2.6 | 6.8 | 6.6 |
| Pence | Pence | Pence | Pence | Pence | |
| Return per Share |
2.1 | 10.1 | 2.8 | 7.2 | 7.1 |
| Net Asset Value per Share |
79.1 | 80.0 | 82.9 | 83.0 | 87.8 |
| Dividends per Share |
8.0 | 13.0 | 10.0 | 12.0 | 6.0 |
| Northern 2 VCT | Audited year end to 31 March 2017 |
£ million | Audited year end to 31 March 2016 £ million |
Audited year end to 31 March 2015 £ million |
|
| Net Assets | 71.6 | 71.3 | 78.7 | ||
| Return on activities before tax |
8.6 | 7.4 | 3.1 | ||
| Pence | Pence | Pence | |||
| Return per Share | 9.3 | 8.0 | 3.4 | ||
| Net Asset Value per Share |
76.6 | 77.9 | 85.4 | ||
| Dividends per Share |
10.5 | 10.5 | 15.5 | ||
| Northern 3 VCT | Audited year end to 31 March 2017 |
Audited year end to 31 March 2016 |
Audited year end to 31 March 2015 |
||
| Net Assets | £ million 69.9 |
£ million 67.0 |
£ million 71.2 |
||
| Return on activities before tax |
9.6 | 6.8 | 2.6 | ||
| Pence | Pence | Pence | |||
| Return per Share | 14.6 | 10.4 | 3.9 | ||
| Net Asset Value per Share |
106.2 | 102.2 | 107.2 | ||
| Dividends per Share |
10.5 | 10.5 | 15.5 |
There have been no significant changes in the financial condition or operating results of any of the Companies during or subsequent to the period covered by the historical information set out above.
B34 Investment
objective and policy, including investment restrictions
The net proceeds of the Offers will be invested by the Companies in accordance with their respective published investment policies, initially in a portfolio of cash and a range of quoted securities.
In November 2015, the legislation governing investments by VCTs was changed to focus on providing development capital for younger growing companies. NVM has adapted to the new rules, added new people to the team and completed 11 new VCT qualifying investments and two follow on investments since the change in rules. Over the coming years, the intention is to build a diversified portfolio of companies to generate capital growth.
Corporate objective: The objective of each of the Companies is to provide high long-term taxfree returns to investors through a combination of dividend yield and capital growth, by investing primarily in unquoted UK manufacturing, service and technology businesses which meet the Manager's key criteria of good value, growth potential, strong management and ability to generate cash in the medium to long term.
Investment policy: The investment policy of each of the Companies has been designed to enable the relevant Company to achieve its objective whilst complying with the qualifying conditions set out in the VCT Rules, as amended by HM Government from time to time. The Directors of each Company intend that the long-term disposition of each of the Companies' assets will be approximately 80% in a portfolio of VCT-qualifying unquoted and AIM-quoted investments, and 20% in other investments selected with a view to producing an enhanced return while avoiding undue capital volatility, to provide a reserve of liquidity which will maximise the relevant Company's flexibility as to the timing of investment acquisitions and disposals, dividend payments and share buybacks. Within the VCT-qualifying portfolio, investments will be structured using various investment instruments, including ordinary and preference shares, loan stocks and convertible securities, to achieve an appropriate balance of income and capital growth. The selection of new investments will necessarily have regard to the VCT Rules, which are designed to focus investment on early stage and development capital opportunities. The portfolio will be diversified by investing in a broad range of VCTqualifying industry sectors and by holding investments in companies at different stages of maturity in the corporate development cycle. The normal investment holding period is expected to be in the range from three to ten years. No single investment will normally represent in excess of 3% of the relevant Company's total assets at the time of acquisition. As investments are held with a view to long-term capital growth as well as income, it is possible that individual holdings may grow in value to the point where they represent a significantly higher proportion of total assets prior to a realisation opportunity being available. Investments will normally be made using the relevant Company's equity shareholders' funds and it is not intended that any of the Companies will take on any long-term borrowings. The Companies each operate a co-investment scheme under which the Manager's investment executives are required to co-invest with them in all new VCT-qualifying investments.
| reserves of the Companies as shown in the latest audited balance sheet, adjusted where appropriate to take account of movements since that date. |
|---|
| (so far, as regards the subsidiaries, as by such exercise they can secure) that the aggregate amount at any one time owing or deemed to be owing by the Companies and/or any subsidiaries, determined as hereinafter mentioned, in respect of moneys borrowed by them or any of them shall not at any time, without the previous sanction of an ordinary resolution of the Companies, exceed an amount equal to the aggregate amount paid up on the issued share capital of the Companies and the amounts standing to the credit of the consolidated |
| mortgage or charge their undertakings, property and uncalled capital. The Directors shall restrict the borrowings of the Companies and exercise all voting and other rights or powers of control exercisable by the Companies in relation to their subsidiaries (if any) so as to secure |
The Manager will receive from each Company an annual management fee, payable quarterly in advance, at the rate of 2.06% of Net Asset Value, calculated at half-yearly intervals. The management fee payable by the Companies in respect of the net proceeds of the Offers will be reduced to 1.0% for the period from the date of allotment to 30 September 2018. The Manager also provides secretarial and administration services to each of the Companies for annual fees of £68,500, £56,200 and £53,000 for Northern Venture Trust, Northern 2 VCT and Northern 3 VCT respectively (rising annually with the movement in the UK Index of Retail Prices).
The Manager is also entitled to receive a performance-related management fee from each of the Companies equivalent to a specified percentage of the amount, if any, by which the Total Return in each financial year (expressed as a percentage of opening Net Asset Value) exceeds a performance hurdle. The relevant specified percentages are 15.0% for Northern Venture Trust, 12.0% for Northern 2 VCT and 14.2% for Northern 3 VCT. The hurdle is a composite rate based on the level of long-term investments and cash and near-cash investments during the year. For the most recent financial year the hurdle rate for Northern Venture Trust was 6.0%, for Northern 2 VCT 6.0% and for Northern 3 VCT 6.2%. Following a year in which the NAV declines, a "high water mark" will apply to the calculation of the performance-related fee, but will then be adjusted downwards to the extent that a positive return is achieved in the following year. The performance-related fee payable by each of the Companies is subject to an overall annual cap of 2.25% of net assets.
NVM executives invest alongside the Companies in every deal in a co-investment scheme on the following basis:
Company, subject to not less than 70% of the Company's investment being in shares with preferential rights.
| Cost (£000) |
Carrying Value (£000) |
% of NAV | |
|---|---|---|---|
| Northern Venture Trust | |||
| Unquoted | 42,885 | 43,960 | 59.1 |
| Quoted | 3,115 | 4,945 | 6.6 |
| Northern 2 VCT | |||
| Unquoted | 34,303 | 39,750 | 52.5 |
| Quoted | 2,602 | 3,464 | 4.6 |
| Northern 3 VCT | |||
| Unquoted | 30,967 | 36,238 | 48.9 |
| Quoted | 7,600 | 11,920 | 16.1 |
B46 Most recent NAV per Ordinary Share As at 30 June 2017, the unaudited net asset value per Northern Venture Trust Share was 70.8p.
As at 30 June 2017, the unaudited net asset value per Northern 2 VCT Share was 76.4p. As at 30 June 2017, the unaudited net asset value per Northern 3 VCT Share was 106.1p.
The maximum number of Offer Shares to be issued pursuant to the Offers are approximately 30,000,000 for Northern Venture Trust, 31,000,000 for Northern 2 VCT and 22,000,000 for Northern 3 VCT.
C4 Description of the rights attaching to the securities The Offer Shares will rank equally in all respects with each other and with the existing Shares in that Company.
E1 Offer net proceeds The Companies are proposing to raise up to £60 million (£20 million in each Company) pursuant to the Offers. The total initial expenses of the Offers (assuming full subscription by Execution-Only Investors and/or Professional Client Investors only) will be 4.0% of the gross proceeds and the total net proceeds are therefore estimated to be £19.2 million per Company, if the Offers are fully subscribed.
E2 Reasons for the Offer and use of proceeds factors into account:
In deciding to launch the Offers, the Directors of the Companies have taken the following
The Companies are seeking to raise £60 million to provide liquidity and flexibility to capitalise on investment opportunities in accordance with their investment policies.
E3 Terms and conditions of the Offer The number of Shares to be issued to each Applicant will be calculated based on the following Pricing Formula (rounded down to the nearest whole Share):
The proceeds of the Offers will be invested in accordance with each Company's investment policy.
For applications received from Retail Client Investors and/or Direct Investors, the Investor will pay a Promoter's Fee of 2.0% and may facilitate any agreed Adviser Charge which the Investor has negotiated with their financial intermediary through a reduction in the number of Offer Shares the Investor will receive, calculated in accordance with the Pricing Formula.
Prospective Investors should carefully consider the following risk factors in addition to the other information presented in this document. If any of the risks described below were to materialise, they could have a material effect on the respective businesses, financial condition, results or operations of any of the Companies. The risks and uncertainties described below are not the only ones that the Companies or Investors may face. Additional risks which are not currently known to the Companies or their Directors, or that the Companies or their Directors currently believe are not material, may also adversely affect the respective business, financial condition and results or operations of the Companies. The value of the Offer Shares could decline due to any of these risk factors. Investors who are in any doubt as to the action that they should take are advised to obtain advice from an Intermediary who specialises in advising on the acquisition of shares. The attention of prospective Investors is drawn to the following risks.
• In August 2017 HM Treasury published a consultative document entitled 'Financing growth in innovative firms'. That consultation is part of a review established to identify and tackle factors affecting the supply of patient capital, being "long-term investment in innovative firms led by ambitious entrepreneurs who want to build large-scale businesses". The review and consultation assess the effective supply and allocation of patient capital, barriers to investing in patient capital and current interventions to support investment in patient capital and entrepreneurship, including tax-efficient schemes such as VCTs like the Companies. Any solutions or measures implemented following the Treasury consultation could impact the investment policies of the Companies, the levels of tax reliefs that are available to Investors, and the level of demand and competition for investment in the target markets of the Companies. Decisions around the allocation of resources across existing and any new programmes will be made by the Chancellor in the Autumn Budget 2017, considering potential benefits of options against their costs. It has been announced that the Budget will take place on 22 November 2017.
Northern Venture Trust PLC Northern 2 VCT PLC Northern 3 VCT PLC Time Central, 32 Gallowgate Newcastle upon Tyne NE1 4SN
21 September 2017
Dear Investor
On 26 July 2017, Northern Venture Trust PLC, Northern 2 VCT PLC and Northern 3 VCT PLC ("the Northern VCTs" or "the Companies") announced their intention to raise up to £60 million (up to £20 million for each VCT) through a joint public offer of new ordinary shares ("the Offers"). This Prospectus contains further details of the Offers and an Application Form for use by Investors.
Background - The three Northern VCTs were launched in 1995, 1999 and 2001 respectively and are among the longest established funds in the VCT sector. They have delivered attractive longterm performance to shareholders and are currently ranked first, third and fourth amongst generalist VCTs on the basis of NAV total return measured over the past ten years (source: The Association of Investment Companies). NVM Private Equity, the manager of the Companies, has specialised in the funding of smaller UK private companies for almost 30 years and has a strong and experienced management team, with the capability of not only identifying and transacting new investment opportunities but also providing strategic support to investee companies as they seek to achieve their long-term objectives.
The Offers – This is the first significant fund-raising by the Northern VCTs since 2013, when a total of £50 million was subscribed by Investors. During the past four years, we have used these funds to carry on an active programme of new investment, whilst generating substantial cash inflows from investment realisations and distributing over £107 million in tax-free dividend payments. We believe that there is strong investor appetite for a further share issue by the Companies, and that the time is now right to approach the market for additional funds which will facilitate our investment activities for the next three years.
Investment focus - Investors will be aware that as a result of changes to the VCT Rules in 2015, VCTs are now focused on providing growth capital for relatively young companies. NVM has responded to this challenge by recruiting additional investment executives with relevant expertise to add to the skill set of its existing team; we have already made 11 new VCT qualifying investments and two follow on investments under the amended VCT rules and have a strong pipeline of opportunities under examination. We expect that the profile of returns from investments made under the new regime may fluctuate more than was the case under the old rules. However, it is important to remember that each of the Companies has a substantial "legacy" portfolio of later-stage VCT-qualifying investments acquired prior to 2015, which should help to underpin the overall performance of the Companies in the near future.
VCT tax reliefs - under the VCT Rules, 30% income tax relief will be available on the value of the shares subscribed under the Offers, so long as they are held for at least five years, and dividends and gains from VCTs are tax-free. Further information about the tax incentives available to Investors is set out in Part VI of this Prospectus.
Shareholder priority - We expect there will be strong market demand for shares in the Companies in response to the Offers. In recognition of the loyalty of our existing shareholders, many of whom have supported the Northern VCTs for over 20 years, applications from each VCT's shareholders (or their spouse or civil partner) will have priority, on a first come first served basis, in that VCT for a period of 21 days from the date of publication of the Prospectus. Thereafter, each VCT (if not already fully subscribed) will satisfy applications already received from shareholders in the other Northern VCTs (or their spouse or civil partner) during the 21 day period, prior to accepting applications from any other Investors. The Offers will be available only for the 2017/18 tax year and will close on 5 April 2018, or earlier if fully subscribed or for any other reason at the discretion of the Directors.
How to apply - In order to invest, please read the Prospectus and complete the Application Form. Early application is advisable. If you have any questions relating to investment in the Offers, you should contact your usual financial adviser. Investors' attention is drawn to the risk factors set out on pages 12 and 13 of this document. For questions relating to a specific application, please telephone NVM Private Equity on 0191 244 6000 (please note that NVM Private Equity is unable to provide personal investment advice).
Yours sincerely
Simon Constantine Chairman, Northern Venture Trust PLC
David Gravells Chairman, Northern 2 VCT PLC
James Ferguson Chairman, Northern 3 VCT PLC
The investment opportunity is to back an experienced team that is already operating at scale with benefits to existing and new Shareholders from deploying further funds.
The Northern VCTs are among the longest established in the market and over the last 22 years almost £380 million has been invested in over 220 companies providing a total return since inception of between 230p and 178p per Share on the three VCTs.
The three Northern VCTs have combined Net Assets of £224 million and a portfolio of 52 unquoted and AIM-quoted companies with a combined value of £149 million.
Diversity and scale are critical to successful growth capital funding and over the next three years the funds raised will be used to continue to build and support a portfolio of growing companies with the intention of delivering attractive realised capital growth over the next three to ten years.
Shareholders may, from time to time, wish to sell some of their shares to assist with personal and financial estate planning. It is the policy of each Company to endeavour to buy back shares which its Shareholders wish to sell, currently at a discount of 5% to the most recently announced NAV (see page 18 for further details).
The Northern VCTs are building a portfolio of growth capital investments in companies in which we expect to provide both initial scale-up funding and follow on investment. Over the next five years and in line with the Companies' investment policies, the objective is to invest in a diversified portfolio of companies in which we are expecting to commit around £30 million per year. We are now seeking to raise £60 million to provide liquidity and flexibility to capitalise on investment opportunities.
In deciding to launch the Offers, the Directors of the Companies have taken the following factors into account:
The three Northern VCTs currently have 34 unquoted investee companies with a combined (unaudited) net asset value of £130 million. There are 11 qualifying investments under the new VCT Rules valued at £27 million and there are 24 unquoted investments made prior to 2015 predominantly in management buy-outs currently valued at £103 million. The structure of the pre-November 2015 investments gives rise to dividend and interest income as well as the potential for capital gain on disposal.
The net proceeds of the Offers will be invested by the Companies in accordance with their respective published investment policies, initially in a portfolio of cash and a range of quoted securities. The Companies are entitled to participate in each opportunity introduced by NVM pro rata to their respective Net Assets.
In November 2015 the legislation governing investments by VCTs was changed to focus on providing development capital for younger growing companies. NVM has adapted to the new VCT Rules, added new people to the team and completed 11 new VCT qualifying investments and two follow on investments since the change in rules. Over the coming years the intention is to build a diversified portfolio of companies to generate capital growth.
Corporate objective: The objective of each of the Companies is to provide high long-term tax-free returns to Investors through a combination of dividend yield and capital growth, by investing primarily in unquoted UK manufacturing, service and technology businesses which meet the Manager's key criteria of good value, growth potential, strong management and ability to generate cash in the medium to long term.
Investment policy: The investment policy of each of the Companies has been designed to enable the relevant Company to achieve its objective whilst complying with the qualifying conditions set out in the VCT Rules, as amended by HM Government from time to time. The Directors of each Company intend that the long-term disposition of each of the Companies' assets will be approximately 80% in a portfolio of VCT-qualifying unquoted and AIM-quoted investments, and 20% in other investments selected with a view to producing an enhanced return while avoiding undue capital volatility, and to provide a reserve of liquidity which will maximise the relevant Company's flexibility as to the timing of investment acquisitions and disposals, dividend payments and share buybacks. Within the VCT-qualifying portfolio, investments will be structured using various investment instruments, including ordinary and preference shares, loan stocks and convertible securities, to achieve an appropriate balance of income and capital growth. The selection of new investments will necessarily have regard to the VCT Rules, which is designed to focus investment on early stage and development capital opportunities. The portfolio is expected to be diversified by investing in a broad range of VCT-qualifying industry sectors and by holding investments in companies at different stages of maturity in the corporate development cycle. The normal investment holding period will be in the range from three to ten years. No single investment will normally represent in excess of 3% of the relevant Company's total assets at the time of acquisition. As investments are held with a view to longterm capital growth as well as income, it is possible that individual holdings may grow in value to the point where they represent a significantly higher proportion of total assets prior to a realisation opportunity being available. Investments will normally be made using the relevant Company's equity shareholders' funds and it is not intended that any of the Companies will take on any long-term borrowings.
The Companies each operate a co-investment scheme under which the Manager's investment executives are required to co-invest with them in all new VCT-qualifying investments.
Any material change to any of the Companies' investment policies in any event will only be made with the approval of that Company's shareholders by ordinary resolution.
In recent years Northern Venture Trust has paid a base annual dividend of 6p and Northern 2 VCT and Northern 3 VCT have each paid a base annual dividend of 5.5p, with the objective of enabling Shareholders to benefit from a strong and consistent flow of tax free income. Changes in the VCT Rules with effect from November 2015 mean that in future the Companies will be required to invest mainly in relatively young businesses which need funding for growth and development. Typically, this funding will consist largely of equity rather than income-yielding debt instruments, which will make future returns to the Companies more dependent on the timing of outright exits. As a result, future dividend payments by the Companies are likely to be subject to fluctuation. The dividends payable by the Companies in respect of any financial year cannot be guaranteed and will be subject to the availability of distributable reserves, cash resources and applicable regulations. This is likely to lead to a lower annual income from investments made by the Companies under the new VCT Rules, and hence to a reduction in the amounts of income available for distribution by the Companies.
Set out below is a table illustrating the income yields to Investors assuming the present base annual dividends referred to above continue to be paid. These yields are based on an illustrative Offer Price net of 30% income tax relief and the costs of the Offers but before any Adviser Charges. Investors should note that the target base annual dividends are objectives and are not guaranteed.
| Illustrative yield per Offer Share (after 30% income tax relief) | ||||||||
|---|---|---|---|---|---|---|---|---|
| Company | Illustrative Offer Price after 30% tax relief1 |
Present base annual dividend |
Tax-free yield |
Gross equivalent yield Higher rate taxpayer2 |
Additional rate taxpayer2 |
|||
| Northern Venture Trust | 50.5p | 6.0p | 11.9% pa | 17.6% pa | 19.2% pa | |||
| Northern 2 VCT | 48.5p | 5.5p | 11.3% pa | 16.7% pa | 18.3% pa | |||
| Northern 3 VCT | 69.7p | 5.5p | 7.9% pa | 11.7% pa | 12.8% pa |
1 The returns listed are based on an illustrative Offer Price of 72.2p for Northern Venture Trust, 69.3p for Northern 2 VCT and 99.6p for Northern 3 VCT, multiplied by 70%, to reflect initial income tax relief of 30%. Investors should note that they will be required to pay the full Offer Price and claim the income tax relief separately.
2 The gross equivalent yield is the yield on a non-VCT UK dividend that would result in a net yield of 11.9% for Northern Venture Trust, 11.3% for Northern 2 VCT and 7.9% for Northern 3 VCT (being a 6.0p dividend divided by 50.5p for Northern Venture Trust, a 5.5p dividend divided by 48.5p for Northern 2 VCT and a 5.5p dividend divided by 69.7p for Northern 3 VCT, in all cases the illustrative Offer Price less 30% to reflect the initial income tax relief), assuming a higher rate taxpayer and an adddional rate taxpayer respectively with at least £5,000 of other dividend income. The returns shown above are illustrative only, and no forecast or projection is inferred or implied.
Investors will be eligible for the next dividend payments after their Shares have been allotted, subject to allotment having taken place prior to the relevant dividend record date. The next dividends are expected to be paid in December 2017 in respect of Northern Venture Trust and January 2018 in respect of Northern 2 VCT and Northern 3 VCT. The Companies all intend to pay dividends bi-annually, usually in June and December in respect of Northern Venture Trust and January and July in respect of Northern 2 VCT and Northern 3 VCT.
The Companies have adopted Dividend Investment Schemes under which Shareholders are given the opportunity to reinvest dividend payments by way of subscription for new Shares. Subject to a Shareholder's personal circumstances, Shares subscribed for under the Dividend Investment Schemesshould obtain the usual VCT tax advantages as set out below.
The Companies wish to ensure that there is liquidity in their Shares and, accordingly, it is the present intention of each of the Companies to continue to pursue an active discount management policy. Each Company will endeavour to buy back those Shares which its Shareholders wish to sell, currently at a discount of 5% to the latest published NAV, subject to applicable legislation governing the relevant Company, authority from Shareholders (currently each Company has authority to purchase up to 10% of its issued share capital annually), market conditions at the time and the relevant Company having both cash resources and distributable reserves available for the purpose. Shares which are bought back by any of the Companies may be cancelled or held in treasury and later sold in the market. The buyback policy of each of the Companies aims to support the share price of that Company by limiting the discount to the NAV at which its Shares trade. The making and timing of any share buybacks will remain at the absolute discretion of the Board of each Company.
The principal UK tax reliefs, which are available on a maximum investment of £200,000 per individual in the 2017/18 tax year, are set out below:
The table below shows the effect of the initial 30% income tax relief (based on a notional investment of £10,000).
| Illustration of the effect of the initial income tax relief | |
|---|---|
| Illustrative cost of investment | £ |
| Gross investment | 10,000 |
| 30% income tax relief | (3,000) |
| Illustrative net of tax cost of investment | 7,000 |
| Illustrative initial value of investment Gross subscription by Investor |
10,000 |
The above table shows that, based on an illustrative investment of £10,000 and income tax relief at 30%, an Investor's net of tax cost of investment is £7,000 and the net assets initially attributable to the investment are £10,000. The table ignores the effect of the Promoter's Fee, any Adviser Charges or commission waivers.
Investors should note that they are required to hold the Offer Shares for at least five years in order to retain the income tax relief.
The above is only a very brief summary of the UK tax position of investors in VCTs and is based on the Companies' understanding of current law and practice. Further details are set out in Part VI of this document. Potential Investors are advised to consult an Intermediary who specialises in advising on the taxation consequences of investing in a VCT before investing.
Northern Venture Trust was incorporated in 1995, Northern 2 VCT was incorporated in 1999 and Northern 3 VCT was incorporated in 2001. Of almost 50 generalist VCT share classifications listed on the London Stock Exchange, all three of the Companies rank in the top 10 in terms of Total Return over 3, 5 and 10 years (source: The Association of Investment Companies, 25 August 2017). The financial performance of the Companies over their last three financial years is summarised below (source: announcements made by the relevant Company through an RIS).
| Year ended | 30 September 2016 | 30 September 2015 | 30 September 2014 |
|---|---|---|---|
| Dividends per Share | 13.0p | 12.0p | 6.0p |
| Cumulative dividends per Share | 148.5p | 135.5p | 123.5p |
| paid since inception† | |||
| NAV per Share | 80.0p | 83.0p | 87.8p |
| Total Return per Share | 228.5p | 218.5p | 211.3p |
| Year ended | 31 March 2017 | 31 March 2016 | 31 March 2015 |
|---|---|---|---|
| Dividends per Share | 10.5p | 10.5p | 15.5p |
| Cumulative dividends per Share | 101.4p | 90.9p | 75.4p |
| paid since inception† | |||
| NAV per Share | 76.6p | 77.9p | 85.4p |
| Total Return per Share | 178.0p | 168.8p | 160.8p |
| Year ended | 31 March 2017 | 31 March 2016 | 31 March 2015 |
|---|---|---|---|
| Dividends per Share | 10.5p | 10.5p | 15.5p |
| Cumulative dividends per Share | 75.4p | 64.9p | 49.4p |
| paid since inception† | |||
| NAV per Share | 106.2p | 102.2p | 107.2p |
| Total Return per Share | 181.6p | 167.1p | 156.6p |
† Excluding dividends declared but not yet paid at the balance sheet date.
The most recently published NAV per Share at 30 June 2017 (unaudited), which was calculated on a basis consistent with the tables above, was 70.8p for Northern Venture Trust, 76.4p for Northern 2 VCT and 106.1p for Northern 3 VCT.
NVM has 30 years' experience of making later and early stage investments in SMEs. There is a long established presence in the regions with offices in Manchester, Newcastle upon Tyne and Reading and since 1988 NVM has steadily built an investment team who have been making both venture capital and private equity investments predominantly in VCTs, but also in private equity funds and will continue to seek to make a mix of early stage investments in the VCTs and later stage investments. NVM has built up a core strength in selecting high growth assets and nurturing their development, and since the changes in the VCT Rules in 2015 has augmented the team with specialist investors with an earlier stage focus. To build on the track record of adding value to companies, NVM is committed to further recruitment to add value to the existing portfolio and new investments. Deal flow, as laid out below, is strong reflecting the strength and prospects of small companies in the UK, with the regions in particular providing a favourable dynamic with fewer investors, but nevertheless a strong entrepreneurial and business opportunity. The Manager has established robust and proven investment processes, including extensive due diligence procedures, developed through consideration of thousands of investment prospects, which has led to making over 300 investments since NVM was formed, the majority of which have been in the regions. With its depth of experience, regional network and strong reputation, the Manager aims to gain access to the best opportunities available to the industry, identifying those companies which potentially offer the best possible risk/return scenarios.
NVM manages the three Northern VCTs. The respective returns of these Companies to Investors who subscribed at launch are as follows:
| Track record of the Northern VCTs | ||||||
|---|---|---|---|---|---|---|
| Tax year of launch | Net cost1 | Total Return to date2 | Increase over net cost (%) | |||
| Northern Venture Trust |
1995/96 | 80p | 230.3p | 188% | ||
| Northern 2 VCT | 1998/99 | 80p | 177.8p | 122% | ||
| Northern 3 VCT | 2001/02 | 80p | 181.5p | 127% | ||
1 Net cost is the initial Offer Price of 100p per Share less income tax relief of 20% available to Investors in each of the VCTs at that time.
2 Total Return is cumulative dividends declared (including the tax credits where reclaimable) plus the most recently announced (unaudited) Net Asset Value for each Company in pence per Share (as at 30 June 2017). (Source: announcements made by the relevant Company through an RIS)
Please note that the past performance of the Manager and of the funds it manages may not be repeated and is not a guide to the future performance of the Companies and no projection is implied or should be inferred.
The Boards consider a strong deal flow to be of vital importance to the future performance of the Companies. The Manager's credentials are as follows:
Set out below are some examples of recent substantial investments made by the Northern VCTs.
Since 1 April 2016 the Northern VCTs have exited from five portfolio companies, four of which were unquoted and one AIM-quoted. The total sale proceeds generated were £31 million. The exits achieved in the period are set out below.
The Manager has also sourced a number of investments for the Companies which have presented the opportunity to provide growth capital allowing early-stage investee companies to scale up their operations. Recent examples of such growth capital investments include the following:
Lineup Systems is based in London and provides advertisement booking and customer relationship software, as well as business analysis and performance management for any business which relies on advertising for all or part of their revenues. Lineup's software facilitates the booking of advertising through a range of media including print (newspapers, magazines) and online publishing, broadcast media (radio and TV) as well as outdoor advertising. It also helps these businesses to maximise the revenue from their media assets.
The software was originally developed for MISA, the owners of the Metro free newspaper, but was spun out of MISA in 2010, with MISA providing Lineup with an exclusive licence to develop and market the software to third party customers.
The Northern VCTs invested £3 million in Lineup in 2011 to support the development of the newly independent business.
The business has demonstrated strong revenue growth over recent years, winning and delivering contracts with significant blue chip customers. Despite its relatively small size, it has developed a strong reputation in the market place and has a pipeline of prospects that includes a number of large media organisations worldwide. Lineup has successfully established a presence in the USA, and management are currently negotiating partnerships with German and French counterparts to expand into Europe.
It's All Good was launched as a start-up in 2012. The company is an innovative manufacturer of high quality snacks, based in Gateshead, with a focus on tortilla chips. Customers range from a number of the major multiples to high end independent stores including Fortnum & Masons and Fenwicks. The business is at the forefront of new product development in this sector and has launched a premium tortilla chip brand, Manomasa, which the management team believe will be the first successful premium branded tortilla chips made in the UK.
The Northern VCTs invested £3.5 million of development capital in It's All Good in February 2014. Approximately half of this was for an additional production line which has provided the business with the capacity to deliver a Marks and Spencer contract and achieve its three year business plan. The remainder was to provide the business with a robust financial structure.
The It's All Good team has been successful in securing listings of Manomasa productsin Waitrose, Sainsbury's and Tesco - in addition to the many independent stores. They have also grown their own label tortilla chip and pitta bread chip sales through contracts with Marks and Spencer, Sainsbury's, Waitrose and Aldi. In addition, the company has recently further expanded its manufacturing capacity and is now also producing rice cakes specifically for Marks and Spencer.
The Manager's VCT investment team comprises 12 executives who have an average of approximately 12 years' service with NVM. The background and experience of the team is as follows:
Sue Bromham qualified as a chartered accountant with BDO Binder Hamlyn and worked in financial management for The Go-Ahead Group before joining NVM in 2005. She carries out market research and financial analysis projects as well as working with other members of the team on portfolio matters.
Karl Cockwill joined NVM in 2014 as portfolio manager from 3i where he worked for eleven years as portfolio manager responsible for investments in the North of England, Scotland and Northern Ireland. He actively managed 29 exits, achieving substantial value uplifts, across a range of notable transactions.
Alastair Conn qualified as a chartered accountant with Price Waterhouse before co-founding NVM in 1988. He was managing director of NVM until 2008 when he became financial director. He is a non-executive director of Northern 2 VCT and a member of The Association of Investment Companies' VCT Technical Committee.
Martin Green qualified as a chartered accountant before joining 3i in Birmingham. He became a director responsible for 3i's investment activity across the Midlands before leaving in 2001 to join Montagu Capital as a founding director. He joined NVM in 2004 and became managing director in 2008. He has over 20 years' experience in private equity and is the managing partner and chief investment officer of NVM.
Victoria Howarth joined NVM as an investment associate in 2017 from IBM Global Business Services where she worked for over five years as a senior business and technology consultant, undertaking a wide range of technology consultancy programmes with FTSE 250 clients. She also completed placements in the NHS after gaining a degree in Information Systems from Newcastle University.
Simon John joined NVM in 2016 as financial controller and is responsible for the accounting and financial reporting of the Northern VCTs. He qualified as a chartered accountant with PricewaterhouseCoopers and was for four years an assistant director in the corporate finance team of the Newcastle office, working on a range of corporate transactions, before spending two years with Sage Group where he was director of investor relations.
Tim Levett co-founded NVM in 1988 and was chief investment officer until 2008. During this period NVM built a mixed portfolio including early stage investments such as DxS and Alaric Systems. After 20 years leading the investment team he became chairman of NVM in 2008, taking responsibility for corporate strategy and investor relations. Since 2015 he has led the VCT investment team's re-focus on early stage investment. He is a non-executive director of Northern Venture Trust and Northern 3 VCT and a member of The Association of Investment Companies' VCT Forum.
Liam May joined NVM in 2014 from Altium Capital where he worked for two years as a corporate finance associate, with responsibility for advising clients on deal structuring, execution and negotiation strategy. Previously, he spent four years in Ernst & Young's corporate finance department where he qualified as a chartered accountant. He is responsible for making VCT investments in the North of England.
Chris Mellor qualified as a chartered accountant with Spicer and Pegler. He was a co-founder of NVM in 1988, becoming a director in 1996 and is company secretary of the Northern VCTs and Northern Investors Company. He is also responsible for compliance, legal services, information technology systems, London Stock Exchange liaison and personnel.
Charlie Pidgeon qualified as a chartered accountant with PricewaterhouseCoopers, where he was involved in M&A advisory work across a variety of business sectors. He joined NVM in 2012, based in the Reading office, and works with the investment team on new business generation and portfolio issues. He is responsible for making VCT investments in the Southern region.
Jason Warren joined NVM in 2017 as an investment associate. He studied Mathematics and Computer Science at the University of Oxford, where he obtained a Masters degree. He became a software engineer with Morgan Stanley, before joining a systematic hedge fund as a quantitative developer, where he was responsible for the trade generation systems and working with the research team on automated trading algorithms.
Charles Winward joined NVM in 2016, having over 12 years' experience in venture investing having been a director of IP Group, where he ran the fund management subsidiary. Whilst at IP Group, he was intensively involved from the earliest stages as investor and director with a number of companies that scaled up successfully, including Tracsis, Xeros Technology and Retroscreen. Charles holds an engineering degree as well as an MBA from the University of California at Berkeley, and is also a CFA Charterholder.
The existing Northern VCTs' venture capital portfolio which is currently valued at £149 million is expected to generate income and realised gains in the coming years. This portfolio is managed by the broad NVM team who will continue to source VCT investments in the regions that will be transacted and managed by the VCT team and will also be investing in later stage deals on behalf of private equity funds managed by NVM. With the increased funds NVM is expanding the specialist VCT team to include experienced people with scale-up expertise and also new investment managers.
Partners and employees of NVM Private Equity held beneficially a total of 3,581,619 shares in the Companies as at the date of this document. They intend to invest a total of £505,000 in the Companies under the Offers.
Northern Venture Trust is registered with the FCA as a Small Alternative Investment Fund Manager. Northern 2 VCT and Northern 3 VCT have each appointed NVM as their Alternative Investment Fund Manager.
The Directors of the Companies are as follows:
Simon Constantine MA ACA (Chairman) (58) A M N co-led the management buy-in and subsequent trade sale of Life Sciences International plc and has served as a non-executive director of a number of venture-backed businesses. He is currently chairman of Capstone Foster Care Limited and a non-executive director of Bioquell PLC and Oxford Photovoltaics Limited. He was appointed to the Board in 2012 and became chairman in 2014.
Nigel Beer BA FCA (63) A M N was formerly London Head of Corporate Finance at KPMG and has over 20 years' experience in corporate transactions and investments, followed by 10 years' experience as a non-executive director of asset management and investment businesses. He is a non-executive director of Community Health Partnerships Limited. He was appointed to the Board in 2009 and is chairman of the Audit Committee.
Richard Green BA FCA CF (55) A M N joined Kleinwort Benson Development Capital in 1988 and was a founder in 2001 of August Equity LLP, where he was managing partner until 2009 and then chairman until 2014. He is a past chairman of the British Private Equity & Venture Capital Association and is a non-executive director of Qannas Investments Limited and Hydrogen Group plc and non-executive chairman of Technology Venture Partners LLP. He was appointed to the Board in 2014 and is chairman of the Management Engagement Committee.
Tim Levett MBA (68) N is executive chairman of NVM Private Equity LLP, whose business he co-founded in 1988. He is a nonexecutive director of Northern 3 VCT PLC and several unquoted companies and is a member of The Association of Investment Companies' VCT Forum and the British Private Equity & Venture Capital Association's Venture Capital Committee. He was appointed to the Board in 2013.
David Mayes (53) A M N is an experienced investment professional who previously managed an emerging markets investment team for Credit Suisse Securities (Europe) Limited. He is currently a trustee director of a major pension fund and vice chair of its investment committee, and is a non-executive director of an EIS-backed pub company and the Salvation Army International Trustee Company. He was appointed to the Board in 2014.
Hugh Younger LLB (59) A M N is senior partner at Murray Beith Murray, a leading firm of solicitors based in Edinburgh. He has more than 30 years' experience of private client work and brings a perspective on matters relating to wealth management and asset protection. He was appointed to the Board in 2009.
The Directors of Northern Venture Trust, other than Tim Levett, have indicated that they intend to invest a total of £310,000 in the Company under the Offers. Tim Levett's intended subscription of £nil is included in the NVM partners' and employees' total shown above.
David Gravells MSc JP (Chairman) (68) A M N is an experienced business entrepreneur with a wide range of private equity financed businesses. He is currently consultant to a number of companies and is a non-executive director of the Student Loans Company Limited. He was appointed to the Board in 2007 and became chairman in 2008.
Alastair Conn FCA (62) is financial director of NVM Private Equity LLP. He qualified as a chartered accountant with Price Waterhouse and was a co-founder of NVM in 1988. He was appointed to the Board in 1999.
Simon Devonshire (49) A M N has extensive business experience in corporate leadership, financial governance, strategy, communications and sales and marketing. He has a portfolio of business interests including being an entrepreneur in residence at the Department for Business, Energy and Industrial Strategy and a non-executive director of the Student Loans Company. He was appointed to the Board on 3 January 2017.
Cecilia McAnulty CA (54) A M N was formerly a partner and portfolio manager with Centaurus Capital, a London based hedge fund, head of structured finance at Royal Bank of Scotland and a director of Barclays Capital. She was recently appointed a member of Industrial Development Advisory Board, an organisation which advises HM Government on funding requests from early stage and mature businesses. She was appointed to the Board in 2014 and is chairman of the Audit Committee.
Frank Neale MBA (67) A M N is a partner in IRRfc, a private equity advisory business and is a non-executive director of FutureLearn Limited which is an early stage company. He is a past vice-chairman of the British Private Equity and Venture Capital Association. He was appointed to the Board in 1999.
The Directors of Northern 2 VCT, other than Alastair Conn, have indicated that they intend to invest a total of £41,000 in the Company under the Offers. Alastair Conn's intended subscription of £10,000 is included in the NVM partners' and employees' total show on page 25.
James Ferguson MSc (Chairman) (69) A M N was chairman and managing director of Stewart Ivory Limited from 1989 until 2000. He is chairman of Value & Income Trust plc, The Monks Investment Trust PLC, North American Income Trust plc and The Scottish Oriental Smaller Companies Trust plc, a non-executive director of The Independent Investment Trust plc and a former deputy chairman of The Association of Investment Companies. He was appointed to the Board in 2001 and became chairman in 2009.
Chris Fleetwood BA FCA (66) A M N is managing partner of io solutions (e-business strategy advisers), a non-executive director of NCFE Limited and a governor of Teesside University. He was formerly chairman of Darlington Building Society and group chief executive of Whessoe plc. He was appointed to the Board in 2001 and is chairman of the Audit Committee.
Tim Levett MBA (68) N is executive chairman of NVM Private Equity LLP, whose business he co-founded in 1988. He is a nonexecutive director of Northern Venture Trust PLC and several unquoted companies and is a member of the Association of Investment Companies' VCT Forum and the British Private Equity & Venture Capital Association's Venture Capital Committee. He was appointed to the Board in 2001.
John Waddell LLB FRSE (61) A M N was until 2015 chief executive of Archangel Investors Limited, a Scottish based syndicate of individual private investors and sits on the boards of three unquoted companies. He also advises two early stage funds and was previously a director of Noble Grossart Limited. He was appointed to the Board in 2007.
The Directors of Northern 3 VCT, other than Tim Levett, have indicated that they intend to invest a total of £122,500 in the Company under the Offers. Tim Levett's intended subscription of £60,000 is included in the NVM partners' and employees' total show on page 25.
As at the date of this document the Companies comply with The Association of Investment Companies (the "AIC") Code of Corporate Governance and the relevant provisions of the UK Corporate Governance Code save as described below:
The Board of Northern Venture Trust comprises six members, the Board of Northern 2 VCT five members, and the Board of Northern 3 VCT four members, all of whom are non-executive Directors. The Companies consider that each of their Directors is independent for the purposes of the UK Corporate Governance Code, with the exception of Alastair Conn (Northern 2 VCT), and Tim Levett (Northern Venture Trust and Northern 3 VCT), who are both members and executives of the Manager.
The Boards meet regularly throughout the year (normally at least quarterly), and all necessary information is supplied to the Directors on a timely basis to enable them to discharge their duties effectively. Additionally, special meetings take place or other arrangements are made when Board decisions are required in advance of regular meetings. The Boards are responsible for leading and controlling each Company.
Each Board delegates specific responsibilities to the committees described below.
(i) The Audit Committee
The audit committee is chaired by Nigel Beer and its other members are Simon Constantine, Richard Green, David Mayes and Hugh Younger. It normally meets five times a year. Northern Venture Trust's auditor and senior executives of NVM may attend and speak at meetings of the audit committee. A summary of the terms of reference of the audit committee is as follows: the committee has responsibility for, among other things, the planning and reviewing of Northern Venture Trust's annual financial statements, half-yearly results and interim management statements, and the supervision of its auditor in the review of such financial statements. The audit committee will focus particularly on Northern Venture Trust's compliance with legal requirements, accounting standards, financial and regulatory reporting requirements, the Listing Rules and the Prospectus Rules and on ensuring that effective systems for internal financial control and for reporting non-financial operating data are maintained. The ultimate responsibility for reviewing and approving the annual report and accounts and the half-yearly financial report remains with the Board.
(ii) The Nomination Committee
The nomination committee, which meets on an ad hoc basis but at least once a year, is chaired by Simon Constantine and its other members are Nigel Beer, Richard Green, Tim Levett, David Mayes and Hugh Younger. This committee has responsibility for considering the size, structure and composition of the Board, the retirement and appointment of Directors and the level of fees paid to Directors, and makes appropriate recommendations to the Board in relation to these matters.
(iii) The Management Engagement Committee
The management engagement committee is chaired by Richard Green and its others members are Nigel Beer, Simon Constantine, David Mayes and Hugh Younger. The committee undertakes a periodic review of the performance of NVM and of the terms of the management agreement and performance incentive arrangements.
(i) The Audit Committee
The audit committee is chaired by Cecilia McAnulty and its other members are David Gravells, Simon Devonshire and Frank Neale. It normally meets three times a year. Northern 2 VCT's auditor and senior executives of NVM may attend and speak at meetings of the audit committee. A summary of the terms of reference of the audit committee is as follows: the committee has responsibility for, among other things, the planning and reviewing of Northern 2 VCT's annual financial statements, half-yearly results and interim management statements, and the supervision of its auditor in the review of such financial statements. The audit committee will focus particularly on Northern 2 VCT's compliance with legal requirements, accounting standards, financial and regulatory reporting requirements, the Listing Rules and the Prospectus Rules and on ensuring that effective systems for internal financial control and for reporting non-financial operating data are maintained. The ultimate responsibility for reviewing and approving the annual report and accounts and the half-yearly financial report remains with the Board.
(ii) The Nomination Committee
The nomination committee, which meets on an ad hoc basis but at least once per year, is chaired by David Gravells and its other members are Simon Devonshire, Cecilia McAnulty and Frank Neale. This committee has responsibility for considering the size, structure and composition of the Board, the retirement and appointment of Directors and the level of fees paid to Directors, and makes appropriate recommendations to the Board in relation to these matters.
(iii) The Management Engagement Committee
The management engagement committee is chaired by David Gravells and its other members are Simon Devonshire, Cecilia McAnulty and Frank Neale. The committee undertakes a periodic review of the performance of NVM and of the terms of the management agreement and performance incentive arrangements.
(i) The Audit Committee
The audit committee is chaired by Chris Fleetwood and its other members are James Ferguson and John Waddell. It normally meets three times a year. Northern 3 VCT's auditor and senior executives of NVM may attend and speak at meetings of the audit committee. A summary of the terms of reference of the audit committee is as follows: the committee has responsibility for, among other things, the planning and reviewing of Northern 3 VCT's annual financial statements, half-yearly results and interim management statements, and the supervision of its auditor in the review of such financial statements. The audit committee will focus particularly on Northern 3 VCT's compliance with legal requirements, accounting standards, financial and regulatory reporting requirements, the Listing Rules and the Prospectus Rules and on ensuring that effective systems for internal financial control and for reporting non-financial operating data are maintained. The ultimate responsibility for reviewing and approving the annual report and accounts and the half-yearly financial report remains with the Board.
(ii) The Nomination Committee
The nomination committee, which meets on an ad hoc basis but at least once per year, is chaired by James Ferguson and its others members are Chris Fleetwood, Tim Levett and John Waddell. This committee has responsibility for considering the size, structure and composition of the Board, the retirement and appointment of Directors and the level of fees paid to Directors, and makes appropriate recommendations to the Board in relation to these matters.
(iii) The Management Engagement Committee
The management engagement committee is chaired by James Ferguson and its other members are Chris Fleetwood and John Waddell. The committee undertakes a periodic review of the performance of NVM and of the terms of the management agreement and performance incentive arrangements.
In recent years Northern Venture Trust has paid a base annual dividend of 6p and Northern 2 VCT and Northern 3 VCT have each paid a base annual dividend of 5.5p, with the objective of enabling Shareholders to benefit from a strong and consistent flow of tax free income. Changes in the VCT Rules with effect from November 2015 mean that in future the Companies will be required to invest mainly in relatively young businesses which need funding for growth and development. Typically, this funding will consist largely of equity rather than income-yielding debt instruments, which will make future returns to the Companies more dependent on the timing of outright exits. As a result, future dividend payments by the Companies are likely to be subject to fluctuation. The dividends payable by the Companies in respect of any financial year cannot be guaranteed and will be subject to the availability of distributable reserves, cash resources and applicable regulations. This is likely to lead to a lower annual income from investments made by the Companies under the new rules, and hence to a reduction in the amounts of income available for distribution by the Companies.
It is expected that the first applicable dividend in relation to which the Dividend Investment Schemes will operate for the Offer Shares will be the final dividend for the financial year ending 30 September 2017 for Northern Venture Trust, expected to be paid in December 2017, or the interim dividends for the financial year ending 31 March 2018 for Northern 2 VCT and Northern 3 VCT, which are expected to be paid in January 2018. Under the Dividend Investment Schemes, participants may apply to have all or a specified part of their dividends invested in new Shares. New Shares will be issued at a price equivalent to the greatest of (a) the latest published Net Asset Value per Share (net of all dividends declared on or before the relevant investment day (being a day on which a special dividend or an annual dividend on Ordinary Shares is credited to the account of Shareholders or, if such day is not a dealing day on the London Stock Exchange, the next dealing day thereafter) but not yet paid), (b) the nominal value per Share and (c) the midmarket price per Share as quoted on the London Stock Exchange, each at the close of business on the tenth Business Day preceding the date of issue of such Shares. On the basis of current law and subject to the limits set out below,
Scheme participants should qualify for income tax relief on the amount applied in acquiring new Shares, provided they hold the Shares for the five year VCT qualifying period applicable to new subscriptions. Shareholders should note that Shares acquired first will be treated as being disposed of first, whether or not income tax relief was obtained on those Shares. The tax consequences of a Shareholder choosing to participate in the relevant Dividend Investment Scheme will depend upon his or her personal circumstances. Shares subscribed through the Dividend Investment Schemes will form part of each Shareholder's annual qualifying limit of £200,000 for new subscriptions in VCTs. Dividends paid by each Company are tax free provided the Shareholder's holding is acquired within the current annual qualifying limit of £200,000 and need not be reported in the Shareholder's annual tax return. Any loss or gain accruing to a Shareholder on a disposal of the Shares acquired within the current annual qualifying limit of £200,000 will neither be a chargeable gain, nor an allowable tax loss, for the purposes of capital gains tax. Shareholders should consult an independent intermediary authorised under FSMA before participating in the Scheme.
The Promoter will, in respect of the services provided pursuant to the Offers, receive a fee of 2% of the gross proceeds of the Offers in respect of subscriptions received either direct or through a financial adviser or 4% of the gross proceeds of the Offers for subscriptions received through an execution only platform or broker. Out of this fee, the Promoter will pay all costs associated with the Offers, including Adviser Charges payable to Intermediaries. Assuming the costs of the Offers are 4% of the gross proceeds of the Offers, the net proceeds of the Offers would be approximately £19.2 million per Company if the Offers are fully subscribed.
Initial commissions may be payable by the Companies (although the Promoter ultimately bears the costs of such commissions) in respect of subscriptions received through execution only brokers. Those Intermediaries that are permitted to receive commission will receive an initial commission of 2.25% of the amount invested by their clients under the Offers. Where initial commission is payable the Intermediary may agree to waive all or part of the initial commission in respect of a subscription. If this is the case, the commission waived will be added to the amount subscribed and Offer Shares will be allotted to the Investor at the relevant Offer Price. Execution only brokers must indicate on the Subscription Form the basis on which they wish to receive their commission.
Additionally, provided that the Intermediary continues to act for the Investor and the Investor continues to be the beneficial owner of the Offer Shares, and subject to applicable regulations, the Intermediary will usually be paid an annual trail commission of 0.4% of their client Investors' gross subscriptions for five years, of which the Manager will pay 0.2% and the balance will be paid by the Companies. Trail commission will be paid annually in April (commencing in 2019).
The Companies have agreed to facilitate the payment of one-off Adviser Charges, by accepting instructions from an Investor to deduct the amount of the fee agreed by them with their Intermediary, from the amount they send to the Companies. Ongoing fees to Intermediaries will not be facilitated by the Companies. Investors who wish the Companies to facilitate the payment of a fee in this manner are required to specify the amount of the charge in Part (i) of section 4 of the Application Form, and the Adviser Charge will be paid to the relevant Intermediary, on behalf of the Investor from an equivalent amount due to the Investor from the Companies. The Investor will be issued fewer Offer Shares (to the equivalent value of the Adviser Charge) as set out on in the Pricing Formula. Where the Adviser Charge stated on the Application Form is inclusive of VAT, the Investor may remain liable for the VAT element thereof.
Income tax relief should still be available on the total amount subscribed, before deduction of Adviser Charges, subject to VCT Rules and personal circumstances.
The Manager will receive from each Company an annual management fee, payable quarterly in advance, at the rate of 2.06% of Net Assets, calculated at half-yearly intervals. The management fee payable by the Companies in respect of the net proceeds of the Offers will be reduced to 1.0% for the period from the date of allotment to 30 September 2018. The Manager also provides secretarial and administration services to each of the Companies for annual fees of £68,500, £56,200 and £53,000 for Northern Venture Trust, Northern 2 VCT and Northern 3 VCT respectively (rising annually with the movement in the UK Index of Retail Prices).
The Manager is also entitled to receive a performance-related management fee from each of the Companies equivalent to a specified percentage of the amount, if any, by which the Total Return in each financial year (expressed as a percentage of opening NAV) exceeds a performance hurdle. The relevant specified percentages are 15.0% for Northern Venture Trust, 12.0% for Northern 2 VCT and 14.2% for Northern 3 VCT. The hurdle is a composite rate based on the level of long-term investments and cash and near-cash investments during the year. For the most recent financial year the hurdle rate for Northern Venture Trust was 6.0%, for Northern 2 VCT 6.0% and for Northern 3 VCT 6.2%. Following a year in which the NAV declines, a "high water mark" will apply to the calculation of the performance-related fee, but will then be adjusted downwards to the extent that a positive return is achieved in the following year. The performance-related fee payable by each of the Companies is subject to an overall annual cap of 2.25% of net assets.
The Annual Running Costs of the Companies (excluding performance-related management fees) are each capped at 2.9% of average Net Assets during the relevant financial year, with any excess being borne by the Manager by way of a reduction of its fees.
Each of the Companies has established a management performance incentive scheme under which the Manager's executives are required to invest personally in the ordinary share capital of investee companies in which the Companies invest, on the same terms as the Companies and other funds managed by the Manager. The Directors review the operation of the scheme annually. Please see part 7(b) of the Material Contracts section on page 64 for more details.
Applications are to be made by delivery of an Application Form with a cheque attached to the Newcastle office of NVM at Time Central, 32 Gallowgate, Newcastle upon Tyne NE1 4SN.
Applicants are encouraged to submit their Application Forms early in order to be confident that their applications will be successful, as Offer Shares will be allotted on a "first come first served" basis. However, applications from Shareholders on the Companies' registers of members as at the close of business on 25 July 2017 will have priority in respect of the Company or Companies of which they are a member for a period of 21 days from the date of this document. Thereafter, valid applications received by the Companies during the 21 day period from Shareholders on the registers of members of any of the Companies as at the close of business on 25 July 2017 will be satisfied prior to the Offers becoming open to all applicants. Provided they reside at the same address, applications received from the spouse or civil partner of a Shareholder on the register of members of any of the Companies as at the close of business on 25 July 2017 will have the same priority as applications received from the relevant registered Shareholder, subject to an aggregate subscription limit of £200,000 per couple. The Offers will remain open until 5 April 2018, unless fully subscribed at an earlier date and subject to the Directors' right to close the Offers at any time.
Written notification will be sent to each successful Applicant as soon as practicable. The first allotment under the Offers is expected to take place on or around 30 October 2017.
Share certificates (where applicable) and certificates to enable a claim for income tax relief to be made in respect of Offer Shares will be posted to Shareholders within 30 days of each allotment. Prior to despatch of definitive share certificates (where applicable), transfers (if any) will be certified against the register of members of the relevant Company.
The minimum individual subscription for Offer Shares under the Offers is £6,000. Applicants may apply for Offer Shares in one, two or all of the Companies provided that the total subscribed is not less than £6,000 and the amount subscribed in each Company is not less than £2,000.
The Offers are separate share offers being made by each Company. The result of the Offers will be announced through a regulatory information service provider authorised by the FCA.
In accordance with the information contained in the Application Form, subscription monies received under the Offers will be allocated to the Companies which the Applicant wishes to invest in. If a particular Company's Offer is fully subscribed, and providing that the Applicant has provided authorisation in section 3 of the Application Form, the subscription monies will be allocated to the other Offers which are not fully subscribed in accordance with the Applicant's authorisation. If the Offers in which the Applicant wishes to invest are fully subscribed, and section 3 has not been completed, then the application monies will be returned to the Applicant without interest.
Fractions of Offer Shares will not be issued and the number of Offer Shares allocated to Applicants will be rounded down to the nearest whole number.
The number of Offer Shares to be issued to each Applicant in each Company will be calculated based on the following Pricing Formula (rounded down to the nearest whole Offer Share):
1 less any reduction for commission waived by Intermediaries (where applicable)
2after deducting any dividends declared but not receivable by Investors and not already deducted from the NAV
An illustration of the application of the Pricing Formula based on the most recently published (unaudited) NAV at 30 June 2017 is set out below:
| Unaudited NAV per Share as at 30 June 2017 |
Illustrative Offer Price* Direct or through a financial adviser |
Illustrative Offer Price* Execution only platform or broker |
|---|---|---|
| Northern Venture Trust – 70.8p | 72.2p | 73.8p |
| Northern 2 VCT – 76.4p | 69.3p | 70.7p |
| Northern 3 VCT – 106.1p | 99.6p | 101.7p |
*The illustrative Offer Prices shown above may differ from the prices at which Offer Shares are actually allotted as the NAV may be different for the purpose of calculating the actual Offer Prices applicable to the allotment of Offer Shares under the Offer (which may be higher or lower than in the examples above).
Set out below is an illustration of the number of Offer Shares that would be allotted for a subscription of £10,000 in each of the three Companies, based on the illustrative Offer Prices above. Where applicable these examples assume an Adviser Charge (to an Intermediary) of 2% or commission waived by an execution only broker of 2.25%.
| Direct or through a financial adviser (no Adviser Charge) |
Through a financial adviser (Adviser Charge of 2%) |
Execution only platform or broker – no commission waived by an Intermediary |
Execution only platform or broker – 2.25% commission waived by an Intermediary |
|
|---|---|---|---|---|
| Amount subscribed | £10,000 | £10,000 | £10,000 | £10,000 |
| Adviser Charge | - | (£200) | - | - |
| Commission waived by the Intermediary | - | - | - | £225 |
| Amount invested in Shares | £10,000 | £9,800 | £10,000 | £10,225 |
| Number of Offer Shares to be allotted | 13,841 | 13,559 | 13,559 | 13,877 |
| Direct or through a financial adviser (no Adviser Charge) |
Through a financial adviser (Adviser Charge of 2%) |
Execution only platform or broker – no commission waived by an Intermediary |
Execution only platform or broker – 2.25% commission waived by an Intermediary |
|
|---|---|---|---|---|
| Amount subscribed | £10,000 | £10,000 | £10,000 | £10,000 |
| Adviser Charge | - | (£200) | - | - |
| Commission waived by the Intermediary | - | - | - | £225 |
| Amount invested in Shares | £10,000 | £9,800 | £10,000 | £10,225 |
| Number of Offer Shares to be allotted | 14,432 | 14,138 | 14,138 | 14,469 |
| Direct or through a financial adviser (no Adviser Charge) |
Through a financial adviser (Adviser Charge of 2%) |
Execution only platform or broker – no commission waived by an Intermediary |
Execution only platform or broker – 2.25% commission waived by an Intermediary |
|
|---|---|---|---|---|
| Amount subscribed | £10,000 | £10,000 | £10,000 | £10,000 |
| Adviser Charge | - | (£200) | - | - |
| Commission waived by the Intermediary | - | - | - | £225 |
| Amount invested in Shares | £10,000 | £9,800 | £10,000 | £10,225 |
| Number of Offer Shares to be allotted | 10,040 | 9,836 | 9,836 | 10,066 |
You should not place undue reliance on forward-looking statements. This Prospectus includes statements that are (or may be deemed to be) "forward-looking statements", which can be identified by the use of forward-looking terminology including the terms "believes", "continues", "expects", "intends", "may", "will", "would", "should" or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. Forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Forward-looking statements contained in this Prospectus or based on past trends or activities, should not be taken as a representation that such trends or activities will continue in the future. Any such statements do not, nor are intended to qualify the Companies' working capital statements.
The information contained in this document will be updated if required by the Prospectus Rules, the Listing Rules and the Disclosure Guidance and Transparency Rules, as appropriate.
Audited statutory accounts of the Company for the financial years ended 30 September 2014, 30 September 2015 and 30 September 2016, in respect of which the Company's auditors, KMPG LLP, Saltire Court, 20 Castle Terrace, Edinburgh EH1 2EG, registered auditors under the Statutory Audit Directive (2006/43/EC) and registered by the Institute of Chartered Accountants in England and Wales, made unqualified reports under section 495 of the 2006 Act, have been delivered to the Registrar of Companies and such reports did not contain any statements under section 498(2) or (3) of the 2006 Act. Copies of these audited statutory accounts are available at the registered office of the Company at Time Central, 32 Gallowgate, Newcastle upon Tyne NE1 4SN.
The audited statutory accounts of the Company for the year ended 30 September 2016 were prepared under FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland. The financial statements for the years ended 30 September 2014 and 2015 were drawn up under UK Generally Accepted Accounting Practice (UK GAAP). An assessment of the impact of adopting FRS 102 was carried out and found that no re-statement of balances as at the transition date, 1 October 2015, or comparative figures in the financial statements was necessary. The Directors and the Company confirm that the Company's financial information for the year ended 30 September 2015 (prepared under UK GAAP) has been presented and prepared in a form which is consistent with that which will be adopted in the Company's next published annual financial statements (which will be prepared under FRS 102) having regard to accounting standards, policies and legislation applicable to such financial statements in so far as there are no material differences between the financial statements for these years prepared under these two accounting frameworks.
These financial statements also contain a description of the Company's financial condition, changes in financial condition and results of operations for each financial period.
The most recent announced unaudited NAV was 70.8p per Ordinary Share as at 30 June 2017.
Historical financial information relating to the Company on the matters referred to below is included in the published annual reports and audited statutory accounts of the Company for the periods stated (which are each hereby incorporated by reference) as follows:
| Annual report and audited accounts for year ended 30 September |
Annual report and audited accounts for year ended 30 September |
Annual report and audited accounts for year ended 30 September |
Half-yearly report and unaudited accounts for six months ended 31 March 2016 |
Half-yearly report and unaudited accounts for six months ended 31 March 2017 |
|
|---|---|---|---|---|---|
| 2014 | 2015 | 2016 | |||
| Nature of information | Page No. | Page No. | Page No. | Page No. | Page No. |
| Income statement | 28 | 28 | 28 | 6 | 6 |
| Dividend per share | 34 | 34 | 34 | 1 | 1 |
| Balance sheet | 29 | 29 | 29 | 8 | 8 |
| Statement of cash flows | 30 | 30 | 31 | 10 | 10 |
| Notes to the financial statements | 31 | 31 | 32 | 11 | 11 |
| Accounting policies | 31 | 31 | 32 | 11 | 11 |
| Independent auditors' report | 26 | 26 | 26 | N/A | N/A |
A description of the changes in the performance of the Company, both capital and revenue, and changes to the Company's portfolio of investments is set out in the sections headed "Chairman's Statement", "Strategic Report" and "Investment Portfolio" in the published audited statutory accounts of the Company for the periods stated.
| Annual report and audited accounts for year ended 30 September 2014 |
Annual report and audited accounts for year ended 30 September 2015 |
Annual report and audited accounts for year ended 30 September 2016 |
Half-yearly report and unaudited accounts for six months ended 31 March 2016 |
Half-yearly report and unaudited accounts for six months ended 31 March 2017 |
|
|---|---|---|---|---|---|
| Nature of Information | Page No. | Page No. | Page No. | Page No. | Page No. |
| Chairman's statement | 2 | 2 | 2 | 2 | 2 |
| Investment Manager's report | 6 | 6 | 6 | N/A | N/A |
| Investment portfolio | 11 | 11 | 11 | 5 | 5 |
The only information incorporated by reference in this document is that set out in this paragraph 3 and in paragraph 2 above.
Since 30 June 2017, being the date of the last published financial information of the Company (unaudited NAV announcement), there have been no significant changes in the financial or trading position of the Company.
The audited statutory accounts of the Company for the years ended 30 September 2014, 30 September 2015 and 30 September 2016, and the half-yearly unaudited accounts for the six months ended 31 March 2016 and 31 March 2017 are being incorporated by reference in this Prospectus and are available at the address set out in paragraph 11 of Part V and which can be accessed at the following website: http://www.nvm.co.uk/investor-area/nvt/. Where these documents make reference to other documents, such other documents are not incorporated into and do not form part of this Prospectus. Those parts of the annual statutory accounts referred to above which are not being incorporated into this Prospectus by reference are either not relevant for Investors or are covered elsewhere in this Prospectus.
Unaudited information on Northern Venture Trust's investment portfolio as at the date of this document is set out below. All the companies below are incorporated in the UK and are valued in Sterling.
The significant venture capital investments held by Northern Venture Trust as at the date of this document, representing in aggregate over 50% of the Company's total net assets, are set out below. The valuations are as at 30 June 2017.
| Cost | Valuation | % of net assets |
||
|---|---|---|---|---|
| £000 | £000 | by value | Sector | |
| Entertainment Magpie Group Re-commerce website for pre-owned media and electronics |
1,610 | 4,550 | 6.1% | Consumer |
| No 1 Lounges Airport lounge operator |
2,006 | 4,012 | 5.4% | Services |
| Buoyant Upholstery Upholstered furniture |
1,674 | 3,263 | 4.4% | Consumer |
| MSQ Partners Group Marketing and communications agencies |
1,695 | 2,798 | 3.8% | Services |
| Lineup Systems Software for advertising and media |
974 | 2,468 | 3.3% | IT services |
| Agilitas IT Holdings Outsourced IT inventory management |
1,662 | 1,981 | 2.7% | IT services |
| IDOX* Document and information management systems |
238 | 1,926 | 2.6% | IT services |
| Wear Inns Managed public houses |
1,640 | 1,854 | 2.5% | Leisure |
| Biological Preparations Group Environmental biotechnology |
2,366 | 1,759 | 2.4% | Healthcare |
| It's All Good Premium savoury snacks |
1,205 | 1,751 | 2.4% | Consumer |
| Closerstill Group Business-to-business exhibitions |
1,747 | 1,747 | 2.3% | Services |
| Weldex (International) Offshore Holdings Crawler crane hire and lifting equipment |
3,262 | 1,670 | 2.2% | Construction |
| Graza Investment holding company |
1,581 | 1,581 | 2.1% | Financial |
| Volumatic Cash handling equipment |
1,423 | 1,555 | 2.1% | Industrial |
| Customs Connect Group Tariff, duty and VAT consultancy |
1,406 | 1,406 | 1.9% | Services |
| Love Saving Group Energy comparison and procurement consultancy |
1,204 | 1,327 | 1.8% | Services |
| Intuitive Holding Software and IT services for travel sector |
1,674 | 1,095 | 1.5% | IT services |
| Intelling Group Business communication consultancy |
1,048 | 1,048 | 1.4% | Services |
| Axial Systems Holdings Systems integration |
1,004 | 979 | 1.3% | IT services |
| CGI Group Holdings Fire-resistant glass |
3,818 | 945 | 1.3% | Construction |
| 20 largest venture capital investments | 33,237 | 39,715 | 53.5% | |
| Net assets | 74,380 | 100.0% |
*Quoted on AIM
Audited statutory accounts of the Company for the financial years ended 31 March 2015, 31 March 2016 and 31 March 2017, in respect of which the Company's auditors, KPMG LLP, Saltire Court, 20 Castle Terrace, Edinburgh EH1 2EG, registered auditors under the Statutory Audit Directive (2006/43/EC) and registered by the Institute of Chartered Accountants in England and Wales, made unqualified reports under section 495 of the 2006 Act, have been delivered to the Registrar of Companies and such reports did not contain any statements under section 498(2) or (3) of the 2006 Act. Copies of these audited statutory accounts are available at the registered office of the Company at Time Central, 32 Gallowgate, Newcastle upon Tyne NE1 4SN.
The audited statutory accounts of the Company for the years ended 31 March 2016 and 31 March 2017 were prepared under FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland. The financial statements for the year ended 31 March 2015 were drawn up under UK Generally Accepted Accounting Practice (UK GAAP). An assessment of the impact of adopting FRS 102 was carried out and found that no re-statement of balances as at the transition date, 1 April 2015, or comparative figures in the financial statements was necessary.
These financial statements also contain a description of the Company's financial condition, changes in financial condition and results of operations for each financial period.
The most recent announced unaudited NAV was 76.4p per Ordinary Share as at 30 June 2017.
Historical financial information relating to the Company on the matters referred to below is included in the published annual reports and audited statutory accounts of the Company for the periods stated (which are each hereby incorporated by reference) as follows:
| Annual report and audited accounts for year ended 31 March 2015 |
Annual report and audited accounts for year ended 31 March 2016 |
Annual report and audited accounts for year ended 31 March 2017 |
|
|---|---|---|---|
| Nature of information | Page No. | Page No. | Page No. |
| Income statement | 28 | 28 | 28 |
| Dividend per share | 34 | 35 | 35 |
| Balance sheet | 29 | 29 | 29 |
| Statement of cash flows | 30 | 31 | 31 |
| Notes to the financial statements | 31 | 32 | 32 |
| Accounting policies | 31 | 32 | 32 |
| Independent auditor's report | 26 | 26 | 26 |
A description of the changes in the performance of the Company, both capital and revenue, and changes to the Company's portfolio of investments is set out in the sections headed "Chairman's Statement", "Strategic Report" and "Investment Portfolio" in the published audited statutory accounts of the Company for the periods stated.
| Annual report and audited accounts for year ended 31 March 2015 |
Annual report and audited accounts for year ended 31 March 2016 |
Annual report and audited accounts for year ended 31 March 2017 |
|
|---|---|---|---|
| Nature of Information | Page No. | Page No. | Page No. |
| Chairman's statement | 2 | 2 | 2 |
| Strategic report | 6 | 6 | 6 |
| Investment portfolio | 11 | 11 | 11 |
The only information incorporated by reference in this document is that set out in this paragraph 3 and in paragraph 2 above.
On 21 July 2017 the Company paid a dividend of 8.5p per Ordinary Share, totalling £8.4 million.
Since 30 June 2017, being the date of the last published financial information of the Company (unaudited NAV announcement), there have been no other significant changes in the financial or trading position of the Company.
The audited statutory accounts of the Company for the years ended 31 March 2015, 31 March 2016 and 31 March 2017 are being incorporated by reference in this Prospectus and are available at the address set out in paragraph 11 of Part V and which can be accessed at the following website: http://www.nvm.co.uk/investor-area/n2vct/. Where these documents make reference to other documents, such other documents are not incorporated into and do not form part of this Prospectus. Those parts of the annual statutory accounts referred to above which are not being incorporated into this Prospectus by reference are either not relevant for Investors or are covered elsewhere in this Prospectus.
Unaudited information on Northern 2 VCT's investment portfolio as at 30 June 2017 is set out below. All the companies below are incorporated in the UK and are valued in Sterling.
The significant venture capital investments held by Northern 2 VCT as at the date of this document, representing in aggregate over 50% of the Company's total net assets, are set out below. The valuations are as at 30 June 2017.
| Cost £000 |
Valuation £000 |
% of net assets by value |
Sector | |
|---|---|---|---|---|
| Entertainment Magpie Group Re-commerce website for pre-owned media and electronics |
1,503 | 4,247 | 5.6% | Consumer |
| No 1 Lounges Airport lounge operator |
1,977 | 3,962 | 5.2% | Services |
| Buoyant Upholstery Upholstered furniture |
1,508 | 2,941 | 3.9% | Consumer |
| MSQ Partners Group Marketing and communications agencies |
1,672 | 2,756 | 3.6% | Services |
| Lineup Systems Software for advertising and media |
974 | 2,468 | 3.3% | IT services |
| Wear Inns Managed public houses |
1,868 | 2,113 | 2.8% | Leisure |
| Agilitas IT Holdings Outsourced IT inventory management |
1,638 | 1,952 | 2.6% | IT services |
| Closerstill Group Business-to-business exhibitions |
1,683 | 1,683 | 2.2% | Services |
| It's All Good Premium savoury snacks |
1,145 | 1,668 | 2.2% | Consumer |
| Biological Preparations Group Environmental biotechnology |
2,166 | 1,605 | 2.1% | Healthcare |
| Volumatic Cash handling equipment |
1,423 | 1,555 | 2.1% | Industrial |
| Graza Investment holding company |
1,523 | 1,523 | 2.0% | Financial |
| Customs Connect Group Tariff, duty and VAT consultancy |
1,322 | 1,322 | 1.7% | Services |
| Love Saving Group Energy comparison and procurement consultancy |
1,124 | 1,239 | 1.6% | Services |
| Intuitive Holding Software and IT services for travel sector |
1,508 | 987 | 1.3% | IT services |
| Intelling Group Business communication consultancy |
979 | 979 | 1.3% | Services |
| Axial Systems Holdings Systems integration |
1,004 | 979 | 1.3% | IT services |
| Rockar Innovative motor vehicle retailing |
823 | 823 | 1.1% | Consumer |
| Sorted Group Delivery management platform |
813 | 813 | 1.1% | Services |
| Nasstar* Managed IT services |
390 | 701 | 0.9% | IT services |
| Channel Mum Parenting video website |
674 | 674 | 0.9% | Media |
| AVID Technology Group Powertrain and thermal management systems for heavy duty vehicles |
673 | 674 | 0.9% | Industrial |
| Lanner Group Process simulation software |
486 | 649 | 0.9% | IT services |
| 23 largest venture capital investments | 28,876 | 38,313 | 50.6% | |
| Net assets | 75,707 | 100.0% |
*Quoted on AIM
Audited statutory accounts of the Company for the financial years ended 31 March 2015, 31 March 2016 and 31 March 2017, in respect of which the Company's auditors, KPMG LLP, Saltire Court, 20 Castle Terrace, Edinburgh EH1 2EG, registered auditors under the Statutory Audit Directive (2006/43/EC) and registered by the Institute of Chartered Accountants in England and Wales, made unqualified reports under section 495 of the 2006 Act, have been delivered to the Registrar of Companies and such reports did not contain any statements under section 498(2) or (3) of the 2006 Act. Copies of these audited statutory accounts are available at the registered office of the Company at Time Central, 32 Gallowgate, Newcastle upon Tyne NE1 4SN.
The audited statutory accounts of the Company for the years ended 31 March 2016 and 31 March 2017 were prepared under FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland. The financial statements for the year ended 31 March 2015 were drawn up under UK Generally Accepted Accounting Practice (UK GAAP). An assessment of the impact of adopting FRS 102 was carried out and found that no re-statement of balances as at the transition date, 1 April 2015, or comparative figures in the financial statements was necessary.
These financial statements also contain a description of the Company's financial condition, changes in financial condition and results of operations for each financial period.
The most recent announced unaudited NAV was 106.1p per Ordinary Share as at 30 June 2017.
Historical financial information relating to the Company on the matters referred to below is included in the published annual reports and audited statutory accounts of the Company for the periods stated (which are each hereby incorporated by reference) as follows:
| Annual report and audited accounts for year ended 31 March 2015 |
Annual report and audited accounts for year ended 31 March 2016 |
Annual report and audited accounts for year ended 31 March 2017 |
|
|---|---|---|---|
| Nature of information | Page No. | Page No. | Page No. |
| Income statement | 28 | 28 | 28 |
| Dividend per share | 34 | 34 | 34 |
| Balance sheet | 29 | 29 | 29 |
| Statement of cash flows | 30 | 31 | 31 |
| Notes to the financial statements | 31 | 32 | 32 |
| Accounting policies | 31 | 32 | 32 |
| Independent auditor's report | 26 | 26 | 26 |
A description of the changes in the performance of the Company, both capital and revenue, and changes to the Company's portfolio of investments is set out in the sections headed "Chairman's Statement", "Strategic Report" and "Investment Portfolio" in the published audited statutory accounts of the Company for the periods stated.
| Annual report and audited accounts for year ended 31 March 2015 |
Annual report and audited accounts for year ended 31 March 2016 |
Annual report and audited accounts for year ended 31 March 2017 |
|
|---|---|---|---|
| Nature of Information | Page No. | Page No. | Page No. |
| Chairman's statement | 2 | 2 | 2 |
| Strategic report | 6 | 6 | 6 |
| Investment portfolio | 11 | 11 | 11 |
The only information incorporated by reference in this document is that set out in this paragraph 3 and in paragraph 2 above.
On 21 July 2017 the Company paid a dividend of 8.5p per Ordinary Share, totalling £5.9m.
Since 30 June 2017, being the date of the last published financial information of the Company (unaudited NAV announcement), there have been no other significant changes in the financial or trading position of the Company.
The audited statutory accounts of the Company for the years ended 31 March 2015, 31 March 2016 and 31 March 2017 are being incorporated by reference in this Prospectus and are available at the address set out in paragraph 11 of Part V and which can be accessed at the following website: http://www.nvm.co.uk/investor-area/n2vct/. Where these documents make reference to other documents, such other documents are not incorporated into and do not form part of this Prospectus. Those parts of the annual statutory accounts referred to above which are not being incorporated into this Prospectus by reference are either not relevant for Investors or are covered elsewhere in this Prospectus.
Unaudited information on Northern 3 VCT's investment portfolio as at the date of this document is set out below. All the companies below are incorporated in the UK and are valued in Sterling.
The significant venture capital investments held by Northern 3 VCT as at the date of this document, representing in aggregate over 50% of the Company's total net assets, are set out below. The valuations are as at 30 June 2017.
| Cost £000 |
Valuation £000 |
% of net assets by value |
Sector | |
|---|---|---|---|---|
| Entertainment Magpie Group Re-commerce website for pre-owned media and electronics |
1,360 | 3,842 | 5.2% | Consumer |
| No 1 Lounges Airport lounge operator |
1,748 | 3,511 | 4.7% | Services |
| IDOX* Document and information management systems |
530 | 2,667 | 3.6% | IT services |
| MSQ Partners Group Marketing and communications agencies |
1,478 | 2,628 | 3.5% | Services |
| Buoyant Upholstery Upholstered furniture |
1,294 | 2,518 | 3.4% | Consumer |
| Lineup Systems Software for advertising and media |
974 | 2,468 | 3.3% | IT services |
| Agilitas IT Holdings Outsourced IT inventory management |
1,448 | 1,725 | 2.3% | IT services |
| It's All Good Premium savoury snacks |
1,131 | 1,656 | 2.2% | Consumer |
| Wear Inns Managed public houses |
1,406 | 1,589 | 2.1% | Leisure |
| Volumatic Cash handling equipment |
1,423 | 1,555 | 2.1% | Industrial |
| Closerstill Group Business-to-business exhibitions |
1,520 | 1,520 | 2.1% | Services |
| Eco Animal Health Group* Pharmaceutical products for animal care |
497 | 1,415 | 1.9% | Healthcare |
| Biological Preparations Group Environmental biotechnology |
1,915 | 1,412 | 1.9% | Healthcare |
| Graza Investment holding company |
1,375 | 1,375 | 1.9% | Financial |
| Ideagen* Software management solutions |
541 | 1,275 | 1.7% | IT services |
| Customs Connect Group Tariff, duty and VAT consultancy |
1,242 | 1,242 | 1.7% | Services |
| Axial Systems Holdings Systems integration |
1,293 | 1,224 | 1.7% | IT services |
| Sinclair Pharma* Aesthetic dermatology products |
957 | 1,183 | 1.6% | Healthcare |
| Love Saving Group Energy comparison and procurement consultancy |
1,017 | 1,121 | 1.5% | Services |
| Intelling Group Business communication consultancy |
958 | 958 | 1.3% | Services |
| Intuitive Holding Software and IT services for travel sector |
1,293 | 846 | 1.1% | IT services |
| 21 largest venture capital investments | 25,400 | 37,690 | 50.8% | |
| Net assets | 74,044 | 100.0% |
*Quoted on AIM
This Prospectus relating to the Companies, has been prepared in accordance with the Prospectus Rules made under section 73A and in accordance with section 84 of FSMA. Copies of the Prospectus are available from NVM Private Equity LLP at Time Central, 32 Gallowgate, Newcastle upon Tyne NE1 4SN and from Downing LLP at Ergon House, Horseferry Road, London SW1P 2AL.
3.1 Shares issued by the Company since 1 October 2013 are summarised as follows:
| Average issue | ||
|---|---|---|
| No. of Ordinary | price (pence per | |
| Date | Shares | share) |
| 04/10/2013 | 16,090,036 | 86.13 |
| 20/12/2013 | 503,903 | 84.30 |
| 13/05/2014 | 1,244,495 | 89.41 |
| 02/06/2014 | 511,770 | 84.80 |
| 23/12/2014 | 503,340 | 84.80 |
| 30/06/2016 | 2,606,159 | 72.90 |
| 23/12/2016 | 768,716 | 77.00 |
| 03/04/2017 | 5,409,557 | 79.43 |
| 30/06/2017 | 2,406,904 | 71.10 |
3.2 Shares bought back by the Company since 1 October 2013 are summarised as follows:
| Average issue | ||
|---|---|---|
| No. of Ordinary | price (pence per | |
| Date | Shares | share) |
| 20/06/2014 | 175,000 | 77.50 |
| 30/09/2014 | 250,000 | 79.00 |
| 19/12/2014 | 50,000 | 76.75 |
| 26/03/2015 | 135,000 | 78.50 |
| 08/07/2015 | 250,000 | 75.60 |
| 28/09/2015 | 50,000 | 75.25 |
| 20/11/2015 | 275,000 | 78.75 |
| 18/12/2015 | 135,000 | 76.00 |
| 21/01/2016 | 90,000 | 76.00 |
|---|---|---|
| 29/01/2016 | 200,000 | 76.00 |
| 30/03/2016 | 440,000 | 76.70 |
| 29/09/2016 | 125,000 | 69.35 |
(ii) sell equity securities which immediately before the sale are held by the Company as treasury shares, in each case as if Section 561(1) of the 2006 Act (existing shareholders' right of pre-emption) did not apply to the allotment or sale, provided that the power conferred by this resolution shall be limited to the allotment or sale of equity securities up to an aggregate nominal value of £2,411,024 and shall expire on the conclusion of the next annual general meeting of the Company after the passing of this resolution or, if earlier, 31 March 2018, save that the Company may before this power expires make an offer or agreement which would or might require equity securities to be allotted or treasury shares to be sold after the power expires.
3.1 Shares issued by the Company since 1 April 2014 are summarised as follows:
| Average issue | ||
|---|---|---|
| No. of Ordinary | price (pence per | |
| Date | Shares | share) |
| 13/05/2014 | 1,099,005 | 85.39 |
| 16/01/2015 | 301,902 | 82.20 |
| 22/07/2016 | 2,011,229 | 69.40 |
| 27/01/2017 | 426,208 | 75.30 |
| 03/04/2017 | 5,570,393 | 77.14 |
| 21/07/2017 | 2,269,295 | 68.10 |
3.2 Shares bought back by the Company since 1 April 2014 are summarised as follows:
| Average issue | ||
|---|---|---|
| No. of Ordinary | price (pence per | |
| Date | Shares | share) |
| 24/06/2014 | 120,000 | 75.50 |
| 30/09/2014 | 190,000 | 76.00 |
| 19/12/2014 | 50,000 | 74.25 |
| 26/03/2015 | 100,000 | 76.50 |
| 08/07/2015 | 50,000 | 68.30 |
| 21/01/2016 | 200,000 | 71.00 |
| 30/03/2016 | 320,000 | 72.40 |
| 29/09/2016 | 225,000 | 66.40 |
|---|---|---|
| 30/03/2017 | 260,000 | 71.90 |
in each case as if Section 561(1) of the 2006 Act (existing shareholders' right of pre-emption) did not apply to the allotment or sale, provided that the power conferred by this resolution shall be limited to the allotment or sale of equity securities up to an aggregate nominal value of £495,655 and shall expire on the conclusion of the next annual general meeting of the Company after the passing of this resolution or, if earlier, 30 September 2018, save that the Company may before this power expires make an offer or agreement which would or might require equity securities to be allotted or treasury shares to be sold after the power expires.
3.1 Shares issued by the Company since 1 April 2014 are summarised as follows:
| Average issue | ||
|---|---|---|
| No. of Ordinary | price (pence per | |
| Date | Shares | share) |
| 13/05/2014 | 1,003,316 | 109.24 |
| 25/07/2014 | 222,153 | 105.40 |
| 16/01/2015 | 128,052 | 103.50 |
| 15/07/2016 | 826,656 | 93.70 |
| 27/01/2017 | 167,915 | 105.10 |
| 03/04/2017 | 3,958,863 | 108.12 |
| 21/07/2017 | 855,313 | 97.70 |
3.2 Shares bought back by the Company since 1 April 2014 are summarised as follows:
| Average issue | ||
|---|---|---|
| No. of Ordinary | price (pence per | |
| Date | Shares | share) |
| 20/06/2014 | 150,000 | 98.00 |
| 19/12/2014 | 100,000 | 93.00 |
| 26/03/2015 | 250,000 | 96.00 |
| 08/07/2015 | 350,000 | 89.00 |
| 28/09/2015 | 170,000 | 89.75 |
|---|---|---|
| 21/01/2016 | 50,000 | 93.75 |
| 30/03/2016 | 250,000 | 95.70 |
| 02/06/2016 | 200,000 | 97.00 |
| 30/06/2016 | 130,000 | 89.00 |
| 29/09/2016 | 150,000 | 91.65 |
| 22/02/2017 | 150,000 | 99.90 |
| 30/03/2017 | 100,000 | 100.70 |
| 04/07/2017 | 299,000 | 92.80 |
3.3 The following resolutions, inter alia, were passed at the annual general meeting held on 13 July 2017:
The Articles of each of the Companies, copies of which are available for inspection as stated in the 'Documents For Inspection' section of this Part V, set out details of the rights attaching to the Shares. The objects of the Companies are unrestricted. The Articles, and the rights of the holders of the Shares set out therein, may be changed by the respective members of each Company by special resolution (requiring a majority of at least 75% of the persons voting on the relevant resolution). The following is a summary of the rights attaching to the Shares and applies to all Companies unless otherwise stated.
(v) Any dividend or other distribution payable in respect of a Share may be paid by cheque sent by post to the registered address of the member, or such address as the member directs in writing. Every such cheque should be made payable to the member or the person the member directs in writing. Dividends may also be paid by transfer to a bank or building society or any other method the Directors consider appropriate. Every such cheque is sent at the risk of the person entitled to the money. If on two consecutive occasions cheques sent are returned undelivered or left uncashed the Company need not despatch further cheques until the member has notified the Company of the correct address or appropriate address. If two or more people are registered as joint holders of any Share any one of them may give effectual receipts for any dividend or other monies payable or properly distributable on or in respect of the Shares.
(vi) The Directors, if so authorised by ordinary resolution, may offer the holders of Shares the right to receive further Shares instead of cash in respect of any dividend payment. The following provisions apply:
The special rights attached to any class of Shares having preferential rights shall not, unless otherwise expressly stated, be deemed to be varied by the creation or issue of further Shares ranking pari passu with them but in no respect in priority to them.
(ii) The Directors may refuse to register a transfer of Shares in favour of more than four persons jointly.
(iii) The Directors may decline to recognise any instrument of transfer unless the instrument of transfer is in respect of one class of Share and has been lodged at the transfer office accompanied by the relevant share certificate and such other evidence as the Directors may reasonably require. In the case of a transfer by a recognised clearing house or certain nominees, the lodgement of a share certificate may not be necessary. All instruments of transfer that are registered may be retained by the Company.
transaction or arrangement with any other such body corporate. A Director may act in a professional capacity for the Company or any body corporate in which the Company is interested. The Directors are authorised to permit individual matters which are or may be in breach of that Director's duty under the 2006 Act to avoid conflicts of interest.
chairman and his ruling shall be final and conclusive except in a case where the nature/extent of the Director's interest has not been disclosed.
The Board shall procure that at the Company's annual general meeting in 2023 and at every fifth annual general meeting thereafter, a resolution will be proposed to the effect that the Company shall continue as a VCT for a further five year period. The resolution that the Company should continue as a VCT shall not be passed only where there is a poll vote and the majority vote against the resolution and such votes represent not less than 25% of votes exercisable on that resolution. If any such resolution is not passed the Board shall, within nine months of such meeting, convene an extraordinary general meeting to consider proposals for the liquidation, reorganisation or unitisation of the Company. The Directors shall use all reasonable endeavours to ensure that such proposals for liquidation, unitisation or reorganisation of the Company are approved by special resolution or implemented as soon as reasonably practicable.
The Articles are consistent with CREST membership and allow for the holding and transfer of Shares in uncertificated form pursuant to the Uncertificated Securities Regulations 2001 (SI 2001/3755).
| Percentage of issued | ||
|---|---|---|
| Director | Number of Shares | share capital |
| Simon Constantine | 243,203 | 0.23% |
| Nigel Beer | 192,631 | 0.18% |
| Richard Green | 10,000 | 0.01% |
| Tim Levett | 410,164 | 0.39% |
| David Mayes | 91,134 | 0.09% |
| Hugh Younger | 52,253 | 0.05% |
The Directors of the Company, other than Tim Levett, have given undertakings to invest a total of £310,000 in the Company under the Offers. Tim Levett's intended subscription of £nil is included in the NVM partners' and employees' total shown on page 25.
Following the Offers, assuming full subscription and based on the Initial Offer Price adjusted for a Promoter's Fee of 2% and no Adviser Charge being paid, the shareholdings of the Directors will be not less than as follows:
| Director | Number of Shares | Percentage of issued share capital assuming full subscription of the Offers* |
|---|---|---|
| Simon Constantine | 298,570 | 0.22% |
| Nigel Beer | 192,631 | 0.15% |
| Richard Green | 79,209 | 0.06% |
| Tim Levett | 410,164 | 0.31% |
| David Mayes | 367,970 | 0.28% |
| Hugh Younger | 79,936 | 0.06% |
*Based on an initial Offer Price of 72.2p
Save as disclosed in this paragraph, no Director nor any person (to the extent the same is known to, or could with reasonable diligence be ascertained by, that Director) connected with any Director (within the meaning of the Disclosure Guidance and Transparency Rules) has any interest in the share capital of the Company which is required to be notified pursuant to the Disclosure Guidance and Transparency Rules or which is required to be entered in the register maintained under section 809 of the 2006 Act.
(c) None of the Directors has a service contract. Directors' appointments are subject to 3 months' notice and all Directors are subject to retirement by rotation. Their appointment does not confer any right to hold office for any period or any right to compensation if they cease to be directors. The office of non-executive director is also not pensionable. Aggregate Directors' emoluments for the year ended 30 September 2016 amounted to £118,000 (plus applicable employer's National Insurance Contributions). Each Director is currently entitled to receive during the year ending 30 September 2017 the fees listed below.
| Annual remuneration (with effect from 1 October 2016) |
|
|---|---|
| Name | £ |
| Simon Constantine | 30,000 |
| Nigel Beer | 24,000 |
| Richard Green | 22,000 |
| Tim Levett* | 22,000 |
| David Mayes | 22,000 |
| Hugh Younger | 22,000 |
| 142,000 |
*Tim Levett has waived his entitlement to a director's fee for the year ending 30 September 2017
| Current | Past 5 Years | |
|---|---|---|
| Simon Constantine | Bioquell PLC Capstone Foster Care (North) Limited Capstone Foster Care (South East) Limited Capstone Foster Care (South West) Limited Capstone Foster Care Limited Classic Foster Care Limited Fostercare Uk Ltd Oxford Photovoltaics Limited Vision Fostering Agency Limited Welcome Foster Care Limited Worktalk Learning |
Capital Children's Services Limited Family Matters Fostering Limited Reinnervate Limited The Capstone Care Leavers' Trust Worknet Learning Limited Xena Systems Limited |
| Nigel Beer | Community Health Partnerships Limited | LPE Limited Stokeley Barton Management Company Limited Trafalgar Court Limited Trafalgar Court Holdings Limited |
| Tim Levett | Channel Mum Limited Gentronix Limited Graza Limited Intuitive Holding Limited Northern VCT Managers Limited Northern Venture Managers Limited Northern 3 VCT PLC NV1 CP Limited NV1 GP Limited NV2 CP Limited NV2 Nominee Limited NV3 CP Limited NVM Group Limited NVM Nominees Limited NVM PE Limited NVM Private Equity LLP Project NVM Limited Ultra Secure Products Limited |
Alaric Systems Limited Control Risks Group Holdings Limited Hunley Limited NF Holdings Limited Northstar Ventures Limited Oceanos Limited Saluda Limited Seawise Limited Turbinia Limited |
| Richard Green | Hydrogen Group PLC Technology Venture Partners LLP Qannas Investments Limited August Equity Partners II Executives Partnership LP August Equity Partners III Executives Partnership LP |
August Equity LLP August Equity Partners I Executives Partnership LP August Equity Partners I Executives GP Limited August Equity Partners I GP Limited Boat International Group Limited Dyslexia Action Shop Limited Dyslexia Institute Limited Dyslexia Institute Trading Limited |
| David Mayes | Airbeem Limited British Country Inns PLC British Country Inns 2 PLC British Country Inns 3 Ltd British Country Inns 4 PLC Coutts Middle East & North Africa Private Equity LP Credit Suisse First Boston Trustees Limited Cumberland House BPRA Property Fund LLP D & M No. 1 LLP Docklands 2001 Plan, L.P. Docklands 2002 Plan, L.P. Docklands 2004 Plan, L.P. Docklands 2005 Plan, L.P. |
Connect Capital Partners Limited Cumberland House (Car Park) LLP Eastern Markets Capital Partners Limited Osprey Income & Growth 9 LP Tritax Amazon A LP Tritax Prime Distribution Income LP |
| Docklands 2006 Plan, L.P. | ||
|---|---|---|
| Docklands 2007 Plan, L.P. | ||
| Fenkle Street BPRA Property Fund LLP | ||
| Inside Track 1 LLP | ||
| Inside Track 2 LLP | ||
| Inside Track Productions LLP | ||
| Maven Capital (Ambassador Homes) LP | ||
| Maven Capital (Courthouse Apartments | ||
| Dundee) LP | ||
| Maven Capital (Maidenhead) LP | ||
| Maven Co-invest CBT LP | ||
| Maven Co-invest DPP LP | ||
| Maven Co-invest Endeavour LP | ||
| Maven Co-invest Fathom LP | ||
| Maven Co-invest Fletcher LP | ||
| Maven Co-invest Geneva LP | ||
| Maven Co-invest HCS LP | ||
| Maven Co-invest Incremental LP | ||
| Maven Co-invest Lambert LP | ||
| Maven Co-invest Platinum LP | ||
| Maven Co-invest Prime LP | ||
| Maven Co-invest Rock LP | ||
| Maven Co-invest Ropley LP | ||
| Maven Co-invest Space LP | ||
| Maven Co-invest Sputnik LP | ||
| Maven Co-invest Vodat LP | ||
| Maven MIP Regional Buyout Co-invest LP | ||
| Maven Co-invest Ouseburn LP | ||
| Osprey Income & Growth 1 LP | ||
| Osprey Income & Growth 2 LP | ||
| The 2010/11 Brookfields Thetford LP | ||
| Tritax 2010/11 Cortonwood Retail LP | ||
| PB China Harvest II Offshore Feeder LP | ||
| The Salvation Army International Trustee | ||
| Company | ||
| Tritax Aberdeen HQ Office LP | ||
| Hugh Younger | 39 Castle Street Limited | MB&M PEP Nominees Limited |
| 41 Castle Street Limited | ||
| Castle Street Nominees Limited | ||
| Castle Street Nominees UK Limited | ||
| Castle Street Trustees | ||
| French Street Properties Limited | ||
| Great Stuart Trustees Limited | ||
| Inchcape Family Trustees Limited | ||
| Lothian Hill Farms | ||
| MBM Board Nominees Limited | ||
| MBM Trustee Company Limited | ||
| Murray Asset Management Limited | ||
| Murray Asset Management UK Limited | ||
| Murray Asset Nominees Limited | ||
| Murray Asset Nominees UK Limited | ||
| Murray Beith Murray Nominees Limited | ||
| Murray Beith Murray | ||
| Murray Investment Management Limited | ||
| Rutherford Fishings | ||
| Smith Trustee Company Limited (The) | ||
| Snawdon Partnership | ||
| Percentage of issued | ||
|---|---|---|
| Director | Number of Shares | share capital |
| David Gravells | 26,692 | 0.03% |
| Alastair Conn | 446,355 | 0.44% |
| Simon Devonshire | - | 0.00% |
| Cecilia McAnulty | 51,957 | 0.05% |
| Frank Neale | 105,030 | 0.10% |
The Directors of the Company, other than Alastair Conn, have given undertakings to invest a total of £41,000 in the Company under the Offers. Alastair Conn's intended subscription of £10,000 is included in the NVM partners' and employees' total shown on page 25.
Following the Offers, assuming full subscription and based on the Initial Offer Price adjusted for a Promoter's Fee of 2% and no Adviser Charge being paid, the shareholdings of the Directors will be not less than as follows:
| Percentage of issued share capital assuming full subscription of the |
||
|---|---|---|
| Director | Number of Shares | Offers* |
| David Gravells | 35,351 | 0.03% |
| Alastair Conn | 460,787 | 0.35% |
| Simon Devonshire | Nil | 0.00% |
| Cecilia McAnulty | 66,389 | 0.05% |
| Frank Neale | 141,112 | 0.11% |
*Based on an initial Offer Price of 69.3p
Save as disclosed in this paragraph, no Director nor any person (to the extent the same is known to, or could with reasonable diligence be ascertained by, that Director) connected with any Director (within the meaning of the Disclosure Guidance and Transparency Rules) has any interest in the share capital of the Company which is required to be notified pursuant to the Disclosure Guidance and Transparency Rules or which is required to be entered in the register maintained under section 809 of the 2006 Act.
(c) None of the Directors has a service contract. Directors' appointments are subject to 3 months' notice and all Directors are subject to retirement by rotation. Their appointment does not confer any right to hold office for any period or any right to compensation if they cease to be directors. The office of non-executive director is also not pensionable. Aggregate Directors' emoluments for the year ended 31 March 2017 amounted to £84,000 (plus applicable employer's National Insurance Contributions). Each Director is currently entitled to receive during the year ending 31 March 2018 the fees listed below.
| Annual remuneration (with effect from 1 April 2017) |
|
|---|---|
| Name | £ |
| David Gravells | 24,000 |
| Alastair Conn* | 18,500 |
| Simon Devonshire | 18,500 |
| Cecilia McAnulty | 18,500 |
| Frank Neale | 18,500 |
| 98,000 |
*Alastair Conn has waived his entitlement to a director's fee for the year ending 31 March 2018
| Current | Past five years | |
|---|---|---|
| David Gravells | Paraclete Limited Student Loans Company Limited The Grammar School At Leeds |
The Association Of Masters In Business Administration Holmes Catering Equipment Ltd. Holmes Catering Group Ltd White Horse Machinery Limited Time of Year Limited |
| Alastair Conn | Community Foundation Serving Tyne & Wear and Northumberland Glendale Crossing Places Trust Northern VCT Managers Limited Northern Venture Managers Limited NV1 CP Limited NV1 GP Limited NV2 CP Limited NV2 Nominee Limited NV3 CP Limited NVM Group Limited NVM Nominees Limited NVM PE Limited NVM Private Equity LLP Project NVM Limited Seed Capital General Partner Limited Tyne & Wear Foundation Limited |
CNE General Partner Limited Northern AIM VCT PLC Northern Enterprise (General Partner) Limited Team General Partner Limited The Northern Baptist Association |
| Simon Devonshire | Intelesant Limited Student Loans Company Limited Tall Man Business Limited Talent Cupboard Limited |
Ding Limited Finance Matters (J.P.) Ltd. Latitude Underwear Ltd The Local Data Company Ltd Wayra Social Ventures Limited Wayra UK Limited |
| Cecilia McAnulty | Celtica Investments LLP | English National Ballet English National Ballet Enterprises Limited European Capital Advisers Limited Root Six (UK) Consulting Limited Ulisse Due SRL |
| Frank Neale | Croxton Park Farm Limited Futurelearn Limited IRRFC West Herts College |
Garrets (Holdings) Limited Francis Combe Academy |
(j) There are no potential conflicts of interest between any Director or any member of the Company's administrative, management or supervisory bodies and his duties to the Company and the private interests and/or duties he may also have. With the exception of Alastair Conn, all of the Company's Directors will be independent of the Manager throughout its life.
(k) None of the Company's major holders of Shares have voting rights different from other holders of Shares.
| Number of | Percentage of issued | |
|---|---|---|
| Director | Shares | share capital |
| James Ferguson | 556,374 | 0.79% |
| Chris Fleetwood | 55,305 | 0.08% |
| Tim Levett | 238,148 | 0.34% |
| John Waddell | 14,340 | 0.02% |
The Directors of the Company, other than Tim Levett, have given undertakings to invest a total of £122,500 in the Company under the Offers. Tim Levett's intended subscription of £60,000 is included in the NVM partners' and employees' total shown on page 25.
Following the Offers, assuming full subscription and based on the Initial Offer Price adjusted for a Promoter's Fee of 2% and no Adviser Charge being paid, the shareholdings of the Directors will be not less than as follows:
| Percentage of issued | ||
|---|---|---|
| share capital | ||
| assuming full | ||
| Number of | subscription of the | |
| Director | Shares | Offers* |
| James Ferguson | 656,783 | 0.73% |
| Chris Fleetwood | 70,366 | 0.08% |
| Tim Levett | 298,393 | 0.33% |
| John Waddell | 21,870 | 0.02% |
*Based on an initial Offer Price of 99.6p
Save as disclosed in this paragraph, no Director nor any person (to the extent the same is known to, or could with reasonable diligence be ascertained by, that Director) connected with any Director (within the meaning of the Disclosure Guidance and Transparency Rules) has any interest in the share capital of the Company which is required to be notified pursuant to the Disclosure Guidance and Transparency Rules or which is required to be entered in the register maintained under section 809 of the 2006 Act.
(c) None of the Directors has a service contract. Directors' appointments are subject to 3 months' notice and all Directors are subject to retirement by rotation. Their appointment does not confer any right to hold office for any period or any right to compensation if they cease to be directors. The office of non-executive director is also not pensionable. Aggregate Directors' emoluments for the year ended 31 March 2017 amounted to £57,500 (plus applicable employer's National Insurance Contributions). Each Director is currently entitled to receive during the year ending 31 March 2018 the fees listed below.
| Annual remuneration (with effect from 1 April 2017) |
|
|---|---|
| Name | £ |
| James Ferguson | 25,000 |
| Chris Fleetwood | 20,000 |
| Tim Levett* | 20,000 |
| John Waddell | 20,000 |
| 85,000 |
*Tim Levett has waived his entitlement to a director's fee for the year ending 31 March 2018
| Current | Past five years | |
|---|---|---|
| James Ferguson | Amati Global Partners LLP Amadeus and Angels Seed Fund Amadeus III Affiliates Fund LP Monks Investment Trust Public Limited Company (The) National Galleries Of Scotland Foundation Penicuik House Preservation Trust The Independent Investment Trust PLC The North American Income Trust PLC The Scottish Oriental Smaller Companies Trust PLC Value And Income Services Limited Value And Income Trust PLC |
Amati Global Investors Limited Archangels Investments LLP Audax Properties plc Gordonstoun Foundation Limited Gordonstoun Schools, Limited Henry Duncan Foundation Lloyds TSB Foundation For Scotland Real Tennis Edinburgh The Corra Foundation |
| Chris Fleetwood | IO Solutions Limited NCFE Limited |
Digitalcity Business Trading Limited |
| Tim Levett | Channel Mum Limited Gentronix Limited Graza Limited Intuitive Holding Limited Northern VCT Managers Limited Northern Venture Managers Limited Northern Venture Trust PLC NV1 CP Limited NV1 GP Limited NV2 CP Limited NV2 Nominee Limited |
Alaric Systems Limited Control Risks Group Holdings Limited Hunley Limited NF Holdings Limited Northstar Ventures Limited Oceanos Limited Saluda Limited Seawise Limited Turbinia Limited |
| NV3 CP Limited NVM Group Limited NVM Nominees Limited NVM PE Limited NVM Private Equity LLP Project NVM Limited Ultra Secure Products Limited |
||
|---|---|---|
| John Waddell | City Health Clinic Edinburgh Limited Cortex Worldwide (Holdings) Limited Indigo Lighthouse Group Ltd Indigo Lighthouse Solutions Ltd JWEB Limited MGB Biopharma Limited NCTECH Ltd Indigo Lighthouse Solutions (Europe) Ltd Terry Trim Limited The Map Magazine Limited Amadeus III Affiliates Fund LP Amadeus IV Early Stage Fund LP Amadeus and Angels Seed Fund |
Archangel Directors Limited Archangel Informal Investment Limited Archangels Investments LLP Archangel Investors (Management) Limited Archangel Investors Limited CXR Biosciences Limited Instant Group Limited Photonic Solutions (Holdings) Limited PRL (Scotland) PDA Systems Limited PRL Scotland Limited Touch Bionics Limited |
The following are (i) the only contracts, not being contracts entered into in the ordinary course of business, that have been entered into by the Companies for the two years immediately preceding publication of this document and which are or may be material to the Companies, and (ii) the only contracts, not being contracts entered into in the ordinary course of business, that have been entered into by the Companies at any time and contain any provisions under which each Company has any obligation or entitlement which is material to the Companies as at the date of this document:
All investments in unquoted entities made by Co-Investors under the co-investment scheme will be realised at the same time as, and on the same terms as, the corresponding investments made by the Companies. Co-Investors under the scheme will not necessarily be required to realise investments at the same time as or on the same terms as the corresponding investments made by the Companies in respect of investments in quoted entities.
(c) A Management and Investment Advisory Deed dated 26 January 2015, as amended on 15 December 2016, made between Northern Venture Trust and NVM, pursuant to which NVM is responsible for managing Northern Venture Trust and advising on its investment portfolio in line with the investment policy determined by the Board of Northern Venture Trust. Northern Venture Trust is registered with the FCA as a small Alternative Investment Fund Manager and retains full discretion over matters relating to the investment portfolio. The Board retains overall responsibility for the conduct of Northern Venture Trust's affairs. NVM has agreed to offer investment opportunities to Northern Venture Trust and to other funds it manages pro-rata to the Net Assets of each fund at the time of investment. he Management and Investment Advisory Deed continues without limitation in point of time unless terminated by either party on giving one year's notice.
NVM receives a basic management fee, payable quarterly in advance, at the rate of 2.06% per annum of Net Assets less current liabilities calculated at half-yearly intervals as at 31 March and 30 September and a performance-related management fee equivalent to 15% of the amount, if any, by which the Total Return increases in each financial year (expressed as a percentage of opening NAV) exceeds a performance hurdle. The hurdle is a composite rate based on 7% on average long-term investments and the higher of base rate and 3% on average cash and near-cash investments during the year, subject to such cash investments being limited to 25% of the total investments of Northern Venture Trust. Following a year in which Total Return decreases, a "high water mark" will apply to the calculation of the performance-related fee, whereby an amount equivalent to the reduction will be deducted from subsequent increases in Total Return achieved prior to any further performance-related fee calculation taking place. The performancerelated management fee is subject to an overall cap of 2.25% of net assets per annum.
Out of such fees NVM will pay the fees of Speirs & Jeffrey Limited, who manage the Company's non-VCT qualifying listed investments. NVM also provides secretarial and administration services to Northern Venture Trust, for which it receives an annual fee of £68,500 (plus VAT) payable quarterly in advance. The secretarial and administration fee is adjusted annually in line with changes in the UK Index of Retail Prices.
The Annual Running Costs of Northern Venture Trust are capped at 2.9% of its net assets, any excess being borne by the Manager by way of a reduction of its fees. Annual Running Costs include, inter alia, Directors' fees, fees for audit and taxation advice, registrars' fees, costs of communicating with Shareholders, the basic annual fees payable to the Manager and annual commission payments to Downing, but exclude performance-related management fees. The total annual running costs (excluding performance-related fees) for the most recently completed financial year for Northern Venture Trust was 2.55% of its average net assets.
NVM is entitled to receive arrangement fees (i.e. fees to cover costs of due diligence and implementing investments) and monitoring/directors' fees from companies in which Northern Venture Trust invests. Costs incurred on abortive investment proposals are the responsibility of NVM.
(d) A Management and Administration Deed dated 30 July 2014, as amended on 8 November 2016, made between Northern 2 VCT and NVM, pursuant to which NVM is responsible for managing Northern 2 VCT and its investment portfolio in line with the investment policy determined by the Board of Northern 2 VCT. The Board retains overall responsibility for the conduct of Northern 2 VCT's affairs. NVM has agreed to offer investment opportunities to Northern 2 VCT and to other funds it manages pro-rata to the Net Assets of each fund at the time of investment.
The Management and Administration Deed continues without limitation in point of time unless terminated by either party on giving one year's notice.
NVM receives a basic management fee, payable quarterly in advance, at the rate of 2.06% per annum of Net Assets less current liabilities calculated at half-yearly intervals as at 31 March and 30 September and a performance-related management fee equivalent to 12% of the amount, if any, by which the Total Return increases in each financial year (expressed as a percentage of opening NAV) exceeds a performance hurdle. The hurdle is a composite rate based on 7% on average long-term investments and the higher of base rate plus 1% and 2.5% on average cash and near-cash investments during the year. Following a year in which Total Return decreases, a "high water mark" will apply to the calculation of the performance-related fee but will be then adjusted downwards to the extent that a positive return is achieved in the following financial year. The performance-related management fee is subject to an overall cap of 2.25% of net assets per annum.
Out of such fees NVM will pay the fees of Speirs & Jeffrey Limited, who manage the Company's non-VCT qualifying listed investments. NVM also provides secretarial and administration services to Northern 2 VCT, for which it receives an annual fee of £56,200 (plus VAT) payable quarterly in advance. The secretarial and administration fee is adjusted annually in line with changes in the UK Index of Retail Prices.
The Annual Running Costs of Northern 2 VCT are capped at 2.9% of its net assets, any excess being borne by the Manager by way of a reduction of its fees. Annual Running Costs include, inter alia, Directors' fees, fees for audit and taxation advice, registrars' fees, costs of communicating with Shareholders, the basic annual fees payable to the Manager and annual commission payments to Downing, but exclude performance-related management fees. The total annual running costs (excluding performance-related fees) for the most recently completed financial year for Northern 2 VCT was 2.58% of its average net assets.
NVM is entitled to receive arrangement fees (i.e. fees to cover costs of due diligence and implementing investments) and monitoring/directors' fees from companies in which Northern 2 VCT invests. Costs incurred on abortive investment proposals are the responsibility of NVM.
(e) A Management and Administration Deed dated 21 May 2014 made between Northern 3 VCT and NVM, as amended on 10 November 2016, pursuant to which NVM is responsible for managing Northern 3 VCT and its investment portfolio in line with the investment policy determined by the Board of Northern 3 VCT. The Board retains overall responsibility for the conduct of Northern 3 VCT's affairs. NVM has agreed to offer investment opportunities to Northern 3 VCT and to other funds it manages pro-rata to the Net Assets of each fund at the time of investment.
The Management and Administration Deed continues without limitation in point of time unless terminated by either party on giving one year's notice.
NVM receives a basic management fee, payable quarterly in advance, at the rate of 2.06% per annum of Net Assets less current liabilities calculated at half-yearly intervals as at 31 March and 30 September and a performance-related management fee equivalent to 14.2% of the amount, if any, by which the Total Return increase in each financial year (expressed as a percentage of opening NAV) exceeds a performance hurdle. The hurdle is a composite rate based on 7% on average long-term investments and the higher of base rate and 3% on average cash and near-cash investments during the year. Following a year in which Total Return decreases, a "high water mark" will apply to the calculation of the performance-related fee but will be then adjusted downwards to the extent that a positive return is achieved in
the following financial year. The performance-related management fee is subject to an overall cap of 2.25% of net assets per annum.
Out of such fees NVM will pay the fees of Speirs & Jeffrey Limited, who manage the Company's non-VCT qualifying listed investments. NVM also provides secretarial and administration services to Northern 3 VCT, for which it receives an annual fee of £53,000 (plus VAT) payable quarterly in advance. The secretarial and administration fee is adjusted annually in line with changes in the UK Index of Retail Prices.
The Annual Running Costs of Northern 3 VCT are capped at 2.9% of its net assets, any excess being borne by the Manager by way of a reduction of its fees. Annual Running Costs include, inter alia, Directors' fees, fees for audit and taxation advice, registrars' fees, costs of communicating with Shareholders, the basic annual fees payable to the Manager and annual commission payments to Downing, but exclude performance-related management fees. The total annual running costs (excluding performance-related fees) for the most recently completed financial year for Northern 3 VCT was 2.52% of its average net assets.
NVM is entitled to receive arrangement fees (i.e. fees to cover costs of due diligence and implementing investments) and monitoring/directors' fees from companies in which Northern 3 VCT invests. Costs incurred on abortive investment proposals are the responsibility of NVM.
(f) Each of the Directors of Northern Venture Trust has entered into a letter of appointment with Northern Venture Trust for a period of up to three years from the dates set out against their names below and each letter of engagement is terminable on three months' notice given by either side.
| Date of appointment or | Annual general meeting at which | |
|---|---|---|
| Director | reappointment | current appointment terminates |
| Simon Constantine | 17 December 2015 | December 2018 |
| Nigel Beer | 17 December 2015 | December 2018 |
| Richard Green | 18 December 2014 | December 2017 |
| David Mayes | 18 December 2014 | December 2017 |
| Tim Levett | 15 December 2016 | December 2017 |
| Hugh Younger | 17 December 2015 | December 2018 |
Pursuant to the terms of each letter of engagement, a Director is required to devote such time to the affairs of Northern Venture Trust as the Board reasonably requires consistent with his role as a non-executive Director. Each Director is entitled to receive the fees set out in paragraph 6 (c) under the heading Directors' and Others' Interests in Northern Venture Trust in this Part V. Each Director is entitled to be reimbursed for expenses properly incurred. There are no specific provisions for compensation in the event of early termination of the letters of engagement. In such event, the Director will be entitled to remuneration pro-rata to the proportion of the accounting period for which he has served. None of the Directors has entered into any service contract with Northern Venture Trust.
(g) Each of the Directors of Northern 2 VCT has entered into a letter of appointment with Northern 2 VCT for a period of up to three years from the dates set out against their names below and each letter of engagement is terminable on three months' notice given by either side.
| Director | Date of appointment or reappointment |
Annual general meeting at which current appointment terminates |
|---|---|---|
| David Gravells | 12 July 2017 | July 2018 |
| Alastair Conn | 12 July 2017 | July 2018 |
| Simon Devonshire | 12 July 2017 | July 2020 |
| Cecilia McAnulty | 12 July 2017 | July 2020 |
| Frank Neale | 12 July 2017 | July 2018 |
Pursuant to the terms of each letter of engagement, a Director is required to devote such time to the affairs of Northern 2 VCT as the Board reasonably requires consistent with his role as a non-executive Director. Each Director is entitled to receive the fees set out in paragraph 6 (c) under the heading Directors' and Others' Interests in Northern 2 VCT in this Part V. Each Director is entitled to be reimbursed for expenses properly incurred. There are no specific provisions for compensation in the event of early termination of the letters of engagement. In such event, the Director will be entitled to remuneration pro-rata to the proportion of the accounting period for which he has served. None of the Directors has entered into any service contract with Northern 2 VCT.
(h) Each of the Directors of Northern 3 VCT has entered into a letter of appointment with Northern 3 VCT for a period of up to three years from the dates set out against their names below and each letter of engagement is terminable on three months' notice given by either side.
| Director | Date of appointment or reappointment |
Annual general meeting at which current appointment terminates |
|---|---|---|
| James Ferguson | 8 July 2015 | July 2018 |
| Chris Fleetwood | 6 July 2016 | July 2019 |
| Tim Levett | 13 July 2017 | July 2018 |
| John Waddell | 13 July 2017 | July 2020 |
Pursuant to the terms of each letter of engagement, a Director is required to devote such time to the affairs of Northern 3 VCT as the Board reasonably requires consistent with his role as a non-executive Director. Each Director is entitled to receive the fees set out in paragraph 6 (c) under the heading Directors' and Others' Interests in Northern 3 VCT in this Part V. Each Director is entitled to be reimbursed for expenses properly incurred. There are no specific provisions for compensation in the event of early termination of the letters of engagement. In such event, the Director will be entitled to remuneration pro-rata to the proportion of the accounting period for which he has served. None of the Directors has entered into any service contract with Northern 3 VCT.
(i) Under the Offer Agreement dated 21 September 2017 between the Companies, the Directors, the Sponsor and Downing, the Sponsor has agreed to act as sponsor to the Offers and Downing has undertaken, as agent of the Companies, to use its reasonable endeavours to procure subscribers for up to £20,000,000 in Northern Venture Trust's offer under the Offers, £20,000,000 in Northern 2 VCT 's offer under the Offers and £20,000,000 in Northern 3 VCT's offer under the Offers. Neither the Sponsor nor Downing is obliged to subscribe for Offer Shares.
Under the Offer Agreement the Companies are obliged to pay Downing an amount equal to 4% (or 2% where no commission is payable) of the aggregate amounts of the subscription monies as received by the Companies pursuant to the Offers together with an annual commission of 0.2% for five years of the gross funds subscribed under the Offers in respect of which trail commission is payable. Pursuant to this agreement, Downing agrees that it will pay all costs, charges, fees and expenses payable by the Companies or the Manager in connection with, or incidental to, the Offers and the Admission.
Under the Offer Agreement, which may be terminated by the Sponsor and Downing in certain circumstances, certain warranties have been given by each Company and the Directors to the Sponsor and Downing, subject to certain limitations. Each Company has also agreed to indemnify the Sponsor in respect of its role as Sponsor and under the Offer Agreement. The warranties and indemnity are in usual form for a contract of this type. The Offer Agreement may be terminated by the Sponsor if any statement in the Prospectus is untrue, any material omission from the Prospectus arises or any breach of warranty occurs.
(j) Each of the Companies has entered into a letter agreement dated 18 September 2017 in the case of Northern 2 VCT and Northern 3 VCT and 20 September 2017 in the case of Northern Venture Trust, with NVM pursuant to which NVM has agreed to reduce its management fee to 1.0% of NAV in respect of the net proceeds of the Offers for the period from the date of allotment to 30 September 2018.
KPMG LLP (formerly KPMG Audit Plc) of Saltire Court, 20 Castle Terrace, Edinburgh EH1 2EG has been the registered auditor of Northern 2 VCT since 2003. From incorporation until 2003, PricewaterhouseCoopers LLP of 89 Sandyford Road, Newcastle upon Tyne NE99 1PL was the registered auditor of Northern 2 VCT.
KPMG LLP (formerly KPMG Audit Plc) of Saltire Court, 20 Castle Terrace, Edinburgh EH1 2EG has been the registered auditors of Northern 3 VCT since 2003. From incorporation until 2003, PricewaterhouseCoopers LLP of 89 Sandyford Road, Newcastle upon Tyne NE99 1PL was the registered auditor of Northern 3 VCT.
(m) As at the date of this document, there are no governmental, economic, monetary, political or fiscal policies and factors which have or could affect the Companies' operations.
(n) The Companies have to satisfy a number of tests to qualify as VCTs and will be subject to various rules and regulations in order to continue to qualify as VCTs, as set out under paragraph 5 of Part VI of this document ("Taxation Considerations for Investors"). In addition, under the rules relating to Admission, the Companies must manage and invest their assets in accordance with the investment policy set out in the section headed "Corporate objective and investment policies" on page 17, which contains information about the policies which they will follow relating to asset allocation, risk diversification and gearing and which includes a maximum exposure. Investors will be informed through a regulatory information service of the action that the Boards propose to take in the event that any of these investment restrictions are breached.
The Companies have been advised that no stamp duty or stamp duty reserve tax ("SDRT") will be payable on the issue of the Shares issued under the Offers.
The transfer on sale of any Shares will be liable to ad valorem stamp duty normally at the rate of 0.5% of the amount or value of the consideration (rounded up to the nearest £5). An unconditional agreement to transfer Shares also gives rise to an obligation to account for SDRT, which is payable within seven days of the start of the month following that in which the agreement was entered into. The payment of stamp duty gives rise to a right to repayment of any SDRT paid. There will be no stamp duty or SDRT on the transfer of the Shares into CREST unless such a transfer is made for consideration in money or money's worth, in which case a liability to SDRT will arise usually at a rate of 0.5%. A transfer of Shares effected on a paperless basis through CREST will generally be subject to SDRT at a rate of 0.5% of the value of the consideration. Following the issue of the Shares pursuant to the Offers, the Companies are not likely to be a close company for tax purposes.
The Sponsor, the Promoter and the Manager have given and have not withdrawn their written consents to the issue of this document with the references to them in the form and context in which they appear.
Copies of the following documents are available for inspection at the offices of Howard Kennedy Corporate Services LLP at No. 1 London Bridge, London SE1 9BG and at the registered office of the Companies at Time Central, 32 Gallowgate, Newcastle upon Tyne NE1 4SN during normal business hours on any weekday (public holidays excepted) from the date of this document until the closing date of the Offers:
VCTs are exempt from corporation tax on chargeable gains. There is no restriction on the distribution of realised capital gains by a VCT, subject to the requirements of company law. The Companies will be subject to corporation tax on their income (excluding dividends received from UK companies) after deduction of attributable expenses.
Individuals who subscribe for Offer Shares must be aged 18 or over to qualify for the tax reliefs outlined below.
An Investor subscribing up to £200,000 in the 2017/18 tax year for eligible shares in a VCT will be entitled to claim income tax relief, at the rate of 30%, although this relief will be withdrawn if either the shares are sold within five years or the Investor takes out a loan which would not have been made, or would not have been made on the same terms, save for the acquisition of such shares. If an Investor has sold, or if they sell, any shares in the Companies within six months either side of the subscription for the Offer Shares, then for the purposes of calculating income tax relief on the Offer Shares the subscribed amount must be reduced by the amount received from the sale. Relief is also restricted to the amount which reduces the investor's income tax liability to nil.
An investor who subscribes for or acquires eligible shares in a VCT (up to a maximum of £200,000 in the 2017/18 tax year) will not be liable for UK income tax on dividends paid by the VCT. The income received by the VCT will usually constitute either interest (on which the VCT may be subject to tax) or a dividend from a UK company (on which the VCT would not be subject to tax). The VCT's income, reduced by the payment of tax (if applicable), can then be distributed tax-free to Investors who benefit from this dividend relief. There is no withholding tax on dividends paid by a UK company and, consequently, the Companies do not assume responsibility for the withholding of tax at source.
A disposal by an individual Investor of his/her shares in a VCT will neither give rise to a chargeable gain nor an allowable loss for the purposes of UK capital gains tax. This relief is also limited to disposals of shares acquired within the £200,000 limit described above.
The Offer Shares are eligible VCT shares for the purposes of this section.
(i) Initial income tax
If an Investor dies at any time after making an investment in a VCT, the transfer of shares on death is not treated as a disposal and, therefore, the initial income tax relief is not withdrawn. However, the shares will become part of the deceased's estate for inheritance tax purposes.
(ii) Tax implications for the beneficiary
Provided a number of conditions are met, the beneficiary of any VCT shares will be entitled to tax-free dividends and will not pay capital gains tax on any disposal within the £200,000 limit described above, but will not be entitled to any initial income tax relief.
(iii) Transfer of shares between spouses Transfers of shares in a VCT between spouses is not deemed to be a disposal and, therefore, all tax reliefs will be retained.
Any subsequent purchaser of existing VCT shares, as opposed to a subscriber for new VCT shares, will not qualify for income tax relief on investment but may benefit from dividend relief and from capital gains tax relief on the disposal of his/her VCT shares.
(iv) The VCT Regulations 2004
Under the VCT Regulations, monies raised by any further issue of shares by an existing VCT are subject to a grace period of three years before they must be applied in making investments which meet the VCT qualifying thresholds. However, to the extent any of the money raised (save for an insignificant amount in the context of the whole issued ordinary share capital of the VCT) is used by the VCT to purchase its own shares then this grace period shall not apply.
To obtain VCT status a company must be approved by HM Revenue & Customs as a VCT. HM Revenue & Customs has granted the Companies approval under Section 274 ITA as a VCT and the Companies intend to continue complying with the requirements of such section.
For a VCT to obtain full unconditional approval, the conditions summarised below must be satisfied in relation to the accounting period of the company which is current when the application for approval is made, or in any event must be satisfied by no later than the beginning of the VCT's next accounting period and must continue to be satisfied throughout the life of the VCT:
The VCT must not be a close company. Its ordinary share capital must be quoted on any regulated market in the EU or European Economic Area.
The VCT must not in respect of any share capital created on or after 6 April 2014, and any reserves created from the cancellation thereof, make any payment or distribution out of such share capital and reserves to shareholders within three years from the end of the accounting period in which that share capital was created.
The following conditions also have to be satisfied by no later than the beginning of the VCT's accounting period which commences no later than three years after provisional approval takes effect and must continue to be satisfied throughout the life of the VCT:
Disposals of Qualifying Companies, which have been a qualifying holding throughout the six months prior to disposal, are disregarded for the purposes of the 70% test for a period of six months.
"Qualifying investments" comprise shares or securities (including loans with a five year or greater maturity period but excluding guaranteed loans and securities) issued by unquoted trading companies which exist wholly or mainly for the purpose of carrying on one or more qualifying trades. The trade must be carried on by, or be intended to be carried on by, the investee company or a 90% held qualifying subsidiary (directly held or in the third tier within the group) at the time of the issue of the shares or securities to the VCT and at all times thereafter). The Qualifying Company must have a permanent establishment in the UK.
A company intending to carry on a qualifying trade must begin to trade within two years of the issue of shares or securities to the VCT and continue it thereafter. The definition of a qualifying trade excludes certain activities, including dealing in property, shares, securities, commodities or futures. It also excludes banking, insurance, receiving royalties or licence fees in certain circumstances, leasing, the provision of legal and accounting services, farming and market gardening, forestry and timber production, property development and operating or managing hotels, guest houses, nursing and residential care homes, coal production, steel production, ship building, the production of fuel or power, the generation or export of heat or electricity or making reserve electricity generation capacity available. The funds raised by the investment must be used for the purposes of the qualifying trade within certain time limits.
A qualifying investment can be made in a company which is a parent company of a trading group where the activities of the group, taken as a whole, consist of carrying on one or more qualifying trades. The subsidiary carrying on the qualifying trade in question must be at least 90% owned by the parent company. The investee company's gross assets must not exceed £15 million immediately prior to the investment. Neither the VCT nor any other company may control the investee company. At least 10% of the VCT's total investment in the investee company must be in ordinary nonpreferential shares. In respect of investments made from funds raised on or after 6 April 2007 Qualifying Companies or groups must have fewer than 250 employees. Companies are permitted to receive a maximum of £5 million from all State Aid investments sources in the 12 months ending on the date of the VCT's investment. There is also a disqualifying purpose test designed to exclude companies set up for the purpose of accessing the tax reliefs. VCT funds may not be used by investee companies to acquire shares, another business or intangible assets in use in a trade.
Companies whose shares are traded on AIM or are ISDX-quoted or ISDX-traded are treated as unquoted companies for the purposes of calculating qualifying investments. Shares in an unquoted company which subsequently become listed may still be regarded as a qualifying investment for a further five years following listing, provided all other conditions are met.
The Companies will notify an RIS as to any action that the Manager takes in the event of a breach of any of the conditions to remaining a VCT.
The above is only a summary of the tax position of individual investors in VCTs, based on the Companies' understanding of current law and practice. Investors are recommended to consult a professional adviser as to the taxation consequences of investing in a VCT. Tax reliefs referred to in this document are UK tax reliefs and are dependent on the Companies maintaining their VCT qualifying status.
| 2006 Act | Companies Act 2006, as amended from time to time |
|---|---|
| Admission | date on which the Offer Shares allotted pursuant to the Offers are listed on the Official List of the UKLA and admitted to trading on the London Stock Exchange's main market for listed securities |
| Adviser Charge | fee, payable to an Intermediary, agreed with the Investor for the provision of a personal recommendation and/or related services in relation to an investment in Offer Shares, and detailed on the Application Form |
| AIM | a sub market of the London Stock Exchange established in 1995 to provide a market for small, growing companies with greater regulatory flexibility than applies to the main market |
| AIF | an alternative investment fund |
| AIFM (s) | manager(s) of AIF(s) for the purposes of the AIFMD |
| AIFMD | Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010 |
| Annual Running Costs | annual running costs incurred by the Companiesin the ordinary course of their business (including irrecoverable VAT) |
| Applicant | person who applies for Offer Shares under the Offers through means of completing an Application Form |
| Application Form(s) | form of application for Offer Shares |
| Articles | articles of association of the Companies as at the date of this document |
| Board or Directors | board of directors of each Company |
| Business Day | any day (other than a Saturday or Sunday) on which clearing banks in London are open for normal banking business in sterling |
| Closing Date | 5 April 2018 |
| Company or Companies or Northern VCTs |
either individually, or any combination of Northern Venture Trust, Northern 2 VCT and Northern 3 VCT |
| CREST | relevant system (as defined in the Uncertificated Securities Regulations 2001 (SI 2001 No. 3755)) for the paperless settlement of transfers and the holding of Shares in uncertificated form which is administered by Euroclear UK & Ireland Limited (registered number 02878738) |
| Direct Investors | an investor with no adviser |
| Disclosure Guidance and Transparency Rules |
the Disclosure Guidance and Transparency Rules, made by the FCA under Part VI of FSMA and relating to the disclosure of information in respect of financial instruments |
| Dividend Investment Scheme(s) or Scheme(s) |
the respective dividend investment scheme for each Company as detailed in Part X of this document, as amended from time to time |
| Downing | Downing LLP, which is authorised and regulated by the FCA (registered number OC341575, FCA number 545025) |
| Execution-Only Investor | an Investor who has not sought advice from an independent financial adviser |
| Existing Shares | the Ordinary Shares in issue at the date of this Prospectus |
| FCA | Financial Conduct Authority or its successor |
| FSMA | Financial Services and Markets Act 2000, as amended from time to time |
| Initial Adviser Charge | a one-off Adviser Charge to be paid at the time of or shortly after the investment being made |
| ITA | Income Tax Act 2007, as amended from time to time. | |
|---|---|---|
| Intermediary | financial intermediary or adviser, authorised under FSMA, who signs the Application Form and whose details are set out in Section 5 on the Application Form |
|
| Investor | individual who subscribes for Offer Shares pursuant to the Offers | |
| Listed | admitted to the premium segment of the Official List and to trading on the London Stock Exchange |
|
| Listing Rules | listing rules of the UKLA | |
| London Stock Exchange or LSE | London Stock Exchange plc | |
| Mandate Form | the form that enables shareholders in the Companies to participate in the Dividend Investment Scheme, available on NVM's website at www.nvm.co.uk |
|
| ML Regulations | the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 |
|
| Net Assets | gross assets less all liabilities (excluding contingent liabilities) of the Companies calculated in accordance with the Companies' normal accounting policies in force at the date of circulation |
|
| NAV or Net Asset Value | net asset value in pence per Share | |
| Northern 2 VCT | Northern 2 VCT PLC (registered number 03695071) | |
| Northern 3 VCT | Northern 3 VCT PLC (registered number 04280530) | |
| Northern Venture Trust | Northern Venture Trust PLC (registered number 03090163) | |
| NVM, Manager or NVM Private Equity |
NVM Private Equity LLP which is authorised and regulated by the FCA | |
| Offers | offer for subscription to raise in aggregate up to £60 million by issues of Ordinary Shares by the Companies pursuant to the Prospectus |
|
| Offer Price | price paid by an Investor for Offer Shares | |
| Offer Shares | ordinary shares of 25p each in the capital of Northern Venture Trust (ISIN: GB0006450703), ordinary shares of 5p each in the capital of Northern 2 VCT (ISIN: GB0005356430) or ordinary shares of 5p each in the capital of Northern 3 VCT (ISIN: GB0031152027) individually or collectively as appropriate, in each case subscribed for under the terms of the Offers (as the context dictates) |
|
| Official List | official list of the UK Listing Authority maintained in accordance with section 74(1) FSMA |
|
| Ordinary Shares or Shares | ordinary shares of 25 pence each in the capital of Northern Venture Trust (ISIN: GB0006450703), ordinary shares of 5 pence each in the capital of Northern 2 VCT (ISIN: GB0005356430) or ordinary shares of 5 pence each in the capital of Northern 3 VCT (ISIN: GB0031152027) |
|
| Ordinary Shareholders or Shareholders |
holders of Ordinary Shares | |
| Pricing Formula | the pricing formula by which the number of Offer Shares issued under the Offers is determined for each investor |
|
| Professional Client Investor | an investor who is either a per se professional client or an elective professional client under rule 3.5 of the conduct of business sourcebook as published in the FCA's handbook. |
|
| Promoter | Downing LLP, the promoter of the Offers | |
| Promoter's Fee | fee payable by the Companies to Downing, calculated as a percentage of each Applicant's gross subscription in the Offers in return for which Downing will pay the launch costs of the Offers |
|
| Prospectus | this document | |
| Prospectus Rules | Prospectus Rules of the UKLA |
| Qualifying Company | unquoted (including an AIM-quoted) company which satisfies the requirements of Part 4 of Chapter 6 of the ITA |
|
|---|---|---|
| Qualifying Investments | shares in, or securities of, a Qualifying Company held by a venture capital trust which meets the requirements described in Parts 3 and 4 of Chapter 6 of the ITA |
|
| Receiving Agent | NVM Private Equity LLP | |
| Registrar | Equiniti Limited, of Aspect House, Spencer Road, Lancing BN99 6DA | |
| Retail Client Investor | Investors who apply for Offer Shares through their Intermediary where the Intermediary has classified the Investor as a retail client for the purposes of the FCA rules |
|
| RIS | regulatory information service | |
| RPI | inflation measured by the Retail Price Index | |
| Sponsor | Howard Kennedy Corporate Services LLP | |
| Total Return | NAV, plus cumulative dividends paid, including tax credits where reclaimable | |
| UK Corporate Governance Code |
the UK Corporate Governance Code issued by the Financial Reporting Council and as updated from time to time |
|
| UK Listing Authority or UKLA | FCA acting in its capacity as the competent authority for the purposes of Part VI of the FSMA |
|
| VCT Regulations 2004 | Venture Capital Trust (Winding Up and Mergers) (Tax) Regulations SI 2004 No. 2199 |
|
| VCT Rules | legislation, rules and HM Revenue & Customs interpretation and practice regulating the establishment and operation of venture capital trusts |
|
| Venture Capital Trust or VCT | venture capital trust as defined in section 259 of the ITA |
The Directors may exercise all the powers of the Companies to borrow money and to mortgage or charge its undertakings, property and uncalled capital. The Directors shall restrict the borrowings of the Companies and exercise all voting and other rights or powers of control exercisable by the Companies in relation to their subsidiaries (if any) so as to secure (so far, as regards the subsidiaries, as by such exercise they can secure) that the aggregate amount at any one time owing or deemed to be owing by the Companies and/or any subsidiaries, determined as hereinafter mentioned, in respect of moneys borrowed by them or any of them shall not at any time, without the previous sanction of an ordinary resolution of the Companies, exceed an amount equal to the aggregate amount paid up on the issued share capital of the Companies and the amounts standing to the credit of the consolidated reserves of the Companies as shown in the latest audited Balance Sheet, adjusted where appropriate to take account of movements since that date.
The Directors are aware of the possibility that the Companies' Shares may trade at a discount to their net asset value at some point. The Directors consider that the Companiesshould have the ability to purchase their Shares in the market (such Shares to be automatically cancelled) with the aim of reducing any discount and increasing the NAV of the remaining Shares. In the view of the Directors, the awareness of Investors that the Companies have such a capability may tend to moderate the scale of any discount which may emerge and the action of buying in shares should enable any such discount to be narrowed.
The 2006 Act provides that a public company may only purchase its own shares out of distributable profits or out of the proceeds of a fresh issue of Shares made for the purpose of the purchase. Subject to confirmation from HM Revenue & Customs that such proposals will not adversely affect the Companies' VCT status and Court approval, the Companies have decided to cancel the share premium account (created on the issue of the Offer Shares) and to transfer the balance to a special reserve which may be treated as a distributable profit, out of which purchases of Shares can be made, subject to regulations, VCT Rules and company legislation. Distributions will not be made from such a reserve to the extent it is attributable to share capital raised after 5 April 2018 for a minimum of three years following the end of the accounting period in which the relevant shares are issued.
Shareholders authorities to create, allot and issue Offer Shares, as if applicable statutory pre-emption rights do not apply, up to the following aggregate maximum nominal value of £10,150,000 were obtained at the following general meetings of the Companies:
| Company | Aggregate nominal value of Offer Shares |
Date of general meeting |
|---|---|---|
| Northern Venture Trust | £7,500,000 | 20 September 2017 |
| Northern 2 VCT | £1,550,000 | 18 September 2017 |
| Northern 3 VCT | £1,100,000 | 18 September 2017 |
All Shareholders will have the same voting rights in respect of the existing share capital of the Companies. An existing holder of Ordinary Shares who does not subscribe for Offer Shares pursuant to the Offers would experience no dilution in terms of NAV per share (as the assets of the Companies will be increased by the proceeds of the Offers and the upfront costs of the Offers are borne by subscribers). The Offer Shares are up to approximately 30,000,000 ordinary shares of 25 pence each in the capital of Northern Venture Trust (ISIN: GB0006450703), up to approximately 31,000,000 ordinary shares of 5 pence each in the capital of Northern 2 VCT (ISIN: GB0005356430) or up to approximately 22,000,000 ordinary shares of 5 pence each in the capital of Northern 3 VCT (ISIN: GB0031152027) and are created under the 2006 Act and are freely transferable.
Northern Venture Trust, Northern 2 VCT and Northern 3 VCT are each of the opinion that they individually have sufficient working capital for their present requirements (that is, for at least 12 months from the date of this document).
The table below shows the capitalisation of Northern Venture Trust as at 30 June 2017, the most recent date in respect of which unaudited financial information of Northern Venture Trust has been published.
| £000 | |
|---|---|
| Total current debt | |
| Guaranteed | - |
| Secured | - |
| Unguaranteed/secured | - |
| Total non-current debt | |
| Guaranteed | - |
| Secured | - |
| Unguaranteed/secured | - |
| Shareholders' equity | |
| Share capital | 26,257 |
| Other reserves | 48,123 |
| 74,380 |
There has been no material change in the capitalisation of Northern Venture Trust, total debt or shareholder equity since 30 June 2017.
The following table shows the net indebtedness of Northern Venture Trust as at 30 June 2017, the most recent date in respect of which unaudited financial information of Northern Venture Trust has been published.
| £000 | ||
|---|---|---|
| A | Cash | 13,617 |
| B | Cash equivalent | - |
| C | Trading Securities | - |
| D | Liquidity (A+B+C) | 13,617 |
| E | Current financial receivables | - |
| F | Current bank debt | - |
| G | Current position of non-current debt | - |
| H | Other current financial debt | - |
| I | Current financial debt (F+G+H) | - |
| J | Net current financial indebtedness (I-E-D) | (13,617) |
| K | Non-current bank loans | - |
| L | Bonds issued | - |
| M Other non-current loans | - | |
| N | Non-current financial indebtedness (K+L+M) | - |
| O Net financial indebtedness (J+N) | (13,617) |
Northern Venture Trust does not have any contingent or indirect indebtedness.
The table below shows the capitalisation of Northern 2 VCT as at 30 June 2017, the most recent date in respect of which unaudited financial information of Northern 2 VCT has been published.
| £000 | ||
|---|---|---|
| Total current debt | ||
| Guaranteed | - | |
| Secured | - | |
| Unguaranteed/secured | - | |
| Total non-current debt | ||
| Guaranteed | - | |
| Secured | - | |
| Unguaranteed/secured | - | |
| Shareholders' equity | ||
| Share capital | 4,957 | |
| Other reserves | 70,750 | |
| 75,707 |
There has been no material change in the capitalisation of Northern 2 VCT, total debt or shareholder equity since 30 June 2017.
The following table shows the net indebtedness of Northern 2 VCT as at 30 June 2017, the most recent date in respect of which unaudited financial information of Northern 2 VCT has been published.
| £000 | ||
|---|---|---|
| A | Cash | 23,767 |
| B | Cash equivalent | - |
| C | Trading Securities | - |
| D | Liquidity (A+B+C) | 23,767 |
| E | Current financial receivables | - |
| F | Current bank debt | - |
| G | Current position of non-current debt | - |
| H | Other current financial debt | - |
| I | Current financial debt (F+G+H) | - |
| J | Net current financial indebtedness (I-E-D) | (23,767) |
| K | Non-current bank loans | - |
| L | Bonds issued | - |
| M Other non-current loans | - | |
| N | Non-current financial indebtedness (K+L+M) | - |
| O Net financial indebtedness (J+N) | (23,767) |
Northern 2 VCT does not have any contingent or indirect indebtedness.
The table below shows the capitalisation of Northern 3 VCT as at 30 June 2017, the most recent date in respect of which unaudited financial information of Northern 3 VCT has been published.
| £000 | ||
|---|---|---|
| Total current debt | ||
| Guaranteed | - | |
| Secured | - | |
| Unguaranteed/secured | - | |
| Total non-current debt | ||
| Guaranteed | - | |
| Secured | - | |
| Unguaranteed/secured | - | |
| Shareholders' equity | ||
| Share capital | 3,488 | |
| Other reserves | 70,556 | |
| 74,044 |
There has been no material change in the capitalisation of Northern 3 VCT, total debt or shareholder equity since 30 June 2017.
The following table shows the net indebtedness of Northern 3 VCT as at 30 June 2017, the most recent date in respect of which unaudited financial information of Northern 3 VCT has been published.
| £000 | ||
|---|---|---|
| A | Cash | 17,864 |
| B | Cash equivalent | - |
| C | Trading Securities | - |
| D | Liquidity (A+B+C) | 17,864 |
| E | Current financial receivables | - |
| F | Current bank debt | - |
| G | Current position of non-current debt | - |
| H | Other current financial debt | - |
| I | Current financial debt (F+G+H) | - |
| J | Net current financial indebtedness (I-E-D) | (17,864) |
| K | Non-current bank loans | - |
| L | Bonds issued | - |
| M Other non-current loans | - | |
| N | Non-current financial indebtedness (K+L+M) | - |
| O Net financial indebtedness (J+N) | (17,864) |
Northern 3 VCT does not have any contingent or indirect indebtedness.
The Companies and their Shareholders are subject to the provisions of the Takeover Code and 2006 Act, which require shares to be acquired/transferred in certain circumstances.
As at 20 September 2017, being the latest practicable date prior to the publication of this document, the Companies are not aware of any person who, directly or indirectly, has or will have an interest in the capital of the Companies or voting rights which is notifiable under UK law (under which, pursuant to 2006 Act and the Listing Rules and the Disclosure Guidance and Transparency Rules of the FCA, a holding of 3% or more will be notified to the Companies).
21 September 2017
ii. a list duly certified by such nominee of the beneficial owners and their spouses or civil partners for whom applications are being made by the nominee shareholder and the number of shares held by such beneficial owners. The right is reserved in the absolute discretion of the Company to reject any such application which is not accompanied by satisfactory evidence of the appointment of such registered shareholder as nominee or to accept any application in whole or part only. The application will not be processed until satisfactory evidence is provided. Satisfactory evidence may include a form of statement from the nominee shareholder detailing their appointment as nominee.
the applicable Company which will become binding upon despatch by post or delivery of your duly completed Application Form to the applicable Company or to your financial adviser;
(u) warrant that if you sign the Application Form on behalf of somebody else or yourself and another or others jointly or a corporation you have the requisite power to make such investments as well as the authority to do so and such person will also be bound accordingly and will be deemed also to have given the confirmations, warranties and undertakings contained in these terms and conditions of application and undertake (save in the case of signature by an authorised financial adviser on behalf of the Investor) to enclose a power of attorney or a copy thereof duly certified by a solicitor with the Application Form;
(v) warrant that you are not subscribing for the Offer Shares using a loan which would not have been given to you or any associate, or not given to you on such favourable terms, if you had not been proposing to subscribe for the Offer Shares;
The Companies are offering to its Shareholders the opportunity to participate in a Dividend Investment Scheme ("the Dividend Investment Scheme" or "the DRIS") whereby they may elect to receive Shares, credited as fully paid, instead of receiving dividends in cash. This is a simple, cost effective method for Shareholders to increase the value of their investment in the Companies and to benefit from additional VCT income tax relief.
To participate in the Dividend Investment Scheme, Shareholders must download and complete the Mandate Form from www.nvm.co.uk and return to:
The Mandate Form must be received no later than 10 Business Days before an Investment Day (as defined below).
A Shareholder's membership of the Dividend Investment Scheme will continue until such a time as that Shareholder cancels their membership. Participation in the Dividend Investment Scheme can be cancelled at any time subject to the cancellation request being received by Equiniti Limited, the Scheme Administrator, before the record date for the relevant dividend.
The Companies retain the right to suspend or terminate the Scheme at any time.
The following definitions apply throughout this Annex I, unless the context otherwise requires:
| Admission | admission of the Ordinary Shares to the Official List and to trading on the premium | |
|---|---|---|
| segment of the London Stock Exchange's main market for listed securities becoming | ||
| effective, and "Admitted" shall be construed accordingly | ||
| Applicant | a Shareholder participating in the DRIS or, where a Shareholder holds Ordinary Shares as a Nominee Shareholder, the person, being the Beneficial Shareholder |
|
| Beneficial Shareholder | an individual entitled to the economic benefit of any Ordinary Shares which are held by | |
| a Nominee Shareholder | ||
| Board or Directors | the directors of the relevant Company | |
| Business Day | a day (excluding Saturdays, Sundays and public holidays) on which banks are open for | |
| business in the City of London | ||
| Company | Northern Venture Trust PLC, Northern 2 VCT PLC or Northern 3 VCT PLC (as the case | |
| may be) | ||
| CREST | the computerised settlement system to facilitate the transfer of title to securities in | |
| uncertificated form operated by Euroclear UK & Ireland Limited | ||
| Dividend Investment Scheme | the dividend investment scheme operated by each of the Companies | |
| or DRIS | ||
| DRIS Manager | Equiniti Limited, or such other person or persons who may from time to time be | |
| appointed by the Company to manage the DRIS | ||
| DRIS Terms and Conditions | the terms and conditions relating to the DRIS as amended from time to time, the latest | |
| version of which is set out in this document | ||
| Investment Day | a day on which a special dividend or an annual dividend on Ordinary Shares is credited | |
| to the account of Shareholders or, if such day is not a dealing day on the London Stock | ||
| Exchange, the next dealing day thereafter | ||
| ITA | Income Tax Act 2007 | |
| London Stock Exchange | London Stock Exchange plc | |
| Mandate Form | the form to be completed by a Shareholder in respect of his or her application for participation in or withdrawal from the DRIS |
|
| Nominee Shareholder | the registered owner of any Ordinary Shares as appointed by the Beneficial | |
| Shareholder | ||
| Nominee Shareholding | Ordinary Shares held by a Beneficial Shareholder but registered in the name of a Nominee Shareholder |
|
| Official List | the Official List maintained by the Financial Conduct Authority in accordance with Part | |
| VI of the Financial Services and Markets Act 2000 (as amended from time to time) | ||
| Ordinary Shares | ordinary shares of 25p each in the capital of Northern Venture Trust PLC and ordinary | |
| shares of 5p each in the capital of Northern 2 VCT PLC and Northern 3 VCT PLC | ||
| Qualifying Companies | has the meaning set out in the ITA | |
| Qualifying Investments | has the meaning set out in the ITA |
5 The Company shall immediately after the subscription of Ordinary Shares in accordance with the condition at paragraph 2 above take all necessary steps to ensure that those Ordinary Shares shall be admitted to the Official List and to trading on the premium segment of the main market of the London Stock Exchange, provided that at the time of such subscription the existing Ordinary Shares in issue are so admitted to the Official List and to trading on the premium segment of the main market of the London Stock Exchange. The DRIS Manager shall as soon as practicable after the subscription of Ordinary Shares in accordance with the condition at paragraph 2 take all necessary steps to ensure that the Applicants (or, where an Applicant is not a Shareholder, the Shareholder on whose behalf the Ordinary Shares mandated to the DRIS are held) are entered onto the share register of the Company as the registered holders of the Ordinary Shares issued to them in accordance with the condition at paragraph 3 above, and that share certificates (unless such Ordinary Shares are to be uncertificated in which case the new Ordinary Shares will be credited to the Applicant's CREST account) in respect of such Ordinary Shares are issued and delivered to Applicants at their own risk. Shareholders (or such other person as aforesaid) will receive with their share certificates (if any) a statement detailing:
(a) the total number of Ordinary Shares held at the Investment Day in respect of which a valid election to participate in the DRIS was made;
Mandate forms current at the time the DRIS Terms and Conditions are amended shall apply in respect of the DRIS. Each Shareholder or other person to whom such a mandate form relates shall be deemed to have given the warranties set out in this paragraph 7.
If an Applicant who is a Shareholder shall at any time cease to hold Ordinary Shares, he or she shall be deemed to have submitted a Mandate Form under paragraph (a) above in respect of his or her participation in the DRIS. Whenever a Nominee Shareholder sells Ordinary Shares on behalf of the Beneficial Shareholder, the Nominee Shareholder agrees to notify the DRIS Manager of the full details of the sale as soon as practicable. Neither the Company nor the DRIS Manager shall be responsible for any loss or damage as a result directly or indirectly of a failure by a Nominee Shareholder to comply with such obligation. If a Shareholder in whose name Ordinary Shares are held on behalf of an Applicant shall at any time cease to hold any Ordinary Shares on behalf of that Applicant, he or she shall be deemed to have submitted a Mandate Form under paragraph (a) above in respect of his or her participation in the DRIS. If notice of termination is served or deemed to have been served, all of the monies held by the Company on the Applicant's behalf shall be delivered to the Applicant as soon as reasonably practicable at the address set out in the Mandate Form, subject to any deductions which the Company may be entitled or bound to make hereunder. Any Mandate Form submitted or deemed to have been submitted under the condition at this paragraph 10 shall not be effective in respect of the next forthcoming Investment Day unless it is received by the DRIS Manager at least 10 Business Days prior to such Investment Day.
11 Cash balances of less than £1 held on behalf of Applicants who have withdrawn from, or otherwise cease to participate in, the DRIS will not be repaid, but will be donated to a recognised registered charity at the discretion of the Company.
regulations or requirement of any regulatory authority or other body which is binding upon the Company or the DRIS Manager.
Nothing in these DRIS Terms and Conditions shall exclude the Company or the DRIS Manager from any liability caused by fraud, wilful default or negligence.
89
The Company's business, financial condition or results could be materially and adversely affected by any of the risks described below. In such cases, the market price of the Ordinary Shares may decline due to any of these risks and Investors may lose all or part of their investment. Additional risks and uncertainties not presently known to the Directors, or which the Directors currently deem immaterial, may also have an adverse effect on the Company. The Directors consider the following to be all the material risks for potential Investors in the Company, but the risks listed do not necessarily comprise all those associated with an investment in the Company and are not set out in any particular order of priority:
Northern Venture Trust Directors (all non-executive)
Northern 2 VCT Directors (all non-executive)
Northern 3 VCT Directors (all non-executive)
Company Secretary and Registered Office
Investment Manager, Receiving Agent and Administrator
Promoter and Receiving Agent
Sponsor
Solicitors to the Companies
Solicitors to the Issuer
Auditors
Simon Constantine Nigel Beer Richard Green Tim Levett David Mayes Hugh Younger (in each case whose business address is Time Central, 32 Gallowgate, Newcastle upon Tyne NE1 4SN)
David Gravells Alastair Conn Simon Devonshire Cecilia McAnulty Frank Neale (in each case whose business address is Time Central, 32 Gallowgate, Newcastle upon Tyne NE1 4SN)
James Ferguson Christopher Fleetwood Tim Levett John Waddell (in each case whose business address is Time Central, 32 Gallowgate, Newcastle upon Tyne NE1 4SN)
Chris Mellor Time Central, 32 Gallowgate Newcastle upon Tyne NE1 4SN
NVM Private Equity Limited Time Central, 32 Gallowgate Newcastle upon Tyne NE1 4SN
Downing LLP Ergon House, Horseferry Road London SW1P 2AL
With effect from 2 October 2017: Magnus House, 3 Lower Thames Street, London EC3R 6HE
Howard Kennedy Corporate Services LLP No. 1 London Bridge London SE1 9BG
Reed Smith LLP Broadgate Tower, 20 Primrose Street London EC2A 2RS
Howard Kennedy LLP No. 1 London Bridge London SE1 9 BG
KPMG Audit Plc Saltire Court, 20 Castle Terrace Edinburgh EH1 2EG
| Bankers | Barclays Bank PLC Barclays House, 5 St Ann's Street, Newcastle upon Tyne NE1 3DX |
|---|---|
| Bank of Scotland Plc Head Office The Mound Edinburgh EH1 1YZ |
|
| Registrar | Equiniti Limited Aspect House, Spencer Road, Lancing BN99 6DA |
| VCT Taxation Advisers | Philip Hare & Associates LLP Suite C – First Floor, 4-6 Staple Inn, London WC1V 7QH |
There is no family relationship between any of the Directors, the Company Secretary or any member of Management.
NVM Private Equity LLP Time Central, 32 Gallowgate Newcastle upon Tyne NE1 4SN
Tel: 01912446000 Email: [email protected] Web: www.nvm.co.uk
NVM Private Equity LLP is authorised and regulated by the Financial Conduct Authority
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