news//views
Issue 02 2012
B
u
il
d
in
g
b
u
si
n
e
ss
e
s
.
Inside
The big event
Partial sale of
CloserStill
generates excellent returns
Our people
David Rolfe
joins the
NVM investment team
Having worked in
the South for 15 years
I genuinely believe in
the market opportunity
for a regionally
-
based
brand such as NVM.
Our portfolio
Lineup Systems
will use
£3m of funding to shape their
advertising and CRM systems
Volumatic
receives £6m to develop
its intelligent cash handling products
Wear Inns
uses further funding
to acquire a portfolio of pubs
Kerridge Commercial Systems
acquires TIS Software to create
a greater global force
Our funds
Trading VCT shares
Northern Venture Trust
wins Best VCT award
Fund performance
Shared ambitions
O
u
r
ap
p
ro
ac
h
.
Shared skills, shared ambitions and shared visions are what drive a business and give it an energy that others may lack. We look for entrepreneurs who not only have great ideas, talent and management ability, but also have an open mind and willing attitude. Our job is to bring a fresh perspective, encourage new ideas and be involved. We help define strategy and add resources to bring out the best in a team so that the business achieves its goals.
We aim to bring
success to our partners,
returns to our investors
– and to embrace
the challenges
along the way
.
F
oc
u
se
d
S
h
ar
ed
am
b
it
io
n
s
In
d
ep
en
d
en
t
E
xp
er
ie
n
ce
d
O
p
en
Strong relationships are at the core of our business – with
our investors, our advisors and the people we invest in.
Four years down the line and CloserStill now owns ten major exhibitions all of which are growing strongly in terms of the number of visitors, exhibitors and floor space. Over half of the events are now turning over between £1m and £2m with the business expected to generate operating profit in excess of £3m this year. In May 2012 the mid-market private equity investor Phoenix Equity Partners acquired the bulk of NVM’s stake in a transaction which valued CloserStill at around £25m. NVM’s funds recorded an excellent return of 3.2 times their original investment, equivalent to an internal rate of return of 38% per annum.
Peter Hodsonof NVM has worked with Andy and his team since NVM first invested in 2005.“We have really enjoyed working with the CloserStill team during the last six years; so much so, we were keen to re-invest and be part of the journey in the next phase of the company’s growth.”
CloserStill, the business-to-business exhibitions, events and media
business, was formed with NVM’s backing in 2008. Its team of industry
experts, headed by Andy Center, had a clear business strategy from
the beginning to acquire or create mid-sized exhibitions and events,
predominantly in the healthcare and technology markets.
The big event: CloserStill
David joins NVM from his role as PwC Director in Corporate Finance responsible for leading deal activity in the South East. David has 15 years’ experience with PwC, spending the last 12 years in a lead advisory role in Corporate Finance; advising both local private businesses and private equity houses on mid-market corporate transactions. In 2011 David was voted Thames Valley and Solent Dealmaker of the Year.
We are delighted to announce the appointment of David Rolfe
to our investment team. He will be responsible for generating new
investment opportunities for NVM across the South of England.
David Rolfe
NVM has a strong
investment team that
is well-respected in
the market and I
am really looking
forwar
d
to working
alongside them.
David Rolfe,
NVM
It’s been a brilliant
journey and huge fun
so far with our
f
riends
at NVM and with a
team of people here
at CloserSti
ll
that can
move mountains.
Andy Center,
CEO of CloserStill
The company delivers collaborative advertising booking, management, analytics and customer relationship management (CRM) tools specifically for multi-channel media companies. The software has been created and implemented by a team drawn from a variety of international advertising backgrounds, representative of the print, digital and broadcast channels that are now supported.
James Arrowsmithled the investment for NVM.“We recognised that the management team had anticipated the new media landscape, developing cutting-edge products to meet the needs of an ever evolving market.”Over 2,000
users, across 26 countries at 96 of the world’s leading publishers, currently use Lineup’s software products.
NVM invested £3m of development capital in Lineup to support the team’s strategy to expand its product sales globally. At the time of the investment Ken Briddon was appointed as chairman of Lineup. He has thirty years’ experience in the software and IT industry and is currently chairman of and investor in NVM-backed Kerridge Commercial Systems and Lanner Group – so has a long-standing relationship with NVM.
Lineup Systems was a spin-out from Metro International S.A. (MISA) in 2010
and has achieved revenue growth of 267% since becoming independent.
Lineup Systems
The NVM team really
understands how we want
to grow the business.
Michael Mendoza,
CEO of Lineup
Volumatic designs, manufactures and services a wide array of products that help companies to count cash, detect forged notes and store cash securely. Cash transactions remain the dominant payment method across the UK and Europe. Its products are used globally to count and protect over $1 billion per day.
James Arrowsmithof NVM worked with the company to complete their management buy-out.“Volumatic is a highly innovative business where the management team have a deep understanding of their market and customer requirements.”
New and existing product development is a key driver of Volumatic’s future growth. NVM’s investment of £6m will help the team to develop their international footprint and be at the forefront of their market.
Volumatic was established in 1972 to pioneer retail security products. 40 years
later the business is a leading force in its market; with a widely recognised
brand and long-established, blue-chip client base covering some of the
best-known UK retailers, supermarket chains, leisure operators and banks.
Volumatic
The buy-out will allow
us to take advantage
of significant growth
opportunities.
Colin Amos,
Both businesses design Enterprise Resource Planning (ERP) software solutions specifically for distributive trades, so complement each other perfectly. After completing the management buy-out in 2010 with NVM’s backing, the TIS acquisition was the next logical step in Kerridge’s strategic development.
Clive Austinled the original investment for NVM and sits on the board of KCS. “The company has bedded-in the original deal extremely well and created a strong platform which can handle acquisitions. The purchase of TIS will create a leading player within the international ERP solutions market.”
Kerridge Commercial Systems (KCS) has acquired TIS Software in
a strategic move to create a greater global force within the industry.
Kerridge
In 2006 NVM backed long-standing pub entrepreneurs, John Weir and
John Sands, to set up Wear Inns – a company focused on acquiring and
managing a chain of community pubs across the North East and Yorkshire.
Wear Inns
NVM originally invested £4.2m to help the team to successfully build up an estate of 15 pubs from well-known chains such as
Mitchells and Butler, Punch, TCG Inns and Barracuda Pubs and Bars. NVM recently joined forces with the Business Growth Fund to pump a further £10m of acquisition funding into the business. The Wear team has used the funding to acquire a further nine pubs from TCG, bringing their total portfolio to 24 premises. More acquisitions are planned in early 2013.
Mauro Biagionimanages Wear Inns for NVM and believes that “the management team have stuck to their business strategy since 2006, using their extensive experience of the industry to create an estate of unique community pubs that meet the desires of the regulars, as well as passing visitors.”
Since starting the
business six years ago,
we have worked with
NVM’s support to build
up an estate of great
community pubs offering
good value and good
quality across the
North of England.
John Weir,
Managing Director of Wear Inns
NVM have delivered
exactly what they
promised the first
time I met them.
Ian Bendelow,
The judges noted that Northern Venture Trust had “yet another great year… its consistent returns rank it well ahead
of its rivals over the medium term”.
Tim Levett, chairman of NVM said:
“We are delighted that the efforts of
the board and managers have been recognised in this very prominent way – the current economic climate presents many challenges to VCT managers but we are confident that NVM’s tried and tested investment process will continue
to deliver good returns to investors.”
Northern Venture Trust, which was one of the first VCTs ever launched
back in 1995, has regained the
What Investment
Best Venture Capital
Trust award which it last won in 2010. The magazine’s annual awards
cover a range of investment company categories, the key criteria being
consistency and total return.
Trading VCT shares
The market for buying and selling Venture Capital Trust (VCT) shares on
the market just isn’t active enough.
Tim Levett, chairman
of NVM, firmly
believes that investors can benefit from the excellent dividend yields and
tax-free returns that come with this type of share trading.
Imagine an investor bought £10,000 of shares inNorthern Venture Trustin July 2009 at the mid-market price of 56.5p per share. Over the past three years, the dividend income has been £3,717 – without any tax liability. And in July 2012, the shares are worth £12,567 at mid-market price.
How to buy VCT shares
To deal in VCT shares you can go through a stockbroker (online or via the telephone) or your bank’s dealing service to arrange for the trade to be executed. Most transactions settle on a T+3 day basis – i.e. three days after the trade has been executed (however most brokers require cleared funds on deposit before they will trade for you).
How to research VCT
fund performance
“You have to do your own research,”
saysRupert Dearden, who’s in Equity Sales at VCT market-maker Singer Capital Markets. “But there are plenty of generalist VCTs with a strong track record that are clearly not seeking out excessively risky investments – they back cash-generative businesses with growth prospects.”
VCT fund manager websites contain reports and accounts which can provide details of investments, share price and dividends paid. Then there are investor websites that review and rank the performance of VCTs – such as Trustnet, Morningstar and Citywire. The AIC website offers a range of performance data within its statistics section, as well as the latest accounts and often a factsheet for each fund. Also, the Motley Fool website has a section devoted to VCTs and a forum for investors to share their investment knowledge and opinions.
How to sell VCT shares
It’s relatively simple to sell. Approach your broker or bank and get the market makers to find a price. Distressed selling is obviously not ideal – in an illiquid market, being able to hold on for buyers at the right price is the best way of securing a decent exit. And with wide spreads, sellers are likely to take a discount into account. But if you time it right, can be patient and put the right limit on the price, exiting a VCT holding is quite straightforward.
Fund performance
Northern Venture Trust PLC
Launch date 1995
Share price 71.00p
Latest NAV per share 89.4p (31 March 2012) Number of shares in issue 71,658,647 Market capitalisation £50.9m
Dividend yield 8.5%
1 year 3 years 5 years 10 years
NAV total return– company 108.4 152.6 165.4 231.7 – sector average 102.7 117.8 110.2 170.7 Share price total return
– company 103.0 171.9 171.8 268.0 – sector average 106.5 138.9 116.2 188.9
Northern 2 VCT PLC
Launch date 1999
Share price 65.50p
Latest NAV per share 80.3p (31 March 2012) Number of shares in issue 69,950,091 Market capitalisation £45.8m
Dividend yield 8.4%
1 year 3 years 5 years 10 years
NAV total return– company 105.4 129.1 128.8 165.2 – sector average 102.7 117.8 110.2 170.7 Share price total return
– company 103.8 193.7 137.5 191.3 – sector average 106.5 138.9 116.2 188.9
Northern 3 VCT PLC
Launch date 2001
Share price 78.25p
Latest NAV per share 96.7p (31 March 2012) Number of shares in issue 49,145,591 Market capitalisation £38.5m
Dividend yield 6.4%
1 year 3 years 5 years 10 years
NAV total return– company 110.7 133.2 125.6 149.4 – sector average 102.7 117.8 110.2 170.7 Share price total return
– company 112.3 197.7 126.8 134.6 – sector average 106.5 138.9 116.2 188.9
Northern Investors Company PLC
Launch date 1984 (listed since 1990)
Share price 238.50p
Latest NAV per share 325.5p (31 March 2012) Number of shares in issue 15,128,440 Market capitalisation £36.1m
Dividend yield 3.8%
1 year 3 years 5 years 10 years
NAV total return– company 110.5 146.0 134.2 183.4 – sector average 97.8 124.7 78.4 127.4 Share price total return
– company 104.1 185.6 135.2 171.3 – sector average 91.6 162.0 57.8 116.6
‘Share price’ is mid-market price as at 29 June 2012. ‘Dividend yield’ is based on dividends paid and proposed in respect of latest full financial year, expressed as a percentage of share price. Total return statistics are for periods to 29 June 2012, return shown is on £100 invested, based on mid to mid share price/latest published NAV, assuming net income re-invested (source: Morningstar). In accordance with AIC methodology, figures shown over three years are based on NAVs excluding current period revenue; and figures shown for three years and under are based on NAVs including current period revenue. ‘Sector average’ refers to the following sectors:
VCT Generalist Northern Venture Trust PLC Northern 2 VCT PLC Northern 3 VCT PLC
Shareholder
meeting dates:
Northern Venture Trust PLC, AGM
Friday 14 December 2012, 11.30am Edinburgh
VCT Shareholder Seminar
Friday 18 January 2013, 11.00am London
If you have a shareholder query, please contact:
Wendy Arkle
T0191 244 6024
Ewendy.arkle@nvm.co.uk
Newcastle Office:
Northumberland House Princess Square Newcastle upon Tyne NE1 8ER
T0191 244 6000
F0191 244 6001
Enewcastle@nvm.co.uk
Reading Office:
Forbury Court 12 Forbury Road
Reading RG11SB
T0118 951 7000
F0118 951 7001
Ereading@nvm.co.uk
Manchester Office:
3111 Beetham Tower 301 Deansgate Manchester M3 4LQ
T0845 272 7023
Emanchester@nvm.co.uk
w
w
w
.n
vm
.c
o.
u
k
Commended
Best Website in AIC’s Best Information to Shareholders Award