Inside. The big event. Our people. Our portfolio. Our funds. news//views Issue

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1 news//views Issue 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. Building businesses. 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 Shareholder meeting dates

2 Our approach. Shared ambitions Strong relationships are at the core of our business with our investors, our advisors and the people we invest in. 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. Focused Independent Shared ambitions Open Experienced

3 The big event: CloserStill CloserStill, the business-to-business exhibitions, events and media business, was formed with NVM s backing in 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. 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 Hodson of NVM has worked with Andy and his team since NVM first invested in 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. It s been a brilliant journey and huge fun so far with our friends at NVM and with a team of people here at CloserStill that can move mountains. Andy Center, CEO of CloserStill David Rolfe 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 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. NVM has a strong investment team that is well-respected in the market and I am really looking forward to working alongside them. David Rolfe, NVM

4 Lineup Systems Lineup Systems was a spin-out from Metro International S.A. (MISA) in 2010 and has achieved revenue growth of 267% since becoming independent. 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 Arrowsmith led 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. The NVM team really understands how we want to grow the business. Michael Mendoza, CEO of Lineup Volumatic 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 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 Arrowsmith of 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. The buy-out will allow us to take advantage of significant growth opportunities. Colin Amos, Managing Director of Volumatic

5 Wear Inns 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. 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 Mauro Biagioni manages 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 Kerridge Kerridge Commercial Systems (KCS) has acquired TIS Software in a strategic move to create a greater global force within the industry. 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 Austin led 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. NVM have delivered exactly what they promised the first time I met them. Ian Bendelow, CEO of Kerridge Commercial Systems

6 TradingVCTshares 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 in Northern Venture Trust in 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, says Rupert 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. Simplythebest 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 The magazine s annual awards cover a range of investment company categories, the key criteria being consistency and total return. 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.

7 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 Share price total return sector average company sector average 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 Share price total return sector average company sector average 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 sector average Share price total return company sector average Northern Investors Company PLC Launch date 1984 (listed since 1990) Share price p 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 sector average Share price total return company sector average Share price is mid-market price as at 29 June 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 Private Equity Northern Investors Company PLC

8 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 T E wendy.arkle@nvm.co.uk Newcastle Office: Northumberland House Princess Square Newcastle upon Tyne NE1 8ER T F E newcastle@nvm.co.uk Commended Best Website in AIC s Best Information to Shareholders Award Reading Office: Forbury Court 12 Forbury Road Reading RG1 1SB T F E reading@nvm.co.uk Manchester Office: 3111 Beetham Tower 301 Deansgate Manchester M3 4LQ T E manchester@nvm.co.uk