Final Results

Northern 2 VCT PLC
18 April 2002


NORTHERN 2 VCT PLC

18 APRIL 2002

PRELIMINARY RESULTS FOR THE YEAR ENDED 31 JANUARY 2002



HIGHLIGHTS OF THE YEAR:


•       11 new venture capital holdings acquired

•       Net asset value per share down by 3.9% to 90.5p

•       Revenue return per share up by 6.9% to 3.1p

•       Dividend increased by 4.2% to 2.5p per share



The Chairman of Northern 2 VCT PLC, Dr Matt Ridley, included the following
points in his statement to shareholders:



Our company has made further progress in a year characterised by difficult
conditions in the financial markets.  We have completed a £22 million issue of
new ordinary shares, continued the process of building the venture capital
investment portfolio, increased the dividend and suffered a relatively modest
decline in net asset value during a period in which the stock market fell
significantly.  A firm foundation is being laid for future development.



Net asset value



The net asset value (NAV) at 31 January 2002 was 90.5p per share, 3.9% down from
the corresponding figure of 94.2p at 31 January 2001.  Over the same period the
FTSE All-Share index fell by 17.6%, and we have clearly benefited from having a
large part of our assets invested in the listed fixed-interest portfolio rather
than in the equity markets during the year.



Investment portfolio



During the year our managers completed 11 new venture capital investments,
further details of which are given in the Investment Manager's Review in the
annual report, and we are now beginning to draw on the proceeds of last year's
share issue.  Shareholders should bear in mind that the process of building the
portfolio requires persistence and patience, with unlisted investment
propositions typically taking up to three months to bring to completion.  Your
directors continue to be encouraged by the way the portfolio is developing and
by the continuing flow of new opportunities.  We have however reduced the
valuation of several companies where progress to date is behind expectations.



Revenue and dividends



The revenue surplus before tax for the year was £1,524,000, compared with
£932,000 in the preceding year.  This produced a revenue return on the enlarged
share capital of 3.1p per share, slightly up on the previous period's 2.9p.  An
interim dividend of 1.0p per share was paid in December 2001 and the directors
propose a final dividend of 1.5p, making a total of 2.5p which is a 4.2%
increase over the total for the preceding year.



For the year ending 31 January 2003, we expect in the absence of unforeseen
circumstances to pay an interim dividend in December 2002 and a final dividend
in June 2003.  As before, I should emphasise to shareholders that in the short
term the annual dividend is likely to reduce as funds are moved from the
fixed-interest portfolio into venture capital investments which may yield less
income.



Share issues and buy-backs



In January 2001 your company launched new open offers and offers for
subscription, spanning the 2000/01 and 2001/02 tax years, to raise a maximum of
£25.4 million by the issue of new ordinary shares at a price of 105p per share.
The response from existing and new investors was excellent and the offers raised
a total of £22 million before expenses, increasing the company's net assets to
over £40 million and ensuring that we have ample liquid resources for
investment.



As in previous years, there has been very little trading in the company's
shares.  Under the authority granted by shareholders, the company has bought
back 22,000 shares for cancellation during the year at a price of 80p per share.
Court consent was obtained to a reduction in the company's share premium
account, creating a new distributable reserve against which the cancellation of
re-purchased shares can be charged.



In order to maintain the company's ability to act as a market purchaser where
this is in the interests of shareholders generally, a resolution will be
proposed at the annual general meeting to renew the board's authority to
purchase shares.



VCT qualifying status



Your board has retained PricewaterhouseCoopers to monitor and report on the
company's compliance with the qualifying investment requirements laid down in
the VCT legislation.  We have been advised that all the relevant conditions have
been met to date, and we have until 31 January 2004 to meet the qualifying
investment levels in respect of the funds raised through the share offers in
2001.



Corporate governance



We have continued to comply with current published guidance to best practice in
corporate governance.  A statement covering the key matters relevant to the
company is set out in the annual report.



Future prospects



The past year has been a challenging one for investment managers, and for UK
companies generally.  Our company has come through this period relatively
unscathed and we have a strong reserve of liquidity available for suitable
future investment opportunities as they arise.  At the same time there has been
a noticeable fall in the cost of investing, with companies and their advisers
taking a more realistic view on the valuations at which new money is raised.



The outlook for the UK economy appears to be improving, albeit only gradually,
and this should help not only our existing portfolio companies but also the flow
of potential new investments on which our long-term prospects depend.  Your
directors are therefore cautiously optimistic about the future.



The financial statements will show the results set out below:


STATEMENT OF TOTAL RETURN (INCORPORATING THE REVENUE ACCOUNT)

for the year ended 31 January 2002


                                     Year ended 31 January 2002         Year ended 31 January 2001
                                     Revenue      Capital    Total      Revenue      Capital   Total
                                     £000         £000       £000       £000         £000      £000
Gains/(losses) on investments:
Realised on disposals                -            (310)      (310)      -            182       182
Unrealised revaluation
movements                            -            (2,001)    (2,001)    -            97        97
                                     ------       ------     ------     ------       ------    ------
                                     -            (2,311)    (2,311)    -            279       279
Income                               1,944        -          1,944      1,246        -         1,246
Investment management fee            (236)        (707)      (943)      (128)        (382)     (510)
Other expenses                       (184)        -          (184)      (186)        -         (186)
                                     ------       ------     ------     ------       ------    ------
Return on ordinary activities
before tax                           1,524        (3,018)    (1,494)    932          (103)     829
Tax on ordinary activities           (413)        197        (216)      (239)        98        (141)
                                     ------       ------     ------     ------       ------    ------
Return on ordinary activities
after tax                            1,111        (2,821)    (1,710)    693          (5)       688
Dividends                            (1,130)      -          (1,130)    (581)        -         (581)
                                     ------       ------     ------     ------       ------    ------
Transfer to/(from) reserves          (19)         (2,821)    (2,840)    112          (5)       107
                                     ------       ------     ------     ------       ------    ------
Return per share                     3.1p         (7.8)p     (4.7)p     2.9p         -         2.9p
Dividend per share                   2.5p         -          2.5p       2.4p         -         2.4p




BALANCE SHEET

as at 31 January 2002


                                                    31 January 2002                 31 January 2001
                                                               £000                            £000
Fixed assets:
Investments                               33,486                            21,758
                                          -------                           -------
Current assets:
Debtors                                   877                               638
Investments                               1,500                             -
Cash at bank                              5,862                             1,344
                                          -------                           -------
                                          8,239                             1,982
Creditors (amounts falling due
   within one year)                       (864)                             (942)
                                          -------                           -------
Net current assets                        7,375                             1,040
                                          --------                          -------
Net assets                                40,861                            22,798
                                          -------                           -------
Capital and reserves:
Called-up equity share capital            2,258                             1,210
Share premium                             33,761                            21,894
Capital redemption reserve                1                                 -
Special reserve                           7,988                             -
Capital reserve - realised                (1,175)                           (354)
                - unrealised              (2,066)                           (65)
Revenue reserve                           94                                113
                                          -------                           -------
Total equity shareholders' funds          40,861                            22,798
                                          -------                           -------
Net asset value per share                   90.5p                             94.2p


CASH FLOW STATEMENT

for the year ended 31 January 2002


                                                          Year ended               Year ended
                                                          31 January 2002          31 January 2001
                                                          £000        £000         £000        £000
Operating activities:
Net revenue before taxation                                           1,524                    932
(Increase)/decrease in debtors                                        (238)                    11
(Decrease)/increase in creditors                                      (216)                    5
Management fees charged to capital reserve                            (707)                    (382)
Other expenses charged to capital reserve                             (18)                     -
                                                                      -------                  -------
Net cash inflow from operating activities                             345                      566
Taxation:
Corporation tax paid                                                  (216)                    (233)
Financial investment:
Purchase of investments                                   (21,428)                 (9,627)
Sale/repayment of investments                             7,187                    6,990
                                                          -------                  -------
Net cash outflow from financial investment                            (14,241)                 (2,637)
Equity dividends paid                                                 (792)                    (727)
Management of liquid resources:
Purchase of UK certificates of deposit                    (3,000)                  -
Redemption of UK certificates of deposit                  1,500                    -
                                                          -------                  -------
Net cash outflow from management
of liquid resources                                                   (1,500)                  -
                                                                      -------                  -------
Net cash outflow before financing                                     (16,404)                 (3,031)
Financing:
Issue of ordinary shares                                  22,042                   2,266
Share issue proceeds received in advance                  -                        523
Share issue expenses                                      (1,102)                  (67)
Purchase of ordinary shares for cancellation              (18)                     (31)
                                                          -------                  -------
Net cash inflow from financing                                        20,922                   2,691
                                                                      -------                  -------
Increase/(decrease) in cash at bank                                   4,518                    (340)
                                                                      -------                  -------
Analysis of cash balance:
At 1 February 2001                                                    1,344                    1,684
Net cash inflow/(outflow) for the year                                4,518                    (340)
                                                                      -------                  -------
At 31 January 2002                                                    5,862                    1,344
                                                                      -------                  -------


INVESTMENT PORTFOLIO SUMMARY

as at 31 January 2002
                                                        Valuation                % of net assets
                                                        £000                     by valuation
Fifteen largest venture capital investments:
T J Brent                                               1,287                    3.1
DMN Installations                                       1,000                    2.4
Stainton Metal Company                                  1,000                    2.4
T&D Packaging                                           800                      2.0
John Fredericks Plastics                                713                      1.7
Tolwood                                                 673                      1.7
Fitzhardinge*                                           589                      1.5
Alaric Systems                                          584                      1.4
Belcot Tool & Die                                       575                      1.4
TFB Group                                               525                      1.3
West's Engineering Design                               480                      1.2
Chorus Application Systems                              455                      1.1
Barony Universal Products                               402                      1.0
Interlube Systems                                       375                      0.9
BioFocus*                                               355                      0.9
                                                        -------                  ------
                                                        9,813                    24.0
Other venture capital investments                       4,015                    9.8
                                                        -------                  ------
Total venture capital investments                       13,828                   33.8
Listed fixed-interest investments                       19,658                   48.1
                                                        -------                  ------
Total investments                                       33,486                   81.9
Net current assets                                      7,375                    18.1
                                                        -------                  ------
Net assets                                              40,861                   100.0
                                                        -------                  ------
*Listed on Alternative Investment Market



The above summary of results for the year ended 31 January 2002 does not
constitute statutory financial statements within the meaning of S240 of the
Companies Act 1985 and has not been delivered to the Registrar of Companies.
Statutory financial statements will be filed with the Registrar of Companies in
due course;  the auditors' report on those financial statements under S235 of
the Companies Act 1985 is unqualified and does not contain a statement under
S237(2) or (3) of the Companies Act 1985.

The proposed final dividend for the year ended 31 January 2002 will, if approved
by shareholders, be paid on 6 June 2002 to shareholders on the register at the
close of business on 10 May 2002.

A copy of the full annual report and financial statements for the year ended 31
January 2002 is expected to be posted to shareholders on 25 April 2002 and will
be available to the public at the registered office of the company at
Northumberland House, Princess Square, Newcastle upon Tyne NE1 8ER.

ENDS

For further information contact:
Christopher Mellor                                     0191 244 6000
(Northern 2 VCT PLC)
Richard Evans                                          0161 839 4222
(Brewin Dolphin Securities Limited)



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