Interim Results

Northern 2 VCT PLC
10 October 2003


10 OCTOBER 2003

NORTHERN 2 VCT PLC

UNAUDITED INTERIM RESULTS
FOR THE SIX MONTHS ENDED 31 JULY 2003

Northern 2 VCT PLC is a Venture Capital Trust (VCT) managed by Northern Venture
Managers.  The trust was launched in 1999 and has to date raised a total of £46
million from private investors.  The trust invests mainly in unquoted venture
capital situations and aims to provide high long-term returns to shareholders
through a combination of dividend yield and capital growth.

Financial highlights (comparative figures as at 31 July 2002 in brackets):
     
•    Net assets                             £42,925,000           (£40,169,000)
•    Net asset value per share                    95.5p                 (89.1p)
•    Investment income                       £1,067,000              (£995,000)
•    Net revenue before tax                    £813,000              (£747,000)
•    Revenue return per share                      1.3p                  (1.2p)
•    Interim dividend per share                    1.0p                  (1.0p)



For further information, please contact:


Alastair Conn, Managing Director

Northern Venture Managers Limited                                     0191 244 6000

Website:  www.nvm.co.uk
Lucy Copeman/Marlene Scott

Polhill Communications                                                020 7655 0540





CHAIRMAN'S STATEMENT



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





The half year to 31 July 2003 has been a period of consolidation for our
company.  The rate of new investment slackened for several months due to a lack
of new venture capital deals in the marketplace, although there has been an
upturn in activity since the end of July.  The sharp falls in the stock market
which occurred in the corresponding period last year have been partly reversed,
but our low exposure to quoted equities has again insulated us from the market's
volatility.  The venture capital portfolio is generally making satisfactory
progress, but has required especially close attention from our managers during a
period when underlying confidence in the UK economy has remained fragile.



Net asset value

The net asset value per share at 31 July 2003 was 95.5p, up by 7.2% over the
past 12 months and by 1.1% over the six months since 31 January 2003.  The
following table shows the movements in the company's net asset value and share
price compared with the FTSE All-Share and Small Cap indices.


                                  Movement to 31 July 2003 over:         Past 6 months        Past 12 months

Northern 2 VCT net asset value                                                   +1.1%                 +7.2%
Northern 2 VCT share price                                                   No change                 +6.7%
FTSE All-Share index                                                            +18.8%                 -0.2%
FTSE Small Cap index (excluding investment trusts)                              +32.4%                +10.7%



Investments

Four new investments have been completed since 31 January 2003:

•                Crabtree of Gateshead (£641,000) - manufacturer of metal
printing machinery, Gateshead (March 2003)

•                Survey Inspection Systems (£195,000) - provider of ground and
airborne surveying services, Stockton-on-Tees (August 2003)

•                GSM-Central (£128,000) - provision of mobile telephone call
routing services, Oxford (September 2003)

•                John Laing Partnership (£500,000) - management buy-out of the
social housing division of John Laing plc, Elstree (September 2003)

The existing portfolio has made steady progress, with no major valuation
movements during the half year.  Two failed investments, SMP Multi-Shot and CLM
Building Services, were written off having been fully provided against in
earlier periods.  There were trade sales of T&D Packaging, at a modest surplus
included in these accounts but with the likelihood of a substantial additional
deferred payment, and Chorus Application Software, which was acquired in a
share-for-share deal by the AiM-listed Computer Software Group.  The net
realised loss on disposal of investments in the period was £406,000.



Our quoted venture capital investments achieved little increase in value during
the half year, but since 31 July there have been significant share price
movements for Alizyme (up 222%), BioFocus (up 35%),  PM Group (up 38%) and
Computer Software Group (up 125%).  The net uplift in value of the quoted
venture capital portfolio between 31 July and 9 October was over £1.3 million
(equivalent to approximately 2.9p per Northern 2 VCT share).



Revenue and dividend

The revenue return per share for the half year was 1.3p, compared with 1.2p in
the corresponding period to 31 July 2002.  Total investment income was up by
7.2% to £1,067,000, despite a further fall in interest rates during the period.
The directors have declared an unchanged interim dividend of 1.0p per share,
which will be paid on 11 December 2003 to shareholders on the register on 7
November 2003.



Share price

There has been very little trading in the company's shares during the past six
months and the mid-market share price has remained at 80p throughout the period.
  A total of 148,900 shares were bought in for cancellation at an average price
of 72p.



VCT qualifying status

Your board monitors closely the company's continuing observance of the Inland
Revenue's VCT rules, and receives six-monthly compliance reports from
PricewaterhouseCoopers.  Although the rate of new investment during the current
year has been slower than we would wish, the level of activity has risen during
the past three months.  The company's overall qualifying investment position is
carefully managed and the board is satisfied that the company's VCT qualifying
status has been and will be maintained.



Northern Venture Managers

Edinburgh Fund Managers Group plc, the parent company of Northern Venture
Managers, has recently announced an agreed takeover by Aberdeen Asset Management
PLC which is expected to become unconditional by the end of October 2003.  Your
board is following developments closely and will seek to ensure that there is no
adverse change to the management of Northern 2 VCT.



Prospects

Our company has substantial liquid funds available for investment and there are
signs that the flow of new deals is beginning to improve.  The venture capital
portfolio includes some very promising holdings, and it is to be hoped that the
recent signs of recovery in the UK economy and the financial markets will prove
to be sustainable.  Given reasonable conditions we expect to see an increasing
number of disposal opportunities as the portfolio continues to mature.







The unaudited interim financial statements for the six months ended 31 July 2003
are set out below.



STATEMENT OF TOTAL RETURN (INCORPORATING THE REVENUE ACCOUNT)
(unaudited) for the six months ended 31 July 2003


                                               Six months ended 31 July 2003       Six months ended 31 July 2002
                                             Revenue     Capital       Total     Revenue     Capital       Total
                                                £000        £000        £000        £000        £000        £000
Gains/(losses) on investments:
  Realised on disposal                             -        (406)       (406)          -        (313)       (313)
  Unrealised revaluation movements                 -         982         982           -        (114)       (114)
                                              ------      ------      ------      ------      ------      ------
                                                   -         576         576           -        (427)       (427)
Income                                         1,067           -       1,067         995           -         995
Investment management fee                       (156)       (470)       (626)       (150)       (450)       (600)
Other expenses                                   (98)          -         (98)        (98)          -         (98)
                                              ------      ------      ------      ------      ------      ------
Return on ordinary activities
  before tax                                     813         106         919         747        (877)       (130)
Tax on ordinary activities                      (208)        148         (60)       (188)        117         (71)
                                              ------      ------      ------      ------      ------      ------
Return on ordinary activities
  after tax                                      605         254         859         559        (760)       (201)
Interim dividend                                (449)          -        (449)       (451)          -        (451)
                                              ------      ------      ------      ------      ------      ------
Transfer to/(from) reserves                      156         254         410         108        (760)       (652)
                                              ------      ------      ------      ------      ------      ------
Return per share                                 1.3p        0.6p        1.9p        1.2p      (1.7)p      (0.5)p
Interim dividend per share                       1.0p          -         1.0p        1.0p          -         1.0p




                                                                                      Year ended 31 January 2003
                                                                                 Revenue     Capital       Total
                                                                                    £000        £000        £000
Gains/(losses) on investments:
  Realised on disposal                                                                 -        (494)       (494)
  Unrealised revaluation movements                                                     -       2,978       2,978
                                                                                  ------      ------      ------
                                                                                       -       2,484       2,484
Income                                                                             1,983           -       1,983
Investment management fee                                                           (297)       (893)     (1,190)
Other expenses                                                                      (193)          -        (193)
                                                                                   ------     ------      ------
Return on ordinary activities
  before tax                                                                       1,493       1,591       3,084
Tax on ordinary activities                                                          (428)        289        (139)
                                                                                  ------      ------      ------
Return on ordinary activities
  after tax                                                                        1,065       1,880       2,945
Dividend                                                                          (1,128)          -      (1,128)
                                                                                  ------      ------      ------
Transfer to/(from) reserves                                                          (63)      1,880       1,817
                                                                                  ------      ------      ------
Return per share                                                                     2.3p        4.2p        6.5p
Dividend per share                                                                   2.5p         -          2.5p



BALANCE SHEET
(unaudited) as at 31 July 2003


                                                       31 July 2003              31 July 2002           31 January 2003
                                                               £000                      £000                      £000
Fixed asset investments:
Venture capital investments
  Unlisted                                                   21,641                    13,482                    21,656
  Listed                                                      1,736                     1,579                     1,205
                                                            -------                   -------                   -------
                                                             23,377                    15,061                    22,861
Listed fixed-interest investments                            15,830                    20,225                    17,285
                                                            -------                   -------                   -------
Total fixed asset investments                                39,207                    35,286                    40,146
Net current assets                                            3,718                     4,883                     2,476
                                                            -------                   -------                   -------
Net assets                                                   42,925                    40,169                    42,622
                                                            -------                   -------                   -------

Capital and reserves
Called-up equity share capital                                2,247                     2,255                     2,254
Share premium                                                33,761                    33,761                    33,761
Capital redemption reserve                                       12                         4                         5
Special reserve                                               7,825                     7,948                     7,932
Capital reserve:
  Realised                                                   (3,001)                   (1,821)                   (2,273)
  Unrealised                                                  1,894                    (2,180)                      912
Revenue reserve                                                 187                       202                        31
                                                            -------                   -------                   -------
Total equity shareholders' funds                             42,925                    40,169                    42,622
                                                            -------                   -------                   -------
Net asset value per share                                      95.5p                     89.1p                     94.5p



CASH FLOW STATEMENT
(unaudited) for the six months ended 31 July 2003


                                                   Six months ended          Six months ended                Year ended
                                                       31 July 2003              31 July 2002           31 January 2003
                                                  £000         £000         £000         £000         £000         £000
Cash flow statement
Net cash inflow from
  operating activities                                          306                       338                       738
Taxation:
Corporation tax paid                                              -                         -                      (125)
Financial investment:
Purchase of investments                         (4,218)                   (7,734)                  (14,365)
Sale/repayment of investments                    5,751                     5,493                    10,189
                                                ------                    ------                    ------
Net cash inflow/(outflow) from
  financial investment                                        1,533                    (2,241)                   (4,176)
Equity dividends paid                                          (675)                     (678)                   (1,129)
                                                             ------                    ------                    ------
Net cash inflow/(outflow) before use
  of liquid resources and financing                           1,164                    (2,581)                   (4,692)
Net cash inflow/(outflow) from
  management of liquid resources                             (1,300)                    1,500                     1,500
Financing:
Purchase of ordinary shares
  for cancellation                                             (107)                      (40)                      (56)
                                                             ------                    ------                    ------
Decrease in cash at bank                                       (243)                   (1,121)                   (3,248)
                                                             ------                    ------                    ------
Reconciliation of net revenue before
taxation to net cash flow from
operating activities
Net revenue from ordinary activities
  before tax                                                    813                       747                     1,493
(Increase)/decrease in debtors                                   (9)                        6                       146
Increase/(decrease) in creditors                                (28)                       35                        (8)
Management fees charged to capital                             (470)                     (450)                     (893)

Net cash inflow from                                         ------                    ------                    ------
  operating activities                                          306                       338                       738
                                                             ------                    ------                    ------
Reconciliation of movement
in net funds
                                                    1 February 2003                Cash flows              31 July 2003
                                                               £000                      £000                      £000
Cash at bank                                                  2,614                      (243)                    2,371
Short-term investments                                            -                     1,300                     1,300
                                                             ------                    ------                    ------
Net funds                                                     2,614                     1,057                     3,671
                                                             ------                    ------                    ------


INVESTMENT PORTFOLIO SUMMARY
as at 31 July 2003


                                                                     Valuation            % of net assets
                                                                          £000               by valuation
Fifteen largest venture capital investments:
DMN Installations                                                        3,737                        8.7
T J Brent                                                                1,981                        4.6
John Fredericks Plastics                                                 1,709                        4.0
TFB Group                                                                1,634                        3.8
Stainton Metal Company                                                   1,595                        3.7
Crantock Bakery                                                          1,000                        2.3
Longhirst Group                                                            900                        2.1
Horncastle Industries                                                      813                        1.9
Keith Prowse                                                               790                        1.8
Arrow Industrial Group                                                     735                        1.7
RBF Industries                                                             650                        1.5
Crabtree of Gateshead                                                      641                        1.5
Tolwood                                                                    504                        1.2
Alizyme*                                                                   475                        1.1
Fitzhardinge**                                                             467                        1.1
                                                                       -------                     ------
                                                                        17,631                       41.0
Other venture capital investments                                        5,746                       13.4
                                                                       -------                     ------
Total venture capital investments                                       23,377                       54.4
Listed fixed-interest investments                                       15,830                       36.9
                                                                       -------                     ------
Total fixed asset investments                                           39,207                       91.3
Net current assets                                                       3,718                        8.7
                                                                       -------                     ------
Net assets                                                              42,925                      100.0
                                                                       -------                     ------
*     Listed on the London Stock Exchange
**    Traded on the Alternative Investment Market





The above summary of results for the six months ended 31 July 2003 does not
constitute statutory financial statements within the meaning of Section 240 of
the Companies Act 1985 and has not been delivered to the Registrar of Companies.
  The figures for the year ended 31 January 2003 have been extracted from the
financial statements for that year, which have been delivered to the Registrar
of Companies;  the independent auditors' report on those financial statements
under Section 235 of the Companies Act 1985 was unqualified.

The proposed interim dividend for the year ending 31 January 2004 will be paid
on 11 December 2003 to shareholders on the register at the close of business on
7 November 2003.

A copy of the interim report is expected to be posted to shareholders on 24
October 2003 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


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