Annual Financial Report

24 NOVEMBER 2021

NORTHERN VENTURE TRUST PLC

ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 30 SEPTEMBER 2021

Northern Venture Trust PLC is a Venture Capital Trust (VCT) whose investment adviser is Mercia Fund Management. The trust was one of the first VCTs launched on the London Stock Exchange in 1995. It invests mainly in UK unquoted companies and aims to provide high long-term tax-free returns to shareholders through a combination of dividend yield and capital growth.

Financial highlights (comparative figures as at 30 September 2020):

	2021	2020
Net assets	£119.3m	£112.8m
Net asset value per share	74.1p	70.7p
Return per share after tax:
Revenue	0.2p	0.3p
Capital	13.7p	7.0p
Total	13.9p	7.3p
Dividend per share for the year:
Interim dividend	2.0p	1.5p
Second interim (special) dividend	6.0p	-
Proposed final dividend	2.0p	2.5p
Total	10.0p	4.0p
Cumulative return to shareholders since launch:
Net asset value per share	74.1p	70.7p
Dividends paid per share*	182.5p	172.0p
Net asset value plus dividends paid per share	256.6p	242.7p
Mid-market share price at end of year	70.25p	56.5p
Tax-free dividend yield (based on the net asset value per share at the start of the year) Excluding special dividend Including special dividend	5.7% 14.1%	5.8% N/A

*Excluding proposed final dividend payable on 14 January 2022

For further information, please contact:

NVM Private Equity LLP

Simon John / James Bryce                0191 244 6000

Mercia Asset Management PLC

James Sly / Graham Venables                        0330 223 1430

HIGHLIGHTS

• Return per share for the year of 13.9 pence per share, representing 19.7% of opening NAV

• NAV per share at year end of 74.1 pence, after paying dividends of 10.5 pence, compares with 70.7 pence at 2020 year end

• 6.0 pence per share special dividend paid, with total dividends declared or proposed of 10.0 pence per share

• 8 successful exits, delivering 5.0 pence per share realised return

• Four new investments in innovative earlier stage companies added to the portfolio, two of which were co-investments with Mercia’s other funds plus 15 follow-on investments

CHAIRMAN’S STATEMENT

Overview

I am pleased to report a year of strong growth, driven by profitable realisations and robust performance across the portfolio as a whole. September 2021 marked 18 months since the start of the first COVID-19 lockdown and the impacts of the pandemic are still being experienced across the global economy and financial markets. While in the UK the widespread rollout of vaccines has permitted a degree of returning to normality, we expect the longer-lasting structural changes to behaviours such as working from home will continue to provide challenges and opportunities to our portfolio companies for the foreseeable future.

Over the past year our investment adviser has continued to provide close support where required and I am pleased to report that the response from our investee management teams has remained positive. The ongoing effect of the pandemic on individual investments has varied greatly and the company continues to benefit from holding a diversified portfolio.

The company finished the year in a strong position and was able to pay shareholders a special dividend in July following several healthy investment realisations. Our investment in Oddbox was partially realised in the year at a return of 10.9 times original investment, providing an excellent return to the company whilst retaining a stake in this fast growing business. The total portfolio disposal proceeds for the year of £30.6 million represented a gain of £22 million over the cost of investments sold.

Liquidity remains the lifeblood of early stage investment funds and in July we announced our intention to raise further funds in the current (2021/22) tax year to enable us to continue to invest over the subsequent three years. Your company is well positioned to continue to support and promote its growing portfolio of entrepreneurial businesses.

Results and dividend

In the year ended 30 September 2021 the company achieved a return on ordinary activities of £22,086,000 (2020: £10,940,000) or 13.9 pence per share (2020: 7.3 pence), representing a total return of 19.7% on the opening net asset value (NAV) per share. The excellent result for the year has generated a performance fee to our investment adviser that has been capped at £2,538,000 (2020: £284,000). The NAV per share at 30 September 2021, after deducting dividends paid during the year of 10.5 pence, was 74.1 pence compared with 70.7 pence at 30 September 2020.

The cumulative total return to shareholders increased to 256.6 pence (2020: 242.7 pence) per share, which marks the sixteenth consecutive year of growth. Investment income was similar to the prior year at £1.4 million (2020: £1.5 million), reflecting the move away from income-yielding investments as the portfolio mix continued to pivot towards earlier stage ventures, following the 2015 change to the definition of VCT qualifying assets.

The profile of the unquoted portfolio is continuing to evolve as we acquire investments in earlier stage innovative UK companies with high growth potential. As previously indicated, the profile of the new investments will lead to greater volatility in the timing and quantum of returns and continuing to pay regular dividends whilst increasing the NAV per share in the medium term remains a priority for your board. In 2018 we revised our dividend policy in the light of the new rules for investment introduced in 2015 and 2017, which we expected to result in more volatile returns. We introduced a target dividend yield of 5% of opening NAV, which has been exceeded in each of the three years since.

As a result of the several strong realisations your directors declared and paid a special dividend of 6.0 pence per share in August 2021. Pleasingly, many shareholders took the opportunity to invest these dividends with the company via its dividend investment programme. Details of how to join the scheme for future dividend payments can be found on the company’s website (www.mercia.co.uk/vcts/nvt).

After careful consideration, the board has proposed a final dividend of 2.0 pence per share, bringing the total dividend for the year to 10.0 pence, which represents a tax-free yield of 14.1% on the opening net asset value per share of 70.7 pence. The final dividend, if approved, will be paid on 14 January 2022 to shareholders on the register on 17 December 2021.

Investment Portfolio

After the challenges faced due to COVID-19 in 2020, investment levels have recovered this year and exceeded pre-pandemic levels, with £3.9 million of capital provided to four new venture capital investments and £7.8 million of follow on capital invested into the existing portfolio. We also made strong progress in realising the company’s mature portfolio acquired under previous VCT rules with the remaining such investments representing 37% by value of the total venture capital portfolio.

The total of £11.7 million invested during the year (2020: £8.8 million) was pleasing to see after 2020, where the impact of COVID necessitated a great deal of time spent by our investment adviser on supporting the existing portfolio.

While COVID-19 continues to provide challenges to some of our portfolio companies, the changes it has driven in consumer habits and working practices has provided opportunities for others. Technology and software sub-sectors have broadly remained resilient throughout the pandemic and investments in these areas represent a little over 30% by cost of the portfolio.

The company benefits from holding a diversified portfolio, which now includes several new investments in life sciences and technology businesses. Two deals in the year were sourced and funded alongside other funds managed by Mercia Asset Management, illustrating the benefit of being part of the wider Mercia network. One of the primary considerations when your directors approved the change in investment adviser was the opportunity to co-source deals and invest alongside other Mercia funds and it is pleasing to see the early signs of this strategy being borne out.

It was a busy year for realisation activity, with several notable transactions. The highlights in the first half of the year were the sale of Agilitas IT Holdings, generating a return of 8.1 times the original cost of the investment and the sale of It’s All Good which registered a return of 3.3 times. In April 2021 Entertainment Magpie Group was admitted to trading on AIM under its new name musicMagpie plc. Our original 2015 investment of £1.5 million produced cash proceeds of £7.8 million and we retained ordinary shares in musicMagpie valued at £8.0 million based on the flotation price, giving an overall return of 10.8 times money. In August 2021 we also partially realised our investment in Oddbox, with our original £0.7 million investment returning £3.2 million in cash proceeds and retaining a holding valued at £4.2 million, a 10.9 times return.

Investment adviser

It is now two years since your board approved the novation of the company’s management and investment advisory agreement from NVM Private Equity to Mercia Fund Management. NVM’s VCT investment team transferred to Mercia at the outset and has been augmented by a number of new recruits in various regional centres as well as by linking into Mercia’s established investment capability and deal flow. We have monitored the transition process closely and are satisfied with progress to date.

NVM has continued to play an important role in managing the legacy portfolio of more mature investments and in providing administrative, accounting and company secretarial services. Following recruitment of specialised staff at Mercia the transfer of these functions will be completed by March 2022 and I would like to thank the directors and staff of both organisations for their hard work during this transitional period.

Share offers and liquidity

As a result of the fundraising proceeds raised from shares issued in April 2020, supported by several strong investment realisations in the year, your directors did not seek to raise further capital in the 2020/21 tax year. However as the economy continues to emerge from the pandemic we are beginning to see evidence of an upturn in demand for long-term growth capital for smaller companies in the UK. In order to remain confident in our ability to address this demand for funding, in July 2021 we announced the intention to launch a new share offer in the 2021/22 tax year in conjunction with the other Northern VCTs. Further details will be announced in due course.

Our dividend investment scheme, which enables shareholders to invest their dividends in new ordinary shares free of dealing costs and with the benefit of the tax reliefs available on new VCT share subscriptions, continues to operate with around 18% participation during the year.

Share buy-backs

We have maintained our policy of being willing to buy back the company’s shares in the market when necessary in order to maintain liquidity, at a 5% discount to NAV. During the year ended 30 September 2021 a total of 2,620,797 (2020: 2,988,048) shares were repurchased by the company for cancellation at an average price of 70.2 pence (2020: 58.8 pence), representing 1.6% (2020: 2.2%) of the opening issued share capital.

VCT legislation and qualifying status

The company has continued to meet the stringent and complex qualifying conditions laid down by HM Revenue & Customs for maintaining its approval as a VCT. Mercia monitors the position closely and reports regularly to the board. Philip Hare & Associates LLP has continued to act as independent adviser to the company on VCT taxation matters.

The VCT scheme rules have been subject to significant legislative changes over the last five years and whilst there were no further amendments announced in 2021, it is possible that further changes will be made in the future. We will continue to work closely with Mercia to maintain compliance with the scheme rules at all times.

Annual general meeting

The company’s AGM will be held at 11.30am on 7 January 2022. The AGM provides an excellent opportunity for shareholders, directors and the investment advisor to exchange views and comments. Your directors are mindful of the ongoing impact of the pandemic and therefore will provide the facility to join the AGM remotely via a Zoom webinar facility. If permitted by the prevailing government guidelines at the time, it will also be open to Shareholders to physically attend. Shareholders taking part via the Zoom webinar facility will not be able to speak or vote on the AGM resolutions. Shareholders should carefully consider whether it is appropriate to attend the AGM. Shareholders are strongly encouraged to exercise their voting rights by completing and submitting a Form of Proxy.

Shareholders may submit questions using the form attached to the proxy form. Details and formal notice of the AGM are provided in the AGM Circular published at the same time as the Annual Report.

Board Succession

We regularly review the composition of your board, taking into account the experience, tenure and contribution of each director individually and together. We are conscious of the nine year guidance under the UK Corporate Governance Code, although believe this to be less relevant in a small investment fund that now typically holds its investments for up to 10 years and where longevity of directors’ service has considerable value. Nevertheless, your current directors have served between seven and 12 years each and we previously announced that Nigel Beer and Hugh Younger will be retiring from the board at the AGM in 2022 after 12 years’ service. I would like to thank Nigel and Hugh for their invaluable contributions during their tenures, which has seen us through some very significant changes, most notably the change in investing rules in 2015 and more recently the transfer of our management and investment advisory agreement from NVM to Mercia in 2019. The four remaining directors will be seeking re-election at the AGM to be held in January 2022 in accordance with the AIC Code of Corporate Governance.

I am pleased to report that Deborah Hudson is expected to join the board in early 2022. Deborah has considerable operational and investment experience in technology and software businesses, which represent an important and growing area of focus for us. She is a founding director of Shackleton Ventures, which specialises in secondary venture and development capital investments and has served on the Board of a number of their investments and other earlier stage companies. We look forward to benefiting from her extensive experience over the coming years.

Outlook

As the economy recovers from the pandemic, factors such as inflation and supply shortages will continue to provide challenges for the portfolio. We have been encouraged by the resilience exhibited thus far and have confidence that the portfolio’s diversity will enable it to perform well over the coming years. The investment team at Mercia continue to work closely and effectively with our investee companies and to identify new opportunities to support the growth of earlier stage companies.

We remain committed to supporting the development and prosperity of entrepreneurial businesses in the UK and believe that your company remains well placed to do so.

Simon Constantine

Chairman

Extracts from the audited financial statements for the year ended 30 September 2021 are set out below.

INCOME STATEMENT

for the year ended 30 September 2021

	Year ended 30 September 2021			Year ended 30 September 2020
	Revenue  £000	Capital  £000	Total  £000	Revenue  £000	Capital  £000	Total  £000
Gain on disposal of investments	-	8,380	8,380	-	(3)	(3)
Movements in fair value of investments	-	17,660	17,660	-	12,043	12,043
	----------	----------	----------	----------	----------	----------
	-	26,040	26,040	-	12,040	12,040
Income	1,372	-	1,372	1,509	-	1,509
Investment management fee	(579)	(4,275)	(4,854)	(462)	(1,672)	(2,134)
Other expenses	(472)	-	(472)	(475)	-	(475)
	----------	----------	----------	----------	----------	----------
Return before tax	321	21,765	22,086	572	10,368	10,940
Tax on return	(15)	15	-	(55)	55	-
	----------	----------	----------	----------	----------	----------
Return after tax	306	21,780	22,086	517	10,423	10,940
	----------	----------	----------	----------	----------	----------
Return per share	0.2p	13.7p	13.9p	0.3p	7.0p	7.3p

BALANCE SHEET

as at 30 September 2021

	30 September 2021  £000	30 September 2020  £000
Fixed assets: Investments	96,563	91,852
	----------	----------
Current assets:
Debtors	308	674
Cash and deposits	25,106	20,693
	----------	----------
	25,414	21,367
Creditors (amounts falling due within one year)	(2,679)	(428)
	----------	----------
Net current assets	22,735	20,939
	----------	----------
Net assets	119,298	112,791
	----------	----------
Capital and reserves
Called-up equity share capital	40,268	39,905
Share premium	14,608	12,745
Capital redemption reserve	3,508	2,853
Capital reserve	38,325	37,872
Revaluation reserve	21,430	18,086
Revenue reserve	1,159	1,330
	----------	----------
Total equity shareholders’ funds	119,298	112,791
	----------	----------
Net asset value per share	74.1p	70.7p

STATEMENT OF CHANGES IN EQUITY

for the year ended 30 September 2021

	---------------Non-distributable reserves---------------				Distributable reserves		Total
	Called-up share  capital	Share  premium	Capital  redemption  reserve	Revaluation reserve*	Capital  reserve	Revenue  reserve
	£000	£000	£000	£000	£000	£000	£000
At 1 October 2020	39,905	12,745	2,853	18,086	37,872	1,330	112,791
Return after tax	-	-	-	3,344	18,436	306	22,086
Dividends paid	-	-	-	-	(16,144)	(477)	(16,621)
Net proceeds of share issues	1,018	1,863	-	-	-	-	2,881
Shares purchased for cancellation	(655)	-	655	-	(1,839)	-	(1,839)
	----------	----------	----------	----------	----------	----------	----------
At 30 September 2021	40,268	14,608	3,508	21,430	38,325	1,159	119,298
	----------	----------	----------	----------	----------	----------	----------

STATEMENT OF CHANGES IN EQUITY

for the year ended 30 September 2020

	---------------Non-distributable reserves---------------					Distributable reserves			Total
	Called-up share  capital	Share  premium		Capital  redemption  reserve	Revaluation  reserve*	Capital  reserve	Revenue  reserve
	£000	£000		£000	£000	£000	£000	£000
At 1 October 2019	34,693	5,584		2,106	4,948	46,820	1,507	95,658
Return after tax	-	-		-	13,138	(2,715)	517	10,940
Dividends paid	-	-		-	-	(4,477)	(694)	(5,171)
Net proceeds of share issues	5,959	7,161		-	-	-	-	13,120
Shares purchased for cancellation	(747)	-	747		-	(1,756)	-	(1,756)
	----------	----------		----------	----------	----------	----------	----------
At 30 September 2020	39,905	12,745		2,853	18,086	37,872	1,330	112,791
	----------	----------		----------	----------	----------	----------	----------

*the revaluation reserve is generally non-distributable other than that part of the reserve relating to gains/losses on readily realisable quoted investments, which is distributable.

STATEMENT OF CASH FLOWS

for the year ended 30 September 2021

	Year ended	Year ended
	30 September 2021	30 September 2020
	£000	£000
Cash flows from operating activities:
Return before tax	22,086	10,940
Adjustments for:
Gain on disposal of investments	(8,380)	3
Movement in fair value of investments	(17,660)	(12,043)
Decrease in debtors	366	508
Increase in creditors	2,251	336
	----------	----------
Net cash outflow from operating activities	(1,337)	(256)
	----------	----------
Cash flows from investing activities:
Purchase of investments	(13,506)	(10,480)
Sale/repayment of investments	34,835	3,077
	----------	----------
Net cash inflow/(outflow) from investing activities	21,329	(7,403)
	----------	----------
Cash flows from financing activities:
Issue of ordinary shares	2,921	13,423
Share issue expenses	(40)	(304)
Purchase of ordinary shares for cancellation	(1,839)	(1,756)
Equity dividends paid	(16,621)	(5,171)
	----------	----------
Net cash (outflow)/inflow from financing activities	(15,579)	6,192
	----------	----------
Increase/(decrease) in cash and cash equivalents	4,413	(1,467)
Cash and cash equivalents at beginning of year	20,693	22,160
	----------	----------
Cash and cash equivalents at end of year	25,106	20,693
	----------	----------

INVESTMENT PORTFOLIO SUMMARY

as at 30 September 2021

Company	Cost £000	Valuation £000	% of net assets by value
Fifteen largest venture capital investments:
musicMagpie	238	7,600	6.4
Lineup Systems	975	5,968	5.0
Currentbody	2,050	5,846	4.9
Oddbox	386	4,216	3.5
SHE Software Group	2,412	4,032	3.4
GRIP-UK (t.a. The Climbing Hangar)	3,530	3,530	3.0
Intelling Group	1,223	3,505	2.9
Volumatic Holdings	216	2,797	2.3
Buoyant Upholstery	1,173	2,773	2.3
Clarilis	1,972	2,553	2.1
Life’s Great Group (t.a. Mojo Mortgages)	1,592	2,466	2.1
IDOX	238	2,210	1.9
Biological Preparations Group	2,366	2,197	1.8
Newcells Biotech	1,771	2,115	1.8
Tutora (t.a. Tutorful)	2,015	2,003	1.7
	----------	----------	-------
	22,157	53,811	45.1
Other venture capital investments:
Rockar	1,800	1,964	1.6
Knowledgemotion	1,903	1,938	1.6
Weldex (International) Offshore Holdings	3,262	1,927	1.6
Sorted Holdings	3,022	1,694	1.4
Pure Pet Food	1,419	1,486	1.2
Medovate	1,593	1,464	1.2
Fresh Approach (UK) Holdings	1,475	1,412	1.2
Adludio	1,402	1,402	1.2
Voxpopme	1,218	1,378	1.2
Quotevine	1,311	1,297	1.1
Ridge Pharma	1,233	1,233	1.0
Administrate	1,806	1,232	1.0
Gentronix	1,104	1,198	1.0
Vectura Group	599	1,071	0.9
Contego Solutions (t.a. NorthRow)	1,151	1,069	0.9
Thanksbox (t.a. Mo)	1,417	945	0.8
Locate Bio Moonshot	876 874	876 874	0.7 0.7
Naitive Technologies	787	787	0.7
Enate	784	784	0.7
Other investments each valued at less than £750,000	16,349	6,353	5.4
	----------	----------	-------
Total venture capital investments	67,542	86,195	72.2
Investment funds (listed equity)	7,591	10,368	8.7
	----------	----------	-------
Total fixed asset investments	75,133	96,563	80.9
	----------
Net current assets		22,735	19.1
		----------	-------
Net assets		119,298	100.0
		----------	-------
*Quoted on AIM
**Listed on London Stock Exchange

Risk management

The board carries out a regular and robust assessment of the risk environment in which the company operates and seeks to identify new risks as they emerge. The principal and emerging risks and uncertainties identified by the board which might affect the company’s business model and future performance, and the steps taken with a view to their mitigation, are as follows:

Investment and liquidity risk: investment in smaller and unquoted companies, such as those in which the company invests, involves a higher degree of risk than investment in larger listed companies because they generally have limited product lines, markets and financial resources and may be more dependent on key individuals. The securities of smaller companies in which the company invests are typically unlisted, making them illiquid, and this may cause difficulties in valuing and disposing of the securities. The company may invest in businesses whose shares are quoted on AIM - the fact that a share is quoted on AIM does not mean that it can be readily traded and the spread between the buying and selling prices of such shares may be wide. Mitigation: the directors aim to limit the risk attaching to the portfolio as a whole by careful selection, close monitoring and timely realisation of investments, by carrying out rigorous due diligence procedures and maintaining a wide spread of holdings in terms of financing stage and industry sector within the rules of the VCT scheme. The board reviews the investment portfolio with the investment adviser on a regular basis.

Financial risk: most of the company’s investments involve a medium to long term commitment and many are illiquid. Mitigation: the directors consider that it is inappropriate to finance the company’s activities through borrowing except on an occasional short-term basis. Accordingly they seek to maintain a proportion of the company’s assets in cash or cash equivalents in order to be in a position to pursue new unquoted investment opportunities and to make follow-on investments in existing portfolio companies. The company has very little direct exposure to foreign currency risk and does not enter into derivative transactions.

Economic risk: events such as economic recession or general fluctuation in stock markets, exchange rates and interest rates may affect the valuation of investee companies and their ability to access adequate financial resources, as well as affecting the company’s own share price and discount to net asset value. The level of economic risk has been elevated by the COVID-19 pandemic which caused a global recession during 2020. Mitigation: the company invests in a diversified portfolio of investments spanning various industry sectors, and maintains sufficient cash reserves to be able to provide additional funding to investee companies where it is appropriate and in the interests of the company to do so. The investment adviser typically provides an investment executive to actively support the board of each unquoted investee company. At all times, and particularly during periods of heightened economic uncertainty, the investment executives share best practice from across the portfolio with investee management teams in order to mitigate economic risk.

Brexit risk: the UK withdrew from the European Union (EU) on 31 January 2020. The process of negotiating longer term trading arrangements between the UK and the EU is ongoing. The impact on the future business environment in the UK is therefore difficult to predict. Mitigation: whilst we do not expect that Brexit will have a significant impact on the operations of Northern Venture Trust PLC itself, the board and the investment adviser follow Brexit developments closely with a view to identifying changes which might affect the company’s investment portfolio. The investment adviser works closely with investee companies in order to plan for a range of possible outcomes.

Stock market risk: some of the company’s investments are quoted on the London Stock Exchange or AIM and will be subject to market fluctuations upwards and downwards. External factors such as terrorist activity or global health crises, such as the COVID-19 pandemic, can negatively impact stock markets worldwide. In times of adverse sentiment there may be very little, if any, market demand for shares in smaller companies quoted on AIM. Mitigation: the company’s quoted investments are actively managed by specialist advisers, including Mercia in the case of the AIM-quoted investments, and the board keeps the portfolio and the actions taken under ongoing review.

Credit risk: the company holds a number of financial instruments and cash deposits and is dependent on the counterparties discharging their commitment. Mitigation: the directors review the creditworthiness of the counterparties to these instruments and cash deposits and seek to ensure there is no undue concentration of credit risk with any one party.

Legislative and regulatory risk: in order to maintain its approval as a VCT, the company is required to comply with current VCT legislation in the UK, which reflects the European Commission’s State-aid rules. Changes to the UK legislation in the future could have an adverse effect on the company’s ability to achieve satisfactory investment returns whilst retaining its VCT approval. Mitigation: the board and the investment adviser monitor political developments and where appropriate seek to make representations either directly or through relevant trade bodies.

Internal control risk: the company’s assets could be at risk in the absence of an appropriate internal control regime which is able to operate effectively even during times of disruption, such as that caused by COVID-19. Mitigation: the board regularly reviews the system of internal controls, both financial and non-financial, operated by the company and the investment adviser. These include controls designed to ensure that the company’s assets are safeguarded and that proper accounting records are maintained.

VCT qualifying status risk: while it is the intention of the directors that the company will be managed so as to continue to qualify as a VCT, there can be no guarantee that this status will be maintained. A failure to continue meeting the qualifying requirements could result in the loss of VCT tax relief, the company losing its exemption from corporation tax on capital gains, to shareholders being liable to pay income tax on dividends received from the company and, in certain circumstances, to shareholders being required to repay the initial income tax relief on their investment. Mitigation: the investment adviser keeps the company’s VCT qualifying status under continual review and its reports are reviewed by the board on a quarterly basis. The board has also retained Philip Hare & Associates LLP to undertake an independent VCT status monitoring role.

DIRECTORS’ RESPONSIBILITIES

The directors are responsible for preparing the annual report and financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law they are required to prepare the financial statements in accordance with UK accounting standards, including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”.

Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of its profit or loss for that year.

In preparing these financial statements, the directors are required to (i) select suitable accounting policies and then apply them consistently; (ii) make judgements and estimates that are reasonable and prudent; (iii) state whether applicable UK accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; (iv) assess the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and (v) use the going concern basis of accounting unless they either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that its financial statements comply with the Companies Act 2006. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the company and to prevent and detect fraud and other irregularities.

Under applicable law and regulations, the directors are also responsible for preparing a strategic report, directors’ report, directors’ remuneration report and corporate governance statement that complies with that law and those regulations.

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company’s website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

The directors have confirmed that to the best of their knowledge (i) the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the company; and (ii) the strategic report and directors' report includes a fair review of the development and performance of the business and the position of the issuer, together with a description of the principal risks and uncertainties that they face.

The directors consider the annual report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the company’s position and performance, business model and strategy.

The directors of the company at the date of this announcement were Mr S J Constantine (Chairman), Mr N J Beer, Mr R J Green, Mr T R Levett, Mr D A Mayes and Mr H P Younger.

OTHER MATTERS

The above summary of results for the year ended 30 September 2021 does not constitute statutory financial statements within the meaning of Section 435 of the Companies Act 2006 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 independent auditor’s report on those financial statements under Section 495 of the Companies Act 2006 is unqualified, does not include any reference to matters to which the auditor drew attention by way of emphasis without qualifying the report and does not contain a statement under Section 498 (2) or (3) of the Companies Act 2006.

The calculation of the revenue and capital return per share is based on the return after tax for the year and on 159,349,187 (2020: 149,267,332) ordinary shares, being the weighted average number of shares in issue during the year.

The calculation of the net asset value per share is based on the net assets at 30 September 2021 divided by the 161,070,303 (30 September 2020: 156,619,990) ordinary shares in issue at that date.

The proposed final dividend of 2.0 pence per share for the year ended 30 September 2021 will, if approved by shareholders, be paid on 14 January 2022 to shareholders on the register at the close of business on 17 December 2021.

The full annual report including financial statements for the year ended 30 September 2021 will be available on the Mercia Asset Management PLC website. For those shareholders who have opted in to receiving printed copies, the accounts are expected to be posted out on 14 December 2021.

Neither the contents of the NVM Private Equity LLP or the Mercia Asset Management PLC website, nor the contents of any website accessible from hyperlinks on the NVM Private Equity LLP or Mercia Asset Management PLC website (or any other website), are incorporated into, or forms part of, this announcement.