Announcements

Northern 2 VCT PLC.


RNS Number:3038E
Northern 2 VCT PLC
21 September 2007


21 SEPTEMBER 2007

NORTHERN 2 VCT PLC

UNAUDITED HALF-YEARLY FINANCIAL REPORT
FOR THE SIX MONTHS ENDED 31 JULY 2007

Northern 2 VCT PLC is a Venture Capital Trust (VCT) managed by NVM Private
Equity Limited. It invests mainly in unquoted venture capital holdings 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 31 July 2006 in italics)
2007 2006

* Net assets #43.1m #41.5m

* Net asset value per share 90.1p 84.5p

* Return per share
Revenue 1.2p 1.2p
Capital 4.4p (2.7)p
Total 5.6p (1.5)p

* Interim dividend per share
in respect of the period
Revenue 1.0p 1.0p
Capital 1.0p -
Total 2.0p 1.0p

* Cumulative returns to
shareholders since launch
Net asset value per share 90.1p 84.5p
Dividends paid per share* 33.4p 27.9p
Net asset value plus dividends
paid per share 123.5p 112.4p

* Share price at end of period 77.0p 78.0p

*Excluding proposed interim dividend


For further information, please contact:
NVM Private Equity Limited
Alastair Conn, Managing Director 0191 244 6000
Website: www.nvm.co.uk
Lansons Communications
Karen Mignon 020 7294 3685


NORTHERN 2 VCT PLC

HALF-YEARLY MANAGEMENT REPORT

The directors are pleased to report that the company has continued to make good
progress during the six months to 31 July 2007, with a high level of activity in
the investment portfolio.

Results and dividend

The net asset value per share at 31 July 2007 was 90.1p (31 January 2007 88.9p).
The cumulative return to shareholders (net asset value plus dividends paid
since launch) increased during the half year by 5.7p per share, equivalent to
6.4% of the opening net asset value.

The revenue return per share for the half year was unchanged at 1.2p, with total
investment income marginally up at #1,005,000. The capital return per share was
4.4p, compared with a loss of 2.7p in the corresponding period last year. Your
board has declared an interim revenue dividend of 1.0p per share (last year
1.0p) and an interim capital dividend of 1.0p (last year nil), making a total
interim dividend of 2.0p per share which will be paid on 7 December 2007 to
shareholders on the register on 9 November 2007. The increase in the interim
dividend is intended to achieve a better balance between the amounts of the
interim and final payments. This takes the cumulative total of dividends
declared by the company since launch to 35.4p per share.

The company continues to operate its dividend investment scheme, which enables
shareholders to re-invest their dividends in new ordinary shares in the company
with the benefit of zero transaction costs plus income tax relief at 30% on the
amount re-invested.

Investments

The flow of new investment opportunities has been strong and seven new venture
capital investments totalling #3.8 million were completed during the half year:

* Gentronix (#173,000) - drug development support services provider,
Manchester

* Promanex Group Holdings (#1,000,000) - engineering and maintenance services
contractor, Nuneaton

* Summit Corporation (#220,000) - AIM-quoted provider of drug discovery
services, Abingdon (acquired in exchange for the former holding in
Daniolabs)

* Maelor (#199,000) - AIM-quoted specialist hospital medicines developer,
Chester

* Foreman Roberts Group (#1,000,000) - building services consultants, London

* Astbury Marsden Holdings (#1,000,000) - specialist recruitment consultancy,
London

* Shieldtech (#248,000) - AIM-quoted manufacturer of body armour systems,
London

In April we sold our AIM-quoted shareholding in Computer Software Group
following a recommended cash bid, realising proceeds of #1.8 million and a gain
of #1.3 million over original cost. The holding in PM Group was also sold to a
cash bidder, with proceeds of #257,000 and a gain of #83,000. Arrow
Therapeutics was sold to AstraZeneca PLC, recovering our original investment of
#298,000, and Daniolabs was acquired by the AIM-quoted Summit Corporation plc
(formerly known as Vastox plc) in a share-for-share deal which valued our
investment at #220,000, a 50% uplift on cost. Since the end of the half year we
have realised our investment in Ithaca Holdings through a sale to United
Business Media Plc, the deal generating a total return of approximately three
times the original cost of #594,000. Our managers are working on several other
prospective disposals.

Shareholder issues

The share price rose slightly from 75p to 77p during the half year. 254,321 new
shares were issued in June under the company's dividend re-investment scheme,
adding #215,000 to our funds available for investment. A total of 749,866
shares, representing approximately 1.6% of the issued share capital, were bought
in the market for cancellation during the half year at an average price of 78p.

The annual general meeting held in Newcastle in May was followed by a London
shareholder presentation in July which was well attended and well received, with
a lively debate on a variety of matters. It is clear that dividend policy and
secondary market liquidity are key issues for shareholders, and the board is
currently considering both of these subjects in conjunction with its periodic
review of the company's share buy-back policy.

The Government has made significant changes to VCT tax reliefs and the
qualifying investment criteria over the past two years. As a result the amount
of money invested in VCT share issues in the 2006/07 tax year was, at around
#270 million, down by two thirds by comparison with the previous year, and it is
possible that there will be a further reduction in 2007/08. Nevertheless we
believe it is important to maintain the company's capital base and replace funds
used in buying back shares in the market, and accordingly your board is
considering a proposal to launch a 'top-up' issue of new ordinary shares during
the second half of the financial year. We will write to shareholders once these
deliberations have been completed.

Board of directors

We are delighted to report that David Gravells was appointed as a director of
the company on 4 July 2007. David is an experienced entrepreneur with a wide
experience of private equity-financed businesses, and is chairman of the
advisory board of Durham Business School. We look forward to working with him.

VCT qualifying status

The company has continued to satisfy the qualifying conditions laid down by HM
Revenue & Customs for approval as a VCT. We retain PricewaterhouseCoopers LLP
to advise the board in relation to VCT taxation matters.

The future

The recent unsettled conditions in the financial markets have created an
unwelcome air of uncertainty about future prospects for the UK economy. Whilst
a downturn in the economy would inevitably have an adverse effect on the
performance of some of our portfolio companies, we have a diversified range of
holdings in well-managed businesses which should overall prove capable of making
further progress.

By order of the Board

Christopher Mellor
Secretary


The unaudited half-yearly financial statements for the six months ended 31 July
2007 are set out below.


INCOME STATEMENT
(unaudited) for the six months ended 31 July 2007

Six months ended 31 July 2007 Six months ended 31 July 2006
Revenue Capital Total Revenue Capital Total

#000 #000 #000 #000 #000 #000
Gain/(loss) on disposal of investments - 553 553 - (107) (107)
Unrealised adjustments to fair value
of investments - 1,815 1,815 - (929) (929)
---------- ---------- ---------- ---------- ---------- ----------
- 2,368 2,368 - (1,036) (1,036)
Income 1,005 - 1,005 955 - 955
Investment management fee (126) (378) (504) (119) (357) (476)
Other expenses (125) - (125) (112) - (112)
---------- ---------- ---------- ---------- ---------- ----------
Return on ordinary activities
before tax 754 1,990 2,744 724 (1,393) (669)
Tax on return on ordinary activities (179) 119 (60) (181) 113 (68)
---------- ---------- ---------- ---------- ---------- ----------
Return on ordinary activities
after tax 575 2,109 2,684 543 (1,280) (737)
---------- ---------- ---------- ---------- ---------- ----------
Return per share 1.2p 4.4p 5.6p 1.2p (2.7)p (1.5)p


Year ended 31 January 2007

Revenue Capital Total
#000 #000 #000
Gain on disposal of investments - 168 168
Unrealised adjustments to fair value
of investments - 957 957
---------- ---------- ----------
- 1,125 1,125
Income 2,036 - 2,036
Investment management fee (247) (784) (1,031)
Other expenses (224) - (224)
---------- ---------- ----------
Return on ordinary activities
before tax 1,565 341 1,906
Tax on return on ordinary activities (343) 243 (100)
---------- ---------- ----------
Return on ordinary activities
after tax 1,222 584 1,806
---------- ---------- ----------
Return per share 2.5p 1.2p 3.7p


RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
(unaudited) for the six months ended 31 July 2007


Six months ended Six months ended Year ended
31 July 2007 31 July 2006 31 January 2007
#000 #000 #000
Equity shareholders' funds at
1 February 2007 42,909 38,675 38,675
Return on ordinary activities 2,684 (737) 1,806
after tax
Dividends recognised in the (2,160) (1,915) (2,403)
period
Net proceeds of share issues 211 6,123 6,168
Shares purchased for (591) (624) (1,322)
cancellation
Expenses charged to capital - (15) (15)
reserve
---------- ---------- ----------
Equity shareholders' funds at
31 July 2007 43,053 41,507 42,909
---------- ---------- ----------


BALANCE SHEET
(unaudited) as at 31 July 2007


31 July 2007 31 July 2006 31 January 2007
#000 #000 #000
Venture capital investments
Unquoted 32,739 26,356 28,406
Quoted 3,370 5,042 4,706
---------- ---------- ----------
Total venture capital 36,109 31,398 33,112
investments
Listed fixed-interest 5,073 8,646 7,161
investments
---------- ---------- ----------
Total fixed asset investments 41,182 40,044 40,273
---------- ---------- ----------
Current assets:
Debtors 468 736 471
Cash at bank 1,642 852 2,410
---------- ---------- ----------
2,110 1,588 2,881
Creditors (amounts falling due
within one year) (239) (125) (245)
---------- ---------- ----------
Net current assets 1,871 1,463 2,636
---------- ---------- ----------

Net assets 43,053 41,507 42,909
---------- ---------- ----------

Capital and reserves:
Called-up equity share capital 2,389 2,457 2,414
Share premium 25,147 24,907 24,949
Capital redemption reserve 265 182 227
Capital reserve - realised 8,868 11,539 10,779
Capital reserve - unrealised 5,507 1,592 3,519
Revenue reserve 877 830 1,021
---------- ---------- ----------
Total equity shareholders' 43,053 41,507 42,909
funds
---------- ---------- ----------
Net asset value per share 90.1p 84.5p 88.9p


CASH FLOW STATEMENT
(unaudited) for the six months ended 31 July 2007


Six months ended Six months Year ended
ended 31 January 2007
31 July 2007 31 July
2006
#000 #000 #000 #000 #000 #000
Net cash inflow from
operating 313 267 799
activities
Taxation:
Corporation tax paid - (185) (184)
Financial investment:
Purchase of (6,730) (8,288) (10,365)
investments
Sale/repayment of 8,189 2,810 7,053
investments
---------- ---------- ----------

Net cash inflow/
(outflow) from
financial 1,459 (5,478) (3,312)
investment
Equity dividends paid (2,160) (1,915) (2,403)
---------- ---------- ----------

Net cash outflow (388) (7,311) (5,100)
before financing
Financing:
Issue of ordinary 215 6,488 6,525
shares
Share issue expenses (4) (365) (357)
Purchase of ordinary
shares
for cancellation (591) (624) (1,322)
---------- ---------- ----------

Net cash (outflow)/
inflow from
financing (380) 5,499 4,846
---------- ---------- ----------

Decrease in cash at (768) (1,812) (254)
bank
---------- ---------- ----------


Reconciliation of
return before tax
to net cash flow from
operating activities
Return on ordinary
activities
before tax 2,744 (669) 1,906
(Gain)/loss on
disposal of
investments (553) 107 (168)
Unrealised
adjustments to fair
value
of investments (1,815) 929 (957)
Decrease/(increase) 3 (93) (62)
in debtors
(Decrease)/increase (66) (7) 95
in creditors
Expenses charged to - - (15)
capital reserve
---------- ---------- ----------

Net cash inflow from
operating 313 267 799
activities
---------- ---------- ----------


Analysis of movement
in net funds
1 February Cash flows 31 July
2007 2007
#000 #000 #000
Cash at bank 2,410 (768) 1,642
---------- ---------- ----------


INVESTMENT PORTFOLIO SUMMARY
as at 31 July 2007
Cost Valuation % of net assets
#000 #000 by value
Investments valued at #1,000,000 or more:
Envirotec 975 2,183 5.1
John Laing Partnership 509 1,859 4.3
Crantock Bakery 1,107 1,704 4.0
Ithaca Holdings 493 1,524 3.5
KCS Global Holdings 702 1,515 3.5
TFB Group 700 1,363 3.2

Longhirst Venues 353 1,302 3.0
IG Doors 1,000 1,273 3.0
Liquidlogic 432 1,207 2.8
Touchstone Asset Management 900 1,169 2.7
Develop Training 1,087 1,163 2.7
DMN 1,145 1,145 2.7
Arrow Industrial Group 735 1,134 2.6
Pivotal Laboratories Holdings 857 1,004 2.3
Astbury Marsden Holdings 1,000 1,000 2.3
Foreman Roberts Group 1,000 1,000 2.3
Product Support (Holdings) 1,000 1,000 2.3
Promanex Group Holdings 1,000 1,000 2.3
---------- ---------- ----------
14,995 23,545 54.6
Other venture capital investments 15,534 12,564 29.3
---------- ---------- ----------
Total venture capital investments 30,529 36,109 83.9
Listed fixed-interest investments 5,147 5,073 11.8
---------- ---------- ----------
Total fixed asset investments 35,676 41,182 95.7
----------
Net current assets 1,871 4.3
---------- ----------
Net assets 43,053 100.0
---------- ----------


The above half-yearly financial statements for the six months ended 31 July 2007
do not constitute statutory financial statements within the meaning of Section
240 of the Companies Act 1985 and have not been delivered to the Registrar of
Companies. The figures for the year ended 31 January 2007 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
half-yearly financial statements have been prepared on the basis of the
accounting policies set out in the annual financial statements for the year
ended 31 January 2007.

The proposed interim dividend of 2.0p per share for the year ending 31 January
2008 will be paid on 7 December 2007 to shareholders on the register at the
close of business on 9 November 2007.

The directors confirm that to the best of their knowledge the half-yearly
financial statements have been prepared in accordance with the Statement
Half-yearly financial reports issued by the UK Accounting Standards Board and
the half-yearly financial report includes a fair review of the information
required by (a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an
indication of important events that have occurred during the first six months of
the financial year and their impact on the condensed set of financial
statements, and a description of the principal risks and uncertainties for the
remaining six months of the year, and (b) DTR 4.2.8R of the Disclosure and
Transparency Rules, being related party transactions that have taken place in
the first six months of the current financial year and that have materially
affected the financial position or performance of the entity during that period,
and any changes in the related party transactions described in the last annual
report that could do so.

A copy of the half-yearly financial report for the six months ended 31 July 2007
is expected to be posted to shareholders on 5 October 2007 and will be available
to the public at the registered office of the company at Northumberland House,
Princess Square, Newcastle upon Tyne NE1 8ER and on the NVM Private Equity
Limited website, www.nvm.co.uk.


ENDS


This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SEDFIFSWSEIU