Share Name Share Symbol Market Type Share ISIN Share Description
Northern 2 Vct Plc LSE:NTV London Ordinary Share GB0005356430 ORD 5P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.0% 63.50 62.00 65.00 63.50 62.00 63.50 10,000 08:00:09
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
General Financial 1.4 0.5 0.3 211.7 104

Northern 2 VCT PLC Annual Financial Report

23/06/2021 3:00pm

UK Regulatory (RNS & others)

Northern 2 Vct (LSE:NTV)
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23 June 2021



Northern 2 VCT PLC is a Venture Capital Trust (VCT) managed by Mercia Fund Management 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 Summary (comparative figures as at 31 March 2020):

                                                                2021              2020 
                                                    ----------------  ---------------- 
Net assets                                                 GBP115.5m          GBP74.4m 
Net asset value per share                                      71.3p             53.5p 
Return per share: 
Revenue                                                         0.3p              0.2p 
Capital                                                        21.5p            (7.2)p 
Total                                                          21.8p            (7.0)p 
Dividend per share for the year: 
Interim dividend                                                2.0p              2.0p 
Second interim (special) dividend                               4.0p                -- 
Proposed final dividend                                         1.5p              1.5p 
Total                                                           7.5p              3.5p 
Cumulative return to shareholders since launch: 
Net asset value per share                                      71.3p             53.5p 
Dividends paid per share*                                     124.9p            121.4p 
Net asset value plus dividends paid per share                 196.2p            174.9p 
Mid-market share price at end of year                          61.0p             47.5p 
Share price discount to net asset value                        14.5%             11.2% 
Tax-free dividend yield (based on net asset value 
 per share at the start of year) 
Excluding special dividend                                      6.5%              5.4% 
Including special dividend                                     14.0%               N/A 

*Excluding proposed second interim and final dividends payable on 10 September 2021


Simon John/James Bryce, NVM Private Equity LLP - 0191 244 6000

Martin Glanfield, Chief Financial Officer, Mercia Asset Management PLC -- 0330 223 1430

Website: https://www.globenewswire.com/Tracker?data=ynxKAl5pKn8X4T9efe4uKC2qDZweb-jbSHVZa0sYT4VuY1dtUqhHVTwm0aViS3cdcyrTYmTtVJeR1uDRbl2xPFqSrdF2DygLe8bNMWHMHhI= www.mercia.co.uk/vcts


I am delighted to report that our company has performed very well over the past 12 months, despite the challenging environment created by the COVID-19 pandemic. Two investments in particular have made a major contribution to the year's results, but it is pleasing to note that a high proportion of our investee companies have shown resilience in response to the changing situation and have adapted where necessary so as to operate effectively. Great credit is due to the management teams involved and also to our investment manager, Mercia, which has provided close support to the portfolio whilst working within the various restrictions introduced by the Government.

Results and dividend

In the year ended 31 March 2021 the company achieved a return of 21.8 pence per share (2020: negative return of 7.0 pence), equivalent to 40.7% of the opening net asset value (NAV) per share. The NAV per share as at 31 March 2021, after deducting dividends paid during the year of 3.5 pence, was 71.3 pence compared with 53.5 pence as at 31 March 2020.

A year ago the significance of the pandemic was just becoming apparent and it was appropriate that we adjusted the holding values of more than half of our portfolio companies downwards at 31 March 2020 to reflect the general uncertainty about the future. 12 months on, we have a better appreciation of the impact of COVID-19 and the results for the year include not only net realised gains of GBP9.0 million on investment sales but also an overall uplift of GBP29.0 million in the directors' valuation of the continuing portfolio, reflecting strong performance by a number of our unquoted holdings. This uplift has been substantially underpinned by the successful partial exit from the investment in Entertainment Magpie Group shortly after the year end.

The excellent results for the year have triggered a performance-related investment management fee of GBP1.7 million under the terms of the management agreement. Following the fall in NAV during the preceding financial, the agreement requires a recovery in the NAV to a prescribed level before a performance fee is capable of being paid. This is the first time in four years that a performance-related fee has been payable.

Three years ago we set an objective of paying an annual dividend representing a yield of at least 5% of the opening NAV per share in each year. A second objective, implicit in this, is that the company's NAV per share should if possible be protected from erosion over the medium term. Since 31 March 2018 the NAV per share has increased by 6.6% from 66.9 pence to 71.3 pence, after taking account of dividend payments totalling 13.0 pence over the three years ended 31 March 2021. We can therefore report that we have achieved our two dividend-related objectives over that period. The challenge before us is to continue to do so in the future, whilst recognising that there will inevitably be some fluctuation in the NAV per share from year to year.

Having already declared an interim dividend of 2.0 pence per share which was paid in January 2021, your directors now propose an unchanged final dividend of 1.5 pence. These payments totalling 3.5 pence are equivalent to 6.5% of the opening NAV of 53.5p per share. However in view of the strong cash flow generated from realisations both during the year and subsequently, your directors are also pleased to declare a one-off special dividend of 4.0 pence per share, making a total of 7.5 pence for the year. The special dividend will be designated as a second interim dividend for the year ended 31 March 2021, and will be paid on 10 September 2021 to shareholders on the register on 20 August 2021. The proposed final dividend will also, subject to approval by shareholders at the annual general meeting, be paid on 10 September 2021, so that the total dividend payment on 10 September will be 5.5 pence per share.

The target dividend yield will remain subject to regular review and the level of future dividend distributions will continue to have regard to the level of returns generated by the company in the medium term, the timing of investment realisations, the availability of distributable reserves and continuing compliance with the VCT scheme rules.

Investment portfolio

Measures intended to reduce the spread of the virus in the UK, including the temporary closure of certain businesses and restrictions on the movement of people, were announced just before the start of the financial year in April 2020. Throughout the subsequent period, our manager has been working closely with investee companies to provide strategic and practical support, and your directors have received frequent progress reports. The portfolio can be broadly categorised into three groups, as follows. There are a small number of businesses which have been significantly impacted, namely those which operate in the leisure sector and which have been forced to remain closed for much of the past year. We are cautiously optimistic that most of these companies can start to recover as the leisure sector fully reopens during 2021. There is a middle category, in which most of the portfolio resides, for which there has been some disruption to operations caused by the pandemic, but where by and large companies have managed to adjust to a new way of working and continue to trade reasonably well. The final category includes a small number of businesses which have benefitted from trends which have been accelerated by the pandemic, such as companies which employ an e-commerce operating model, and for which trading has improved significantly during 2020 and the first half of 2021.

Northern 2 VCT continues to benefit from holding a diversified portfolio of investments, both in terms of sector exposure and stage of business maturity. Around 44% by value of our venture capital portfolio at the year-end comprised "legacy" investments in more mature businesses acquired under the previous (pre-2018) VCT rules. This segment of the portfolio produced two good investment exits during the period under review. Whilst the mature portfolio will continue to reduce as a percentage of overall capital invested, we expect that it will continue to provide a series of profitable exits in the years to come, supporting the overall return of the company.

Venture capital investment activity

Notwithstanding the difficult conditions experienced since the onset of the pandemic, further progress has been made on the development of the portfolio with two new venture capital investments added to the portfolio during the year and three more completed in the period since 31 March 2021. We also continue to experience an encouraging level of follow-on investment activity across the earlier stage portfolio. GBP5.2 million of capital was provided to 13 existing investee companies to support further growth ambitions, representing around 78% by value of investment activity during the year.

The total of GBP6.7 million invested during the year (2020: GBP10.1 million) is lower than we have experienced in recent years and reflects the effort and time spent by the manager in providing strategic support to the existing portfolio, particularly during the first half of the year.

It was a busy year for realisation activity, with a number of notable transactions either completed or in progress as at the balance sheet date. The highlights during 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 3.2 times. In April 2021, subsequent to the year end, Entertainment Magpie Group was admitted to trading on AIM under its new name musicMagpie plc. Our original 2015 investment of GBP1.5 million produced cash proceeds of GBP7.8 million and we have retained ordinary shares in musicMagpie valued at GBP8.0 million based on the flotation price. The resulting uplift contributed significantly to the increase in the overall portfolio valuation as at 31 March 2021.

Investment manager

It is now 18 months since your board approved the novation of the company's investment management agreement from NVM Private Equity to Mercia Fund Management. NVM's VCT investment team transferred to Mercia en bloc at the outset and has been augmented by a number of new recruits in various regional centres, as well as linking in to Mercia's established investment capability and deal flow. We have monitored the transition process closely and are broadly 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. It is envisaged that the transfer of these functions to Mercia 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 offer and liquidity

As a result of the public share offer launched in January 2020, 24,444,699 new ordinary shares were issued in April 2020 for gross proceeds of GBP12.5 million.

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 16% of total dividends reinvested by shareholders during the year.

Events over the past 12 months have validated the board's decision not to launch a public share offer in the 2020/21 tax year. However as the economy emerges from the worst of 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 have confidence in our capacity to address this demand for funding over the next two to three years, we intend 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.

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, a total of 2,873,212 shares were repurchased for cancellation, equivalent to approximately 2.1% of the opening share capital.

Annual general meeting

The company's annual general meeting (AGM) will take place on 31 August 2021. The AGM usually provides an excellent opportunity for shareholders, directors and the manager to meet in person and exchange views and comment, however in view of the changeable Government advice concerning non-essential travel and social distancing, we have decided that the 2021 AGM should not be open to physical attendance by shareholders. Detailed arrangements are however being made to enable virtual attendance and shareholders will be invited to submit proxy votes and ask questions in advance of as well as at the meeting itself. Details and formal notice of the AGM are provided in the AGM Circular published at the same time as the Annual Report and Accounts.

Board of directors

Your board recognises the need to consider succession planning and with due regard to developing its diversity. That process is a continuing one and remains a matter of regular board discussion. We are determined to only ever appoint when we have found high quality, value adding and experienced people who will contribute to the board in the interests of shareholders. That process has now begun using the resources of Mercia's talent management function as well as other routes to identifying potential candidates. Alastair Conn will stand down as a director at the AGM in 2022 and it is envisaged that over the two succeeding years two other directors will retire, one at each of the AGMs in 2023 and 2024. Shareholders should be aware that the board goes through a rigorous appraisal process both collectively and individually during which it considers the independence of each director in the light of their performance at, and between, board meetings and when engaging with the manager. Shareholders can be assured that with the benefit of their wide experience and expertise your directors, individually and collectively, can be, and are, frequently extremely challenging to the manager in respect of the strategic direction of the company, their view of each investment, and the important issues around such matters as performance fees and fund raising.

All the directors will be seeking re-election at the 2021 AGM in accordance with the AIC Code of Corporate Governance.

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.

Whilst no further amendments to the VCT legislation were announced by the Chancellor in his 2021 Spring Budget statement, 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.

Independent auditor

The audit committee regularly reviews the requirements and deadlines for mandatory audit tendering and rotation. As previously reported, the audit committee conducted a tender process in November 2020, as a result of which Mazars LLP, an international firm of chartered accountants, were appointed as independent auditor of the company for the year ended 31 March 2021. A resolution for their re-appointment will be proposed at the forthcoming AGM.


Many financial indices have staged a significant recovery from the lows experienced in March 2020 as market participants have digested the success of vaccination programmes and the prospect of economies fully re-opening during 2021. Against the backdrop of unprecedented disruption experienced by most businesses over the past year, your directors have been encouraged by the resilience exhibited by the portfolio as a whole.

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

David Gravells

Chairman 23 June 2021

Extracts from the audited financial statements for the year ended 31 March 2021 are set out below.


for the year ended 31 March 2021

                   Year ended 31 March 2021            Year ended 31 March 2020 
               Revenue     Capital      Total      Revenue     Capital      Total 
                GBP000      GBP000      GBP000      GBP000      GBP000      GBP000 
 on disposal 
 investments           -       8,998       8,998           -       (728)       (728) 
Movements in 
 fair value 
 investments           -      28,956      28,956           -     (8,050)     (8,050) 
              ----------  ----------  ----------  ----------  ----------  ---------- 
                       -      37,954      37,954           -     (8,778)     (8,778) 
Income             1,421           -       1,421       1,052           -       1,052 
 fee               (460)     (3,052)     (3,512)       (431)     (1,293)     (1,724) 
 expenses          (445)           -       (445)       (369)           -       (369) 
              ----------  ----------  ----------  ----------  ----------  ---------- 
 before tax          516      34,902      35,418         252    (10,071)     (9,819) 
Tax on 
 return             (83)          83           -           -           -           - 
              ----------  ----------  ----------  ----------  ----------  ---------- 
Return after 
 tax                 433      34,985      35,418         252    (10,071)     (9,819) 
              ----------  ----------  ----------  ----------  ----------  ---------- 
Return per 
 share              0.3p       21.5p       21.8p        0.2p      (7.2)p      (7.0)p 


as at 31 March 2021

                                                  31 March 2021  31 March 2020 
                                                      GBP000         GBP000 
Fixed assets: 
  Investments                                            87,078         59,191 
                                                     ----------     ---------- 
Current assets: 
  Debtors                                                 1,662             79 
  Cash and cash equivalents                              28,567         15,203 
                                                     ----------     ---------- 
                                                         30,229         15,282 
Creditors (amounts falling due within one year)         (1,807)          (117) 
                                                     ----------     ---------- 
Net current assets                                       28,422         15,165 
                                                     ----------     ---------- 
Net assets                                              115,500         74,356 
                                                     ----------     ---------- 
Capital and reserves: 
Called-up equity share capital                            8,102          6,945 
Share premium                                            20,175          8,401 
Capital redemption reserve                                  511            367 
Capital reserve                                          63,547         61,247 
Revaluation reserve                                      22,343        (2,993) 
Revenue reserve                                             822            389 
                                                     ----------     ---------- 
Total equity shareholders' funds                        115,500         74,356 
                                                     ----------     ---------- 
Net asset value per share                                 71.3p          53.5p 


for the year ended 31 March 2021

               ---------------Non-distributable reserves---------------  Distributable reserves     Total 
               Called up share     Share     redemption    Revaluation     Capital     Revenue 
                   capital        premium     reserve       reserve*       reserve     reserve 
                   GBP000         GBP000      GBP000         GBP000        GBP000      GBP000       GBP000 
At 1 April 
 2020                    6,945       8,401          367         (2,993)      61,247          389      74,356 
Return after 
 tax                         -           -            -          25,336       9,649          433      35,418 
 paid                        -           -            -               -     (5,690)            -     (5,690) 
Net proceeds 
 of share 
 issues                  1,301      11,774            -               -           -            -      13,075 
 cancellation            (144)           -          144               -     (1,659)            -     (1,659) 
                    ----------  ----------   ----------      ----------  ----------   ----------  ---------- 
At 31 March 
 2021                    8,102      20,175          511          22,343      63,547          822     115,500 
                    ----------  ----------   ----------      ----------  ----------   ----------  ---------- 


for the year ended 31 March 2020

               ---------------Non-distributable reserves---------------  Distributable reserves     Total 
               Called up share     Share     redemption    Revaluation     Capital     Revenue 
                   capital        premium     reserve       reserve*       reserve     reserve 
                   GBP000         GBP000      GBP000         GBP000        GBP000      GBP000       GBP000 
At 1 April 
 2019                    6,502       1,555          215           6,679      67,341        1,817      84,109 
Return after 
 tax                         -           -            -         (9,672)       (399)          252     (9,819) 
 paid                        -           -            -               -     (3,904)      (1,680)     (5,584) 
Net proceeds 
 of share 
 issues                    595       6,846            -               -           -            -       7,441 
 cancellation            (152)           -          152               -     (1,791)            -     (1,791) 
                    ----------  ----------   ----------      ----------  ----------   ----------  ---------- 
At 31 March 
 2020                    6,945       8,401          367         (2,993)      61,247          389      74,356 
                    ----------  ----------   ----------      ----------  ----------   ----------  ---------- 

*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.


for the year ended 31 March 2021

                                                   Year ended     Year ended 
                                                  31 March 2021  31 March 2020 
                                                     GBP000         GBP000 
Cash flows from operating activities: 
Return before tax                                        35,418        (9,819) 
Adjustments for: 
(Gain)/loss on disposal of investments                  (8,998)            728 
Movements in fair value of investments                 (28,956)          8,050 
(Increase)/decrease in debtors                            (460)            142 
Increase/(decrease) in creditors                          1,690           (83) 
                                                     ----------     ---------- 
Net cash outflow from operating activities              (1,306)          (982) 
                                                     ----------     ---------- 
Cash flows from investing activities: 
Purchase of investments                                 (9,973)       (11,850) 
Sale/repayment of investments                            18,917          8,006 
                                                     ----------     ---------- 
Net cash inflow/(outflow) from investing 
 activities                                               8,944        (3,844) 
                                                     ----------     ---------- 
Cash flows from financing activities: 
Issue of ordinary shares                                 13,427          7,568 
Share issue expenses                                      (352)          (127) 
Share subscriptions held pending allotment                    -        (6,468) 
Purchase of ordinary shares for cancellation            (1,659)        (1,791) 
Equity dividends paid                                   (5,690)        (5,584) 
                                                     ----------     ---------- 
Net cash inflow/(outflow) from financing 
 activities                                               5,726        (6,402) 
                                                     ----------     ---------- 
Increase/(decrease) in cash and cash equivalents         13,364       (11,228) 
Cash and cash equivalents at beginning of year           15,203         26,431 
                                                     ----------     ---------- 
Cash and cash equivalents at end of year                 28,567         15,203 
                                                     ----------     ---------- 


as at 31 March 2021

                                                                    % of 
                                            Cost      Valuation   net assets 
                                           GBP000      GBP000      by value 
Fifteen largest venture capital 
Entertainment Magpie Group                    1,503      17,114         14.8 
Lineup Systems                                  975       5,443          4.7 
Currentbody.com                               1,867       4,221          3.7 
SHE Software Group                            2,195       3,629          3.1 
Intelling Group                               1,142       3,416          3.0 
Oddbox                                          648       3,157          2.7 
Sorted Holdings                               2,715       3,045          2.6 
Buoyant Upholstery                            1,057       2,500          2.2 
Clarilis                                      1,828       2,374          2.1 
Volumatic Holdings                              216       2,228          1.9 
Biological Preparations Group                 2,166       1,958          1.7 
Newcells Biotech                              1,612       1,917          1.7 
Rockar                                        1,677       1,831          1.6 
Knowledgemotion                               1,778       1,781          1.5 
Soda Software Labs t.a. Hello Soda            1,499       1,574          1.4 
                                         ----------  ----------     -------- 
                                             22,878      56,188         48.7 
Other venture capital investments            34,253      22,013         19.4 
                                         ----------  ----------     -------- 
Total venture capital investments            57,131      78,201         68.1 
Listed equity investments                     6,336       7,582          6.6 
Listed interest-bearing investments           1,268       1,295          1.1 
                                         ----------  ----------     -------- 
Total fixed asset investments                64,735      87,078         75.8 
Net current assets                                       28,422         24.2 
                                                     ----------     -------- 
Net assets                                              115,500        100.0 
                                                     ----------     -------- 


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 manager 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 manager 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 2 VCT itself, the board and the manager follow Brexit developments closely with a view to identifying changes which might affect the company's investment portfolio. The manager 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 managers, 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 manager 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 manager. 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 manager 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.


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 the 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 directors' report and strategic report include 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 that 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 D P A Gravells (Chairman), Mr A M Conn, Mr S P Devonshire, Miss C A McAnulty and Mr F L G Neale.


The above summary of results for the year ended 31 March 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 return per share is based on the profit after tax for the year of GBP35,418,000

(2020: loss of GBP9,819,000) and on 162,830,534 (2020: 139,793,223) shares, being the weighted average number of shares in issue during the year.

The calculation of the net asset value per share as at 31 March 2021 is based on the net assets of GBP115,500,000 (2020: GBP74,356,000) divided by the 162,026,501 (2020: 138,886,797) ordinary shares in issue at that date.

If approved by shareholders, the proposed final dividend of 1.5 pence per share and the second interim dividend of 4.0 pence per share for the year ended 31 March 2021 will be paid on 10 September 2021 to shareholders on the register at the close of business on 20 August 2021.

The full annual report including financial statements for the year ended 31 March 2021 is expected to be posted to shareholders on or around 30 July 2021 and will be available to the public at the registered office of the company at Time Central, 32 Gallowgate, Newcastle upon Tyne NE1 4SN and on the company's website.

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 form part of, this announcement.


(END) Dow Jones Newswires

June 23, 2021 10:00 ET (14:00 GMT)

Copyright (c) 2021 Dow Jones & Company, Inc.

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