Final Results

Northern 2 VCT PLC
17 March 2003

17 MARCH 2003

NORTHERN 2 VCT PLC

PRELIMINARY RESULTS
FOR THE YEAR ENDED 31 JANUARY 2003



Northern 2 VCT PLC is a Venture Capital Trust (VCT) managed by Northern Venture
Managers.  The trust was launched in 1999 through a public share issue which
raised £22 million;  a further £22 million was raised in a second public issue
in 2001.  The trust invests mainly in unquoted venture capital situations and
aims to provide high long-term returns to shareholders through a combination of
dividend yield and capital growth.



Financial highlights (comparative figures as at 31 January 2002):

•         Net assets                                                 £42,622,000               £40,861,000
•         Net asset value per share                                        94.5p                     90.5p
•         Share price                                                        80p                       75p
•         Investment income                                           £1,983,000                £1,944,000
•         Net revenue before tax                                      £1,493,000                £1,524,000
•         Revenue return per share                                          2.3p                      3.1p
•         Dividend per share                                                2.5p                      2.5p




For further information, please contact:


Northern Venture Managers Limited
Alastair Conn, Managing Director                                   0191 244 6000
Website:  www.nvm.co.uk
Polhill Communications

Lucy Copeman/Marlene Scott                                         020 7655 0540




CHAIRMAN'S STATEMENT



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





During the period under review our company has continued to build on the
foundations laid in earlier years.  We have recorded a modest increase in net
asset value per share, added ten new holdings to our investment portfolio and
maintained the annual dividend.  Against a background of declining stock markets
and economic uncertainty, these achievements are not to be underestimated.



Net asset value



The net asset value per share at 31 January 2003 was 94.5p per share, 4.4% up on
the corresponding figure of 90.5p at 31 January 2002.  Over the same period the
FTSE All-Share index fell by 31.0% and the FTSE Small Cap (excluding investment
companies) index by 31.4%.



Investment portfolio



During the year ten new venture capital investments were completed, and we now
have a portfolio comprising 43 holdings with a total value of £22.9 million.
Detailed information on our investments is given in the annual report.
Inevitably some of the individual companies concerned have not lived up to
original expectations, but a number of others have made excellent progress and
the overall condition of the portfolio is broadly satisfactory.  Northern
Venture Managers have continued to produce a good flow of new investment
opportunities.



As the portfolio matures it will become increasingly important that successful
exits are achieved, generating cash resources for new investment and for paying
dividends to shareholders.  The current economic and financial climate is not
helpful to this process, but your directors review the portfolio at regular
intervals with Northern Venture Managers with a view to ensuring that
realisation opportunities have been identified and are being pursued.



Revenue and dividends



The revenue surplus before tax for the year was £1,493,000, compared with
£1,524,000 in the preceding year.  The revenue return per share fell from 3.1p
to 2.3p, reflecting a move in assets from the listed fixed-interest portfolio
into venture capital investments which initially tend to produce a lower yield.
An interim dividend of 1.0p per share was paid in December 2002 and a final
dividend of 1.5p is proposed, making a total of 2.5p - the same as last year.
This is equivalent to a 4.2% gross yield to a higher-rate taxpayer subscribing
for shares at 100p, and 5.2% if the 20% income tax relief on subscriptions is
taken into account.  The cumulative total of dividends declared by the company
is 9.6p per share.



Share price and market liquidity



The company's mid-market share price increased from 75p to 80p over the 12
months to 31 January 2003.  As before, there has been relatively little trading
in the company's shares:  during the year the company bought back 78,500 shares
in the market for cancellation at an average price of 71p per share.  A
resolution will be proposed at the annual general meeting to renew the board's
authority to purchase shares.  Our managers continue to work with other VCT
management groups to find ways of developing greater liquidity in the secondary
market for VCT shares.



VCT qualifying status



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



Corporate governance



We have continued to comply with current published guidance on best practice in
corporate governance.  In recent years this has been a fast-moving scene, with
pronouncements and recommendations emerging at regular intervals.  A corporate
governance statement covering the key matters relevant to the company and the
directors' remuneration report now required by company law are set out in the
annual report.



Future prospects



The past three years have been in many ways a challenging period in which to
build a portfolio of venture capital investments.  However we have managed to
achieve the happy combination of raising funds near the top of the market and
then investing them at a time when the markets are weak and there is good value
to be had.  We still have a strong reserve of liquid assets available for
investment and we continue to see a good flow of new proposals.



There is little doubt that economic conditions will remain difficult for some
time to come.  This emphasises the need for careful management of our portfolio,
so as to ensure that our companies will be in a position to take advantage when
the upturn eventually comes.  As was the case 12 months ago, it is difficult to
be more than cautiously optimistic about the medium term prospects for smaller
businesses in the UK.  But we are confident that we begin the new financial year
with a solid base from which to work.




The financial statements for the year ended 31 January 2003 will show the
results set out below.





STATEMENT OF TOTAL RETURN (INCORPORATING THE REVENUE ACCOUNT)

for the year ended 31 January 2003


                                                      Year ended                          Year ended
                                                    31 January 2003                     31 January 2002
                                             Revenue     Capital       Total     Revenue     Capital       Total
                                                £000        £000        £000        £000        £000        £000
Gains/(losses) on investments
  Realised on disposals                            -        (494)       (494)          -        (310)       (310)
  Unrealised revaluation movements                 -       2,978       2,978           -      (2,001)     (2,001)
                                              ------      ------      ------      ------      ------      ------
                                                   -       2,484       2,484           -      (2,311)     (2,311)
Income                                         1,983           -       1,983       1,944           -       1,944
Investment management fee                       (297)       (893)     (1,190)       (236)       (707)       (943)
Other expenses                                  (193)          -        (193)       (184)          -        (184)
                                              ------      ------      ------      ------      ------      ------
Return on ordinary activities
  before tax                                   1,493       1,591       3,084       1,524      (3,018)     (1,494)
Tax on ordinary activities                      (428)        289        (139)       (413)        197        (216)
                                              ------      ------      ------      ------      ------      ------
Return on ordinary activities
  after tax                                    1,065       1,880       2,945       1,111      (2,821)     (1,710)
Dividends                                     (1,128)          -      (1,128)     (1,130)          -      (1,130)
                                              ------      ------      ------      ------      ------      ------
Transfer to/(from) reserves                      (63)      1,880       1,817         (19)     (2,821)     (2,840)
                                              ------      ------      ------      ------      ------      ------
Return per share                                 2.3p        4.2p        6.5p        3.1p      (7.8)p      (4.7)p
Dividend per share                               2.5p         -          2.5p        2.5p         -          2.5p



BALANCE SHEET

as at 31 January 2003


                                       31 January  31 January 2002
                                            2003              £000
                                            £000
Fixed asset                               40,146            33,486
investments
Net current assets                         2,476             7,375
                                         -------           -------
Net assets                                42,622            40,861
                                         -------           -------

Capital and reserves
Called-up equity share                     2,254             2,258
capital
Share premium                             33,761            33,761
Capital redemption                             5                 1
reserve
Special reserve                            7,932             7,988
Capital reserve:
  Realised                                (2,273)           (1,175)
  Unrealised                                 912            (2,066)
Revenue reserve                               31                94
                                         -------           -------
Total equity                              42,622            40,861
shareholders' funds
                                         -------           -------
Net asset value per                         94.5p             90.5p
share




CASH FLOW STATEMENT

for the year ended 31 January 2003
                                                       Year ended                 Year ended
                                                     31 January 2003           31 January 2002
                                                       £000       £000              £000         £000
Cash flow statement
Net cash inflow from
  operating activities                                             738                            345
Taxation:
Corporation tax paid                                              (125)                          (216)
Financial investment:
Purchase of investments                             (14,365)                     (21,428)
Sale of investments                                  10,189                        7,187
                                                    -------                      -------
Net cash outflow from
  financial investment                                          (4,176)                       (14,241)
Equity dividends paid                                           (1,129)                          (792)
                                                               -------                        -------
Cash outflow before use of
liquid
  resources and financing                                       (4,692)                       (14,904)
Net cash flow from
  management of liquid                                           1,500                         (1,500)
resources
Financing:
Issue of ordinary shares                                  -                       22,042
Share issue expenses                                      -                       (1,102)
Shares purchased for                                    (56)                         (18)
cancellation
                                                    -------                      -------
Net cash inflow/(outflow) from                                     (56)                        20,922
financing
                                                               -------                        -------
Increase/(decrease) in cash                                     (3,248)                         4,518
at bank
                                                               -------                        -------
Reconciliation of net
revenue before
taxation to net cash flow
from
operating activities
Net revenue from ordinary activities                             1,493                          1,524
before tax
Decrease/(increase) in                                             146                           (238)
debtors
(Decrease)/increase in                                              (8)                          (216)
creditors
Management fees charged to                                        (893)                          (707)
capital
Other expenses charged to                                            -                            (18)
capital
                                                               -------                        -------
Net cash inflow from operating                                     738                            345
activities
                                                               -------                        -------
Analysis of cash at bank and
short-term investments
                                 1 February 2002            Cash flows                31 January 2003
                                            £000                  £000                           £000
Cash at bank                               5,862                (3,248)                         2,614
Short-term investments                     1,500                (1,500)                             -
                                         -------               -------                        -------
                                           7,362                (4,748)                         2,614
                                         -------               -------                        -------





INVESTMENT PORTFOLIO SUMMARY

as at 31 January 2003


                                                                       Valuation           % of net assets
                                                                            £000              by valuation
15 largest venture capital investments
DMN Installations                                                          3,531                       8.3
T J Brent                                                                  1,602                       3.8
John Fredericks Plastics                                                   1,594                       3.7
Stainton Metal Company                                                     1,552                       3.6
TFB Group                                                                  1,379                       3.2
Horncastle Industries                                                      1,083                       2.5
Crantock Bakery                                                            1,000                       2.3
Longhirst Group                                                              900                       2.1
T&D Packaging                                                                800                       1.9
Keith Prowse                                                                 790                       1.9
Arrow Industrial Group                                                       735                       1.7
RBF Industries                                                               650                       1.5
Tolwood                                                                      504                       1.2
West's Engineering Design                                                    480                       1.1
Fitzhardinge*                                                                463                       1.1
                                                                         -------                    ------
Fifteen largest venture capital investments                               17,063                      39.9
Other venture capital investments                                          5,798                      13.7
                                                                         -------                    ------
Total venture capital investments                                         22,861                      53.6
Listed fixed-interest investments                                         17,285                      40.6
                                                                         -------                    ------
Total fixed asset investments                                             40,146                      94.2
Net current assets                                                         2,476                       5.8
                                                                         -------                    ------
Net assets                                                                42,622                     100.0
                                                                         -------                    ------
*Listed on Alternative Investment Market





The above summary of results for the year ended 31 January 2003 does not
constitute statutory financial statements within the meaning of Section 240 of
the Companies Act 1985 and has not been delivered to the Registrar of Companies.
Statutory financial statements will be filed with the Registrar of Companies
in due course;  the auditors' report on those financial statements under S235 of
the Companies Act 1985 is unqualified and does not contain a statement under
S237(2) or (3) of the Companies Act 1985.

The proposed final dividend for the year ended 31 January 2003 will, if approved
by shareholders, be paid on 5 June 2003 to shareholders on the register at the
close of business on 2 May 2003.

Copies of the full annual report and financial statements for the year ended 31
January 2003 are expected to be posted to shareholders on 11 April 2003 and will
be available to the public at the registered office of the company at
Northumberland House, Princess Square, Newcastle upon Tyne NE1 8ER.

END


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