TIDMNTV
15 June 2022
NORTHERN 2 VCT PLC
ANNUAL FINANCIAL REPORT FOR THE YEARED 31 MARCH 2022
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 long-term tax-free
returns to shareholders through a combination of dividend yield and
capital growth.
Financial Summary (comparative figures as at 31 March 2021):
2022 2021
---------------- ----------------
Net assets GBP104.9m GBP115.5m
Net asset value per share 64.4p 71.3p
Return per share:
Revenue 0.2p 0.3p
Capital 0.4p 21.5p
Total 0.6p 21.8p
Dividend per share for the year:
Interim dividend 2.0p 2.0p
Second interim (special) dividend - 4.0p
Proposed final dividend 1.6p 1.5p
Total 3.6p 7.5p
Cumulative return to shareholders since launch:
Net asset value per share 64.4p 71.3p
Dividends paid per share* 132.4p 124.9p
Net asset value plus dividends paid per share 196.8p 196.2p
Mid-market share price at end of year 61.5p 61.0p
Share price discount to net asset value 4.5% 14.5%
Tax-free dividend yield (based on net asset value
per share at the start of year)
Excluding special dividend 5.0% 6.5%
Including special dividend N/A 14.0%
*Excluding proposed final dividend payable on 19 August 2022
Enquiries:
James Sly / Graham Venables, Mercia Asset Management PLC -- 0330
223 1430
Website:
https://www.globenewswire.com/Tracker?data=uO2hh52mdxRiUc9zzcb_FVBdzv9_Rg9o09cE31gsyYlHrTUfzGfUOu23FkO-xOHy-HZ6l1WEtHiotfpCjuugqVJuzpVk7KFpTXGQ4VovJNw=
www.mercia.co.uk/vcts
CHAIRMAN'S STATEMENT
The past year's economic landscape has been dominated by two
main drivers -- the lingering impact of COVID-19 measures and, in
the second half of the year, supply side shortages and inflationary
pressures, which have introduced volatility into the financial
markets.
Nonetheless I am pleased to report that despite a degree of
macroeconomic turbulence over the past 12 months, our investment
portfolio has not been materially impacted overall and has
continued to see strong realisation activity, consolidating the
excellent performance reported in the preceding year. The proceeds
of investments sold during the period totalled GBP26.2 million,
compared with an initial cost of GBP11.6 million. Investment
activity increased in the year, with GBP14.7 million invested
across 22 investee companies. The cash generated from investment
disposals, together with the proceeds of our fully subscribed
GBP17.0 million public share offer, means that your company is well
positioned both to pursue new opportunities to support small and
medium businesses and to work with existing portfolio companies to
realise their growth plans.
Results and dividend
In the year ended 31 March 2022 the company achieved a return of
0.6 pence per share (2021: 21.8 pence), equivalent to 0.8% of the
opening net asset value (NAV) per share as a result of several
profitable disposals. The NAV per share as at 31 March 2022, after
deducting dividends paid during the year totalling 7.5 pence, was
64.4 pence compared with 71.3 pence as at 31 March 2021.
Several investment realisations were completed during the year,
with a number of notable transactions either completed or in
progress as at the balance sheet date. Highlights were the partial
disposal of Oddbox, generating a return of 10.9 times the original
cost, and the sales of Currentbody.com and Intelling Group which
registered returns of 2.9 times and 3.6 times cost respectively
over their lifetimes (inclusive of loan interest received). The
part disposal of MusicMagpie on the company's flotation on AIM
generated a return of 11.6 times the original cost of the
investment, although the value of the retained shareholding fell
sharply in early 2022 reducing the lifetime return on the entire
investment as at 31 March 2022 to 7.2 times cost.
Net realised gains of GBP14.6 million underpinned the annual
performance. The return for the year also included a carefully
considered reduction of GBP2.3 million in the directors' valuation
of the unquoted portfolio. It is right to recognise where unquoted
investments do not perform as anticipated. The very significant
reduction in the number of air passengers during the pandemic
resulted in the liquidation of No 1 Lounges, resulting in a loss of
our investment, although the cost of this investment had already
been provided against in the preceding financial year. In addition
the company's investment in Avid was sold at a loss against
original cost following a decision not to provide further funding
to the company.
In 2018 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 whilst endeavouring to protect the NAV from erosion over
the medium term. Over the three years since 31 March 2019 the NAV
per share has decreased by 0.5% from 64.7 pence to 64.4 pence,
after taking account of dividend payments totalling 15.0 pence over
the same period. We have therefore broadly continued to meet our
objective.
Having already declared an interim dividend of 2.0 pence per
share which was paid in January 2022, your directors now propose a
final dividend of 1.6 pence. The total of 3.6 pence is equivalent
to 5.0% of the opening NAV of 71.3p per share. The proposed final
dividend will, subject to approval by shareholders at the annual
general meeting, be paid on 19 August 2022.
The target dividend yield will remain subject to regular review
and the level of future dividend distributions will continue to
reflect 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
While COVID-19 continued to provide challenges to some of our
portfolio companies, the changes it has driven in consumer habits
and working practices provided opportunities for others. The
software and electronics sub-sectors have broadly remained
resilient throughout the pandemic and investments in these areas
represent a little over 20% by cost of the portfolio. sub-sectors
have broadly remained resilient throughout the pandemic and
investments in these areas represent a little over 20% by cost of
the portfolio. Your directors take great care when considering the
valuations of the unquoted venture portfolio and have updated
valuations to reflect current market conditions where
appropriate.
In the first quarter of 2022 stock markets fell sharply in
reaction to the news of inflationary pressures and the conflict in
Ukraine. Despite this our portfolio of listed investments ended the
year marginally ahead, rising by 3.9% compared to March 2021.
In response to the conflict in Ukraine, our investment manager
undertook a review of the entire portfolio for links to sanctioned
individuals and companies, and continues to monitor the situation
carefully.
After the restrictions caused by COVID-19 in the year to March
2021, investment levels have recovered this year and have exceeded
pre-pandemic levels, with GBP9.6 million of capital provided to
nine new venture capital investments and GBP5.1 million of follow
on capital invested into the existing portfolio.
Since the year end we have also disposed of our holding in
another recent early stage investment, Knowledgemotion, for initial
net proceeds of GBP3.0 million, representing a 1.7 times return on
the original cost.
As of March 2022 33% by value of our venture capital portfolio
at the year-end comprised "legacy" investments in more mature
businesses acquired under the previous (pre-2015) VCT rules. This
mature portfolio will continue to reduce as a percentage of overall
capital invested as we realise our holdings in these investments,
and 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.
Your company is mindful of its Environmental, Social and
Governance (ESG) responsibilities and we have outlined our evolving
approach in the annual report which will be made available on
Mercia's website.
Investment manager
The transitional services agreement, covering the transfer of
the company's administrative, accounting and company secretarial
services, terminated on 31 March 2022. Mercia Fund Management now
performs the functions in respect of the post-2015 investments,
accounting and company secretarial services which were previously
undertaken by NVM Private Equity prior to the novation of the
company's investment management agreement in December 2019. NVM
will continue to play an important role in managing part of the
legacy portfolio of more mature investments. I would like to thank
the directors and staff of both organisations for their hard work
during the transitional period.
At the end of March 2022 Tim Levett retired from his position
leading the fund manager's VCT investment team. Tim leaves behind
an experienced team, led by the newly promoted VCT partners and
overseen by Peter Dines, with whom he has worked closely since
Mercia took over the fund management agreement. I would like to
take this opportunity to thank Tim for his immense contribution to
Northern 2 VCT over the past 23 years, and we wish him a happy
retirement.
Share offer and liquidity
As a result of the public share offer launched in January 2022,
25,597,510 new ordinary shares were issued in April 2022 for gross
proceeds of GBP17.0 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.
Following the increase in the rate of investment in the past
year, we will continue to monitor liquidity prior to taking a view
on possible fundraising in the 2022/23 tax year.
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
2,089,334 shares were repurchased for cancellation, equivalent to
approximately 1.3% of the opening share capital.
Annual general meeting
The company's annual general meeting (AGM) will take place on 10
August 2022. The AGM usually provides an excellent opportunity for
shareholders, directors and the manager to meet in person and
exchange views and comment, but in 2020 and 2021 we held the
meetings remotely in view of Government advice concerning
non-essential travel and social distancing. Subject to any
subsequent restrictions being enforced, we intend to hold the 2022
AGM in person at The Royal College of General Practitioners, 30
Euston Square, London NW1 2FB. Following positive feedback received
from the last two years, we also intend to offer remote access for
shareholders through an online webinar facility for those who would
prefer not to travel. Full details and formal notice of the AGM are
set out in a separate document.
Board of directors
Your board recognises the need to consider succession planning
and with due regard to developing its diversity. 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. As previously announced, Alastair Conn
will retire as a director at the AGM in August 2022 and it is
envisaged that two other directors will retire over the next two
years.
On behalf of the board I would like to thank Alastair for his
invaluable contribution during his period on the board. He
co-founded NVM Private Equity along with Tim Levett and Michael
Denny, and was managing director during the formative first decade
of the VCT sector from 1995. He has worked with us through some
very significant changes, notably in recent years the re-framing of
the investing rules in 2015 and more recently the transfer of our
management agreement from NVM to Mercia in 2019. We shall miss his
expertise and guidance.
I am delighted to report that Ranjan Ramparia was appointed to
the board on 27 May 2022. Ranjan has extensive experience in
advising management teams, corporate finance, including valuations,
and investment management. We look forward to benefiting from her
significant experience over the coming years.
As reported in previous years, 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 the valuation of unquoted assets,
performance fees and fund raising.
All the directors who served throughout the year, with the
exception of Alastair Conn, will be seeking re-election at the 2022
AGM in accordance with the AIC Code of Corporate Governance. Ranjan
Ramparia will be seeking election as a director following her
recent appointment.
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 2022 Spring Budget statement, it
is possible that further changes will be made in the future.
The upcoming 2025 'sunset clause' was a European state aid
requirement when the VCT scheme received state aid approval, which
means that without a small change in legislation investors will not
receive upfront tax relief when investing in VCTs after this date.
The Treasury Select Committee has already issued a call for
evidence on the venture capital market and we expect a review of
all current tax advantaged schemes by the Government in the period
up to 2025. The board considers that the company, and VCTs more
generally, are successfully delivering against the Government's
mandate, which is to channel money into higher-risk, early-stage
businesses. Mercia is represented on the relevant committees of the
various trade bodies working to demonstrate to Government the
positive contribution that VCTs make to the UK economy.
We will continue to work closely with Mercia to maintain
compliance with the scheme rules at all times.
Outlook
Despite macroeconomic headwinds caused by domestic inflation and
the residual impact of COVID-19 measures and the possibility that
the UK economy may slip into recession, your directors remain
encouraged by the resilience of the portfolio to date.
We remain committed to supporting early stage businesses in the
UK and believe that your company is set up and well placed to
support both its existing portfolio and the exciting selection of
new companies that are currently in the investment pipeline.
We thank our investors for their continuing support.
David Gravells
Chairman 15 June 2022
Extracts from the audited financial statements for the year
ended 31 March 2022 are set out below.
INCOME STATEMENT
for the year ended 31 March 2022
Year ended 31 March 2022 Year ended 31 March 2021
Revenue Capital Total Revenue Capital Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Gain/(loss)
on disposal
of
investments - 4,491 4,491 - 8,998 8,998
Movements in
fair value
of
investments - (2,265) (2,265) - 28,956 28,956
---------- ---------- ---------- ---------- ---------- ----------
- 2,226 2,226 - 37,954 37,954
Income 1,314 - 1,314 1,421 - 1,421
Investment
management
fee (541) (1,621) (2,162) (460) (3,052) (3,512)
Other
expenses (455) - (455) (445) - (445)
---------- ---------- ---------- ---------- ---------- ----------
Return
before tax 318 605 923 516 34,902 35,418
Tax on
return (3) 3 - (83) 83 -
---------- ---------- ---------- ---------- ---------- ----------
Return after
tax 315 608 812 433 34,985 35,418
---------- ---------- ---------- ---------- ---------- ----------
Return per 0.2p 0.4p 0.6p 0.3p 21.5p 21.8p
share
BALANCE SHEET
as at 31 March 2022
31 March 2022 31 March 2021
GBP000 GBP000
Fixed assets:
Investments 77,878 87,078
---------- ----------
Current assets:
Debtors 43 1,662
Cash and cash equivalents 27,086 28,567
---------- ----------
27,129 30,229
Creditors (amounts falling due within one year) (153) (1,807)
---------- ----------
Net current assets 26,976 28,422
---------- ----------
Net assets 104,854 115,500
---------- ----------
Capital and reserves:
Called-up equity share capital 8,145 8,102
Share premium 21,952 20,175
Capital redemption reserve 615 511
Capital reserve 63,642 63,547
Revaluation reserve 9,765 22,343
Revenue reserve 735 822
---------- ----------
Total equity shareholders' funds 104,854 115,500
---------- ----------
Net asset value per share 64.4p 71.3p
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2022
---------------Non-distributable reserves--------------- Distributable reserves Total
Capital
Called up share Share redemption Revaluation Capital Revenue
capital premium reserve reserve* reserve reserve
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 April
2021 8,102 20,175 511 22,343 63,547 822 115,500
Return after
tax - - - (12,578) 13,186 315 923
Dividends
paid - - - - (11,703) (402) (12,105)
Net proceeds
of share
issues 147 1,837 - - - - 1,984
Shares
purchased
for
cancellation (104) (60) 104 - (1,388) - (1,448)
---------- ---------- ---------- ---------- ---------- ---------- ----------
At 31 March
2022 8,145 21,952 615 9,765 63,642 735 104,854
---------- ---------- ---------- ---------- ---------- ---------- ----------
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2021
---------------Non-distributable reserves--------------- Distributable reserves Total
Capital
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
Dividends
paid - - - - (5,690) - (5,690)
Net proceeds
of share
issues 1,301 11,774 - - - - 13,075
Shares
purchased
for
cancellation (144) - 144 - (1,659) - (1,659)
---------- ---------- ---------- ---------- ---------- ---------- ----------
At 31 March
2021 8,102 20,175 511 22,343 63,547 822 115,500
---------- ---------- ---------- ---------- ---------- ---------- ----------
*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 31 March 2022
Year ended Year ended
31 March 2022 31 March 2021
GBP000 GBP000
Cash flows from operating activities:
Return before tax 923 35,418
Adjustments for:
(Gain)/loss on disposal of investments (4,491) (8,998)
Movements in fair value of investments 2,265 (28,956)
(Increase)/decrease in debtors 1,619 (460)
Increase/(decrease) in creditors (1,654) 1,690
---------- ----------
Net cash outflow from operating activities (1,338) (1,306)
---------- ----------
Cash flows from investing activities:
Purchase of investments (16,414) (9,973)
Sale/repayment of investments 27,840 18,917
---------- ----------
Net cash inflow/(outflow) from investing
activities 11,426 8,944
---------- ----------
Cash flows from financing activities:
Issue of ordinary shares 1,984 13,427
Share issue expenses (60) (352)
Purchase of ordinary shares for cancellation (1,388) (1,659)
Equity dividends paid (12,105) (5,690)
---------- ----------
Net cash inflow/(outflow) from financing
activities (11,569) 5,726
---------- ----------
Increase/(decrease) in cash and cash equivalents (1,481) 13,364
Cash and cash equivalents at beginning of year 28,567 15,203
---------- ----------
Cash and cash equivalents at end of year 27,086 28,567
---------- ----------
INVESTMENT PORTFOLIO SUMMARY
as at 31 March 2022
% of
Cost Valuation net assets
GBP000 GBP000 by value
Fifteen largest venture capital
investments:
Lineup Systems 975 7,222 6.9
Evotix (formerly SHE Software Group) 2,518 5,395 5.1
Volumatic Holdings 216 3,339 3.2
Grip-UK (T/A Climbing Hangar) 3,213 3,213 3.1
Oddbox 355 3,098 3.0
Knowledgemotion 1,778 3,040 2.9
Buoyant Upholstery 1,056 2,694 2.6
musicMagpie* 222 2,074 2.0
Biological Preparations Group 2,166 1,947 1.9
Newcells Biotech 1,612 1,928 1.8
Clarilis 1,828 1,911 1.8
Rockar 1,693 1,880 1.8
Intechnica 1,607 1,770 1.7
Tutora (T/A Tutorful) 1,843 1,765 1.7
Project Glow Topco (T/A
Currentbody.com) 1,544 1,544 1.5
---------- ---------- --------
22,626 42,820 41.0
Other venture capital investments 37,612 25,836 24.9
---------- ---------- --------
Total venture capital investments 60,238 68,656 65.9
Listed equity investments 6,549 7,932 7.6
Listed interest-bearing investments 1,326 1,290 1.2
---------- ---------- --------
Total fixed asset investments 68,113 77,878 74.7
----------
Net current assets 26,976 25.3
---------- --------
Net assets 104,854 100.0
---------- --------
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 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 lingering impact of
the COVID 19 pandemic, inflationary pressures, and conflict in
Ukraine. 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.
UK's ongoing relationship with the European Union risk:
following the UK's withdrawal from the European Union in January
2020, the ongoing relationship is evolving which may impact on the
trading activities of some investee companies. Mitigation: whilst
we do not expect any significant impact on the operations of
Northern 2 VCT itself, the board and the manager follow
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 the
conflict in Ukraine, 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 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.
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 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, Mr F L G Neale and Miss R Ramparia.
OTHER MATTERS
The above summary of results for the year ended 31 March 2022
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 GBP923,000
(2021: GBP35,418,000) and on 162,327,382 (2021: 162,830,534)
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
2022 is based on the net assets of GBP104,854,000 (2021:
GBP115,500,000) divided by the 162,907,914 (2021: 162,026,501)
ordinary shares in issue at that date.
If approved by shareholders, the proposed final dividend of 1.6
pence per share for the year ended 31 March 2022 will be paid on 19
August 2022 to shareholders on the register at the close of
business on 29 July 2022.
The full annual report including financial statements for the
year ended 31 March 2022 is expected to be made available to
shareholders on or around 8 July 2022 and will be available to the
public at the registered office of the company at Forward House, 17
High Street, Henley-in-Arden B95 5AA and on the company's
website.
Neither the contents of the Mercia Asset Management PLC website,
nor the contents of any website accessible from hyperlinks on the
Mercia Asset Management PLC website (or any other website), are
incorporated into, or form part of, this announcement.
(END) Dow Jones Newswires
June 15, 2022 10:00 ET (14:00 GMT)
Copyright (c) 2022 Dow Jones & Company, Inc.
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