Interim Results

Northern 3 VCT PLC 19 June 2003 19 JUNE 2003 NORTHERN 3 VCT PLC INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2003 Northern 3 VCT PLC is a Venture Capital Trust (VCT) launched in 2001 and managed by Northern Venture Managers. The trust intends to invest 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 March 2002 in brackets): • Net assets £15,086,000 (£8,215,000) • Net asset value per share 95.5p (94.6p) • Net revenue before tax £158,000 (£18,000 loss) • Revenue return per share 0.9p (0.7p loss) • Interim dividend per share 0.4p (Nil) • Share price at end of period 95p (95p) For further information, please contact: John Hustler (Chairman, Northern 3 VCT PLC) Alastair Conn (Managing Director, Northern Venture Managers Limited) 0191 244 6000 Website: www.nvm.co.uk Lucy Copeman/Marlene Scott Polhill Communications 020 7655 0540 CHAIRMAN'S STATEMENT The Chairman of Northern 3 VCT PLC, John Hustler, included the following points in his interim statement to shareholders: In spite of difficult market conditions, I am pleased to say that your company has made progress over the last six months. We have added six new venture capital investments, five of which are VCT qualifying holdings. We have also completed a public issue of new ordinary shares. I would like to take this opportunity to welcome our new investors and to thank all shareholders for their continuing support. Net asset value The unaudited net asset value per share at 31 March 2003 was 95.5p, down by 1.4% compared with the figure of 96.9p at 30 September 2002. During the same period the FTSE AIM index fell by 10.3% and the FTSE All Share index fell by 3.7%. Investments The new investments completed during the half year were: • Crantock Bakery (£399,000) - supplier of premium hand-made Cornish pasties, Newquay • Arrow Industrial Group (£245,000) - manufacturer of industrial doors and curtains, Hull • RBF Industries (£250,000) - manufacturer of healthcare products and flexible heat shields, Southend-on-Sea • Longhirst Group (£300,000) - provider of business training and conference services, Morpeth • Alizyme (£119,000) - drug discovery company, Cambridge • Crabtree of Gateshead (£219,000) - manufacturer of metal printing machinery, Gateshead The majority of our investments are showing encouraging progress but under our valuation policy, based on the British Venture Capital Association's guidelines, it is too early to recognise any increase in their value. However some difficulties have been experienced with one of the operating divisions of Horncastle Industries and, as a result, a partial provision has been made against the investment. Latest reports indicate that the company's corrective measures are having a positive effect. Our two quoted investments, PM Group and Alizyme, are both trading comfortably above their respective issue prices. Revenue and dividend The revenue return per share for the half year was 0.9p, compared with a loss of 0.7p for the corresponding period to 31 March 2002. As you will recall, an interim dividend of 0.4p per share was paid on 6 February 2003 to coincide with the new share issue. It is intended that a final dividend for the year ending 30 September 2003 will be paid in February 2004. Share issue In January 2003 we launched new public share offers for the 2002/03 and 2003/04 tax years, with the objective of raising up to £15 million of additional capital for future investment. The outcome of the offers was disappointing, with a total of only £3 million raised despite a two-month extension of the offer period until June 2003. Market conditions were very difficult for those VCTs which sought to raise funds this year, with an estimated total of £50 million being subscribed compared to three times as much in the previous year: many investors were deterred by the state of the stock markets, and the VCT capital gains tax deferral relief has become less attractive due to a general absence of capital gains and also the effect of tapering relief on marginal CGT rates. Your directors continue to believe that VCTs offer an attractive investment opportunity as well as providing vital equity capital to young maturing companies. It is to be hoped that the Government will continue to recognise the role played by VCTs in stimulating the enterprise economy and will review and improve VCT tax reliefs for investors in the light of the reduction in capital raised in the last year. Share price There has been very little trading in the company's shares at this early stage in its life and the mid-market share price has remained steady at 95p. As envisaged in our original prospectus, we have now obtained Court consent to the cancellation of part of the share premium account in order to create a new special balance sheet reserve, which can be used if required to buy back the company's shares for cancellation. Prospects We are pleased that net assets are now in excess of £15 million but continue to believe that all shareholders would benefit from a larger fund. The directors still have authority to issue a limited number of new shares in response to demand, and when market conditions are favourable we will be open to the possibility of launching a further public offer. Meanwhile we have sufficient funds to continue to build our diversified portfolio by investing significant sums in opportunities of a reasonable size through our ability to co-invest with other funds managed by Northern Venture Managers. With encouraging signs of some recovery of interest in the smaller company sector, as evidenced by the fact that the FTSE AIM index has subsequently more than recovered the loss for the half year to 31 March 2003, and a strong deal flow, your directors look to the future of Northern 3 VCT with confidence. The unaudited interim financial statements for the six months ended 31 March 2003 are as shown below. STATEMENT OF TOTAL RETURN (INCORPORATING THE REVENUE ACCOUNT) (unaudited) for the six months ended 31 March 2003 Six months ended 31 March 2003 30 weeks ended 31 March 2002 Revenue Capital Total Revenue Capital Total £000 £000 £000 £000 £000 £000 Gains/(losses) on investments: Realised on disposal - - - - - - Unrealised revaluation movements - (140) (140) - - - ------ ------ ------ ------ ------ ------ - (140) (140) - - - Income 287 - 287 41 - 41 Investment management fee (41) (122) (163) (7) (20) (27) Other expenses (88) (21) (109) (52) - (52) ------ ------ ------ ------ ------ ------ Return/(loss) on ordinary activities before tax 158 (283) (125) (18) (20) (38) Tax on ordinary activities (31) 24 (7) - - - ------ ------ ------ ------ ------ ------ Return/(loss) on ordinary activities after tax 127 (259) (132) (18) (20) (38) Dividend (58) - (58) - - - ------ ------ ------ ------ ------ ------ Transfer to/(from) reserves 69 (259) (190) (18) (20) (38) ------ ------ ------ ------ ------ ------ Return/(loss) per share 0.9p (1.8)p (0.9)p (0.7)p (0.7)p (1.4)p Dividend per share 0.4p - 0.4p - - - 56 weeks ended 30 September 2002 Revenue Capital Total £000 £000 £000 Gains/(losses) on investments: Realised on disposal - - - Unrealised revaluation movements - 344 344 ------ ------ ------ - 344 344 Income 269 - 269 Investment management fee (34) (102) (136) Other expenses (124) - (124) ------ ------ ------ Return on ordinary activities before tax 111 242 353 Tax on ordinary activities (22) 20 (2) ------ ------ ------ Return on ordinary activities after tax 89 262 351 Dividend (84) - (84) ------ ------ ------ Transfer to reserves 5 262 267 ------ ------ ------ Return per share 1.2p 3.4p 4.6p Dividend per share 0.6p - 0.6p BALANCE SHEET (unaudited) as at 31 March 2003 31 March 2003 31 March 2002 30 September 2002 £000 £000 £000 Venture capital investments: Unlisted 2,260 280 1,138 Listed 327 - 176 ----- ----- ----- Total venture capital 2,587 280 1,314 investments Listed fixed-interest 7,669 - 8,179 investments ----- ----- ----- Total fixed asset 10,256 280 9,493 investments Net current assets 4,830 7,935 4,038 ----- ----- ----- Net assets 15,086 8,215 13,531 ----- ----- ----- Capital and reserves Called-up equity share 790 434 698 capital Share premium 7,959 7,819 12,566 Special reserve 6,260 - - Capital reserve: Realised (201) (20) (82) Unrealised 204 - 344 Revenue reserve 74 (18) 5 ----- ----- ----- Total equity 15,086 8,215 13,531 shareholders' funds ----- ----- ----- Net asset value per 95.5p 94.6p 96.9p share CASH FLOW STATEMENT (unaudited) for the six months ended 31 March 2003 Six months ended 30 weeks 56 weeks ended ended 30 September 2002 31 March 2003 31 March 2002 £000 £000 £000 £000 £000 £000 Cash flow statement Net cash inflow/ (outflow) from operating activities 48 150 (258) Taxation: Corporation tax paid - - - Financial investment: Purchase of investments (2,157) (280) (9,149) Sale/repayment of 1,254 - - investments ---- ---- ---- Net cash outflow from financial investment (903) (280) (9,149) Equity dividends paid (144) - - ---- ---- ---- Net cash outflow before use of liquid resources and (999) (130) (9,407) financing Net cash inflow/ (outflow) from management of liquid - - (2,867) resources Financing: Shares issued Redeemable preference - 50 50 Ordinary 1,830 8,687 13,975 Share issue expenses (85) (434) (698) Shares purchased for - - (13) cancellation Redemption of - (50) (50) preference shares ---- ---- ---- Net cash inflow from 1,745 8,253 13,264 financing ---- ---- ---- Increase in cash at 746 8,123 990 bank ---- ---- ---- Reconciliation of net revenue before taxation to net cash flow from operating activities Net revenue/(loss) from ordinary activities before tax 158 (18) 111 (Increase)/decrease in 29 (35) (296) debtors Increase in creditors 4 223 29 Management fees charged (122) (20) (102) to capital Other expenses charged (21) - - to capital ---- ---- ---- Net cash inflow/ (outflow) from operating activities 48 150 (258) ---- ---- ---- Reconciliation of movement in net funds 1 October Cash 31 2002 flows March 2003 £000 £000 £000 Cash at bank 990 746 1,736 Short-term investments 2,867 - 2,867 ---- --- ---- Net funds 3,857 746 4,603 ---- --- ---- INVESTMENT PORTFOLIO SUMMARY as at 31 March 2003 Valuation % of net assets £000 by valuation Venture capital investments: Horncastle Industries 437 2.9 Crantock Bakery 399 2.6 Longhirst Group 300 2.0 Keith Prowse 280 1.9 RBF Industries 250 1.7 Arrow Industrial Group 245 1.6 Crabtree of Gateshead 219 1.4 PM Group** 205 1.4 Alizyme* 123 0.8 Liquidlogic 88 0.6 Oxonica 41 0.3 ------ ----- Total venture capital investments 2,587 17.2 Listed fixed-interest investments 7,669 50.8 ------ ----- Total fixed asset investments 10,256 68.0 Net current assets 4,830 32.0 ------ ----- Net assets 15,086 100.0 ------ ----- * Listed on London Stock Exchange **Traded on Alternative Investment Market The above summary of results for the six months ended 31 March 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. A copy of the interim report for the six months ended 31 March 2003 is expected to be posted to shareholders on 27 June 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. ENDS This information is provided by RNS The company news service from the London Stock Exchange

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