Interim Results

Northern 3 VCT PLC 18 May 2007 18 MAY 2007 NORTHERN 3 VCT PLC UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2007 Northern 3 VCT PLC is a Venture Capital Trust (VCT) managed by NVM Private Equity (formerly Northern Venture Managers). It invests mainly in unquoted venture capital holdings and aims to provide high long-term tax-free returns to shareholders through a combination of dividend yield and capital growth. Financial highlights: (comparative figures as at 31 March 2006 in italics) 2007 2006 • Net assets £29.5m £30.3m • Net asset value per share 97.0p 97.2p • Return per share Revenue 1.4p 1.4p Capital 2.2p 1.7p Total 3.6p 3.1p • Interim dividend per share in respect of the period Revenue 1.4p 1.0p Capital 0.6p 1.0p Total 2.0p 2.0p • Cumulative returns to shareholders since launch Net asset value per share 97.0p 97.2p Dividends paid per share* 12.9p 8.9p Net asset value plus dividends paid per share 109.9p 106.1p • Share price at end of period 85.0p 85.0p *Excluding interim dividend For further information, please contact: NVM Private Equity Limited 0191 244 6000 Alastair Conn, Managing Director Website: www.nvm.co.uk Lansons Communications 020 7294 3685 Karen Mignon NORTHERN 3 VCT PLC CHAIRMAN'S STATEMENT The Chairman of Northern 3 VCT PLC, John Hustler, included the following points in his statement to shareholders: I am pleased to report that the company has continued to make steady progress during the half year to 31 March 2007. Results The unaudited net asset value per share at 31 March 2007 was 97.0p, an increase of 1.9% over the audited figure of 95.2p at 30 September 2006. The return per share for the half year was 3.6p, compared with 3.1p in the corresponding period last year. The revenue element of the return per share for the period was unchanged at 1.4p. The directors have declared a first interim dividend of 2.0p per share (2006 2.0p), comprising 1.4p revenue and 0.6p capital distribution, which will be paid on 20 July 2007 to shareholders on the register on 22 June 2007. This will bring the cumulative total of dividends paid by the company to 14.9p per share. Investments During the half year five new investments totalling £2.4 million were completed: • Brulines (Holdings) (£183,000) - AIM-quoted provider of revenue protection systems for the licensed trade, Stockton-on-Tees • Product Support (Holdings) (£1,000,000) - logistics services contractor to the defence industry, Kingswinford • Gentronix (£119,000) - drug development support services, Manchester • Promanex Group Holdings (£1,000,000) - engineering and maintenance services contractor, Nuneaton • Vastox (£114,000) - AIM-quoted provider of drug discovery services, Abingdon (acquired in a share-for-share exchange for the former holding in Daniolabs) Since 31 March we have completed an investment of £198,000 in Maelor, an AIM-quoted specialist pharmaceutical and medical devices company, and our managers have approved four further venture capital investments (three unquoted, one quoted on AIM) totalling £2.9 million which we hope to complete during the six months ending 30 September 2007. This is a satisfactory level of activity given the current strong competition for new deals in the market in which our managers operate. Daniolabs was the only disposal from the venture capital portfolio during the period, but since 31 March bids for our AIM-quoted holdings in Computer Software Group and PM Group have been declared unconditional, generating cash proceeds of £510,000 and realised gains of £267,000. Sale negotiations are currently in progress in relation to several other investments. The board reviews the portfolio regularly with the directors of NVM and it is encouraging that most of our companies are currently making good progress. However Nightingales Holdings, the mail order and internet retailer of women's clothing in which we invested just over a year ago, has found trading conditions difficult in recent months and consequently a 50% provision has been made against the cost of the investment to reflect its under-performance. Our managers are working intensively with the company during this challenging period. Shareholder issues During the six months to 31 March 2007 the company bought back for cancellation 438,018 shares, representing approximately 1.4% of the issued capital. This is in line with the level of buy-backs in the preceding financial year. In the medium term your directors would like to see an active secondary market in the company's shares develop, and we recognise that the best way of encouraging this is to achieve good performance and in particular to maintain a strong dividend yield. At the current quoted offer price of 90p and on the basis of last year's dividend of 4.0p, Northern 3 VCT shares are currently yielding 4.4% free of tax. Your board and managers will continue to work with representative bodies such as the Association of Investment Companies to present the investment merits of VCTs to the private investor market. The company's dividend investment scheme has continued to operate, enabling shareholders to re-invest their dividend in new ordinary shares with the benefit of VCT tax reliefs at the current rates. Shareholders interested in joining the scheme should contact the company secretary for further information. The annual general meeting in April 2007 was held in London and the directors were pleased to meet a number of shareholders on that occasion. The next annual general meeting will be held in Edinburgh in July 2008. VCT qualifying status Your board continues to monitor progress towards HM Revenue & Customs' qualifying targets with the help of PricewaterhouseCoopers LLP, who are retained to advise on this and other tax matters. We are satisfied that the company has continued to fulfil the conditions for maintaining VCT status. As I reported last year, in order to maximise the time available for satisfying the VCT qualifying tests in respect of the funds raised in 2005, the directors have decided to extend the company's current financial year by changing the accounting year end to 31 March. The next audited accounts will be drawn up for the 18 months ending 31 March 2008 and in the meantime unaudited interim accounts will be published for the 12 months ending 30 September 2007. We intend to pay a second interim dividend in January 2008. Prospects The flow of new investment opportunities is currently good and we hope to achieve some profitable exits from existing portfolio companies in the foreseeable future. The recent Budget changes may have the effect of reducing investor demand for new VCT issues in future, as well as restricting the investment flexibility of new funds. We believe that this will increase the relative attraction of those established VCTs which can demonstrate a maturing portfolio and the prospect of a tax-free dividend yield. Our investments will continue to be managed actively with a view to capital growth and dividend generation for the benefit of shareholders. John Hustler Chairman The unaudited interim financial statements for the six months ended 31 March 2007 are set out below. INCOME STATEMENT (unaudited) for the six months ended 31 March 2007 Six months ended 31 March 2007 Six months ended 31 March 2006 Revenue Capital Total Revenue Capital Total £000 £000 £000 £000 £000 £000 Loss on disposal of investments - (13) (13) - (185) (185) Unrealised adjustments to fair value of - 876 876 - 926 926 investments ---------- ---------- ---------- ---------- ---------- ---------- - 863 863 - 741 741 Income 745 - 745 770 - 770 Investment management (86) (258) (344) (80) (316) (396) fee Other (96) - (96) (96) - (96) expenses ---------- ---------- ---------- ---------- ---------- ---------- Return on ordinary activities before tax 563 605 1,168 594 425 1,019 Tax on return on ordinary (124) 80 (44) (158) 100 (58) activities ---------- ---------- ---------- ---------- ---------- ---------- Return on ordinary activities after tax 439 685 1,124 436 525 961 ---------- ---------- ---------- ---------- ---------- ---------- Return per share 1.4p 2.2p 3.6p 1.4p 1.7p 3.1p Year ended 30 September 2006 Revenue Capital Total £000 £000 £000 Loss on disposal of investments - (106) (106) Unrealised adjustments to fair value of investments - 605 605 ---------- ---------- ---------- - 499 499 Income 1,372 - 1,372 Investment management fee (167) (502) (669) Other expenses (180) - (180) ---------- ---------- ---------- Return on ordinary activities before tax 1,025 (3) 1,022 Tax on return on ordinary activities (265) 160 (105) ---------- ---------- ---------- Return on ordinary activities after tax 760 157 917 ---------- ---------- ---------- Return per share 2.4p 0.5p 2.9p RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS (unaudited) for the six months ended 31 March 2007 Six months Six months Year ended ended ended 31 March 2007 31 March 2006 30 September 2006 £000 £000 £000 Equity shareholders' funds at 1 October 2006 29,281 30,136 30,136 Return on ordinary activities after tax 1,124 961 917 Dividends recognised in the period (614) (535) (1,153) Net proceeds of share issues 72 56 126 Shares purchased for cancellation (371) (324) (745) ---------- ---------- ---------- Equity shareholders' funds at 31 March 2007 29,492 30,294 29,281 ---------- ---------- ---------- BALANCE SHEET (unaudited) as at 31 March 2007 31 March 2007 31 March 2006 30 September 2006 £000 £000 £000 Venture capital investments Unquoted 13,000 8,665 10,012 Quoted 2,405 2,228 1,997 ---------- ---------- ---------- Total venture capital investments 15,405 10,893 12,009 Listed fixed-interest investments 11,894 15,466 13,229 ---------- ---------- ---------- Total fixed asset investments 27,299 26,359 25,238 ---------- ---------- ---------- Current assets: Debtors 430 480 600 Cash at bank 1,852 3,657 3,606 ---------- ---------- ---------- 2,282 4,137 4,206 Creditors (amounts falling due within one year) (89) (202) (163) ---------- ---------- ---------- Net current assets 2,193 3,935 4,043 ---------- ---------- ---------- Net assets 29,492 30,294 29,281 ---------- ---------- ---------- Capital and reserves: Called-up equity share capital 1,520 1,558 1,538 Share premium 22,827 22,693 22,759 Capital redemption reserve 99 53 77 Capital reserve - realised 2,643 4,291 3,703 Capital reserve - unrealised 1,696 1,139 629 Revenue reserve 707 560 575 ---------- ---------- ---------- Total equity shareholders' funds 29,492 30,294 29,281 ---------- ---------- ---------- Net asset value per share 97.0p 97.2p 95.2p CASH FLOW STATEMENT (unaudited) for the six months ended 31 March 2007 Six months Six months Year ended ended ended 31 March 2007 31 March 2006 30 September 2006 £000 £000 £000 £000 £000 £000 Net cash inflow from operating 462 61 525 activities Taxation: Corporation (105) (81) (81) tax paid Financial investment: Purchase of (6,205) (4,399) (9,740) investments Sale/repayment of 5,007 2,823 9,043 investments ---------- ---------- ---------- Net cash outflow from financial (1,198) (1,576) (697) investment Equity (614) (535) (1,153) dividends paid ---------- ---------- ---------- Net cash outflow before (1,455) (2,131) (1,406) financing Financing: Issue of 73 70 145 ordinary shares Share issue (1) (14) (19) expenses Purchase of ordinary shares for (371) (324) (745) cancellation ---------- ---------- ---------- Net cash outflow from (299) (268) (619) financing ---------- ---------- ---------- Decrease in (1,754) (2,399) (2,025) cash at bank ---------- ---------- ---------- Reconciliation of return before tax to net cash flow from operating activities Return on ordinary activities before tax 1,168 594 1,022 Loss on disposal of 13 185 106 investments Unrealised adjustments to fair value of investments (876) (926) (605) Decrease in 170 137 17 debtors (Decrease)/ increase in (13) 71 (15) creditors ---------- ---------- ---------- Net cash inflow from operating 462 61 525 activities ---------- ---------- ---------- Analysis of movement in net funds 1 October 2006 Cash flows 31 March 2007 £000 £000 £000 Cash at bank 3,606 (1,754) 1,852 ---------- ---------- ---------- INVESTMENT PORTFOLIO SUMMARY as at 31 March 2007 Cost Valuation % of net assets £000 £000 by valuation Fifteen largest venture capital investments: John Laing Partnership 305 1,173 4.0 Product Support (Holdings) 1,000 1,000 3.4 Promanex Group Holdings 1,000 1,000 3.4 Pivotal Laboratories Holdings 679 874 3.0 Envirotec 455 841 2.9 Longhirst Group 480 736 2.5 IG Doors 500 647 2.2 Touchstone Asset Management 593 593 2.0 Crantock Bakery 442 576 1.9 KCS Global Holdings 338 496 1.7 Nightingales Holdings 992 496 1.7 Ithaca Holdings 307 489 1.6 Abermed Group 375 450 1.5 Direct Valeting 427 427 1.4 Arleigh International 210 420 1.4 ---------- ---------- ---------- 8,103 10,218 34.6 Other venture capital investments 5,463 5,187 17.6 ---------- ---------- ---------- Total venture capital investments 13,566 15,405 52.2 Listed fixed-interest investments 12,037 11,894 40.3 ---------- ---------- ---------- Total fixed asset investments 25,603 27,299 92.5 ---------- Net current assets 2,193 7.5 ---------- ---------- Net assets 29,492 100.0 ---------- ---------- The above summary of results for the six months ended 31 March 2007 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. The figures for the year ended 30 September 2006 have been extracted from the financial statements for that year, which have been delivered to the Registrar of Companies; the independent auditors' report on those financial statements under Section 235 of the Companies Act 1985 was unqualified. The first interim dividend of 2.0p per share for the 18 month period ending 31 March 2008 will be paid on 20 July 2007 to shareholders on the register at the close of business on 22 June 2007. A copy of the interim report for the six months ended 31 March 2007 is expected to be posted to shareholders on 1 June 2007 and will be available to the public at the registered office of the company at Northumberland House, Princess Square, Newcastle upon Tyne NE1 8ER. ENDS This information is provided by RNS The company news service from the London Stock Exchange

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