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


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