Interim Results

Northern 3 VCT PLC
20 May 2004


20 MAY 2004

NORTHERN 3 VCT PLC

INTERIM RESULTS
FOR THE SIX MONTHS ENDED 31 MARCH 2004



Northern 3 VCT PLC is a Venture Capital Trust (VCT) launched in 2001 and managed
by Northern Venture Managers.  The trust's policy is to invest mainly in
unquoted venture capital holdings and it 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 2003):
                                                                            2004                      2003

•         Net assets                                                 £18,592,000               £15,086,000

•         Net asset value per share                                        94.7p                     95.5p

•         Investment income                                             £338,000                  £287,000

•         Net revenue before tax                                        £198,000                  £158,000

•         Revenue return per share                                          0.8p                      0.9p

•         Interim dividend per share                                        0.5p                      0.4p

•         Share price at end of period                                       90p                       95p



For further information, please contact:


John Hustler (Chairman, Northern 3 VCT PLC)
or Alastair Conn (Managing Director,                            0191 244 6000
Northern Venture Managers Limited)

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:





I am pleased to report that our company has continued to make progress over the
last six months and I would like to welcome all new shareholders who have
subscribed to the recent offers.  Despite the adverse trend in interest rates,
the improvement in the stock markets has led to increased confidence which
should in turn result in a higher activity level in the private equity sector.
Overall your directors consider the current progress of the portfolio to be
encouraging.



Net asset value

The unaudited net asset value per share at 31 March 2004 was 94.7p, compared to
94.9p at 30 September 2003.  We are pleased with the performance of most of our
unquoted portfolio, although many of the holdings are still valued at cost in
line with our accounting policy.  We have also taken the opportunity to realise
gains from our two quoted holdings, Alizyme and PM Group.  However the recent
rises in interest rates have led to some reduction in the value of our listed
fixed-interest portfolio, and we have also had to recognise a provision against
one significant unquoted investment, GB Industries (formerly known as Horncastle
Industries), where poor trading performance has not as yet responded to remedial
action.



Investments

During the half year we completed investments totalling £1,172,000 in the
following companies:



IG Doors (£500,000) - manufacturer of steel and GRP composite doors, Cwmbran

Warmseal Windows (Newcastle) (£339,000) - manufacturer of PVCu windows, doors
and conservatories, Newcastle upon Tyne

Omnico Plastics (£333,000) - specialist builders' merchants, Ipswich



Two more new investments totalling £503,000 have been completed since the end of
March.  The investment rate has not been as rapid as we would have liked, as the
venture capital industry generally has in recent months experienced a slowdown
in the flow of potential new deals.  The process of completing individual
investments has also been more protracted, and in four cases deals have been
aborted either because of issues uncovered by due diligence investigations or
through the target company being withdrawn from sale at the last minute.
However we are adamant that we should not pay inflated prices nor reduce the
rigorous standards of due diligence which are applied.



The current enquiry list is strong and we hope to see an upturn in the rate of
new investment.



Revenue and dividend

The revenue return per share for the half year was 0.8p, compared with 0.9p (on
a lower issued share capital) for the corresponding period to 31 March 2003.  As
you will recall, an interim dividend of 0.5p per share was declared on 19
January 2004 to shareholders on the register on 30 January and was paid on 13
May.  We expect to pay a final dividend for the current year at the beginning of
2005.



Share issue

I am delighted to report that the response to our top-up share issues has been
good.  Our first top-up issue of 1,757,415 shares was fully subscribed by 25
March 2004 and we issued a further 1,687,023 shares following the renewal of the
directors' authority to issue shares at the EGM on 25 March.  1,379,998 of these
shares were issued after 31 March and so are not yet reflected in the balance
sheet.  Since being launched in 2001 the company has raised a total of £20.0
million net of issue expenses.



Shareholders will be aware that the Chancellor has made major changes to VCT
legislation in his Budget.  I believe that this will significantly improve
investor interest in VCTs in the current year; we have therefore decided to
continue our policy to increase the size of Northern 3 VCT as we remain
convinced that it is in shareholders' interests to own shares in a larger fund.
 Accordingly your directors intend to seek shareholders' approval to issue
further shares in the current tax year, and we will be writing to you about this
in the near future.



VCT qualifying status

Your board continues to monitor progress towards the Inland Revenue qualifying
targets in conjunction with NVM and PricewaterhouseCoopers.  As mentioned
earlier, the investment rate in the last six months has not been as great as we
might have hoped.  However we are confident that the VCT qualifying status of
the fund will be maintained.



Northern Venture Managers

As I reported in the last annual report, Edinburgh Fund Managers Group plc, the
parent company of Northern Venture Managers, was acquired by Aberdeen Asset
Management plc in October 2003.  Since then the directors of NVM have negotiated
a management buyout and I am pleased to report that NVM is now wholly owned by
its directors and staff.  Your board regard this outcome as highly satisfactory
and we are pleased that the uncertainties have been resolved.



Prospects

Based on our review of existing and prospective investee companies, we remain
positive in our outlook for our fund.  We are seeing good progress at a number
of investee companies and are likely to provide more funds to some of them to
finance expansion.  The recent enhancements to VCT tax reliefs for investors
should create favourable conditions for attracting additional investment in our
company so that we can spread the fixed costs over a wider capital base and
build a well-diversified portfolio of interesting companies.  Dividends will
remain relatively modest until the realisation of gains is achieved, at which
time we will take the necessary steps to allow us to distribute the tax-free
capital gains.



The share price has remained relatively static at 90p throughout the period
under review, and there are relatively few trades at this stage of the company's
life.  Your directors are aware of the need for shareholders to be able to
realise their investment in due course and the changes in the VCT rules will
accentuate this requirement.  We will be considering how best to achieve this in
the coming months.  In the meantime I would like to thank all shareholders for
their continuing support.


John Hustler
Chairman


The unaudited interim financial statements for the six months ended 31 March
2004 are as shown below.


STATEMENT OF TOTAL RETURN (INCORPORATING THE REVENUE ACCOUNT)
(unaudited) for the six months ended 31 March 2004

                                            Six months ended 31 March 2004      Six months ended 31 March 2003
                                             Revenue     Capital       Total     Revenue     Capital       Total

                                                £000        £000        £000        £000        £000        £000
Gains/(losses) on investments:
  Realised on disposal                             -         106         106           -           -           -
  Unrealised revaluation movements                 -         (88)        (88)          -        (140)       (140)
                                              ------      ------      ------      ------      ------      ------
                                                   -          18          18           -        (140)       (140)
Income                                           338           -         338         287           -         287
Investment management fee                        (57)       (170)       (227)        (41)       (122)       (163)
Other expenses                                   (83)          -         (83)        (88)        (21)       (109)
                                               ------     ------      ------       ------     ------      ------
Return/(loss) on ordinary activities
  before tax                                     198        (152)         46         158        (283)       (125)
Tax on ordinary activities                       (47)         43          (4)        (31)         24          (7)
                                              ------      ------      ------      ------      ------      ------
Return/(loss) on ordinary activities
  after tax                                      151        (109)         42         127        (259)       (132)
Dividend                                         (91)          -         (91)        (58)          -         (58)
                                              ------      ------      ------      ------      ------      ------
Transfer to/(from) reserves                       60        (109)        (49)         69        (259)       (190)
                                              ------      ------      ------      ------      ------      ------
Return/(loss) per share                          0.8p      (0.6)p        0.2p        0.9p      (1.8)p      (0.9)p
Dividend per share                               0.5p         -          0.5p        0.4p         -          0.4p


                                                                                          Year ended
                                                                                       30 September 2003
                                                                                 Revenue     Capital       Total

                                                                                    £000        £000        £000
Gains/(losses) on investments:
  Realised on disposal                                                                 -         118         118
  Unrealised revaluation movements                                                     -        (248)       (248)
                                                                                  ------      ------      ------
                                                                                       -        (130)       (130)
Income                                                                               615           -         615
Investment management fee                                                            (86)       (258)       (344)
Other expenses                                                                      (153)        (22)       (175)
                                                                                   ------     ------      ------
Return on ordinary activities
  before tax                                                                         376        (410)        (34)
Tax on ordinary activities                                                           (81)         59         (22)
                                                                                  ------      ------      ------
Return on ordinary activities
  after tax                                                                          295        (351)        (56)
Dividend                                                                            (251)          -        (251)
                                                                                  ------      ------      ------
Transfer to/(from) reserves                                                           44        (351)       (307)
                                                                                  ------      ------      ------
Return per share                                                                     1.8p      (2.2)p      (0.4)p
Dividend per share                                                                   1.5p         -         1.5p


BALANCE SHEET
(unaudited) as at 31 March 2004

                           31 March 2004  31 March 2003     30 September 2003
                                   £000            £000                £000
Venture capital
investments:
  Unquoted                        3,859           2,260           2,685
  Quoted                            380             327             441
                                -------         -------         -------
Total venture capital             4,239           2,587           3,126
investments
Listed fixed-interest             8,675           7,669          10,210
investments
                                -------         -------         -------
Total fixed asset                12,914          10,256          13,336
investments
Net current assets                5,678           4,830           3,365
                                -------         -------         -------
Net assets                       18,592          15,086          16,701
                                -------         -------         -------

Capital and reserves
Called-up equity share              982             790             880
capital
Share premium                    11,480           7,959           9,622
Capital redemption reserve            3               -               1
Special reserve                   6,216           6,260           6,238
Capital reserve:
  Realised                         (206)           (201)           (185)
  Unrealised                          8             204              96
Revenue reserve                     109              74              49
                                -------         -------         -------
Total equity shareholders'       18,592          15,086          16,701
funds
                                -------         -------         -------
Net asset value per share          94.7p           95.5p           94.9p





CASH FLOW STATEMENT
(unaudited) for the six months ended 31 March 2004

                                 Six months ended        Six months ended              Year ended
                                    31 March 2004           31 March 2003       30 September 2003
                                 £000        £000         £000       £000         £000       £000

Cash flow statement
Net cash inflow/(outflow)
from 
  operating activities                        283                      48                     (10)
Taxation:
Corporation tax paid                            -                       -                       -
Financial investment:
Purchase of investments        (6,315)                  (2,157)                 (8,191)
Sale/repayment of               6,755                    1,254                   4,218
investments
                               ------                   ------                  ------
Net cash inflow/(outflow)
from
  financial investment                        440                    (903)                 (3,973)
Equity dividends paid                        (193)                   (144)                   (144)
                                           ------                  ------                  ------
Net cash inflow/(outflow)
before use
  of liquid resources and                     530                    (999)                 (4,127)
financing
Net cash inflow/(outflow)
from
  management of liquid                       (621)                      -                     496
resources
Financing:
Issue of ordinary shares        2,065                    1,830                   3,668
Share issue expenses             (103)                     (85)                   (170)
Shares purchased for              (22)                       -                     (21)
cancellation
                               ------                   ------                  ------
Net cash inflow from                        1,940                   1,745                   3,477
financing
                                           ------                  ------                  ------
Increase/(decrease) in                      1,849                     746                    (154)
cash at bank
                                           ------                  ------                  ------
Reconciliation of net
revenue before
taxation to net cash flow
from
operating activities
Net revenue from ordinary
  activities before tax                       198                     158                     376
(Increase)/decrease in                        164                      29                    (112)
debtors
Increase in creditors                          91                       4                       6
Management fees charged to                   (170)                   (122)                   (258)
capital
Other expenses charged to                       -                     (21)                    (22)
capital
                                           ------                  ------                  ------
Net cash inflow/(outflow)
from
  operating activities                        283                      48                     (10)
                                           ------                  ------                  ------
Reconciliation of movement
  in net funds

                                         1 October              Cash flows                31 March
                                             2003                                            2004
                                             £000                    £000                    £000

Cash at bank                                  836                   1,849                   2,685
Short-term investments                      2,371                     621                   2,992
                                           ------                  ------                  ------
Net funds                                   3,207                   2,470                   5,677
                                           ------                  ------                  ------



INVESTMENT PORTFOLIO SUMMARY
as at 31 March 2004

                                                                       Valuation           % of net assets
                                                                            £000              by valuation
Venture capital investments:
Keith Prowse                                                                 634                       3.4
IG Doors                                                                     500                       2.7
Crantock Bakery                                                              428                       2.3
Warmseal Windows (Newcastle)                                                 339                       1.8
Omnico Plastics                                                              333                       1.8
John Laing Partnership                                                       300                       1.6
Longhirst Group                                                              300                       1.6
RBF Industries                                                               250                       1.3
Arrow Industrial Group                                                       245                       1.3
PM Group**                                                                   240                       1.3
Crabtree of Gateshead                                                        219                       1.2
Liquidlogic                                                                  165                       0.9
Alizyme*                                                                     140                       0.8
Survey Inspection Systems                                                     73                       0.4
GSM-Central                                                                   52                       0.3
Oxonica                                                                       21                       0.1
GB Industries                                                                  -                         -
                                                                         -------                    ------
Total venture capital investments                                          4,239                      22.8
Listed fixed-interest investments                                          8,675                      46.7
                                                                         -------                    ------
Total fixed asset investments                                             12,914                      69.5
Net current assets                                                         5,678                      30.5
                                                                         -------                    ------
Net assets                                                                18,592                     100.0
                                                                         -------                    ------
* Listed on London Stock Exchange
**Traded on Alternative Investment Market


The above summary of results for the six months ended 31 March 2004 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 2003 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 proposed interim dividend of 0.5p for the year ending 30 September 2004 was
paid on 13 May 2004 to shareholders on the register at the close of business on
31 January 2004.

A copy of the interim report for the six months ended 31 March 2004 is expected
to be posted to shareholders on 28 May 2004 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