Announcements

Northern 3 VCT PLC.


RNS Number:3367V
Northern 3 VCT PLC
08 December 2005


8 DECEMBER 2005

NORTHERN 3 VCT PLC

PRELIMINARY RESULTS
FOR THE YEAR ENDED 30 SEPTEMBER 2005

Northern 3 VCT PLC is a Venture Capital Trust (VCT) managed by Northern Venture
Managers. The trust was launched in September 2001 and its public share offers
have to date raised a total of over #32 million. The trust invests mainly in
unquoted venture capital holdings and aims to provide high long-term returns to
shareholders through a combination of dividend yield and capital growth.


Financial highlights - year ended 30 September 2005:
(comparative figures as at 30 September 2004 in italics)
2005 2004
* Net assets #29,610,000 #20,802,000
* Net asset value per share 94.1p 93.4p
* Investment income #1,232,000 #796,000
* Profit/(loss) on ordinary activities
before tax:
Revenue #894,000 #505,000
Capital #(446,000) #85,000
Total #448,000 #590,000
* Earnings per share:
Revenue 2.4p 2.0p
Capital (1.1)p 0.9p
Total 1.3p 2.9p
* Dividend per share:
Revenue 2.0p 1.6p
Capital 0.4p 2.8p
Total 2.4p 4.4p
* Cumulative return to shareholders
since launch:
Dividends per share 8.9p 6.5p
Net asset value plus dividends
per share 103.0p 99.9p
* Share price at end of year 87.0p 90.0p


For further information, please contact:
Northern Venture Managers Limited

Alastair Conn, Managing Director 0191 244 6000

Website: www.nvm.co.uk
Lansons Communications

Alison Boucher 020 7294 3616


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:


The past year has seen further steady progress by Northern 3 VCT. Our series of
top-up share issues for the 2004/05 and 2005/06 tax years closed in June 2005
with a total of #10.7 million raised from investors, with the result that the
company now has net assets of just under #30 million. The total return to
shareholders (year-end net asset value plus cumulative dividends) increased by
3.0% over the year, from 99.9p to 103.0p. New venture capital investments
totalled #4.7 million and one of the holdings acquired in earlier years was sold
at a satisfactory profit.


Net asset value

The net asset value (NAV) at 30 September 2005, after providing for dividends
totalling 2.4p in respect of the year, was 94.1p per share - a modest increase
on the corresponding figure of 93.4p at 30 September 2004. The venture capital
portfolio is still relatively immature and is currently valued at a slight
overall surplus compared with its original cost. Your directors consider this
is a satisfactory position at this stage in the company's development.


Investments

15 new investments were completed during the year at a total cost of #4.7
million. The increase in the company's size has brought a corresponding
increase in our proportionate entitlement to invest in each new opportunity
developed by Northern Venture Managers, and shortly before the year end we
completed our largest investment to date, #679,000 in Pivotal Laboratories. A
successful exit was achieved from Crabtree of Gateshead, where the original
investment of #219,000 produced total cash proceeds (including loan stock
redeemed in the preceding year) of #322,000 and a profit of #103,000 over cost.
Subsequent to the year end our investment in Omnico Plastics has also been sold
for #653,000 in cash, compared with an original cost of #333,000.


I am pleased to report that GB Industries, whose valuation was written down to
zero last year, is now achieving much improved results and we have been able to
restore some value at the year end. However SMS Agencies, a new investment
during the year, has been performing behind expectations and this is reflected
in a 50% provision against cost. The other investments in the portfolio are
generally making encouraging progress.


Revenue and dividends

Income from investments increased from #796,000 in the preceding year to
#1,232,000, and the revenue surplus before tax rose from #505,000 to #894,000.
The revenue element of earnings per share rose from 2.0p to 2.4p per share,
reflecting the benefit of spreading the company's running costs across a wider
capital base. The directors propose a final revenue dividend of 1.3p per share
(last year 1.1p), making a total of 2.0p for the year (last year 1.6p). A final
capital dividend of 0.4p is also proposed (last year's capital dividend was
2.8p, resulting largely from the gain on the sale of Keith Prowse in September
2004). The total dividend for the year is therefore 2.4p (last year 4.4p). The
final dividend of 1.7p will, if approved by shareholders, be paid on 20 January
2006 to shareholders on the register on 16 December 2005.


The dividend investment scheme introduced by the company a year ago was taken up
by 20% of shareholders, representing approximately 17% of the company's issued
capital. #177,000 was reinvested in ordinary shares during the year, with
subscribers benefiting from the attractive tax reliefs currently available on
new VCT investments. Shareholders who are interested in joining the scheme in
respect of the final dividend should contact the company secretary by 23
December 2005 for further information.


VCT qualifying status

Your board, advised by PricewaterhouseCoopers LLP, has continued to monitor
closely the company's progress towards meeting the qualifying investment
requirements laid down in the VCT legislation, and we are satisfied that the
company's VCT qualifying status has been maintained.


Share price

There continues to be relatively little trading in the company's shares. We
have continued to buy back shares in the market for cancellation, generally at a
discount to NAV of 10%, in order to provide liquidity for shareholders - a total
of 581,620 shares were re-purchased during the year at an average price of 86p
per share. A resolution will be proposed at the annual general meeting to renew
the board's powers to purchase shares in the market up to a maximum of 10% of
the issued share capital.


Management performance incentive

In the light of experience gained over the past four years, your board has been
considering how best to remunerate and incentivise the company's investment
managers in the future whilst aligning their interests with those of
shareholders. We believe it is of great importance to the long-term prospects
of our company that NVM should be able to recruit and retain high-calibre
executives in a competitive market environment.


As a result of these discussions, it has been agreed in principle that a
co-investment scheme will be established in place of the existing performance
incentive scheme. Under the terms of the new scheme investment executives
employed by NVM will be required to invest personally, and on the same terms as
Northern 3 VCT and NVM's other funds, in the ordinary shares of new investee
companies. Your directors are firmly of the view that the change in
arrangements will be in the best interests of the company and its shareholders.


Future prospects

Whilst the outlook for the UK economy is uncertain, the pipeline of venture
capital investment opportunities for the company remains encouraging. The size
and quality of the team of investment executives at NVM has increased in the
period and your directors believe that we are in a good position to achieve our
objective of above-average tax-free returns. On your behalf I would like to
thank the team at NVM for the good results which I believe they have achieved
for us.


JOHN HUSTLER

Chairman


The audited financial statements for the year ended 30 September 2005 will show
the results set out below.


PROFIT AND LOSS ACCOUNT

for the year ended 30 September 2005


Year ended 30 September 2005 Year ended 30 September 2004
Revenue Capital Total Revenue Capital Total

#000 #000 #000 #000 #000 #000
Profits recognised in the year
on realisation of investments - 29 29 - 442 442
Income 1,232 - 1,232 796 - 796
Investment management fee (158) (475) (633) (119) (357) (476)
Other expenses (180) - (180) (172) - (172)
------ ------ ------ ------ ------ ------
Profit/(loss) on ordinary activities
before tax 894 (446) 448 505 85 590
Tax on ordinary activities (233) 152 (81) (116) 94 (22)
------ ------ ------ ------ ------ ------
Profit/(loss) on ordinary activities

after tax 661 (294) 367 389 179 568
Dividends (639) (126) (765) (336) (623) (959)
------ ------ ------ ------ ------ ------
Retained profit/(loss) for the year 22 (420) (398) 53 (444) (391)
------ ------ ------ ------ ------ ------
Earnings/(loss) per share 2.4p (1.1)p 1.3p 2.0p 0.9p 2.9p
Dividend per share 2.0p 0.4p 2.4p 1.6p 2.8p 4.4p


STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES

for the year ended 30 September 2005


Year ended 30 September 2005 Year ended 30 September 2004
Revenue Capital Total Revenue Capital Total

#000 #000 #000 #000 #000 #000
Profit/(loss) on ordinary activities
after tax 661 (294) 367 389 179 568
Unrealised gains on
revaluation of investments - 497 497 - 16 16
------ ------ ------ ------ ------ ------
Total recognised gains and losses
during the year 661 203 864 389 195 584
------ ------ ------ ------ ------ ------


NOTE OF HISTORICAL COST PROFITS AND LOSSES
for the year ended 30 September 2005


Year ended 30 September 2005 Year ended 30 September 2004
Revenue Capital Total Revenue Capital Total

#000 #000 #000 #000 #000 #000
Reported profit/(loss) on ordinary
activities before tax 894 (446) 448 505 85 590
Realisation of investment revaluation
gains of prior years - 103 103 - 173 173
------ ------ ------ ------ ------ ------
Historical cost profit/(loss) for the
year before tax 894 (343) 551 505 258 763
------ ------ ------ ------ ------ ------
Historical cost profit/(loss) for the
year after taxation and dividends 22 (317) (295) 53 (271) (218)
------ ------ ------ ------ ------ ------


BALANCE SHEET

as at 30 September 2005

30 September 2005 30 September 2004
#000 #000
Venture capital
investments:
Unquoted 8,433 4,312
Quoted 1,310 456
------- -------
9,743 4,768
Listed fixed-interest 14,308 7,413
investments
------- -------
Total fixed asset 24,051 12,181
investments
------- -------
Current assets:
Debtors 617 395
Cash at bank 5,631 9,184
------- -------
6,248 9,579
Creditors (amounts
falling due
within one year) (689) (958)
------- -------
Net current assets 5,559 8,621
------- -------

Net assets 29,610 20,802
------- -------

Capital and reserves:
Called-up equity 1,573 1,113
share capital
Share premium 22,641 13,922
Capital redemption 34 5
reserve
Revaluation reserve 333 (61)
Profit and loss 5,029 5,823
account
------- -------
Total equity 29,610 20,802
shareholders' funds
------- -------
Net asset value per 94.1p 93.4p
share


CASH FLOW STATEMENT

for the year ended 30 September 2005
Year ended Year ended
30 September 30 September
2005 2004
#000 #000 #000 #000
Cash flow statement
Net cash inflow from
operating activities 204 192
Taxation:
Corporation tax paid (24) (22)
Financial investment:
Purchase of investments (17,372) (12,015)
Sale/repayment of 6,028 13,628
investments
------ ------
Net cash (outflow)/inflow
from
financial investment (11,344) 1,613
Equity dividends paid (1,098) (282)
------ ------
Net cash (outflow)/inflow
before use
of liquid resources and (12,262) 1,501
financing
Net cash inflow from
management of liquid - 2,371
resources
Financing:
Issue of ordinary shares 9,698 4,776
Share issue expenses (490) (239)
Purchase of ordinary shares
for cancellation (499) (61)
------ ------
Net cash inflow from 8,709 4,476
financing
------ ------
(Decrease)/increase in cash (3,553) 8,348
at bank
------ ------
Reconciliation of profit
before
tax to net cash flow from
operating activities
Profit on ordinary
activities
before tax 448 590
(Increase)/decrease in (222) 13
debtors
Increase in creditors 7 31
Profit recognised on
realisation of investments (29) (442)
------ ------
Net cash inflow from
operating activities 204 192
------ ------
Analysis of movement
in net funds
1 October Cash flows 30
2004 September
2005
#000 #000 #000
Cash at bank 9,184 (3,553) 5,631
------ ------ ------


INVESTMENT PORTFOLIO SUMMARY

as at 30 September 2005
Valuation % of net assets
#000 by valuation
Fifteen largest venture capital investments:
Pivotal Laboratories 679 2.3
Omnico Plastics 633 2.1
Crantock Bakery 518 1.8
IG Doors 500 1.7
Longhirst Group 495 1.7
Envirotec 455 1.5
Direct Valeting 427 1.4
Warmseal Windows (Newcastle) 396 1.3
LEDA Holdings 385 1.3
Abermed Industrial Doctors 375 1.3
Arrow Industrial Group 366 1.2

KCS Global Holdings 338 1.1
Cello Group* 330 1.1
Ithaca Holdings 307 1.0
John Laing Partnership 300 1.0
------- ------
6,504 21.8
Other venture capital investments 3,239 11.0
------- ------
Total venture capital investments 9,743 32.8
Listed fixed-interest investments 14,308 48.4
------- ------
Total fixed asset investments 24,051 81.2
Net current assets 5,559 18.8
------- ------
Net assets 29,610 100.0
------- ------
*Quoted on the Alternative Investment Market


The above summary of results for the year ended 30 September 2005 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.
Statutory financial statements will be filed with the Registrar of Companies
in due course; the independent auditors' report on those financial statements
under Section 235 of the Companies Act 1985 is unqualified and does not contain
a statement under Section 237(2) or (3) of the Companies Act 1985.

The proposed final dividend of 1.7p per share for the year ended 30 September
2005 will, if approved by shareholders, be paid on 20 January 2006 to
shareholders on the register at the close of business on 16 December 2005.

The full annual report including financial statements for the year ended 30
September 2005 is expected to be posted to shareholders on 16 December 2005 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
END

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