Announcements

Northern 3 VCT PLC.




TIDMNTN

4 NOVEMBER 2009

NORTHERN 3 VCT PLC

UNAUDITED HALF-YEARLY FINANCIAL REPORT
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2009


Northern 3 VCT PLC is a Venture Capital Trust (VCT) managed by NVM
Private Equity. 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 for the six months ended 30 September 2008 in
italics)

2009 2008

Net assets GBP26.2m GBP24.9m

Net asset value per share 90.5p 86.1p

Return per share
Revenue 1.5p 1.5p
Capital 6.9p (11.8)p
Total 8.4p (10.3)p

Interim dividend per share
in respect of the period
Revenue 1.4p 1.4p
Capital 0.6p 0.6p
Total 2.0p 2.0p

Cumulative returns to
shareholders since launch
Net asset value per share 90.5p 86.1p
Dividends paid per share* 22.9p 18.9p
Net asset value plus dividends
paid per share 113.4p 105.0p

Share price at end of period 55.5p 85.5p


*Excludes interim dividend declared but not yet paid


For further information, please contact:

NVM Private Equity Limited
Alastair Conn/Christopher Mellor 0191 244 6000
Website: www.nvm.co.uk



HALF-YEARLY MANAGEMENT REPORT
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2009

The past six months have seen a continuation of the adverse
conditions in the UK economy and financial markets. Against this
background we are pleased to report that our company has made good
progress during the period.

Results

The unaudited net asset value (NAV) per share at 30 September 2009
was 90.5p, which represents an increase of 10.1% over the audited
figure of 84.0p at 31 March 2009 (after adjusting for the dividend
paid during the period). Your directors consider that this is a
satisfactory result given the harsh environment in which many of our
investee companies are operating. The cumulative return to
shareholders (latest NAV plus total dividends paid since launch) is
113.4p at 30 September 2009 compared with 105.0p a year earlier.

The revenue return per share for the half year was unchanged at
1.5p. Income from the investment portfolio was slightly higher than
in the corresponding period, although we expect the income in the
second half of the year to be adversely affected by the continuing
low level of interest rates.

The board has declared an unchanged interim dividend of 2.0p per
share, comprising a revenue dividend of 1.4p and a capital dividend
of 0.6p. The interim dividend will be paid on 15 January 2010 to
shareholders on the register at the close of business on 11 December
2009. We are aware of the importance which our shareholders attach
to a consistent flow of tax-free dividends, especially with the
prospect of higher income tax rates in the near future.

Investment portfolio

New investment activity has remained subdued. GBP995,000 was invested
in Phusion Healthcare, a company formed to acquire businesses
supplying pharmaceutical medicines to the healthcare sector, and a
further tranche of GBP104,000 was drawn down by Wear Inns which
continues to add to its estate of managed public houses. Given the
difficult economic climate our managers have taken a cautious
approach to making new commitments, although there are currently some
indications that the quality of potential opportunities is beginning
to improve.

Encouragingly there were two successful exits during the period.
DxS, the Manchester-based molecular diagnostics business, was sold to
Qiagen NV in September 2009 on terms which enabled us to recognise
sale proceeds of GBP3.3 million and a realised gain over original cost
of GBP2.9 million, with the possibility of up to a further GBP2.5 million
becoming receivable over the next three years depending on the
achievement of certain milestones. Our investment in the public
sector software developer Liquidlogic was sold to the AIM-quoted
System C Healthcare for GBP363,000, realising a gain of GBP314,000.
However conditions have remained very challenging for some of our
companies and the engineering consultancy Foreman Roberts Group
continued to perform poorly in a very difficult market, eventually
undergoing a financial re-structuring as a result of which our
investment was effectively written off. Your directors have
continued to take a prudent view when valuing the portfolio of
venture capital investments, and as before we are prepared to provide
additional funding where there is a good business case to help our
companies overcome the effects of the recession and also the
difficulty of obtaining funding from the clearing banks on acceptable
terms.

Ordinary shares

In the annual report six months ago, reference was made to the
board's decision that the company should in principle continue to buy
back its shares in the market, although in the prevailing market
conditions it was not considered feasible to maintain a fixed 10%
discount to NAV. In May 2009 Singer Capital Markets was appointed as
the company's broker, as well as making a market in the company's
shares. Subsequently the mid-market share price has risen from its
low point of 45p, reaching 64p by early November. The latter figure
still represents a discount to NAV of almost 30% and the directors
are currently considering measures with the objective of reducing the
discount further.

We are also planning to launch a further issue of ordinary shares in
the first quarter of 2010, with the objective of raising
approximately GBP10 million of new funds. This would bring about a
step change in the company's size, which we believe would have a
positive effect in terms of allowing a wider spread of investments,
reducing the running costs per share and helping improve the market
liquidity of our shares. It would also provide an additional reserve
of funds giving the company greater scope to take advantage of the
attractively valued investment opportunities which are now beginning
to emerge. A further announcement on this subject will be made in
due course.

VAT on management fees

Following the European Court decision in the JPMorgan Claverhouse
case, management fees paid to NVM Private Equity have been exempt
from VAT since July 2008. We have also been able to recover some VAT
paid in earlier periods, in respect of which a total of GBP280,000 has
been recognised in our financial statements to date. Negotiations
are continuing with HM Revenue & Customs over possible further
repayments.

VCT qualifying status

The company has continued to comply with the conditions laid down by
HM Revenue & Customs for the maintenance of approved venture capital
trust status. Our managers continue to monitor the position closely
with the help of our taxation advisers at PricewaterhouseCoopers LLP.

Risk management

The board carries out a regular review of the risk environment in
which the company operates. There has been no significant change to
the key risks discussed on page 10 of the annual report for the year
ended 31 March 2009, including those resulting from the size and
relative illiquidity of the unquoted and AIM-quoted investments held
by the company.

Prospects

We see no reason at this stage to revise our cautious view of the
outlook for UK businesses in the short to medium term. The recent
buoyancy of the financial markets cannot disguise the fundamental
challenges facing the UK economy, which will inevitably have an
impact on the type of small private company in which venture capital
trusts invest. This means that careful selection and screening of
new investments will remain crucial. However, our company has the
benefit of a robust balance sheet and an experienced management team,
as well as a maturing portfolio of investments which should be well
placed to take advantage of any upturn in the economy.

On behalf of the Board

James Ferguson
Chairman


The unaudited half-yearly financial statements for the six months
ended 30 September 2009 are set out below.


INCOME STATEMENT
(unaudited) for the six months ended 30 September 2009


Six months ended Six months ended
30 September 2009 30 September 2008
Revenue Capital Total Revenue Capital Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000

Gain on disposal
of investments - 787 787 - 458 458
Movements in fair
value
of investments - 1,365 1,365 - (3,917) (3,917)
------ ------ ------ ------ ------ ------
- 2,152 2,152 - (3,459) (3,459)

Income 732 - 732 686 - 686
Investment (63) (207) (270) (78) (234) (312)
management fee
Recoverable VAT - - - 72 228 300
Other expenses (100) - (100) (109) - (109)
------ ------ ------ ------ ------ ------
Return on
ordinary
activities
before tax 569 1,945 2,514 571 (3,465) (2,894)
Tax on return
on ordinary (129) 60 (69) (128) - (128)
activities
------ ------ ------ ------ ------ ------



Return on
ordinary
activities 440 2,005 2,445 443 (3,465) (3,022)
after tax
------ ------ ------ ------ ------ ------

Return per share 1.5p 6.9p 8.4p 1.5p (11.8)p (10.3)p

Dividend per 1.4p 0.6p 2.0p 1.4p 0.6p 2.0p
share




Year ended 31 March 2009
Revenue Capital Total
GBP000 GBP000 GBP000

Gain on disposal
of investments - 814 814
Movements in fair value
of investments - (4,460) (4,460)
------ ------ ------
- (3,646) (3,646)

Income 1,249 - 1,249
Investment management fee (140) (420) (560)
Recoverable VAT 67 213 280
Other expenses (213) - (213)
------ ------ ------
Return on ordinary activities
before tax 963 (3,853) (2,890)
Tax on return
on ordinary activities (208) 61 (147)
------ ------ ------
Return on ordinary activities
after tax 755 (3,792) (3,037)
------ ------ ------

Return per share 2.6p (13.0)p (10.4)p

Dividend per share 2.5p 1.5p 4.0p



RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
(unaudited) for the six months ended 30 September 2009


Six months ended Six months Year ended
30 September ended 31 March
2009 30 September 2009
2008
GBP000 GBP000 GBP000

Equity shareholders' funds
at
1 April 2009 24,323 28,645 28,645

Return on ordinary
activities after tax 2,445 (3,022) (3,037)
Dividends recognised in the (580) 3 (575)
period
Net proceeds of share issues 55 - 63
Shares purchased for (41) (772) (773)
cancellation
------ ------ ------
Equity shareholders' funds
at
30 September 2009 26,202 24,854 24,323
------ ------ ------



BALANCE SHEET
(unaudited) as at 30 September 2009


30 September 30 September 31 March
2009 2008 2009
GBP000 GBP000 GBP000

Fixed asset investments:
Venture capital
investments
Unquoted 11,933 13,778 13,606
Quoted 2,468 1,910 1,603
------ ------ ------
Total venture capital 14,401 15,688 15,209
investments

Listed fixed-interest 3,971 7,423 5,700
investments
------ ------ ------
Total fixed asset 18,372 23,111 20,909
investments
------ ------ ------
Current assets:
Debtors 843 566 848
Cash and deposits 7,282 1,385 2,785
------ ------ ------
8,125 1,951 3,633
Creditors (amounts
falling due
within one year) (295) (208) (219)
------ ------ ------
Net current assets 7,830 1,743 3,414
------ ------ ------

Net assets 26,202 24,854 24,323
------ ------ ------

Capital and reserves:
Called-up equity share 1,447 1,443 1,447
capital
Share premium 8,140 8,031 8,089
Capital redemption 192 188 188
reserve
Capital reserve 18,232 15,779 16,432
Revaluation reserve (2,522) (1,270) (2,424)
Revenue reserve 713 683 591
------ ------ ------
Total equity 26,202 24,854 24,323
shareholders' funds
------ ------ ------

Net asset value per 90.5p 86.1p 84.0p
share



CASH FLOW STATEMENT
(unaudited) for the six months ended 30 September 2009


Six months Six months Year ended
ended ended 31 March 2009
30 September 30 September
2009 2008
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000

Net cash inflow from
operating 374 113 42
activities

Taxation:
Corporation tax paid - (115) (143)

Financial investment:
Purchase of (1,237) (4,246) (2,234)
investments
Sale/repayment of 5,926 4,876 4,879
investments
------ ------ ------
Net cash inflow
from financial 4,689 630 2,645
investment

Equity dividends paid (580) 3 (575)
------ ------ ------
Net cash inflow
before financing 4,483 631 1,969

Financing:
Issue of ordinary 70 - 72
shares
Share issue expenses (15) - (9)
Purchase of ordinary
shares
for cancellation (41) (772) (773)
------ ------ ------
Net cash
inflow/(outflow)
from financing 14 (772) (710)
------ ------ ------
Increase/(decrease)
in cash at bank 4,497 (141) 1,259
------ ------ ------

Reconciliation of
return
before tax to net
cash
flow from operating
activities
Return on ordinary
activities
before tax 2,514 (2,894) (2,890)
Gain on disposal of (787) (458) (814)
investments
Movements in fair
value
of investments (1,365) 3,917 4,460
(Increase)/decrease 5 (301) (583)
in debtors
Increase/(decrease) 7 (151) (131)
in creditors
------ ------ ------
Net cash inflow from
operating 374 113 42
activities
------ ------ ------

Analysis of movement
in net funds
1 April 2009 Cash flows 30 September
2009
GBP000 GBP000 GBP000

Cash at bank 2,785 4,497 7,282
------ ------ ------



INVESTMENT PORTFOLIO SUMMARY
as at 30 September 2009


Cost Valuation % of net assets
GBP000 GBP000 by valuation
15 largest investments:
Axial Systems Holdings 1,004 1,215 4.6
Paladin Group 861 1,190 4.5
Phusion Healthcare 995 995 3.8
Advanced Computer Software* 429 947 3.6
Optilan Group 1,000 821 3.1
Envirotec 456 818 3.1
Promanex Group Holdings 1,000 750 2.9
CloserStill Holdings 743 743 2.8
Britspace Holdings 1,201 735 2.8
Crantock Bakery 442 656 2.5
Abermed 375 642 2.5
Arleigh International 210 437 1.7
Promatic Group 568 426 1.6
Wear Inns 490 414 1.6
IDOX* 298 387 1.5
------ ------ -----
10,072 11,176 42.6

Other venture capital investments 6,820 3,225 12.3
------ ------ -----
Total venture capital investments 16,892 14,401 54.9
Listed fixed-interest investments 4,001 3,971 15.2
------ ------ -----
Total fixed asset investments 20,893 18,372 70.1
------
Net current assets 7,830 29.9



------ -----
Net assets 26,202 100.0
------ -----


*Quoted on AIM


The above half-yearly financial statements for the six months ended
30 September 2009 do not constitute statutory financial statements
within the meaning of Section 240 of the Companies Act 1985 and have
not been delivered to the Registrar of Companies. The figures for
the year ended 31 March 2009 have been extracted from the audited
financial statements for that period, 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 half-yearly financial statements have been
prepared on the basis of the accounting policies set out in the
financial statements for the year ended 31 March 2009.

Each of the directors confirms that to the best of his knowledge the
half-yearly financial statements have been prepared in accordance
with the Statement "Half-yearly financial reports" issued by the UK
Accounting Standards Board and the half-yearly financial report
includes a fair review of the information required by (a) DTR 4.2.7R
of the Disclosure and Transparency Rules, being an indication of
important events that have occurred during the first six months of
the financial year and their impact on the condensed set of financial
statements, and a description of the principal risks and
uncertainties for the remaining six months of the year, and (b) DTR
4.2.8R of the Disclosure and Transparency Rules, being related party
transactions that have taken place in the first six months of the
current financial year and that have materially affected the
financial position or performance of the entity during that period,
and any changes in the related party transactions described in the
last annual report that could do so.

The directors of the company at the date of this announcement were Mr
J G D Ferguson (Chairman), Mr C J Fleetwood, Mr J R Hustler, Mr T R
Levett and Mr J M O Waddell.

The calculation of the revenue and capital return per share is based
on the return on ordinary activities after tax for the period and on
28,936,373 (2008 29,376,116) ordinary shares, being the weighted
average number of shares in issue during the period.

The proposed interim dividend of 2.0p per share for the year ending
31 March 2010 will be paid on 15 January 2010 to shareholders on the
register at the close of business on 11 December 2009.

A copy of the half-yearly financial report for the six months ended
30 September 2009 is expected to be posted to shareholders by 20
November 2009 and will be available to the public at the registered
office of the company at Northumberland House, Princess Square,
Newcastle upon Tyne NE1 8ER and on the NVM Private Equity Limited
website, www.nvm.co.uk.

=--END OF MESSAGE---




This announcement was originally distributed by Hugin. The issuer is
solely responsible for the content of this announcement.


(END) Dow Jones Newswires



November 04, 2009 11:44 ET (16:44 GMT)