Servizi
Annual Report and Financial Statements for the year ended 31 March 2025
Northern 3 VCT PLC
Annual Report and Financial Statements for the year ended 31 March 2025
Northern 3 VCT PLC is a Venture Capital Trust (VCT) managed by Mercia Fund Management Limited. It invests mainly in unquoted venture capital holdings and aims to provide long-term tax-free returns to shareholders through a combination of dividend yield and capital growth.
Financial highlights (comparative figures as at 31 March 2024):
* Excluding proposed final dividend payable on 5 September 2025.
** Based on net asset value per share at the start of the period.
^ Definitions of the terms and alternative performance measures used in this report can be found in the glossary of terms in the annual report.
Chairman’s statement
Results and dividend
The net asset value (NAV) per share at 31 March 2025 was 90.0 pence compared with 89.3 pence as at 31 March 2024. The total return per share for the year was 4.8 pence (2024: 2.2 pence). A performance fee is payable to our Manager of £65,000 (year ended 31 March 2024: £nil).
The target for the annual dividend yield continues to be set at 4.5% of the opening NAV per share. Having already declared an interim dividend of 2.0 pence per share which was paid in January 2025, the Directors now propose a final dividend of 2.5 pence. These payments totalling 4.5 pence (2024: 4.2 pence) are equivalent to 5.0% of the opening NAV (2024: 4.6%). The proposed final dividend will, subject to approval by shareholders at the Annual General Meeting, be paid on 5 September 2025.
Our dividend investment scheme, under which dividends can be reinvested in new ordinary shares free of dealing costs and with the benefit of the tax reliefs available on new VCT share subscriptions, continues to operate. Instructions on how to join the scheme are included within the dividend section of our website, which can be found here: mercia.co.uk/vcts/n3vct/.
Investment portfolio
The overall progress of the portfolio was satisfactory and several companies enjoyed significant growth: Pure Pet Food and Project Glow Topco (t/a The Beauty Tech Group) both increased in value by over £3 million.
Sales in the venture portfolio realised £9.9 million on an initial cost of £8.1 million. The most notable was the Gentronix sale for net proceeds of £3.6 million, which compares with an original cost of £0.8 million, a return of 4.5 times.
£9.5 million was provided for six new venture capital investments and £5.4 million of follow-on capital was invested in existing investments.
As we noted last year, there have been comments suggesting that in general unlisted shares have been valued too highly. We would like to reiterate the fact that your Board has always had a realistic but conservative approach to valuation policy, which is reflected in our net asset value.
Share offer and liquidity
In April 2024 11,702,332 new ordinary shares, the second allotment of the 2023/24 share offer, were issued, yielding gross subscriptions of £11.0 million. As a result of the public share offer launched in January 2025, 6,596,320 new ordinary shares were issued in April 2025, yielding gross proceeds of £6.0 million.
The Board continues to monitor liquidity carefully and plans to raise up to £20 million, comprising a £14 million offer with an overallotment facility (if utilised) of £6 million, in the 2025/26 tax year. Further details will be provided in due course.
Our dividend investment scheme continues to operate. This enables shareholders to invest their dividends in new ordinary shares free of dealing costs and with the benefit of the tax reliefs available on new VCT share subscriptions. Instructions on how to join the scheme are included within the dividend section of our website, which can be found here: mercia.co.uk/vcts/n3vct/. During the year around 11% of total dividends were reinvested by shareholders.
We have maintained our policy of being willing to buy back the Company’s shares in the market when necessary in order to maintain liquidity, at a 5% discount to NAV. During the year, a total of 5,161,691 shares were repurchased for cancellation, equivalent to approximately 3.8% of the opening share capital.
Responsible investment
The Company’s approach to Environmental, Social and Governance (ESG) responsibilities is set out in the annual report.
The Board
David Ovens joined the Board as a non-executive director in April 2025. He has 30 years’ experience of investment and is currently Joint Managing Director of Archangel Investors.
VCT legislation and qualifying status
The Company has continued to meet the stringent and complex qualifying conditions laid down by HM Revenue & Customs for maintaining its approval as a VCT. The Manager monitors the position closely and reports regularly to the Board. Philip Hare & Associates LLP has continued to act as independent adviser to the Company on VCT taxation matters.
In September 2024 we were pleased to report the extension of the VCT Sunset Clause until 2035. The ‘Sunset Clause’ is a European state aid requirement which, without extension, would have removed the VCT tax reliefs that investors receive on newly issued VCT shares.
Audit tender process
Following a formal and rigorous audit tender process, the Board has resolved that it intends to recommend Johnston Carmichael LLP for appointment as the Company’s auditor for the financial year ending 31 March 2026 onwards, subject to shareholder approval at the AGM in 2025. Forvis Mazars will remain the Company’s auditor until the AGM in 2025. The Board would like to thank Forvis Mazars LLP for their diligent service over the past five years.
Annual General Meeting
The Company’s Annual General Meeting (AGM) will take place at 12:30pm on 7 August 2025 at the offices of Addleshaw Goddard, Exchange Tower, 19 Canning Street, Edinburgh, EH3 8EH. This will be an in person meeting but following positive comments received from the last meetings, we also intend to offer remote access for shareholders through an online webinar facility. Full details and formal notice of the AGM will be provided separately. Please note that shareholders attending remotely must register their votes ahead of time, as it will not be possible to count votes from online participants at the AGM.
Outlook
Despite recent US economic policy, global conflict and stubbornly high UK inflation, the Manager continues to see high-quality investment opportunities. The Company’s portfolio has grown steadily over the last 12 months, which the Manager looks to build upon over the coming year. As shown by recent realisation activity, there is still demand for high growth UK venture assets, and having invested across the economic cycle, the Company is well placed to generate returns when interest rates fall and business confidence levels increase. The Company’s commitment remains the provision of capital to nurture the development of innovative early-stage businesses across the UK.
James Ferguson
Chairman
17 June 2025
Extracts from the audited financial statements for the year ended 31 March 2025 are set out below.
Income statement
for the year ended 31 March 2025
Balance sheet
as at 31 March 2025
Statement of changes in equity
for the year ended 31 March 2025
for the year ended 31 March 2024
Statement of cash flows
for the year ended 31 March 2025
Investment portfolio
31 March 2025
* Quoted on AIM.
** This change in ‘like for like’ valuations is a comparison of the 31 March 2025 valuations with the 31 March 2024 valuations (or where a new investment has been made in the year, the investment amount), having adjusted for any partial disposals, loan stock repayments or new and follow-on investments in the year.
Risk management
The Board carries out a regular and robust assessment of the risk environment in which the Company operates and seeks to identify new risks as they emerge. The principal and emerging risks and uncertainties identified by the Board which might affect the Company’s business model and future performance, and the steps taken with a view to their mitigation, are as follows:
Other matters
The above summary of results for the year ended 31 March 2025 does not constitute statutory financial statements within the meaning of Section 435 of the Companies Act 2006 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 auditor’s report on those financial statements under Section 495 of the Companies Act 2006 is unqualified, does not include any reference to matters to which the auditor drew attention by way of emphasis without qualifying the report and does not contain a statement under Section 498 (2) or (3) of the Companies Act 2006.
The calculation of the return per share is based on the return after tax for the year of £6,956,000 (2024: £3,038,000) and on 146,866,413 (2024: 131,811,967) shares, being the weighted average number of shares in issue during the year.
If approved by shareholders, the proposed final dividend of 2.5 pence per share for the year ended 31 March 2025 will be paid on 5 September 2025 to shareholders on the register at the close of business on 8 August 2025.
The full annual report including financial statements for the year ended 31 March 2025 is expected to be made available to shareholders on or around 27 June 2025 and will be available to the public at the registered office of the company at Forward House, 17 High Street, Henley-in-Arden B95 5AA and on the Company’s website.
The contents of the Mercia Asset Management PLC website and the contents of any website accessible from hyperlinks on the Mercia Asset Management PLC website (or any other website) are not incorporated into, nor form part of, this announcement.
2321 Rosecrans Avenue. Suite 2200
90245 El Segundo Stati Uniti