Interim Results

Baronsmead VCT 3 PLC 17 August 2001 Investment Objective Baronsmead VCT 3 plc aims to achieve long-term capital growth and to generate tax-free dividends for private investors. Interim Results - Period Ended 30 June 2001 £32.8 million funds raised First interim dividend of 1.0 pence per share Net asset value per share of 94.5 pence First five qualifying investments made The Board are delighted to present the first interim report to the 2,078 shareholders that have subscribed to Baronsmead VCT 3 in the seven weeks to 6 March 2001. The Company raised £32.8 million gross proceeds during the period under review. The Board's intention is to communicate to shareholders the progress of the Company as clearly as possible, particularly the nature of the underlying portfolio investments so that shareholders can appreciate how the performance is achieved. Performance is measured by calculating the total return generated for shareholders from the growth in net asset value (NAV) per share combined with the reinvestment of dividends. In the period since inception of the Company on 26 January 2001 to 30 June 2001, the total return has been 0.5 per cent. This compares with a fall in the FTSE All-Share Index of 10 per cent over the same period. The initial NAV per share has fallen slightly from 95.0p to 94.5p per share and a first interim dividend has been declared of 1.0p per share which will be paid on 17 September 2001 to shareholders on the register at the close of business on 31 August 2001. The Board intends to pay capital dividends to shareholders in the future once capital profits have been realised on the sale of investments. These distributions are, however, unlikely to occur before the fund is more fully invested and the investees have had time to progress their plans towards a satisfactory outcome. Building the portfolio To fulfil the investment policy, the intention is to build the equity portfolio to over 30 companies across a range of different sectors and stages of corporate growth. Baronsmead VCT 3 will invest in unquoted companies as well as companies whose shares are traded on the Alternative Investment Market (AiM). VCT legislation requires that over £22 million be invested in qualifying holdings by 31 December 2003. At 30 June 2001, £20.9 million was retained in cash awaiting investment into fixed rate securities and qualifying holdings. At 30 June 2001, five investments totalling £2 million had been completed in accordance with the Company's investment policy. To date of the equity investments, 50% has been invested in consumer markets, 27% in business services and 23% in the healthcare sector. Management buy-in/buy-out Thomas Sanderson, based in Waterlooville, is the UK market leader in pleated conservatory blinds. Two directors from Staybrite Windows and seven incumbent senior managers acquired the company from the founding shareholders. As part of the £6 million fund raising, Baronsmead VCT 3 provided £667,000. Early stage expansion Vectura is based in Bath and is a drug discovery business specialising in particle science and pulmonary inhalation. It was formed in collaboration with Bath University in 1997 and in the second round financing raised £10.5 million. Baronsmead VCT 3 invested £445,000. Growth by acquisition Blooms of Bressingham, based in Maidenhead, is a chain of retail garden centres. Blooms of Bressingham was listed on AiM in December 1999 and in April 2001 it acquired the share capital of a similar business, Jardinerie, increasing the number of garden centres to thirteen and extending geographically across the southern half of England. Baronsmead VCT 3 invested £320,000 as part of a total equity fund raising on AiM of £4 million before expenses. AiM flotation Capcon based in central London is a stock auditing and surveillance company servicing the pub and transport industry. It floated on AiM on April 2001 raising £1.75 million before expenses of which Baronsmead VCT 3 subscribed £137,000. Shareholder reconstruction/expansion Kidsunlimited based in Cheshire manages 32 day care nursery centres for children under 5 years old. Two new directors acquired a minority shareholding from the founders and in all £4.95 million was raised to increase the number of day care centres, including work place day centres for businesses. Baronsmead VCT 3 invested £400,000. Outlook Economic confidence has fallen during 2001 as lower profits are declared by larger quoted companies which has been reflected in lower stock market prices and signals more difficult trading conditions for unquoted companies. In the short-term, the high level of fixed interest securities in the portfolio provides a buffer during the period that the qualifying portfolio is built up. The Company is well positioned to take advantage of these lower valuations and benefit once stronger economic conditions return. Enquiries: David Thorp Friends Ivory & Sime Private Equity plc : Tel. 0207 506 1100 Rhonda Nicoll Friends Ivory & Sime plc : Tel. 0131 465 1000 Unaudited Statement of Total Return (incorporating the revenue account) of the Company Period from 22 November 2000 to 30 June 2001 Revenue Capital Total £'000 £'000 £'000 Unrealised losses on investments - (48) (48) Income 640 - 640 Investment management fee (66) (199) (265) Other expenses (93) - (93) Return on ordinary activities before tax 481 (247) 234 Tax on ordinary activities (138) 65 (73) Return attributable to equity shareholders 343 (182) 161 Dividend payable (330) - (330) Transfer to/(from) reserves 13 (182) (169) Return per ordinary share: 1.23p (0.66p) 0.57p Unaudited Statement of Total Return (incorporating the revenue account) of the Company Period from 22 November 2000 to 31 May 2001 Revenue Capital Total £'000 £'000 £'000 Unrealised gains on investments - 59 59 Income 495 - 495 Investment management fee (52) (156) (208) Other expenses (44) - (44) Return on ordinary activities before tax 399 (97) 302 Tax on ordinary activities (104) 41 (63) Return attributable to equity shareholders 295 (56) 239 Dividend payable - - - Transfer to/(from) reserves 295 (56) (239) Return per ordinary share: 1.10p (0.21p) 0.89p Unaudited Balance Sheet As at As at 30 June 31 May 2001 2001 £'000 £'000 Fixed Assets Quoted on the Alternative Investment Market 520 582 Unquoted investments 1,512 1,112 Listed fixed interest investments 8,248 8,293 ________ ________ 10,280 9,987 Net current assets 20,901 21,602 _______ _______ Net assets 31,181 31,589 ________ ________ Financed by: Shareholders' funds 31,181 31,589 ________ ________ Net asset value per ordinary share: 94.49p 95.72p Ordinary shares in issue 32,999,999 32,999,999 Summarised Unaudited Statement of Cash Flows Period from Period from 22 November 22 November 2000 to 2000 to 30 June 31 May 2001 2000 to £'000 £'000 Net cash outflow from operating activities (89) (68) Capital expenditure and financial investment (10,328) (9,482) Net cash outflow before financing (10,417) (9,550) Financing 32,069 32,069 Increase in cash 21,652 22,519 Reconciliation of net cash flow to movement in net cash Increase in cash 21,652 22,519 Net cash at 30 June/31 May 21,652 22,519 Reconciliation of operating profit to net cash flow from activities Net return before taxation 481 399 Management fee charged to capital (199) (156) Increase in debtors (610) (543) Increase in creditors 239 232 Net cash flow from operating activities (89) (68) Notes 1. The unaudited interim results which cover the period from incorporation on 22 November 2000 to 30 June 2001 have been drawn up in accordance with the applicable accounting Statement of Recommended Practice for Financial Statements of Investment Trust Companies. In order to comply with UK Listing Authority regulations it is necessary to present two sets of interim figures, from 22 November 2000 to 31 May 2001 being the first six month period and 22 November to 30 June 2001. 2. The Company was launched on 26 January 2001 at which date 5,721,688 ordinary shares were issued. A further 27,278,311 ordinary shares were issued during the period to 30 June 2001. 3. Earnings for the period from incorporation on 22 November 2000 to 30 June 2001 should not be taken as a guide to the results for the full year and are based on a weighted average of 28,021,335 ordinary shares in issue during the period since launch. 4. Income for the period from incorporation on 22 November 2000 to 30 June 2001 is derived from: 2001 £'000 Government securities and corporate bonds 170 Deposit interest 470 ___ 640 5. The interim dividend of 1.00p will be paid on 17 September 2001 to shareholders on the register on 31 August 2001. 6. These are not statutory accounts in terms of Section 240 of the Companies Act 1985 and are unaudited. 7. Copies of the interim report have been mailed to shareholders and are available from the Registered Office of the Company at 100 Wood Street, London EC2V 7AN.

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