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Sgr & Frdlndr AIM 3 (VICT)

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Monday 16 October, 2006

Sgr & Frdlndr AIM 3

Interim Results

Singer & Friedlander AIM 3 VCT PLC
16 October 2006


SINGER & FRIEDLANDER AIM 3 VCT plc


Interim Report for the six month period ended 31 July 2006


Board Review


Performance

During the six months to 31 July the AIM Index declined by 8.2%. Over the same
period your Adjusted Net Asset Value ('Adjusted NAV') at 83.7 pence fell by 5.3%
and your Net Asset Value ('NAV') at 82.2 pence fell by 7.1%. Adjusted NAV has
been presented in this Interim Report to remove the distortion created by the
requirement to include in the consolidated balance sheet negative goodwill
arising on the merger of the Company with Singer & Friedlander AIM VCT and
Singer & Friedlander AIM 2 VCT. This is explained in note 3.

It is disappointing to report a further decline in the NAV but it is important
to consider the market background and that during the period the fund had to
bear the costs of the merger and of restructuring the portfolio. Since launch in
February 2001 shareholders in the Singer & Friedlander AIM 3 VCT have seen a
fall in Adjusted NAV of 8.5% (after allowing for dividend payments of 3.25
pence) compared to a fall of 23.1% in the AIM Index.

Shareholders who invested in the 'C' Share issue of the Singer & Friedlander AIM
3 VCT in April 2005, adjusted for the conversion ratio used upon conversion in
December 2005, have not seen a change in their effective Adjusted NAV whilst the
AIM Index has fallen by 3.9%.

Shareholders in Singer & Friedlander AIM 2 VCT (after allowing for dividend
payments of 5.25 pence and the relevant merger conversion ratio) have seen an
effective decline in Adjusted NAV of 29.6% since launch in April 2000. Over the
same period the AIM Index has declined by 52.8%.

Shareholders in the Singer & Friedlander AIM VCT, launched in late 1998, and
after accounting for dividends totalling 32.4 pence and following conversion
have seen a decline of 28.9%.

The above returns do not take into account any tax relief which may have been
received by shareholders.


Dividends

As in previous years, the Directors are not declaring the payment of an interim
dividend but do anticipate the payment of a final dividend which will be
announced with our full year results. Since the interim date the Company has
revoked its Investment Company status and will therefore be in a position to
distribute capital profits as part of any year end dividend.


Investment Strategy

The objective of the Company is to provide investors with an attractive return
from a portfolio of investments primarily in companies whose shares are traded
on AIM. Returns will be enhanced as a consequence of dividends and capital gains
being free of tax for private investors.


Portfolio commentary and developments

The merged portfolio continues to comply with the HM Revenue and Customs'
criteria for VCT qualification and now consists of 81 investments. 77 of these
are listed on AIM and 4 are unquoted. Unquoted investments represent 7% of the
portfolio whilst fixed interest investments and cash account for some 16%.
Following the merger the combined portfolio contained nearly 120 investments,
the Manager has subsequently reduced that number to a more manageable level. The
restructuring process is now largely complete.

We reported in the last annual report that a number of our investee companies
had produced some disappointing results, although they appeared to be largely
one off in nature; it is pleasing to note that recent news appears to confirm
this view and we have seen a recovery in share prices of the majority of these
companies.

During the period we have seen particularly good performance from Aquilo,
Formation Group, Oasis Healthcare and Tanfield Group.


Merger Completion and Running Costs

The merger of the three Singer & Friedlander AIM VCTs was completed in February.
Whilst this exercise incurred considerable costs which have been reflected in
these results it is anticipated that the benefits will begin to accrue during
the second half of our financial year. We have focussed on reducing the ongoing
running costs of the Trust, with the annualised running costs being 2.38% of the
value of the fund (before negative goodwill and excluding option costs) and the
total annualised running costs (including option costs) of 2.65%.

We anticipate that expense ratio at the end of the year, subject to market
conditions, will be below that forecast in the merger documents.


Share Repurchases

During the period we repurchased 3,011,584 shares representing 5.7% of our
post-merger issued share capital. The Trust had been in an extended 'closed
period' due to the merger and this led to an increase in demand for share
buy-backs. These shares were bought at a 10% discount to the NAV prevailing at
the time and on average the price paid was 75 pence thereby enhancing the NAV
for remaining shareholders. The Trust will continue to repurchase its own shares
from time to time as appropriate and within the powers granted at the AGM. These
transactions are handled by our stockbroker, Teather & Greenwood.


Outlook

There are at present many economic global uncertainties which make forecasting
particularly difficult. These uncertainties include geo-political risk, slower
economic growth, higher inflation and rising interest rates. This has led to
considerable volatility in share prices which is unlikely to reduce in the
immediate future. Our Fund Manager believes that most of the negative factors
have been discounted by the market, however he continues to recognise that stock
selection is as important as ever. Your Board and Fund Manager continue to
believe that the portfolio has many attractive investments which have the
ability to deliver superior returns in the medium to long term as the companies
mature and deliver the expected results.


Christopher Moorsom (Chairman)
James Hambro
Mike Killingley
David Page
Dominic Wheatley

Singer & Friedlander AIM 3 VCT plc

12 October 2006



Summary Financial Information
Unaudited Consolidated Income Statement

                                          Unaudited                         Unaudited                           Audited
                                     6 months ended                    6 months ended                        Year ended
                                       31 July 2006                     31 July 2005*                   31 January 2006
                    Revenue     Capital       Total   Revenue     Capital       Total   Revenue     Capital       Total
             Note         £           £           £         £           £           £         £           £           £

Losses on                 - (2,121,751) (2,121,751)         - (1,958,550) (1,958,550)         - (3,318,759) (3,318,759)
investments
at fair value
Negative                  -     261,213     261,213         -           -           -         -           -           -
goodwill
released
Income              303,985           -     303,985   163,561           -     163,561   263,590           -     263,590
Investment         (89,784)   (269,352)   (359,136)  (71,881)   (215,645)   (287,526) (141,312)   (423,937)   (565,249)
management
fees
Cost of         4  (13,896)    (41,686)    (55,582)         -           -           -         -           -           -
share
options
Other             (133,320)           -   (133,320) (157,735)           -   (157,735) (304,617)           -   (304,617)
expenses

Return on            66,985 (2,171,576) (2,104,591)  (66,055) (2,174,195) (2,240,250) (182,339) (3,742,696) (3,925,035)
ordinary
activities
before
taxation
Taxation on               -           -           -      (93)          93           -         -           -           -
ordinary
activities

Return               66,985 (2,171,576) (2,104,591)  (66,148) (2,174,102) (2,240,250) (182,339) (3,742,696) (3,925,035)
attributable
to equity
shareholders

Adjusted        2     0.14p     (4.96)p     (4.82)p   (0.21)p     (6.99)p     (7.20)p   (0.59)p    (12.06)p    (12.65)p
return per
Ordinary
share
Return per      2     0.14p     (4.43)p     (4.29)p   (0.21)p     (6.99)p     (7.20)p   (0.59)p    (12.06)p    (12.65)p
Ordinary
share


The accounts have been prepared using accounting standards and policies adopted
at the previous year end. All revenue and capital items in the above statement
derive from continuing operations. No operations were discontinued during the
period.

These accounts are unaudited and are not the Group's statutory accounts.

The total column of this statement is the profit and loss account of the Group.

* The figures for the period ended 31 July 2005 include results for both the
Ordinary share fund and C share fund. The return per share relates to the
Ordinary share fund only.



Unaudited Consolidated Reconciliation of Movements in Shareholders' Funds


                                        Note   Called-up       Share       Merger       Special     Capital
                                                   share     Premium      reserve      reserve   redemption
                                                 capital     account                                reserve
                                                       £           £            £            £            £             
            
6 months ended 31 July 2006
31 January 2006                                1,555,894   3,121,068            -   25,082,853      116,500
Issue of shares on merger                      1,064,034           -            -            -            -
Premium on merger                                      -           -   16,492,539            -            -
Share issue costs on merger                            -   (166,274)            -            -            -
Re-purchase and cancellation
of ordinary shares                             (150,579)           -            -  (2,268,516)      150,579
Cost of share options                      4           -           -            -            -            -
Net return after taxation for the          
period                                                 -           -            -            -            -

31 July 2006                                   2,469,349   2,954,794   16,492,539   22,814,337      267,079

Year ended 31 January 2006
31 January 2005                                1,576,043   2,721,969            -   25,774,626       73,500
Conversion of C shares into
ordinary shares                                   22,851           -            -            -            -
Premium on issue of shares                             -     399,099            -            -            -
Re-purchase and cancellation
of ordinary shares                              (43,000)           -            -    (691,773)       43,000
Net return after taxation for the year                 -           -            -            -            -
Dividends paid                                         -           -            -            -            -

31 January 2006                                1,555,894   3,121,068            -   25,082,853      116,500

6 months ended 31 July 2005
31 January 2005                                1,576,043   2,721,969            -   25,774,626       73,500
Re-purchase and cancellation
of ordinary shares                              (43,000)           -            -    (691,773)       43,000
Net return after taxation for the                      -           -            -            -            -
period
Dividends paid                                         -           -            -            -            -

31 July 2005 (Ordinary shares)                 1,533,043   2,721,969            -   25,082,853      116,500
31 July 2005 (C shares)                           20,101     362,072            -            -            -

31 July 2005 Total                             1,553,144   3,084,041            -   25,082,853      116,500



                                        Note        Share      Capital     Revenue        Total
                                                   Option      reserve     reserve      
                                                  reserve      
                                                        £            £           £            £
6 months ended 31 July 2006
31 January 2006                                         -  (2,243,889)   (116,639)   27,515,787
Issue of shares on merger                               -            -           -    1,064,034
Premium on merger                                       -            -           -   16,492,539
Share issue costs on merger                             -            -           -    (166,274)
Re-purchase and cancellation
of ordinary shares                                      -            -           -  (2,268,516)
Cost of share options                      4       55,582            -           -       55,582
Net return after taxation for the 
period                                                  -  (2,171,576)      66,985  (2,104,591)

31 July 2006                                       55,582  (4,415,465)    (49,654)   40,588,561

Year ended 31 January 2006
31 January 2005                                         -    1,498,807     221,004   31,865,949
Conversion of C shares into
ordinary shares                                         -            -           -       22,851
Premium on issue of shares                              -            -           -      399,099
Re-purchase and cancellation
of ordinary shares                                      -            -           -    (691,773)
Net return after taxation
for the year                                            -  (3,742,696)   (182,339)  (3,925,035)
Dividends paid                                          -            -   (155,304)    (155,304)

31 January 2006                                         -  (2,243,889)   (116,639)   27,515,787

6 months ended 31 July 2005
31 January 2005                                         -    1,498,807     221,004   31,865,949
Re-purchase and cancellation
of ordinary shares                                      -            -           -    (691,773)
Net return after taxation
for the period                                          -  (2,185,245)    (66,777)  (2,252,022)
Dividends paid                                          -            -   (155,304)    (155,304)

31 July 2005 (Ordinary shares)                          -     (686,438)    (1,077)   28,766,850
31 July 2005 (C shares)                                 -        11,143        629      393,945

31 July 2005 Total                                      -     (675,295)      (448)   29,160,795


These accounts are unaudited and are not the Group's statutory accounts



Unaudited Consolidated Balance Sheet

                                                                        Unaudited          Unaudited            Audited
                                                                          31 July            31 July         31 January
                                                                             2006              2005*               2006
                                                            Note                £                  £                  £
Fixed assets
Investments at fair value                                      5       41,392,054         28,738,967         27,200,217
Negative goodwill                                                       (757,985)                  -                  -

Current assets
Debtors                                                                   720,893            401,767            228,184
Accrued interest on fixed interest securities                             112,858             77,359             36,141
Cash at bank                                                              233,508            409,458            412,435

                                                                        1,067,259            888,584            676,760

Creditors: amounts falling due within one year
Other creditors and accruals                                            1,112,767            466,756            361,190

Net current (liabilities)/assets                                         (45,508)            421,828            315,570

Total net assets                                                       40,588,561         29,160,795         27,515,787

Capital & reserves
Called-up share capital                                                 2,469,349          1,553,144          1,555,894
Share premium account                                                   2,954,794          3,084,041          3,121,068
Merger reserve                                                         16,492,539                  -                  -
Special reserve                                                        22,814,337         25,082,853         25,082,853
Capital redemption reserve                                                267,079            116,500            116,500
Share option reserve                                           4           55,582                  -                  -
Capital reserve - realised                                              1,044,690          1,510,881          1,568,267
Capital reserve - unrealised                                          (5,460,155)        (2,186,176)        (3,812,156)
Revenue Reserve                                                          (49,654)              (448)          (116,639)

Equity shareholders' funds                                             40,588,561         29,160,795         27,515,787

Adjusted net asset value per Ordinary share                    3           83.72p             93.82p             88.42p
Net asset value per Ordinary share                             3           82.18p             93.82p             88.42p



Since the period end the Company has not purchased any ordinary shares for
cancellation.

These accounts are unaudited and are not the Group's statutory accounts.

* The figures for the period ended 31 July 2005 include results for both the
Ordinary share fund and         C share fund. The net asset value per share
relates to the Ordinary share fund only.



Unaudited Summarised Consolidated Cash Flow Statement

                                                                                 Unaudited     Unaudited        Audited
                                                                            6 months ended      6 months
                                                                                                   ended     Year ended
                                                                                   31 July       31 July    31  January
                                                                                      2006         2005*           2006
                                                                                         £             £              £

Net cash outflow from operating activities                                       (128,729)     (535,346)      (610,584)
Net cash inflow from capital expenditure and financial investment                1,887,812       967,421      1,276,418
Equity dividends paid                                                                    -     (155,304)      (155,304)
Net cash inflow before financing                                                 1,759,083       276,771        510,530
Net cash outflow from financing                                                (1,938,010)     (295,530)      (526,312)
Net funds at the beginning of the period                                           412,435       428,217        428,217
Net funds at end of the period                                                     233,508       409,458        412,435


These accounts are unaudited and are not the Group's statutory accounts.

* The figures for the period ended 31 July 2005 include results for both the
Ordinary share fund and C share fund.


Notes to the Unaudited Financial Statements

The financial statements for the year ended 31 January 2006 have been audited
whilst the results for the six months ended 31 July 2005 and 31 July 2006 are
unaudited.  The Interim Report is unaudited and does not constitute statutory
accounts within the meaning of S240 of the Companies Act 1985.  The financial
information for the year to 31 January 2006 is an abridged statement of the
financial statements for that year which were prepared under UK Generally
Accepted Accounting Practice and were delivered to the Registrar of Companies.
The auditors' opinion on these accounts was unqualified and did not contain a
statement made under S237(2) or S237(3) of the Companies Act 1985.


1.       Principal Accounting Policies

The financial statements have been prepared using the accounting policies
adopted in the Company's audited financial statements for the year ended 31
January 2006.  The basis of consolidation is set out below.


a)      Basis of Accounting

The financial statements have been prepared under the historical cost 
convention, modified to include the revaluation of fixed asset investments.


b)      Basis of preparation

The financial statements are presented as consolidated financial statements and
incorporate the results, assets and liabilities of the Company and its
subsidiary undertakings, Singer & Friedlander AIM VCT plc ('AIM') and Singer &
Friedlander AIM 2 VCT plc ('AIM2') following the merger of the Company with AIM
and AIM2 on 22 February 2006.

Following the merger the third party assets and liabilities of AIM and AIM2 were
transferred to the Company and it is proposed that AIM and AIM2 will be
liquidated.


c)       Basis of consolidation

AIM and AIM2 have been included in the financial statements from their
acquisition date using the acquisition method of accounting.  Accordingly, the
consolidated income statement and consolidated statement of cash flows include
the results of AIM and AIM2 for the period since the merger.

Negative goodwill arose on the acquisition being the difference between the fair
value of the net tangible assets acquired and the aggregate of the fair value of
the Company's shares issued and the expenses of the merger.

In accordance with FRS 10 'Goodwill and intangible assets' the negative goodwill
has been treated as a negative asset in the consolidated balance sheet.  This
negative asset has been released to the capital column of the consolidated
income statement to the extent that it has been subsequently realised through
either the disposal of investments or their write down to an amount below their
fair value on acquisition.


d)      Investments

All investments held by the Company are classified 'at fair value through profit
or loss'. Investments are initially recognised at cost, being the fair value of
consideration given. Interest accrued on fixed interest rate securities at the
date of purchase or sale is accounted for separately as accrued income, so that
the value or purchase price or sale proceeds is shown net of such items.

After initial recognition, investments are measured at fair value, with
unrealised gains and losses on investments and impairment of investments
recognised in the income statement and allocated to capital. Realised gains and
losses on investments sold are calculated as the difference between sales
proceeds and cost.

For investments actively traded in organised financial markets, fair value is
generally determined by reference to Stock Exchange quoted market bid prices at
the close of business on the balance sheet date, without adjustment for
transaction costs necessary to realise the asset.

Where trading in the securities of an investee company is suspended, the
investment is valued at the Board's estimate of its net realisable value.

Unquoted investments are stated at the fair value with reference to the
International Private Equity and Venture Capital Valuation ('IPEVCV') guidelines
where appropriate.

Capital gains and losses on investments, whether realised or unrealised, are
dealt with in the capital reserve.


2.       Return per share and adjusted return per share

Basic and diluted revenue return per ordinary share is based on the net gain on
ordinary activities after taxation of £66,985 (31 July 2005: loss £66,777, 31
January 2006: loss £182,339) and on 49,081,147      (31 July 2005: 31,243,676,
31 January 2006: 31,025,626) ordinary shares, being the weighted average number
of ordinary shares in issue during the period.

Basic and diluted capital return per ordinary share is based on net capital
losses for the period of £2,171,576 (31 July 2005: loss £2,185,245, 31 January
2006: £3,742,696) and 49,081,147 (31 July 2005: 31,243,676, 31 January 2006:
31,025,626) ordinary shares, being the weighted average number of ordinary
shares in issue during the period.


Adjusted return per share

As the financial statements have been distorted by the need under accounting
standards to record negative goodwill, which will not result in an outflow of
resources from the Company or its subsidiaries, adjusted return per share
figures have been presented which eliminate the effect of negative goodwill. The
adjusted figures have been presented so as to better reflect the underlying
investment performance.

The adjusted return per share affects the six months ended 31 July 2006 only and
has been determined as follows:
                                                                             6 months ended 31 July 2006
                                                                             Revenue          Capital            Total
                                                                                   £                £                £

Return attributable to equity shareholders                                    66,985      (2,171,576)      (2,104,591)
Adjustment for negative goodwill                                                   -        (261,213)        (261,213)

Adjusted return attributable to equity shareholders                           66,985      (2,432,789)      (2,365,804)

Weighted average number of shares during the period                       49,081,147       49,081,147       49,081,147
Adjusted return per share                                                      0.14p          (4.96)p          (4.82)p


3.        Net asset value per share and adjusted net asset value per share

The net asset value per ordinary share at 31 July 2006 has been calculated by
reference to net assets of £40,588,561 (31 July 2005: £28,766,850, 31 January
2006: £27,515,787) and 49,386,992 (31 July 2005: 30,660,860, 31 January 2006:
31,117,880) ordinary shares, being the number of ordinary shares in issue at the
period end.


Adjusted net asset value per share

As stated above, the financial statements have been distorted by the need under
accounting standards to record negative goodwill. An adjusted net asset value
per share has been presented which eliminates the effect of negative goodwill
and better reflects the underlying investment performance.

The adjusted net asset value affects the six months ended 31 July 2006 only and
has been determined as follows:
                                                                                                     As at 31 July 2006
                                                                                                                      £

Net assets                                                                                                   40,588,561
Adjustment for negative goodwill                                                                                757,985

Adjusted net assets                                                                                          41,346,546

Number of shares in issue at the period end                                                                  49,386,992
Adjusted net asset value per share                                                                               83.72p



4.       Managers' option

In accordance with the arrangements agreed on the merger of the Company with AIM
and AIM2, the Managers have been granted an option which provides that if by the
date of payment of the final dividend in respect of the ordinary shares for the
Company's accounting year ending 31 January 2013 cumulative dividends declared
and paid on each ordinary share (by reference to a record date after the merger)
exceed a return of 8 per cent. (compounded annually) of the net asset value per
ordinary share the Manager will be entitled to subscribe at par for such number
of additional ordinary shares as shall in aggregate be equal to 15 per cent. of
ordinary shares in the enlarged Company as enlarged by such subscriptions.

This right is a share based payment under FRS20.  This right or option has been
valued on the date that it was granted to the Managers and this cost is being
charged to the consolidated income statement as part of the management fee
evenly over the period over which it vests.  An amount of £55,582 has been
charged to the consolidated income statement in the period to 31 July 2006 with
a separate reserve being created in the consolidated balance sheet.


5.        Fixed Asset Investments

Ordinary Shares
Summary of Investments at 31 July 2006



AIM Quoted Companies                Sector Analysis                       Purchase       Current      % of
                                                                              Cost     Valuation portfolio
                                                                                 £             £  by value
1st Dental
Laboratories                        Healthcare equipment & services        450,000       290,333      0.72
Adval Group                         Support services                       287,265        64,884      0.16
Aero Inventory                      Aerospace & defence                  1,394,420     1,497,927      3.69
Aquilo                              Support services                     1,017,454       651,842      1.61
Asfare Group                        Industrial engineering                 370,835       342,078      0.84
ATA Group                           Support services                       220,375       382,969      0.94
Autoclenz Holdings                  Support services                       131,440       110,998      0.27
Avingtrans                          Industrial engineering                 443,333       442,500      1.09
Bank Restaurant Group               Travel & leisure                        62,500        58,563      0.14
BBI Holdings                        Pharmaceuticals & biotechnology        239,708       546,993      1.35
Blooms of Bressingham Holdings      General retailers                      941,180     1,033,312      2.55
Bright Things                       Leisure goods                          352,500        17,625      0.04
Camaxys Group                       Software & computer services           254,825        17,901      0.04
Cello Group                         Media                                  257,625       263,813      0.65
Charteris Group                     Software & computer services            84,500        39,650      0.10
Chromogenex                         Healthcare equipment & services         27,750        26,997      0.07
Clerkenwell Ventures                Non-equity investment instruments      190,489       134,020      0.33
CMS Webview                         Media                                  401,674        60,211      0.15
Conder Environmental                Industrial engineering                 385,241       192,595      0.48
Connaught                           Support services                       421,685       435,779      1.07
Corpora                             Software & computer services           945,280       532,233      1.31
Disperse Group                      Personal goods                         315,104       246,354      0.61
Eagle Eye Telematics                Industrial transportation                3,830         3,828      0.01
First Artist Corporation            Media                                  704,265       393,207      0.97
Fountains                           Support services                       155,852       117,704      0.29
Fujin Technology                    Software & computer services           310,000       210,972      0.52
Fulcrum Pharma                      Pharmaceuticals & biotechnology        279,532        91,127      0.23
Glisten                             Food producers                         240,000       959,250      2.36
Gourmet Holdings                    Travel & leisure                        29,200        18,200      0.05
Huveaux                             Media                                  664,082       975,168      2.40
ID Data                             Electronic & electrical equipment      939,736       357,529      0.88
ILX Group                           Support services                       374,960       542,793      1.34
Imagesound                          General financial                       92,188       128,125      0.32
Imprint                             Support services                       422,558     1,219,339      3.00
Intelligent Environments Group      Software & computer services           116,123       206,962      0.51
Inter Link Foods                    Food producers                         629,000       395,038      0.97
Just Car Clinics Group              General retailers                       95,865       110,667      0.27
Knowledge Technology Solutions      Media                                  127,362        42,412      0.11
Kuju                                Software & computer services           549,999       106,800      0.26
Lo-Q                                Travel & leisure                       760,000       134,892      0.33
Maelor                              Healthcare equipment & services         32,710        16,700      0.04
Medal Entertainment & Media         General financial                      602,509       633,288      1.56
Mediwatch                           Healthcare equipment & services      1,046,144       930,370      2.29
Music Copyright Solutions           Media                                  375,000       118,544      0.29

AIM Quoted Companies                Sector Analysis                       Purchase       Current      % of
                                                                              Cost     Valuation portfolio
                                                                                 £             £  by value

Neutrahealth                        Food & drug retailers                  279,470       304,184      0.75
NWD Group                           Media                                  518,312        73,735      0.18
Oasis Healthcare                    Healthcare equipment & services        914,525       936,296      2.31
Petards Group                       Support services                        82,860        88,274      0.22
Pixology                            Software & computer services           399,000        80,513      0.20
Playgolf Holdings                   Travel & leisure                       255,000       119,985      0.30
PM Group                            Support services                       524,232     1,283,058      3.16
Prezzo                              Travel & leisure                       275,076     1,286,250      3.17
Pubs 'n' Bars                       Travel & leisure                       281,813       283,490      0.70
Quadnetics Group                    Support services                       341,381       289,908      0.71
Red Squared                         Software & computer services            57,292        38,949      0.10
Ringprop                            Industrial engineering                 366,999        50,109      0.12
Smallbone                           Household goods                        293,220       350,000      0.86
Symphony Plastic Technologies       General industrials                    460,339       338,490      0.83
Synergy Healthcare                  Healthcare equipment & services        379,167     1,374,375      3.39
Tanfield Group                      Support services                     1,175,391     1,151,926      2.84
Tasty                               Travel & leisure                        52,000       103,250      0.25
The Celltalk Group                  General retailers                       40,500         5,247      0.01
The Clapham House Group             Travel & leisure                       453,872       828,269      2.04
The Food & Drink Group              Travel & leisure                        16,625        17,143      0.04
The Real Good Food Company          Food producers                         596,112       358,271      0.88
Thomson Intermedia                  Media                                  729,005       716,049      1.76
Tikit Group                         Software & computer services           400,000       715,652      1.76
Tissue Science Laboratories         Healthcare equipment & services        656,267       596,850      1.47
Torex Retail                        Software & computer services           694,691       769,514      1.90
Triplearc                           Support services                        84,814        78,264      0.19
UBC Media Group                     Media                                  663,754       496,277      1.22
Vianet Group                        Technology hardware & equipment        894,990       649,841      1.60
XKO Group                           Software & computer services           297,500       238,125      0.59
Xpertise Group                      Support services                       573,508       215,733      0.53
Zytronic                            Electronic & electrical equipment      610,958       554,487      1.37

                                                                        31,114,771    29,495,006     72.66

Private Companies

Flexbenefits                        Software & computer services           681,828       757,125      1.87
Lilestone Holdings                  General retailers                      648,175       292,187      0.72
Sportsweb.com                       Support services                       352,128       352,128      0.87
U4EA                                Technology hardware & equipment      1,803,122     1,467,332      3.62

                                                                         3,485,253     2,868,772      7.08

Other qualifying investments

Xpertise Group Loan Stock           Support services                       200,000       200,000      0.49

                                                                           200,000       200,000      0.49

Other fixed interest securities and
non-qualifying investments

Debentures and loan stocks

Financial Objects VAR RTE
Unsecured Loan Notes 2007                                                    9,304        10,150      0.03
Kreditanstalt Fur Wiederaufbau                                             
4.5% NTS 7/12/2006                                                         501,570       499,495      1.23

                                                                           510,874       509,645      1.26

UK Government loans                 Sector Analysis                       Purchase       Current      % of
                                                                              Cost     Valuation portfolio
                                                                                 £             £  by value

Treasury 7.5% Stock 7/12/2006                                              512,800       504,795      1.24
Treasury 4.5% Stock 7/3/2007                                             3,547,095     3,546,415      8.74
Treasury 4% Stock 7/3/2009                                               1,832,300     1,817,237      4.48

                                                                         5,892,195     5,868,447     14.46

Other non-qualifying investments

Aero Inventory                      Aerospace & defence                         87            94         -
Aquilo                              Support services                       432,769       277,258      0.68
Blooms of Bressingham Holdings      General retailers                      488,228       536,021      1.32
Cardpoint                           Support services                       645,994       935,353      2.30
Formation Group                     Media                                  519,751       583,860      1.44
Medal Entertainment & Media         General financial                       51,170        53,784      0.13
The Food & Drink Group              Travel & leisure                        61,888        63,814      0.16

                                                                         2,199,887     2,450,184      6.03

Investments held at nil valuation*

Award International Holdings
(delisted)                          Media                                  209,990             -         -
Coinmaster Gaming                   Travel & leisure                       350,000             -         -
Exertris                            Software & computer services           503,445             -         -
Exertris Conv Debt                  Software & computer services           100,000             -         -
Flying Scotsman                     Travel & leisure                       400,800             -         -
Global Money Transfer (Loan
Notes)                              Speciality & other finance             300,000             -         -
Laminate Flooring                   General retailers                      450,000             -         -
Monotub Industries                  Household goods                        260,000             -         -
Recycled Waste                      Support services                       374,994             -         -
Stanhope Telecom                    Telecommunication services             500,000             -         -

                                                                         3,449,229             -         -

Summary                                                                   Purchase       Current      % of
                                                                              Cost     Valuation portfolio
                                                                                 £             £  by value

Total qualifying portfolio                                              34,800,024    32,563,778     80.23
Fixed interest/non-qualifying
portfolio                                                                8,602,956     8,828,276     21.75
Investments held at nil valuation                                        3,449,229             -         -

Subtotal                                                                46,852,209    41,392,054    101.98
Negative goodwill                                                                      (757,985)    (1.87)
Net current liabilities                                                                 (45,508)    (0.11)

Total                                                                   46,852,209    40,588,561    100.00



The purchase cost of AIM and AIM2 investments is the cost to the parent company,
being the market value of investments as at the date of the merger and not the
original purchase cost.


* These companies are in liquidation and the Directors consider it appropriate
to value them at zero. With the exception of Exertris Conv Debt and Global Money
Transfer, they count towards the VCT investment test, which states that 70% of
the Company's assets will be invested in VCT qualifying investments by January
2004.


6.        Dividends

The Directors are not declaring the payment of an interim dividend in respect of
the period ended 31 July 2006.


Directors

C J L Moorsom
J D Hambro
M S Killingley
D M Page
D M D A Wheatley

Singer & Friedlander AIM 3 VCT plc
Registered in England & Wales No. 4138683
Registered office (with effect from 21 August 2006)
One Hanover Street
London W1S 1AX

Secretary

Singer & Friedlander Secretaries Limited
One Hanover Street
London W1S 1AX
Tel:    0203 205 5900
Fax:   0203 205 5905

Manager

Singer & Friedlander Investment Management Limited
(Authorised and regulated by the Financial Services Authority)
One Hanover Street
London W1S 1AX

E-mail:              info@sfim.co.uk
Website:           www.sfim.co.uk


Registrar

Capita IRC plc
Northern House
Woodsome Park
Fenay Bridge
Huddersfield
West Yorkshire HD8 0LA
(change of address with effect from 20 October 2006)


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