Interim Results
Baronsmead VCT 3 PLC
20 August 2003
To: RNS
From: Baronsmead VCT 3 plc
Date: 20 August 2003
Investment Objective
Baronsmead VCT 3 plc is a tax efficient listed company which aims to achieve
long-term capital growth and generate tax-free dividends for private investors.
Interim Results - Six months ended 30 June 2003
• Net asset value increased by 1.1 per cent to 95.87p per share
• Interim dividend of 0.9p per share declared
• Investments in period increased to 23 companies
• Total return of 7.5 per cent since launch
The two largest unquoted investments were sold in May and June realising
aggregate profits of £1.9 million on the sale of Thomas Sanderson and the AIMS
Group to trade purchasers. These are examples of how successful private equity
investment can add value to growth companies and achieve excellent returns for
the shareholders in these companies.
Results I During the interim period, the Net Asset Value per share increased by
1.1% to 95.9p per share after declaring an interim dividend of 0.9p per share.
This dividend will be paid on 20 September 2003 to shareholders who are on the
register at the close of business on 29 August 2003.
New investment I In the six months to 30 June 2003, one unquoted and three AiM
subscriptions were transacted.
• Huveaux - Specialist publishing group based in London
Huveaux owns three publishing businesses: Vacher Dod and Le Trombinoscope
produce UK and French political biographies; Lonsdale publishes revision
guides aimed at school children sitting GCSEs. Baronsmead VCT 3 invested
£534,000 of a £7.6 million placing for acquisitions.
• Universe Group - provides payment and currency exchange systems
Based in London and Southampton, Universe has two divisions: HTEC designs
loyalty and payment systems to the retail petrol industry and currency
exchange via bureau de change outlets and money transfer systems. Baronsmead
VCT 3 invested £158,000 of a £1.5 million placing, raised to develop their
global money transfer business.
• Cardpoint - operates independent cash machines
Based in Lytham, Cardpoint operates 1,600 independent ATMs throughout the UK
in service stations, pubs and hospitals. Baronsmead VCT 3 invested £92,000
of the £5.5 million placing on AiM, raised to purchase the automated teller
machine estate of Securicor.
• Oxxon Pharmacinnes - develops treatments for chronic infectious diseases
Based in Oxford, the core activity of Oxxon is the development of innovative
'Pharmacinnes' for the treatment of chronic infectious diseases and cancer.
Baronsmead VCT 3 invested £250,000 as part of a £12 million funding round.
The Investment Managers have focussed on completing new and follow-on round
investments to meet the requirement that at least 70% of the value of the
Company's total assets be invested in VCT qualifying holdings by the end of the
third accounting period, 31 December 2003, and thereafter.
The Board with its advisers monitors the VCT status of its new and existing
investments with a view to ensuring that the Company will be able to comply. The
Board will be considering a range of options in this regard whilst maintaining
the investment policy and sustaining quality standards.
Cash management I The Investment Managers have replaced Cazenove Fund Management
in managing the Company's liquid capital, awaiting investment into qualifying
holdings. The original intention was that active management of a corporate bond
portfolio merited Cazenove's involvement. In view of the low yield environment
and small relative fund size, Cazenove subsequently recommended that investing
in a portfolio of gilts rather than corporate bonds would be more appropriate to
achieve the required diversity and flexibility. In these circumstances the Board
has decided that the Investment Manager's in-house expertise would be as
effective and more cost efficient.
Meeting shareholder needs I Since launch, the Managers have sustained
performance measured in terms of total return some way ahead of the FTSE
All-Share Index. Baronsmead VCT 3 has returned a positive 7.5% total return
since launch compared to a fall in total return of 30.0% in the FTSE All-Share
index. The relatively high level of cash balances has helped. The performance
differential improves further if the VCT tax reliefs are also taken into
account.
Outlook I There are some signs of increasing corporate activity from trade
purchasers, of which the recent sales to corporate purchasers are strong
evidence. Economic conditions, however, are unlikely to return to the more
buoyant times of the 1990s for some years.
There has been resilient performance to date, both relatively and absolutely,
and the first sales of investments demonstrate what private equity can achieve.
The Managers are focusing hard on building the level of new investment within
the criteria to establish a diversified portfolio of over 30 holdings in
qualifying unquoted and AiM-traded companies.
Enquiries: David Thorp
ISIS Equity Partners plc Tel: 0207 506 1100
Unaudited Statement of Total Return (incorporating the revenue account) of the
Company
Six Months to 30 June 2003
Revenue Capital Total
£'000 £'000 £'000
Gain on investments - 459 459
Income 745 - 745
Investment management fee (95) (284) (379)
Other expenses (116) - (116)
Return on ordinary activities
before tax 534 175 709
Tax on ordinary activities (140) 92 (48)
Return attributable to
equity shareholders 394 267 661
Dividends in respect of equity shares (308) - (308)
Transfer to reserves 86 267 353
Return per ordinary share: 1.16p 0.79p 1.95p
Unaudited Statement of Total Return (incorporating the revenue account) of the
Company
Six Months to 30 June 2002
Revenue Capital Total
£'000 £'000 £'000
Gain on investments - 491 491
Income 1,037 - 1,037
Investment management fee (94) (282) (376)
Other expenses (157) - (157)
Return on ordinary activities
before tax 786 209 995
Tax on ordinary activities (232) 91 (141)
Return attributable to
equity shareholders 554 300 854
Dividends in respect of equity shares (468) - (468)
Transfer to reserves 86 300 386
Return per ordinary share: 1.66p 0.90p 2.56p
Unaudited Statement of Total Return (incorporating the revenue account) of the
Company
Year to 31 December 2002
Revenue Capital Total
£'000 £'000 £'000
Gain on investments - 698 698
Income 1,825 - 1,825
Investment management fee (186) (559) (745)
Other expenses (290) - (290)
Return on ordinary activities
before tax 1,349 139 1,488
Tax on ordinary activities (396) 181 (215)
Return attributable to
equity shareholders 953 320 1,273
Dividends in respect of equity shares (941) - (941)
Transfer to reserves 12 320 332
Return per ordinary share: 2.85p 0.96p 3.81p
Unaudited Balance Sheet
As at As at As at
30 June 30 June 31 December
2003 2002 2002
£'000 £'000 £'000
Fixed Assets
Quoted on the Alternative Investment Market 4,337 3,016 3,539
Unquoted investments 5,217 5,724 8,125
Listed fixed interest investments 11,281 20,104 16,927
________ ________ ________
20,835 28,844 28,591
Net current assets 11,675 2,892 3,459
_______ ________ _______
Net assets 32,510 31,736 32,050
________ ________ ________
Financed by:
Shareholders' funds 32,510 31,736 32,050
________ ________ ________
Net asset value per ordinary share: 95.87p 95.02p 94.85p
Ordinary shares in issue 33,909,332 33,400,146 33,792,157
Summarised Unaudited Statement of Cash Flows
Six months Six months Year
to to to
30 June 30 June 31 December
2003 2002 2002
£'000 £'000 £'000
Net cash flow inflow from operating activities 493 405 1,228
Tax paid - - (167)
Capital expenditure and financial investment 7,850 2,536 3,367
Equity dividends paid (476) (430) (898)
Net cash inflow before financing 7,867 2,511 3,530
Financing 108 367 649
Increase in cash 7,975 2,878 4,179
Reconciliation of net cash flow to movement in net cash
Increase in cash 7,975 2,878 4,179
Opening net cash 4,587 408 408
Net cash at 30 June / 31 December 12,562 3,286 4,587
Reconciliation of net revenue before taxation to net cash
flow from operating activities
Net revenue before taxation 534 786 1,349
Management fee charged to capital (284) (282) (559)
Decrease/(increase) in debtors 48 (87) 427
Increase/(decrease) in creditors 195 (12) 11
Net cash flow from operating activities 493 405 1,228
Notes
1. The unaudited interim results which cover the six months to 30 June 2003 have
been drawn up in accordance with the applicable accounting standards,
adopting the accounting policies set out in the statutory accounts for the
year ended 31 December 2002.
2. There were 33,909,332 ordinary shares in issue at 30 June 2003 (31 December
2002: 33,792,157; 30 June 2002: 33,400,146). During the period 157,175
ordinary shares were issued and 40,000 ordinary shares of 10p each were
bought in by the company for cancellation.
3. Earnings for the six months to 30 June 2003 should not be taken as a guide to
the results for the full year and are based on a weighted average of
33,842,855 (31 December 2002: 33,446,891; 30 June 2002: 33,298,728) ordinary
shares in issue during the period.
4. Income for the period to 30 June is derived from:
2003 2002
£'000 £'000
Equity investment 50 14
Fixed interest investment 584 994
Deposit interest 111 25
Other income - 4
___ _____
745 1,037
5. The interim dividend of 0.90p will be paid on 20 September 2003 to
shareholders on the register on 29 August 2003.
6. These are not statutory accounts in terms of Section 240 of the Companies Act
1985 and are unaudited. The full audited accounts for the year to 31
December 2002, which were unqualified, have been lodged with the Registrar
of Companies.
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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