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Murray VCT 3 PLC (MYV)

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Wednesday 19 May, 2004

Murray VCT 3 PLC

Final Results


Preliminary Results for the Year ended 29 February 2004

The Directors announce the preliminary results, subject to the conclusion of the
audit process, of Murray VCT 3 PLC for the year ended 29 February 2004.

   ·Net Asset Value, before payment of annual dividends, of 58.1p per share.
   ·Proposed final dividend of 1.8p per share.
   ·Proposed capital gain dividend of 0.2p per share.
   ·Total return since launch, being the sum of dividends paid plus NAV, of
    81.04p per share.

Investment activity

Further unlisted investments during the year ended 29 February 2004 totalled
£2.9 million. At 29 February 2004, the portfolio stood at 42 investments with a
total cost of £30.64 million and representing a qualifying investment level of

Since the publication of the Interim Report, a new investment of £300,000 has
been made in Enterprise Food Group Limited in October 2003. Based in East
Kilbride, Enterprise is a provider of supply chain and management services to
the bakery sector. The total fundraising was £2.0 million and Murray VCT 4 PLC,
Aberdeen Growth VCT I PLC, Aberdeen Growth Opportunities PLC, Aberdeen
Development Capital PLC and Aberdeen City Council were co-investors.

Portfolio developments

Since the publication of the Interim Report the remaining holding in Intron has
been sold. Proceeds of £673,231 were received representing a very satisfactory
gain of £544,657 over cost and a gain of £311,545 over the August 2003
valuation. In total the sale of the investment in Intron has generated proceeds
of £1,638,161 and a gain of £638,161 over cost.

Since the period end, Conveco has been sold to the Co-operative Group Cash
proceeds attributable to the Company of £1.9 million were received on completion
and are reflected in the valuation at 29 February 2004. There are provisions for
further receipts by way of deferred consideration within the next twelve months,
which if received would represent an aggregate return of the original cost of
the investment.


Realisations are difficult to achieve in the current market conditions; however,
the disposal of Intron during the year was a significant and positive result for
the Company.

The Net Asset Value (NAV) at 29 February 2004, before payment of all dividends
in respect of the year then ended, was 58.1p per share ("pps") compared with
62.2pps at 28 February 2003. This 6.6% decrease in NAV over the year is
disappointing; however, the Board is encouraged that in the period since the
interim announcement there are signs that the portfolio is responding to the
close attention of the Manager.

Investment strategy

The Board, which regularly reviews portfolio performance and the Company's
investment strategy with the Manager, has agreed two prime objectives with the
Manager: intense portfolio management to help restore profitability to the
investee companies in the current market conditions, and the resumption of yield
payments to the Company from the portfolio.

The aim of these objectives is to restore value and, ultimately, achieve
successful disposals from a stronger position in an improved market. Where it is
believed that future potential from an investment justifies it, further
financial support will be given. It will also be the aim to sell
under-performing investments and to recycle the proceeds into opportunities
which show greater growth potential.

At present the Company has approximately 22% of its assets in cash and gilts
which will enable the necessary support to be given to existing investee
companies and also permit investment in new opportunities on the basis
indicated. Where possible, new investment activity will be targeted on larger
companies through co-investment with other private equity funds managed by
members of the Aberdeen Asset Management Group.

Valuation process

Murray VCT 3's investments in unquoted companies are valued at fair value in
accordance with the British Venture Capital Association guidelines. In line with
normal market practice for investment companies and investment trusts,
investments listed on the Alternative Investment Market (AIM) are valued at
their mid-market price, discounted to reflect any trading restrictions.

Dividends and returns to date

A dividend of 4.26pps representing the gain arising from the sale of Palgrave
Brown was paid on 18 July 2003; however, the Company did not declare an interim
dividend. The Board now declares a final dividend of 1.8pps, to be paid on 16
July 2004 to Shareholders on the register at close of business on 18 June 2004.
The Board also intends to distribute a dividend of 0.2pps, representing part of
the gain arising on the disposal of the holding in Intron. Subject to obtaining
approval from the Inland Revenue for this distribution, the dividend will be
paid at the same time as the final dividend. The total dividend for the year
ended 29 February 2004 will therefore amount to 2.00pps.

The Board has an objective of distributing gains achieved on the sale of
investments, while taking into account the need to retain funds for the existing
portfolio and new investment opportunities. The decision to distribute in any
particular year will normally be taken in the light of the annual results.

Since the Company's launch most Shareholders will have received 24.94pps in tax
free dividends, comprising 16.07pps in income dividends and 8.87pps in
distributions of capital gains. To an investor who took advantage of the initial
income tax relief, this represents a return of over 31% of the effective initial
investment cost of 80pps. The total return is 81.04pps, being the sum of
dividends paid plus NAV, for a Shareholder who subscribed at launch. In the
short-term, the NAV is a less important measure of performance as the underlying
investments are long-term in nature and not readily realisable. The most
important measures for a VCT are the long term record of dividend payments and
the timing of those payments over the life of the Company.

Dividend re-investment

The Board decided to terminate the dividend re-investment scheme and this was
announced with the interim results. The rules of the scheme required the issue
of new shares at the prevailing NAV per share on the date of re-investment.
However, as the price of the Company's shares stands at a discount to NAV,
the Board concluded that it was not in Shareholders' interests for their
dividends to continue to be re-invested. Therefore, Shareholders who had
previously elected to re-invest their dividends will receive any future
distributions by cheque or bank transfer.

Share buy-back policy

Purchases of shares will be made within guidelines established from time to time
by the Board at prices below the prevailing net asset value per ordinary share.
Under the rules of the UK Listing Authority, the maximum price at which the
Company can acquire shares is 5% above the average market value of the shares
over the five business days immediately preceding the purchase. Shares purchased
in this way will be cancelled and the Company will only deal with member firms
of the London Stock Exchange. Share purchases will be funded from distributable
reserves and to the extent that shares are purchased at a discount to net asset
value, the net asset value of the remaining shares will increase.

Cancellation of share premium account

At the Company's Extraordinary General Meeting on 2 December 2003, Shareholders
approved the cancellation of the share premium account to enable the Company to
continue to make distributions and to purchase its own shares. This has been
approved by the Court and the transaction has been reflected in these Financial


The Company now has a broad spread of investments and the Board believes that a
number of these have very positive prospects which should respond to an
improvement in the economic environment for smaller companies and intensive

The immediate priority of the Manager is to improve the performance of the
portfolio companies. Market conditions are improving and the Manager expects
that a number of exits will be actively pursued in the short to medium term.
Deal flow has also increased and if the pricing of new investments continues to
be attractive, the Manager will continue to pursue new investments on a
selective basis.

Murray VCT 3 PLC
for the year ended 29 February 2004

                        29 February 2004             28 February 2003
                     Revenue   Capital    Total   Revenue   Capital    Total
                       £'000     £'000    £'000     £'000     £'000    £'000

Investment income      1,687         -    1,687     1,495         -    1,495
and deposit
Investment              (300)     (450)    (750)     (393)     (590)    (983)
management fees
Other expenses          (208)        -     (208)     (165)        -     (165)
                       -------   -------  -------   -------    ------  -------
Operating profit/      1,179      (450)     729       937      (590)     347
Profit on                  -       596      596         -     1,143    1,143
realisation of         -------   -------  -------   -------    ------  -------
Profit on ordinary     1,179       146    1,325       937       553    1,490
activities before
Tax on ordinary         (346)      147     (199)     (197)      177      (20)
activities             -------   -------  -------   -------    ------  -------

Profit on ordinary       833       293    1,126       740       730    1,470
activities after
Dividends               (724)      (83)    (807)     (652)   (2,101)  (2,753)
                       -------   -------  -------   -------    ------  -------
Balance transferred      109       210      319        88    (1,371)  (1,283)
to/(from) reserves     =======   =======  =======   =======    ======  =======
Earnings per share       2.0       0.8      2.8       1.8       1.8      3.6
(pence)                =======   =======  =======   =======    ======  =======

for the year ended 29 February 2004

                        29 February 2004             28 February 2003
                     Revenue   Capital    Total   Revenue   Capital    Total
                       £'000     £'000    £'000     £'000     £'000    £'000

Profit on ordinary       833       293    1,126       740       730    1,470
activities after
Unrealised loss on         -    (3,112)  (3,112)        -    (8,040)  (8,040)
revaluation of
Current tax              346      (147)     199        48         -       48
attributable to        -------   -------  -------   -------    ------  -------
unrealised gains/
(losses) on loan
Total recognised       1,179    (2,966)  (1,787)      788    (7,310)  (6,522)
gains/(losses)         -------   -------  -------   -------    ------  -------
relating to the

for the year ended 29 February 2004

                                                29 February        28 February
                                                     2004               2003
                                                    £'000              £'000

Profit on ordinary activities before                1,325              1,490
Realisation of revaluation (losses)/               (1,533)               604
gains of previous years                             -------           -------
Historical cost (loss)/profit on ordinary            (208)             2,094
activities before taxation

Historical cost loss for the year
retained after taxation and dividends              (1,099)              (671)
                                                    -------            -------

All items in the above statements are derived from continuing operations. The
Company has only one class of business and derives its income from investments
made in shares, securities and bank deposits.

Murray VCT 3 PLC
as at 29 February 2004

                              29 February 2004    28 February 2003
                               £'000     £'000   £'000         £'000
Fixed assets

Investments                             21,587                25,795
Current assets
Debtors                        1,970             2,110
Cash and overnight deposits      653               107
                             --------           -------
                               2,623             2,217
Amounts falling due within     1,070             2,516
one year                     --------           -------
Net current assets/                      1,553                  (299)
(liabilities)                          --------              --------
                                        23,140                25,496
                                       ========              ========

Capital and reserves
Called up share capital                  4,128                 4,098
Share premium account                        -                20,395
Revaluation reserve                    (13,031)              (11,536)
Capital redemption reserve                 117                    72
Profit and loss account                 31,926                12,467
                                        --------              --------
Equity Shareholders' funds              23,140                25,496
                                        ========              ========

Net Asset Value per Ordinary              56.1                  62.2
share (pence)

Murray VCT 3 PLC
for the year ended 29 February 2004

                                          29 February        28 February
                                               2004               2003
                                     £'000    £'000     £'000    £'000
Operating activities
Investment income received           1,574              1,682
Deposit interest received                7                 16
Other income                            10                  -
Investment management fees paid       (809)            (1,019)
Secretarial fees paid                  (55)               (54)
Cash paid to and on behalf of          (60)               (29)
Other cash payments                   (114)               (90)
                                     -------            -------
Net cash inflow from operating                  553                506

Financial investment
Purchase of investments             (6,625)           (13,187)
Sale of investments                  8,516             13,785
                                     -------            -------
Net cash inflow from financial                1,891                598
Equity dividends paid                        (2,178)            (1,375)
                                              -------            -------
Net cash inflow/(outflow) before                266               (271)

Issue of Ordinary shares               472                346
Repurchase of Ordinary shares         (192)              (201)
                                     -------            -------
Net cash inflow from financing                  280                145
                                              -------            -------
Increase/(decrease) in cash                     546               (126)
                                              =======            =======

This preliminary announcement has been prepared on the same basis as that set
out in the statutory Financial Statements for the prior year.

Although the Company is no longer an investment company, as investment company
status was revoked in order to permit the distribution of capital profits, the
Directors believe that the presentation of the profit and loss account and the
statement of total recognised gains and losses is enhanced by showing additional
non-statutory information on the returns attributable to revenue and to capital.

The Profit and Loss Account and Statement of Total Recognised Gains and Losses
have been prepared in accordance with Schedule 4 of the Companies Act 1985 and
Financial Reporting Standard No. 3 "Reporting Fina                                                                                                                                                                                                                                                

a d v e r t i s e m e n t