BARONSMEAD SECOND VENTURE TRUST PLC

Quarterly Report • Aug 18, 2015

National Storage Mechanism | Additional information

You don't have Javascript enabled. For full functionality this page requires javascript to be enabled.

RNS Number : 4105W

Baronsmead VCT 3 PLC

18 August 2015

Baronsmead VCT 3 plc

Half-yearly report for the six months ended

30 June 2015

The Directors announce the audited half-yearly financial report for the six months to 30 June 2015 as follows:-

Copies of the half-yearly report can be obtained from the following website: www.baronsmeadvct3.co.uk.

Our Investment Objective

Baronsmead VCT 3 is a tax efficient listed Company which aims to achieve long-term investment returns for private investors.

Investment Policy

·          To invest primarily in a diverse portfolio of UK growth businesses, whether unquoted or traded on AIM

·          Investments are made selectively across a range of sectors in companies that have the potential to grow and enhance their value.

Dividend Policy

The Board of Baronsmead VCT 3 has the objective to maintain a minimum annual dividend level of around 4.5p per ordinary share if possible, but this depends primarily on the level of realisations achieved and cannot be guaranteed.

Shareholder choice

The Board wishes to provide shareholders with a number of choices that enable them to utilise their investment in Baronsmead VCT 3 in ways that best suit their personal investment and tax planning and in a way that treats all shareholders equally.

·      Fund raising | From time to time the Company seeks to raise additional funds by issuing new shares at a premium to the latest published net asset value to account for issue costs.

·      Dividend Reinvestment Plan | The Company offers a Dividend Reinvestment Plan which enables shareholders to purchase additional shares through the market in lieu of cash dividends.

·      Buy back of shares | From time to time the Company buys its own shares through the market in accordance with its share price discount policy. Subject to certain conditions, the Company seeks to maintain a mid market share price discount of approximately 5 per cent. to net asset value. In the six months to 30 June 2015, 1,065,000 shares were bought back representing 1.4 per cent. of the shares in issue (excluding treasury shares) at 30 June 2015 at prices which represent an average of 5.1 per cent. discount to the latest published net asset values at the time the shares were bought back.

·      Secondary market | The Company's shares are listed on the London Stock Exchange and can be bought using a stockbroker or authorised share dealing service in the same way as shares of any other listed company. Approximately 164,000 existing shares were bought by investors in the six months to 30 June 2015.

Financial Headlines

·      + 5.5% - Net asset value ("NAV") per share increased 5.5 per cent to 107.35p in the six months to 30 June 2015, before deduction of dividends.

·      271.4p - NAV total return to shareholders for every 100.0p invested at launch.

·      3.0p - Interim dividend of 3.0p for the six month period to 30 June 2015 to be paid on 18 September 2015.

·      £4.7m - Total divestments made of £2.2m unquoted and £2.5m quoted in the six months to 30 June 2015.

Cash Returned to Shareholders by date of investment

The table below shows the cash returned to shareholders, dependent on their subscription cost, including their income tax reclaimed on subscription.

Year subscribed	Cash invested (p)	Income tax reclaim (p)	Net cash invested (p)	Cumulative dividends paid (p)*	Return on cash invested (%)
2001 (January)	100.00	20.00	80.00	98.30	118.3
2005 (March) - C share**	100.00	40.00	60.00	62.67	102.7
2010 (March)	103.09	30.93	72.16	50.00	78.5
2012 (December)	117.40	35.22	82.18	32.00	57.3
2014 (March)	112.40	33.70	78.70	12.00	40.7

Note - The total return could be higher for those shareholders who were able to defer a capital gain on subscription and the net sum invested may be less.

* Includes 3.0p interim dividend payable on 18 September 2015.

** Dividends paid to C shareholders post conversion have been adjusted by the conversion ratio (0.85642528).

Chairman's Statement

I am pleased to report an increase of 5.6p (5.5 per cent.) in the underlying NAV per share for the six months to 30 June 2015.  This was attributable to increases in valuation of both the unquoted and quoted portfolios.

The interim dividend of 3.0p per share will be paid on 18 September 2015 to shareholders on the register as at 4 September 2015.

Results

During the six months to 30 June 2015, the Company's NAV per share increased 5.5 per cent. from 101.72p to 107.35p before taking dividends into account.

	p per ordinary share
NAV as at 1 January 2015	101.72
Valuation uplift (5.5 per cent.)	5.63
NAV as at 30 June 2015 before dividends	107.35
Less: Interim dividend payable on 18 September 2015	(3.00)
NAV as at 30 June 2015 after accounting for interim dividend	104.35

Portfolio Review

As shown in the table below, as at 30 June 2015 the Company's net assets of £79.7m were invested directly or indirectly in 107 companies.  This table also shows that the main driver of the growth in the value of the NAV over the period was the 12.6 per cent. increase in the value of the unquoted portfolio along with positive contributions from the Company's quoted investments.

Asset class	NAV (£m)	% of net assets*	No. of investees	% return over the period
Unquoted companies	29.2	37	24	12.6**
AIM traded companies	24.8	31	45	3.0
Wood Street Microcap Investment Fund	8.5	11	38	10.6
Other net assets, primarily cash and fixed interest	17.2	21	N/A	-
Totals	79.7	100	107

* By value as at 30 June 2015.

** Includes capitalised interest and redemption premium income received.

Investment and Divestment Activity

The Company invested £4.7m in four new unquoted and four new quoted companies.  Smaller follow-on investments in four quoted companies totalled £0.8m.  Three of the new unquoted investments were in "acquisition" companies formed to enable investments into established trading entities over the next two years. The other new unquoted investment was in Centre4 Testing which is a specialist provider of software testing services that helps its clients to manage software implementations, upgrades and integration.

A total of £4.7m was realised from the five full and several partial sales of investments and loan note redemptions.  From the unquoted portfolio, the sale of the Company's investment in Luxury For Less generated a return 2.0 times its original cost within a relatively short investment period of 20 months.  From the quoted portfolio, a longer term investment in Accumuli generated a return 4.4 times its original cost over 4.5 years.

Against these successes, losses were realised on other investments; notably, Impetus Holdings and Surgi C.  While it is disappointing to have poor realisations, it is in the nature of private equity investment that some investments will fail to achieve their full potential. However, these realisations had no impact on the NAV at 30 June 2015 as the Board had made full provisions against the value of these investments in earlier periods.  More positively, the Investment Manager has continued to consolidate the gains achieved in the quoted portfolio with the Accumuli realisation referred to above being the most notable.

The tables below provide further information concerning the Company's investments and divestments during the period.

Long Term Performance

The Company's objective continues to be focused on generating consistent returns over the long-term through investing in a portfolio of small unquoted and AIM traded companies with strong growth prospects.

Baronsmead VCT 3 has been investing funds for shareholders since 2001 and, despite the inherent risk of investing in small companies, the trust has delivered consistently good returns for investors. While VCT tax reliefs do not change the underlying risks associated with investing in smaller companies, the upfront tax relief and the payment of tax free dividends helps to lessen the amount of shareholders original investment cost which remains "at risk".

As shown in the table above those shareholders who subscribed for shares in the Company's fundraisings in January 2001 and March 2005 have had their entire investment returned in dividends and reliefs. For instance, since investing 100p in 2001, founder shareholders have received cash payments totalling 118.3p (being 20p VCT income tax relief and 98.3p in dividends) and they still have an investment in the trust with a NAV of 104.35p per share (after accounting for the interim dividend).

While this analysis does not take account of the on-going value of the tax free nature of VCT dividends, it serves as a useful indicator of investment performance over the long term and the cumulative cash that has been returned to shareholders.

VCT LEGISLATION

In the successive March and Summer Budgets 2015, the Chancellor announced legislative changes that are designed to ensure that VCTs continue to be approved by the European Union ("EU") and remain effective in giving small and growing businesses access to finance.  In order to meet EU requirements the UK Government has proposed introducing new criteria regarding the age of companies that will be eligible as investments, a lifetime cap on the total amount of state aided investment that an investee company can receive and rules that require that the investment be used for the "organic" growth of the investee company.  The legislation is subject to EU State aid approval and is expected to take effect from the date of Royal Assent later this year.

The objective of these changes is to direct VCT investments into younger companies that will use the investment to grow their businesses "organically" rather than acquiring another business or trade.  The Manager believes that if the proposed legislation is enacted by the UK as drafted it will present a number of challenges for the VCT industry.  However, the Manager, with its long track record of successful investing and experienced team, should be well placed to adapt to these new rules.  As the draft legislation is complex it is not yet entirely clear how the rules will affect the VCT industry but we expect to be able to provide an update in the next quarter.

Outlook

The improvement in the UK economy now appears to be more firmly established.  However, the UK economy does not operate in isolation and the external environment remains uncertain with concerns over the on-going issues related to Greece and the Eurozone countries, growth and stock market valuations in China and continued political instability in various regions.

The unquoted portfolio contains a higher proportion of newer investments following recent sales. As a result, growth in the value of the unquoted portfolio is likely to be more modest until these investments mature, although some increase in value has begun to take place. The progress made by our newer investments and the Company's portfolio diversity and asset mix should help to continue to deliver consistent returns for shareholders.

Anthony Townsend

Chairman

18 August 2015

Table of Investments and Realisations

Investments in the period

Company	Location	Sector	Activity	Book cost £'000
Unquoted investments New
Ingleby (1973) Ltd	London	Business Services	Company seeking to acquire businesses in the Business Services sector	956
Ingleby (1974) Ltd	London	Business Services	Company seeking to acquire businesses in the Business Services sector	956
Ingleby (1975) Ltd	London	Consumer Markets	Company seeking to acquire businesses in the Consumer Markets sector	956
Centre4 Testing Ltd	Sussex	Business Services	Provider of software testing services, primarily through use of contractors	954
Total unquoted investments				3,822
AIM traded investments New
CentralNic Group plc	London	TMT*	Provider of domain name & registry services	396
Venn Life Sciences Holdings plc	London	Healthcare & Education	Clinical Research organisation providing consulting and clinical trial services	225
Plant Impact plc	Hertfordshire	Business Services	Crop enhancing products	189
MXC Capital Ltd	Guernsey	Business Services	Tech focused investor & advisory business	112
Follow on
Ideagen plc	Derbyshire	TMT*	Compliance software solutions	450
EG Solutions plc#	Staffordshire	TMT*	Back office optimisation software	228
Pinnacle Technology Group plc	Stirlingshire	TMT*	B2B telecoms and IT reseller	50
Castleton Technology plc	Cambridge	TMT*	Public sector IT managed services and software	33
Total AIM traded investments				1,683
Total investments in the period				5,505
* Technology, Media & Telecommunications ("TMT").                                            # During the period, the EG Solutions plc Loan note and capitalised interest was converted into Ordinary shares.

Realisations in the period

Company		First investment date	Book cost £'000	Proceeds‡ £'000	Overall multiple return*
Unquoted realisations
Luxury For Less Ltd	Full trade sale	Jul 13	955	1,787	2.0
Create Health Ltd	Loan repayment	Mar 13	112	213	1.9
Eque2 Ltd	Loan repayment	Apr 13	111	123	1.1
Kingsbridge Ltd	Loan repayment	Jan 14	48	76	1.6
Impetus Holdings Ltd	Full trade sale	Apr 12	1,305	0	0.0
Surgi C Ltd	Full trade sale	Apr 10	853	0	0.3
Total unquoted realisations			3,384	2,199
AIM traded realisations
Accumuli plc	Recommended offer	Nov 10	505	2,140	4.4
Anpario plc	Market sale	Nov 06	54	235	4.3
Cohort plc	Full market sale	Oct 07	48	76	1.7
Total AIM traded realisations			607	2,451
Total realisations in the period			3,991	4,650†
‡ Proceeds at time of realisation including redemption premium and interest. * Includes interest/dividends received, loan note redemptions and partial realisations accounted for in prior periods. † Proceeds of £39,000 were also received in respect of MLS Ltd and £5,000 in respect of Playforce Holdings Ltd, both of which had be sold in prior periods. Deferred consideration of £88,000 was also received in respect of CSC (World) Ltd.

Summary Investment Portfolio

Investment Diversification at 30 June 2015

Sector by value	Percentage
Business Services	41%
Consumer Markets	17%
Healthcare & Education	10%
Technology, Media & Telecommunications ("TMT")	32%

Total assets by value	Percentage
Unquoted - loan note	25%
Unquoted - equity	12%
AIM & collective investment vehicle	42%
Listed interest bearing securities	10%
Net current assets (principally cash)	11%

Time investments held by value	Percentage
Less than 1 year	17%
Between 1 and 3 years	26%
Between 3 and 5 years	20%
Greater than 5 years	37%

Independent Review Report to Baronsmead VCT 3 plc

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2015 which comprises the Income Statement, Statement of Changes in Equity, Balance Sheet and Statement of Cash Flows and the related explanatory notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements. 

This report is made solely to the Company in accordance with the terms of our engagement to assist the Company in meeting the requirements of the Disclosure and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA"). Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have reached. 

Directors' responsibilities 

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA. 

As disclosed in note 1, the annual financial statements of the Company will be prepared in accordance with UK Accounting Standards and applicable law (UK Generally Accepted Accounting Practice), including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with FRS 104 Interim Financial Reporting.

Our responsibility 

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. 

Scope of review 

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK.  A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. 

Conclusion 

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2015 is not prepared, in all material respects, in accordance with FRS 104 Interim Financial Reporting and the DTR of the UK FCA. 

Catherine Burnet

for and on behalf of KPMG LLP

Chartered Accountants

Saltire Court

20 Castle Terrace

Edinburgh EH1 2EG

18 August 2015 

Responsibility statement of the Directors in respect of the half-yearly financial report

We confirm that to the best of our knowledge:

·      the condensed set of financial statements has been prepared in accordance with the FRS104 'Interim Financial Reporting';

·      the Chairman's Statement (constituting the interim management report) includes a fair review of the information required by DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements;

·      the Statement of Principal Risks and Uncertainties below is a fair review of the information required by DTR 4.2.7R being a description of the principal risks and uncertainties for the remaining six months of the year; and

·      the financial statements include a fair review of the information required by DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the Company during that period; and any changes in the related party transactions described in the last annual report that could do so.

On behalf of the Board

Anthony Townsend

Chairman

18 August 2015

Unaudited Income Statement

For the six months to 30 June 2015

		Six months to 30 June 2015			Six months to 30 June 2014			Year to 31 December 2014
	Notes	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Unrealised gains on movement in fair value of investments	7	-	4,142	4,142	-	3,285	3,285	-	2,443	2,443
Realised gains on disposal of investments	7	-	473	473	-	323	323	-	957	957
Income		711	-	711	790	-	790	2,591	-	2,591
Investment management fee		(233)	(700)	(933)	(232)	(697)	(929)	(461)‌‌	(1,381)‌‌	(1,842)‌‌
Other expenses		(246)	-	(246)	(232)	-	(232)	(455)‌‌	-	(455)‌‌
Profit on ordinary activities before taxation		232	3,915	4,147	326	2,911	3,237	1,675	2,019	3,694
Taxation on ordinary activities		-	-	-	(11)	11	-	(250)‌‌	250	-
Profit for the period, being total comprehensive income for the period		232	3,915	4,147	315	2,922	3,237	1,425	2,269	3,694
Return per ordinary share:
Basic	2	0.31p	5.21p	5.52p	0.44p	4.09p	4.53p	1.95p	3.10p	5.05p

All items in the above statement derive from continuing operations.

The revenue column of the Income Statement includes all income and expenses. The capital column accounts for the realised and unrealised profit or loss on investments and the proportion of the management fee charged to capital.

The total column of this statement is the Statement of Total Comprehensive Income of the Company prepared in accordance with Financial Reporting Standards ("FRS"). The supplementary revenue return and capital return columns are prepared in accordance with the Statement of Recommended Practice issued in November 2014 by the Association of Investment Companies ("AIC SORP").

Unaudited Statement of Changes in Equity

For the six months to 30 June 2015

		Non-distributable reserves				Distributable reserves
	Notes	Called-up share capital £'000	Share premium £'000	Other reserve £'000	Revaluation reserve £'000	Capital reserve £'000	Revenue reserve £'000	Total £'000
At 1 January 2015		8,463	8,813	33,716#	12,521	12,410	694	76,617
Movement between reserves		-	-	(33,716)	-	33,716	-	-
Profit/(loss) on ordinary activities after taxation		-	-	-	4,114	(199)	232	4,147
Buyback of shares to be held in treasury	4	-	-	-	-	(1,052)	-	(1,052)
At 30 June 2015		8,463	8,813	-	16,635	44,875	926	79,712

On 18 December 2013 the court granted orders allowing the Company to cancel its share premium account and capital redemption reserve. The amounts of £22,866,000 (share premium) and £10,862,000 (capital redemption reserve) less costs paid became distributable during 2015.

For the six months to 30 June 2014

		Non-distributable reserves				Distributable reserves
	Notes	Called-up share capital £'000	Share premium £'000	Other reserve £'000	Revaluation reserve £'000	Capital reserve £'000	Revenue reserve £'000	Total £'000
At 1 January 2014		7,573	-	33,718	12,992	19,906	690	74,879
Profit on ordinary activities after taxation		-	-	-	2,612	310	315	3,237
Net proceeds of share issue		890	8,810	-	-	-	-	9,700
Other costs charged to capital		-	-	(2)	-	-	-	(2)
Dividends paid	6	-	-	-	-	(4,972)	(311)	(5,283)
At 30 June 2014		8,463	8,810	33,716	15,604	15,244	694	82,531

For the year to 31 December 2014

		Non-distributable reserves				Distributable reserves
	Notes	Called-up share capital £'000	Share premium £'000	Other reserve £'000	Revaluation reserve £'000	Capital reserve £'000	Revenue reserve £'000	Total £'000
At 1 January 2014		7,573	-	33,718	12,992	19,906	690	74,879
(Loss)/profit on ordinary activities after taxation		-	-	-	(471)	2,740	1,425	3,694
Net proceeds of share issue & sale of shares from treasury		890	8,813	-	-	378	-	10,081
Other costs charged to capital		-	-	(2)	-	-	-	(2)
Dividends paid	6	-	-	-	-	(10,614)	(1,421)	(12,035)
At 31 December 2014		8,463	8,813	33,716	12,521	12,410	694	76,617

Unaudited Balance Sheet

As at 30 June 2015

	Notes	As at 30 June 2015 £'000		As at  30 June  2014 £'000	As at 31 December 2014 £'000
Fixed assets
Unquoted investments	7	29,210		27,068	24,302
Traded on AIM	7	24,841		26,748	24,938
Collective investment vehicle	7	8,493		7,537	7,676
Listed interest bearing securities	7	7,992		8,996	9,494
Listed on LSE		-		2,770	-
Traded on ISDX		-		502	-
Investments	7	70,536		73,621	66,410
Current assets
Debtors		272		280	485
Cash at bank and on deposit		9,516		9,254	10,323
		9,788		9,534	10,808
Creditors (amounts falling due within one year)		(612)		(624)	(601)‌‌
Net current assets		9,176		8,910	10,207
Net assets		79,712		82,531	76,617
Capital and reserves
Called-up share capital		8,463		8,463	8,463
Share premium		8,813		8,810	8,813
Other reserve		-		33,716	33,716
Capital reserve		44,875		15,244	12,410
Revaluation reserve	7	16,635		15,604	12,521
Revenue reserve		926		694	694
Equity shareholders' funds		79,712		82,531	76,617

	As at 30 June 2015 £'000		As at  30 June  2014 £'000		As at 31 December 2014 £'000
Net asset value per share	107.35	p	110.15	p	101.72	p
Number of ordinary shares in circulation	74,253,966		74,928,966		75,318,966
Treasury net asset value per share	106.37	p	109.56	p	100.98	p
Number of ordinary shares in circulation	74,253,966		74,928,966		75,318,966
Number of ordinary shares held in treasury	10,374,214		9,699,214		9,309,214
Number of listed ordinary shares in issue	84,628,180		84,628,180		84,628,180

Unaudited Statement of Cash Flows

For the six months to 30 June 2015

	Six months to 30 June 2015 £'000	Six months to 30 June 2014 £'000	Year to 31 December 2014 £'000
Net cash (outflow)/inflow from operating activities	(407)	(402)‌‌	161
Net cash inflow/(outflow) from investing activities	648	(2,316)‌‌	4,561
Equity dividends paid	-	(5,283)‌‌	(12,035)‌‌
Net cash inflow/(outflow) before financing activities	241	(8,001)‌‌	(7,313)‌‌
Net cash (outflow)/inflow from financing activities	(1,048)	9,691	10,072
(Decrease)/increase in cash	(807)	1,690	2,759
Reconciliation of net cash inflow to movement in net cash
(Decrease)/increase in cash	(807)	1,690	2,759
Opening cash position	10,323	7,564	7,564
Closing cash at bank and on deposit	9,516	9,254	10,323
Reconciliation of profit on ordinary activities before taxation to net cash (outflow)/inflow from operating activities
Profit on ordinary activities before taxation	4,147	3,237	3,694
Gains on investments	(4,615)	(3,608)‌‌	(3,400)‌‌
Changes in working capital and other non-cash items	61	(31)‌‌	(133)‌‌
Net cash (outflow)/inflow from operating activities	(407)	(402)‌‌	161

Notes

1.   The condensed financial statements for the six months to 30 June 2015 comprise the statements set out on pages 7 to 13 together with the related notes below. The Company applies UK Generally Accepted Accounting Principles in its annual financial statements, and is intending to adopt FRS 102 and the AIC's Statement of Recommended Practice issued in November 2014 for its financial year ending 31 December 2015. The condensed financial statements for the six months to 30 June 2015 have therefore been prepared in accordance with FRS 104 'Interim Financial Reporting'. The directors do not expect any significant changes to the Company's accounting policies as a result of the adoption of FRS 102. The accounts have therefore been prepared on the basis of the same accounting policies as set out in the Company's Annual Report and Financial Statements for the year ended 31 December 2014.

The comparative figures for the financial year ended 31 December 2014 are not the Company's statutory accounts for that financial year, but are based on those accounts, represented as necessary to comply with FRS 102. Those accounts have been reported on by the Company's auditor and delivered to the registrar of companies. The report of the auditor was (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

2.   Return per share is based on a weighted average of 75,135,817 ordinary shares in issue (30 June 2014 - 71,390,122 ordinary shares; 31 December 2014 - 73,235,895 ordinary shares).

3.   Earnings for the first six months to 30 June 2015 should not be taken as a guide to the results of the full financial year to 31 December 2015.

4.   During the six months to 30 June 2015 the Company purchased 1,065,000 shares to be held in treasury. At 30 June 2015, the Company holds 10,374,214 ordinary shares in treasury. These shares may be re-issued below Net Asset Value as long as the discount at issue is narrower than the average discount at which the shares were bought back.

5.   Excluding treasury shares, there were 74,253,966 ordinary shares in issue at 30 June 2015 (30 June 2014 - 74,928,966 ordinary shares; 31 December 2014 - 75,318,966 ordinary shares).

6.   The interim dividend of 3.0p per share (2.7p capital, 0.3p revenue) will be paid on 18 September 2015 to shareholders on the register on 4 September 2015. The ex-dividend date is 3 September 2015.

During the year to 31 December 2014, the Company paid a first interim dividend on 7 March 2014 of 8.0p per share (7.53p capital, 0.47p revenue), a second interim dividend on 19 September 2014 of 4.5p per share (3.76p capital, 0.74p revenue) and a third interim dividend on 19 December 2014 of 4.5p per share (3.76p capital, 0.74p revenue).

7.   All investments are initially recognised and subsequently measured at fair value. Changes in fair value are recognised in the Income Statement.

The methods of fair value measurement are classified into a hierarchy based on reliability of the information used to determine the valuation.

· Level a - Fair value is measured based on quoted prices in an active market.

· Level b - Fair value is measured based on directly observable current market prices or indirectly being derived from market prices.

· Level c -

i)    Fair value is measured using a valuation technique that is based on data from an observable market or;

ii)   Fair value is measured using a valuation technique that is not based on data from an observable market.

	Level a		Level b	Level c (ii)
	Listed interest bearing securities £'000	Traded on AIM £'000	Collective investment vehicle £'000	Unquoted £'000	Total £'000
Opening book cost	9,494	17,697	3,525	23,173	53,889
Opening unrealised appreciation	-	7,241	4,151	1,129	12,521
Opening valuation	9,494	24,938	7,676	24,302	66,410
Movements in the period:
Purchases at cost	23,485	2,052	-	3,822	29,359
Sales - proceeds	(24,987)	(2,820)	-	(2,041)	(29,848	)
- realised gains on sales	-	324	-	149	473
Unrealised gains/(losses) realised during the period	-	1,520	-	(1,492)	28
(Decrease)/increase in unrealised appreciation	-	(1,173)	817	4,470	4,114
Closing valuation	7,992	24,841	8,493	29,210	70,536
Closing book cost	7,992	18,773	3,525	23,611	53,901
Closing unrealised appreciation	-	6,068	4,968	5,599	16,635
Closing valuation	7,992	24,841	8,493	29,210	70,536
Equity shares	-	24,841	8,493	9,246	42,580
Loan notes	-	-	-	19,964	19,964
Fixed income securities	7,992	-	-	-	7,992
Closing valuation	7,992	24,841	8,493	29,210	70,536

There has been no significant change in the risk analysis as disclosed in the Company's annual accounts.

8.   The financial information contained in this half-yearly financial report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The information for the year to 31 December 2014 has been extracted from the latest published audited financial statements. The audited financial statements for the year to 31 December 2014, which were unqualified, have been filed with the Registrar of Companies. No statutory accounts in respect of any period after 31 December 2014 have been reported on by the Company's auditors or delivered to the Registrar of Companies.

9.   The Company has one reportable segment being investing in primarily a portfolio of UK growth businesses, whether unquoted or traded on AIM.

10.  Copies of the half-yearly financial report will shortly be made available to shareholders and will also be available from the Registered Office of the Company at 100 Wood Street, London EC2V 7AN.

Principal Risks and Uncertainties

The Company's assets consist of equity and fixed interest investments, cash and liquid resources. Its principal risks are therefore market risk, credit risk and liquidity risk. Other risks faced by the Company include loss of approval as a Venture Capital Trust, investment performance, regulatory and compliance, legislation, economic, political and external factors and operational risks. These risks, and the way in which they are managed, are described in more detail in the Risk Matrix within the Strategic Report in the Company's Annual Report and Accounts for the year to 31 December 2014. The Company's principal risks and uncertainties have not changed materially since the date of that report.

Related Parties

Livingbridge VC LLP ('the Manager') manages the investments of the Company. The Manager also provides or procures the provision of secretarial, accounting, administrative and custodian services to the Company. Under the management agreement, the Manager receives a fee of 2.5 per cent per annum of the net assets of the Company. This is described in more detail under the heading the investment management agreement within the Strategic Report in the Company's Annual Report and Accounts for the year to 31 December 2014. During the period, the Company has incurred management fees of £933,000 (30 June 2014 - £929,000; 31 December 2014 - £1,842,000) and secretarial and accounting fees of £69,000 (30 June 2014 - £69,000; 31 December 2014 - £133,000) payable to the Manager.

Going Concern

After making enquiries, and bearing in mind the nature of the Company's business and assets, the Directors consider that the Company has adequate resources to continue in operational existence for the foreseeable future. In arriving at this conclusion, the Directors have considered the liquidity of the Company and its ability to meet obligations as they fall due for a period of at least twelve months from the date that these financial statements were approved. As at 30 June 2015, the Company held cash and readily realisable securities totalling £17,508,000. Cash flow projections have been reviewed and show that the Company has sufficient funds to meet both its contracted expenditure and its discretionary cash outflows in the form of the share buyback programme and dividend policy. The Company has no external loan finance in place and is therefore not exposed to any gearing covenants.

Corporate Information

Directors Anthony Townsend‡ Gill Nott OBE^ Andrew Karney* Ian Orrock Secretary Livingbridge VC LLP Registered Office 100 Wood Street London EC2V 7AN Investment Manager Livingbridge VC LLP 100 Wood Street London EC2V 7AN 020 7506 5717 Registered Number 04115341 ‡ Chairman ^ Audit and Risk Chairman * Senior Independent Director

Registrars and Transfer Office Computershare Investor Services PLC The Pavilions Bridgwater Road Bristol BS99 6ZZ Tel: 0800 923 1532 Brokers Panmure Gordon & Co One New Change London EC4M 9AF Tel: 020 7886 2500 Auditor KPMG LLP Saltire Court 20 Castle Terrace Edinburgh EH1 2EG Solicitors Dickson Minto W.S. Broadgate Tower 20 Primrose Street London EC2A 2EW VCT Status Adviser Robertson Hare LLP 4-6 Staple Inn London WC1V 7QH Website www.baronsmeadvct3.co.uk

National Storage Mechanism

A copy of the Half-yearly Report will be submitted shortly to the National Storage Mechanism ("NSM") and will be available for inspection at the NSM, which is situated at: www.hemscott.com/nsm.do.

END

Neither the contents of the Company's website not the contents of any website accessible from hyperlinks on this announcements (or any other website) is incorporated into, or forms part of, this announcement.

This information is provided by RNS

The company news service from the London Stock Exchange

END

IR GGUAWRUPAGAR

//<![CDATA[$.ajaxSetup({headers: {'__RequestVerificationToken':'93SKJbEL77v3EvOSLhkGXSq1inWr_QVnK-guJ9EMK0xGGlJi9dF3FFVT9w-KwU3k1b2Tsx14nM_ISowp-Cx3DV3XT0yUoK_1qs969yZwNYA1:qv2eYzIqXCfGZjSLpx34kdGoWTzm3eqBcpssP0fwJzMs_LGwv0RYBUVNFwnivSJhEY8SxznW7MK9ipOHE_XDmBT_CwLB1vp_mmYuSbWEonw1'}});//]]>