TIDMDP3F
Downing THREE VCT plc
LEI: 2138008V2JDU2K6ZHF80
9 September 2019
Half-Yearly Report
for the six months ended 30 June 2019 (Correction)
The announcement released on 6 September 2019 at 5.03 p.m. by the
Company entitled "Half year report" incorrectly stated that dividends
are payable to Shareholders on the register at 17 October 2019. It
should have stated that dividends are payable to Shareholders on the
register at 18 October 2019. The full corrected text of the
announcement is as follows:
Performance summary
30 Jun 31 Dec 30 Jun
'F' Share pool 2019 2018 2018
Pence Pence Pence
Net asset value per 'F' Share 30.3 28.4 53.6
Cumulative distributions per 'F' Share 67.0 67.0 49.0
------ ------ ------
Total return per 'F' Share 97.3 95.4 102.6
====== ====== ======
30 Jun 31 Dec 30 Jun
'H' Share pool 2019 2018 2018
Pence Pence Pence
Net asset value per 'H' Share 43.5 51.3 78.7
Cumulative distributions per 'H' Share 30.0 25.0 22.5
------ ------ ------
Total return per 'H' Share 73.5 76.3 101.2
====== ====== ======
30 Jun
'J' Share pool 2019 31 Dec 2018 30 Jun 2018
Pence Pence Pence
Net asset value per 'J' Share 68.3 88.9 91.2
Cumulative distributions per 'J' Share 2.5 - -
------ ----------- -----------
Total return per 'J' Share 70.8 88.9 91.2
====== =========== ===========
'F' Shares 'H' Shares 'J' Shares
Interim 2019 -- Payable 8 November 5.0p 5.0p 2.5p
2019
CHAIRMAN'S STATEMENT
Introduction
I present the Half-Yearly Report for the six months ended 30 June 2019.
The Company has a number of share pools, each of which is in a different
stage in its planned exit life. Performance across the pools varies and
it is disappointing to have to report that there have been some negative
developments in a number of investee companies that have impacted some
of the share pools.
A brief summary of each share pool is provided below.
Net asset values and overview
'F' Share pool
The 'F' Share pool launched in 2012 and is currently in its realisation
phase.
At 30 June 2019 the net asset value ("NAV") for a holding of one 'F'
Share was 30.3p, an increase of 1.9p (6.7%) over the period. Total
Return (NAV plus dividends paid to date) is now 97.3p, compared to the
original cost, net of income tax relief, of 70p per share.
The pool still holds 10 investments, but plans are being progressed for
exits from each of them.
Following the period end, one further exit has been achieved. As a
result, the Share pool will pay a further dividend of 5.0p per 'F' Share
on 8 November 2019. This will bring total distributions to 72.0p and
leave a remaining NAV of 25.3p.
The task of exiting the remaining investments is dependent on third
parties and it is therefore difficult to accurately estimate when this
process will complete. However, the Investment Manager believes there
are reasonable prospects for completion during the course to this year,
with a final distribution to 'F' Shareholders to follow soon after.
'H' Share pool
The 'H' Share pool was launched in 2014 and the process of returning
funds to investors is scheduled to commence in 2020.
The pool has suffered from some further investment provisions during the
period, mainly relating to the share pool's Indian solar energy
investments.
At 30 June 2019, the net asset value ("NAV") for a holding of one 'H'
Share was 43.5p which represents a net decrease of 2.8p (5.5%) over the
period after adjusting for the dividends paid out. Total Return (NAV
plus dividends paid to date) is now 73.5p, compared to the initial NAV,
before income tax relief, of 100.0p (or original cost, net of income tax
relief, which was typically between 70.0p and 75.0p, depending on
costs).
In line with the dividend policy, the Board is proposing to pay a
dividend of 5.0p per 'H' Share on 8 November 2019, to Shareholders on
the register at the close of business on 18 October 2019.
'J' Share pool
The 'J' Share pool raised funds in 2015 and completed its initial
investment phase this year. At 30 June 2019, the pool held 15
investments with a total value of GBP5.2 million.
The 'J' Share portfolio has suffered from some significant issues during
the period. Large provisions have been required against the investments
in several of the pool's largest investments: Yamuna Renewables Limited,
Ormsborough Limited and Jito Trading Limited. Further details are
included in the 'J' Share Investment Manager's Report below. The Board
is working with the Manager to ensure that appropriate action is taken
to recover as much value as possible for 'J' Shareholders.
At 30 June 2019, the net asset value ("NAV") for a holding of one 'J'
Share was 68.3p which represents a net decrease of 18.1p (20.4%) over
the period after adjusting for the dividends paid out. Total Return (NAV
plus dividends paid to date) is now 70.8p, compared to the initial NAV,
before income tax relief, of 100.0p (or original cost, net of income tax
relief, of 70.0p and 75.0p, depending on costs).
In line with the dividend policy, the Board is proposing to pay a final
dividend of 2.5p per 'J' Share on 8 November 2019, to Shareholders on
the register at the close of business on 18 October 2019.
The Investment Manager's Report below will provide more detail on each
of the share pools.
Dividends
In line with the Company's stated policies, interim dividends will be
paid as follows:
'F' Shares 5.0p per share
'H' Shares 5.0p per share
'J' Shares 2.5p per share
Each of the above dividends will be paid on 8 November 2019 to
Shareholders on the register at 18 October 2019.
Share buybacks
As announced in June 2019, the Company is now unlikely to make any
further purchases of any share class as the process of returning funds
to the 'F' Shareholders is now underway and the 'H' and 'J' Shareholders
are due to commence shortly.
No share buybacks in respect of any share class was undertaken during
the period.
Outlook
Over the remainder of the year, we expect to see further realisations
made by the 'F' Share pool as the Manager looks at maximising
Shareholder returns. Shareholders should note that timing of the exit
process can be difficult to predict and could take some time to complete
as the Board are keen to see that full value is achieved for all
investments.
In respect of the 'H' Share pool and 'J' Share pool, focus is on working
to recover as much value as possible of the portfolio companies in
question and nurturing the investments such that they will eventually be
well positioned to deliver successful exits.
I will update Shareholders on progress in my statement with the annual
report to 31 December 2019.
Michael Robinson
Chairman
INVESTMENT MANAGER'S REPORT
'F' SHARE POOL
As at 30 June 2019, the 'F' Share pool holds 10 investments as focus for
the 'F' Share pool remains on the realisation of its investments and
maximising Shareholder returns.
'F' Share pool -- Portfolio valuation
The majority of the portfolio investments remain valued at or above cost,
with there being a small number of valuation movements in the period
which generated an uplift over opening value of GBP201,000.
The most significant increase in valuation was Baron House Developments
LLP, a company created to fund the purchase of a property opposite
Newcastle station, which qualifies under the BPRA scheme. At the period
end, an uplift of GBP192,000 was recognised following improved trading
and an uplift in value of the hotel site.
Realisation plans
Following the period end, one of the pool's larger investments,
Lambridge Solar Limited, the 9.0 MW ground mounted solar farm in
Pedwardine Lincolnshire, was exited and delivered a good return to the
pool.
Plans are in place for the successful exit of the Antic portfolio of
investments including Pearce and Saunders Limited, Downing Pub EIS One
Limited and Atlantic Dogstar Limited, which is expected to conclude
following the publication of this report. Realisation plans for the
remaining portfolio companies are in place although the exact timing of
the final exits is dependent on transactions involving third parties.
Net asset value, results and dividend
At 30 June 2019, the net asset value ("NAV") for a holding of one 'F'
Share was 30.3p, an increase of 1.9p (6.7%) over the period. Total
Return (NAV plus dividends paid to date) is now 97.3p.
The gain on ordinary activities for the 'F' Shares, after taxation was
GBP208,000 for the period, comprising a revenue gain of GBP7,000 and a
capital gain of GBP201,000.
The Company will pay an interim dividend of 5.0p per 'F' Share on 8
November 2019 to 'F' Shareholders on the register at 18 October 2019.
Outlook
Focus for the 'F' Share pool remains on the realisation of its
investments, with realisation plans in place for the final 10
investments held. However, Shareholders should note that any
transactions are dependent on many external factors and hurdles in order
to achieve a good return for 'F' Shareholders.
Downing LLP
SUMMARY OF INVESTMENT PORTFOLIO
'F' SHARE POOL
as at 30 June 2019
Unrealised gain/ % of portfolio
Cost Valuation (loss) in period by value
GBP'000 GBP'000 GBP'000
VCT qualifying and
partially qualifying
investments
Pearce and Saunders
Limited 497 671 - 20.5%
Downing Pub EIS One
Limited 490 626 7 19.1%
Lambridge Solar Limited 500 605 - 18.5%
Atlantic Dogstar
Limited 200 272 2 8.3%
Fresh Green Power
Limited 189 210 - 6.4%
Apex Energy Limited 1,000 100 - 3.1%
Green Energy Production
UK Limited 100 54 - 1.7%
Non-qualifying
investments
Baron House
Developments LLP 481 673 192 20.6%
Pearce and Saunders
DevCo Limited 46 46 - 1.4%
London City Shopping
Centre Limited 66 - - 0.0%
3,569 3,257 201 99.6%
======= =================
Cash at bank and in
hand 14 0.4%
--------- --------------
Total 3,271 100.0%
========= ==============
INVESTMENT MANAGER'S REPORT
'H' SHARE POOL
The 'H' Share pool raised funds in 2014 and the task of building the
initial VCT qualifying portfolio is complete. During the period the
share pool suffered some further provisions related to its Indian solar
investments.
Investment activity
With the task of building the initial qualifying portfolio complete, no
new investments took place over the period. However, two full exits were
made in the six months to 30 June 2019.
Hedderwick Limited, the owner of two freehold pubs located in Royston,
Hertfordshire and Olney, Milton Keynes, was successfully exited during
the period and generated proceeds of GBP1.0 million for the Share pool.
This represented an uplift over cost of GBP143,000.
In addition, proceeds of GBP515,000 were generated from the sale of
Antelope Pub Limited, which owns a pub of the same name in Tooting,
London. This represented a gain over cost of GBP15,000.
The period to 30 June 2019 has seen a number of valuation movements,
resulting in a net unrealised loss of GBP463,000.
The most notable provisions related to Indigo Generation Limited,
Ironhide Generation Limited and Rockhopper Renewables Limited who are
developing solar farms in India. Indigo and Ironhide were expected to
complete this year, however due to monsoon season, construction of the
sites has been delayed, leading to a provision of GBP184,000 in each
company. Rockhopper Renewables Limited has suffered from poor grid
availability as a result of the said monsoon season, leading to a
provision of GBP64,000.
Net asset value and results
At 30 June 2019, the net asset value per 'H' Share was 43.5p, a net
decrease of 2.8p (5.5%) over the period. Total Return (NAV plus
dividends paid to date) is now 73.5p.
Results and dividend
The loss on ordinary activities for the 'H' Shares, after taxation, for
the period was GBP364,000, comprising a revenue profit of GBP11,000 and
a capital loss of GBP375,000.
The Company will pay an interim dividend of 5.0p per 'H' Share, on 8
November 2019 to Shareholders on the register at 18 October 2019.
Outlook
The focus for the 'H' Share pool is on the close monitoring of the
remaining investments. The process of realising investments to return
funds to investors is scheduled to commence in 2020.
We continue to dedicate substantial resources to the portfolio companies
requiring attention and are seeking to develop plans to recover as much
value as possible for investors ahead of the ultimate exit date.
Downing LLP
SUMMARY OF INVESTMENT PORTFOLIO
'H' SHARE POOL
as at 30 June 2019
Unrealised gain/ % of portfolio
Cost Valuation (loss) in period by value
GBP'000 GBP'000 GBP'000
VCT qualifying
investments
Atlantic Dogstar
Limited 1,000 1,359 9 24.4%
Quadrate Catering
Limited 851 702 - 12.6%
Ironhide Generation
Limited 613 429 (184) 7.7%
Indigo Generation
Limited 613 429 (184) 7.7%
Rockhopper Renewables
Limited 492 428 (64) 7.7%
SF Renewables (Solar)
Limited 282 298 (26) 5.3%
Hermes Wood Pellets
Limited 1,500 228 - 4.1%
Pearce and Saunders
Limited 193 193 - 3.5%
Apex Energy Limited 1,300 130 - 2.3%
Zora Energy Renewables
Limited 1,000 90 (14) 1.6%
Non-qualifying
investments
Quadrate Spa Limited 850 392 - 7.1%
8,694 4,678 (463) 84.0%
======= =================
Cash at bank and in
hand 894 16.0%
--------- --------------
Total 5,572 100%
========= ==============
SUMMARY OF INVESTMENT MOVEMENTS
'H' SHARE POOL
as at 30 June 2019
Market value at Disposal Gain against Total realised
Disposals Cost 01/01/19 proceeds cost gain
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Hedderwick
Limited 875 945 1,018 143 73
Antelope
Pub
Limited 500 500 515 15 15
1,375 1,445 1,533 158 88
======= =============== ========= ============ ===============
INVESTMENT MANAGER'S REPORT
'J' SHARE POOL
The fundraising for the 'J' Share pool was launched in December 2014 and
raised GBP11 million prior to closing in 2015. The majority of these
funds have now been invested and the focus for the pool is on the
deployment of the remaining cash in the pool and the close monitoring of
the investee companies.
It is disappointing to report that the 'J' Share pool has suffered from
difficulties in a number of investments over the period. As a result, a
number of provisions have been required which have had a significant
impact on the Total Return over the period. Further details can be found
below.
Investment activity
With the pool being fully invested, no new investments were made in the
period. However, one full and one partial exit completed, generating
proceeds of GBP387,000.
Loan notes in Hedderwick Limited, the owner of two freehold pubs located
in Royston, Hertfordshire and Olney, Milton Keynes, were redeemed at par
value for GBP375,000.
One partial exit completed generating proceeds of GBP12,000 from the
partial redemption of loans notes in Snow Hill Developments LLP.
The period to 30 June 2019 has seen several valuation provisions,
resulting in an unrealised loss of GBP1.9 million.
As reported in the year end accounts, the most notable provision related
to Yamuna Renewables Limited, a wood pelleting plant in Gars am Kamp,
Austria. Consumer demand has substantially reduced following warmer than
expected weather. Additionally, production was halted following two
serious fires at the facility. Downing is working with the management
team to address these issues.
The company is pursuing a business interruption and consequential loss
insurance claim. However, as the business had not been operating for
very long this is unlikely to cover the real estimated losses. As the
company has some borrowings, this may ultimately make it difficult to
recover any value. The investment has been fully provided against as a
result.
Ormsborough Limited, the owner of pubs and restaurants in Yorkshire, ran
into difficulties in respect of several pub developments which it was
undertaking. The investment partner and management company then went
into administration and subsequently we have identified some potentially
fraudulent transactions which we are continuing to investigate. We have
put a new management team in place but trading at the existing pubs has
weakened. The investment has been reduced in value by GBP459,000 as a
result. We continue to work with the new management team seeking to
recover value.
Jito Trading Limited, the operator of a wood pelleting plant in Weitra,
Austria, has suffered partly as a result of the demand problem
encountered by Yamuna discussed above. The valuation has been reduced by
GBP250,000 as a result of weaker trading and other concerns.
Indigo Generation Limited and Ironhide Generation Limited are developing
solar farms in India. Both plants were expected to complete this year,
however due to monsoon season and issues acquiring grid connection,
construction of the sites has been delayed, leading to a provision of
GBP184,000 in each company.
The unrealised losses were partially offset by gains in the period
totalling GBP56,000. The majority of the gains in the period related to
Fenkle Street LLP, which was uplifted by GBP40,000, as the impact of
discounting the expected future cash flows unwinds over time.
Net asset value and results
At 30 June 2019, the net asset value per 'J' Share was 68.3p, a net
decrease of 18.1p (20.4%) over the period. Total return (NAV plus
dividends paid to date) is 70.8p. The loss on ordinary activities for
the 'J' Shares, after taxation, was GBP1.9 million for the period,
comprising a revenue loss of GBP17,000 and a capital loss of GBP1.9
million.
Outlook
We are dedicating substantial resources to the portfolio companies
facing difficulties and are monitoring closely and developing plans to
recover as much value as possible for investors ahead of the ultimate
exit date.
Downing LLP
SUMMARY OF INVESTMENT PORTFOLIO
'J' SHARE POOL
as at 30 June 2019
Unrealised (loss)/ % of portfolio
Cost Valuation gain in period by value
GBP'000 GBP'000 GBP'000
VCT qualifying
investments
Pilgrim Trading
Limited 1,297 1,297 - 18.0%
Jito Trading Limited 1,000 750 (250) 10.4%
Exclusive Events
Venues Limited 500 500 - 6.9%
Indigo Generation
Limited 613 429 (184) 5.9%
Ironhide Generation
Limited 613 429 (184) 5.9%
Rockhopper Renewables
Limited 492 428 (64) 5.9%
Garthcliff Shipping
Limited 400 400 - 5.5%
SF Renewables (Solar)
Limited 281 298 (25) 4.1%
Ormsborough Limited 1,000 230 (459) 3.2%
Zora Energy Renewables
Limited 300 27 (4) 0.4%
Mosaic Spa and
Healthclubs Limited 24 13 (13) 0.2%
Yamuna Renewables
Limited 800 - (800) 0.0%
Non-qualifying
investments
Fenkle Street LLP 287 335 40 4.6%
Snow Hill Developments
LLP 31 47 16 0.7%
London City Shopping
Centre Limited 15 - - 0.0%
7,653 5,183 (1,927) 71.7%
======= ==================
Cash at bank and in
hand 2,041 28.3%
--------- --------------
Total 7,224 100%
========= ==============
SUMMARY OF INVESTMENT MOVEMENTS
'J' SHARE POOL
as at 30 June 2019
Market value Disposal Gain against Total realised
Disposals Cost at 01/01/19 proceeds cost gain
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Hedderwick
Limited 375 375 375 - -
Snow Hill
Developments
LLP 12 12 12 - -
387 387 387 - -
======= ============ ========= ============ ===============
UNAUDITED SUMMARISED BALANCE SHEET
as at 30 June 2019
30 Jun 31 Dec
30 Jun 2019 2018 2018
'F' Shares 'H' Shares 'J' Shares Total Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Fixed assets
Unquoted investments 3,257 4,678 5,183 13,118 23,229 17,140
Current assets
Debtors 80 377 131 588 519 779
Cash at bank and in hand 14 894 2,041 2,949 2,551 1,762
------------ ------------ ----------- -------- -------- -------
94 1,271 2,172 3,537 3,070 2,541
Creditors: amounts falling due within
one year (70) (121) (59) (250) (215) (255)
------------ ------------ ----------- -------- -------- -------
Net current assets 24 1,150 2,113 3,287 2,855 2,286
Net assets 3,281 5,828 7,296 16,405 26,084 19,426
============ ============ =========== ======== ======== =======
Capital and reserves
Called up share capital 11 13 11 35 60 35
Capital redemption reserve 149 - - 149 124 149
Special reserve 4,229 9,574 10,911 24,714 2,971 25,206
Share premium account - - - - 24,639 -
Revaluation reserve (521) (4,015) (2,471) (7,007) (497) (4,748)
Capital reserve -- realised (1,033) - (267) (1,300) (1,039) (1,029)
Revenue reserve 446 256 (888) (186) (174) (187)
------------ ------------ ----------- -------- -------- -------
Total equity shareholders' funds 3,281 5,828 7,296 16,405 26,084 19,426
============ ============ =========== ======== ======== =======
Basic and diluted net asset value per:
'F' Share 30.3p 53.6p 28.4p
'H' Share 43.5p 78.7p 51.3p
'J' Share 68.3p 91.2p 88.9p
STATEMENT OF CHANGES IN EQUITY
for the period ended 30 June 2019
Capital Share Capital
Called up share redemption Special premium Revaluation reserve Revenue
capital reserve reserve reserve reserve - realised reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2018 60 124 5,146 24,639 1 (1,039) (239) 28,692
Total
comprehensive
income - - - - (5,079) 434 87 (4,558)
Share premium
cancellation - - 24,639 (24,639) - - - -
Transactions with
owners
Purchase of own
shares - - - - - - (35) (35)
Transfer between
reserves - - (4,579) - 330 4,249 - -
Cancellation of
shares (25) 25 - - - - - -
Dividend paid - - - - - (4,673) - (4,673)
--------------- ------------- -------- -------- ----------- ----------- -------- --------
At 31 December
2018 35 149 25,206 - (4,748) (1,029) (187) 19,426
Total
comprehensive
income - - - - (2,189) 104 1 (2,084)
Transactions with
owners
Purchase of own
shares - - - - - - - -
Transfer between
reserves - - (492) - (70) 562 - -
Dividend paid - - - - - (937) - (937)
At 30 June 2019 35 149 24,714 - (7,007) (1,300) (186) 16,405
=============== ============= ======== ======== =========== =========== ======== ========
INCOME STATEMENT
for the six months ended 30 June 2019
Company Total
Six months ended Six months ended Year ended
30 Jun 2019 30 Jun 2018 31 Dec 2018
Revenue Capital Total Revenue Capital Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 296 16 312 514 - 514 917
Gains/(losses)
on investments
- realised - 88 88 - 220 220 403
- unrealised - (2,189) (2,189) - (502) (502) (5,080)
296 (2,085) (1,789) 514 (282) 232 (3,760)
Investment
management
fees (180) - (180) (239) - (239) (430)
Other expenses (129) - (129) (137) - (137) (256)
Return/(loss)
on ordinary
activities
before
taxation (13) (2,085) (2,098) 138 (282) (144) (4,446)
Tax on total
comprehensive
income and
ordinary
activities 14 - 14 (38) - (38) (112)
Return/(loss)
attributable
to equity
shareholders 1 (2,085) (2,084) 100 (282) (182) (4,558)
======= ======= ======= ======= ======= ======== ============
Return per 'F'
Share 0.1p 1.9p 2.0p 0.1p 3.0p 3.1p (4.2p)
Return per 'H'
Share 0.1p (2.8p) (2.7p) 1.3p (2.4p) (1.1p) (26.1p)
Return per 'J'
Share (0.2p) (17.9p) (18.1p) (0.8p) (2.7p) (3.5p) (5.8p)
INCOME STATEMENT (analysed by Share pool)
for the six months ended 30 June 2019
Six months ended Six months ended Year ended
'F' Shares 30 Jun 2019 30 Jun 2018 31 Dec 2018
Revenue Capital Total Revenue Capital Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 75 - 75 113 - 113 172
Gains/(losses)
on investments
- realised - - - - 220 220 350
- unrealised - 201 201 - 104 104 (780)
75 201 276 113 324 437 (258)
Investment
management
fees (24) - (24) (58) - (58) (98)
Other expenses (27) - (27) (46) - (46) (68)
Return/(loss)
on ordinary
activities
before
taxation 24 201 225 9 324 333 (424)
Tax on total
comprehensive
income and
ordinary
activities (17) - (17) - - - (27)
Return
attributable
to equity
shareholders 7 201 208 9 324 333 (451)
======= ======= ======= ======= ======= ======= ============
Six months ended Six months ended Year ended
'H' Shares 30 Jun 2019 30 Jun 2018 31 Dec 2018
Revenue Capital Total Revenue Capital Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 134 - 134 332 - 332 515
Gains/(losses) on investments
- realised - 88 88 - - - 26
- unrealised - (463) (463) - (318) (318) (3,710)
134 (375) (241) 332 (318) 14 (3,169)
Investment management fees (76) - (76) (102) - (102) (169)
Other expenses (46) - (46) (49) - (49) (105)
Return/(loss) on ordinary activities before taxation 12 (375) (363) 181 (318) (137) (3,443)
Taxation on total comprehensive income and ordinary
activities (1) - (1) (9) - (9) (47)
Return/(loss) attributable to equity shareholders 11 (375) (364) 172 (318) (146) (3,490)
======= ======= ======= ======= ======= ======= ============
Six months ended Six months ended Year ended
'J' Shares 30 Jun 2019 30 Jun 2018 31 Dec 2018
Revenue Capital Total Revenue Capital Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 87 16 103 69 - 69 230
(Losses)/gains
on investments
- realised - - - - - - 27
- unrealised - (1,927) (1,927) - (288) (288) (590)
87 (1,911) (1,824) 69 (288) (219) (333)
Investment
management
fees (80) - (80) (79) - (79) (163)
Other expenses (56) - (56) (42) - (42) (83)
Loss on
ordinary
activities
before
taxation (49) (1,911) (1,960) (52) (288) (340) (579)
Tax on total
comprehensive
income and
ordinary
activities 32 - 32 (29) - (29) (38)
Loss
attributable
to equity
shareholders (17) (1,911) (1,928) (81) (288) (369) (617)
======= ======= ======= ======= ======= ======= ============
UNAUDITED CASH FLOW STATEMENT
for the six months ended 30 June 2019
30 Jun 31 Dec
30 Jun 2019 2018 2018
'F' 'H'
Shares Shares 'J' Shares Total Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Net cash
(outflow)/inflow from
operating activities (17) (72) 293 204 (144) (345)
Cash flows from
investing activities
Purchase of
investments - - - - - (375)
Sale of investments - 1,533 387 1,920 1,188 3,257
-------- -------- ----------- ------- ------- -------
Net cash inflow from
investing activities - 1,533 387 1,920 1,188 2,882
-------- -------- ----------- ------- ------- -------
Net cash
(outflow)/inflow
before financing
activities (17) 1,461 680 2,124 1,044 2,537
Cash flows from
financing activities
Purchase of own
shares - - - - (35) (35)
Equity dividends paid - (670) (267) (937) (2,391) (4,673)
Net cash outflow from
financing - (670) (267) (937) (2,426) (4,708)
-------- -------- ----------- -------
(Decrease)/increase in
cash (17) 791 413 1,187 (1,382) (2,171)
======== ======== =========== ======= ======= =======
NOTES TO THE UNAUDITED CASH FLOW STATEMENT
for the six months ended 30 June 2019
30 Jun 31 Dec
30 Jun 2019 2018 2018
'F' 'H' 'J'
Shares Shares Shares Total Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cash (outflow)/inflow from operating activities and
returns on investments
Return/(loss) on ordinary activities before taxation 225 (363) (1,960) (2,098) (144) (4,446)
Corporation tax paid 1 1 27 29 (38) (45)
(Gains)/losses on investments (201) 375 1,927 2,101 282 4,677
Decrease/(increase) in other debtors (25) (93) 308 190 (197) (456)
(Decrease)/increase in other creditors (17) 8 (9) (18) (47) (75)
Net cash (outflow)/inflow from operating activities (17) (72) 293 204 (144) (345)
======== ======== ======= ======= ======= =======
Analysis of net funds
Beginning of period 31 103 1,628 1,762 3,933 3,933
Net cash (outflow)/inflow (17) 791 413 1,187 (1,382) (2,171)
-------- -------- ------- ------- ------- -------
End of period 14 894 2,041 2,949 2,551 1,762
======== ======== ======= ======= ======= =======
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
1. General information
Downing THREE VCT plc ("the Company") is a venture capital trust
established under the legislation introduced in the Finance Act 1995 and
is domiciled in the United Kingdom and incorporated in England and
Wales.
2. Accounting policies - Basis of accounting
The unaudited half-yearly results cover the six months to 30 June 2019
and have been prepared in accordance with the Statement of Recommended
Practice "Financial Statements of Investment Trust Companies and Venture
Capital Trusts" issued in February 2018 ("AIC SORP") and in accordance
with the accounting policies set out in the statutory accounts for the
year ended 31 December 2018, which were prepared in accordance with
United Kingdom Generally Accepted Accounting Practice (United Kingdom
accounting standards and applicable law), including Financial Reporting
Standard 102, the financial reporting standard applicable in the UK and
Republic of Ireland ("FRS 102").
3. All revenue and capital items in the Income Statement derive from
continuing operations.
4. The Company has only one class of business and derives its income
from investments made in shares, securities and bank deposits.
5. The comparative figures are in respect of the six-month period ended
30 June 2018 and the year ended 31 December 2018 respectively.
6. Dividends
Year ended
Six months ended 31 Dec
30 June 2019 2018
Per share Revenue Capital Total Total
Paid in period pence GBP'000 GBP'000 GBP'000 GBP'000
'F' Shares
Y/E Dec 2018
Interim 18.0p - - - 1,948
Y/E Dec 2017 Final 19.0p - - - 2,056
- - - 4,004
======= ======= ======= ==========
'H' Shares
Y/E Dec 2018 Final 5.0p - (670) (670) -
Y/E Dec 2018
Interim 2.5p - - - 334
Y/E Dec 2017 Final 2.5p - - - 335
------- ------- ------- ----------
- (670) (670) 669
======= ======= ======= ==========
'J' Shares
Y/E Dec 2018 Final 2.5p - (267) (267) -
- (267) (267) -
======= ======= ======= ==========
7. Basic and diluted return per share
Weighted average Revenue Capital
number of shares in issue return/(loss) return/(loss)
Per
GBP'000 Per share GBP'000 share
'F'
Shares 10,821,660 7 0.1p 201 1.9p
'H'
Shares 13,389,758 11 0.1p (375) (2.8p)
'J'
Shares 10,675,533 (17) (0.2p) (1,911) (17.9p)
--------- ---------
1 (2,085)
========= =========
8. Net asset value per share
Shares in issue Net asset value
GBP'000 Per Share
'F' Shares 10,821,660 3,281 30.3p
'H' Shares 13,389,758 5,828 43.5p
'J' Shares 10,675,533 7,296 68.3p
---------
16,405
=========
9. Reserves
Period ended
30 June Year ended
2019 31 Dec 2018
GBP'000 GBP'000
Capital redemption reserve 149 149
Special reserve 24,714 25,206
Revaluation reserve (7,007) (4,748)
Capital reserve - realised (1,300) (1,029)
Revenue reserve (186) (187)
16,370 19,391
============ ============
The Special reserve, Capital reserve - realised and Revenue reserve are
all distributable reserves. The Revaluation reserve includes losses of
GBP8,203,000 which are included in the calculation of distributable
reserves. Total distributable reserves are GBP15,025,000 (31 Dec 2018:
GBP18,200,000).
10. The fair value of investments is determined using the detailed
accounting policy set out in the statutory accounts for the year ended
31 December 2018.
The Company has categorised its financial instruments using the fair
value hierarchy as follows:
Level 1 Reflects financial instruments quoted in an active market;
Level 2 Reflects financial instruments that have prices that are
observable either directly or indirectly; and
Level 3 Reflects financial instruments that use valuation techniques
that are not based on observable market data (unquoted equity
investments and loan note investments).
Period Year
ended ended
Level 30 June Level Level Level 31 Dec
1 Level 2 Level 3 2019 1 2 3 2018
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Loan
notes - - 2,572 2,572 - - 2,873 2,873
Unquoted
equity - - 10,546 10,546 - - 14,267 14,267
- - 13,118 13,118 - - 17,140 17,140
======= ========= ========= ======== ======= ======= ======= =========
11. The unaudited condensed financial statements set out herein do not
constitute statutory accounts within the meaning of Section 434 of the
Companies Act 2006 and have not been delivered to the Registrar of
Companies. The figures for the year ended 31 December 2018 have been
extracted from the financial statements for that year, which have been
delivered to the Registrar of Companies; the Auditor's report on those
financial statements was unqualified.
12. The Directors confirm that, to the best of their knowledge, the
half-yearly financial statements have been prepared in accordance with
the "Statement: Half-Yearly Financial Reports" issued by the UK
Accounting Standards Board as well as in accordance with FRS 104 Interim
Financial Reporting and the half-yearly financial report includes a fair
review of the information required by:
a) 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, and a description of the principal risks and
uncertainties for the remaining six months of the year; and
b) 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 entity during that period, and any
changes in the related party transactions described in the last annual
report that could do so.
13. Risks and uncertainties
Under the Disclosure and Transparency Directive, the Board is required,
in the Company's half-yearly results, to report on principal risks and
uncertainties facing the Company over the remainder of the financial
year.
The Board concluded that the key risks facing the Company over the
remainder of the financial period are as follows:
(i) Compliance risk of failure to maintain approval as a VCT; and
(ii) Investment risk associated with investing in small and immature
businesses.
The Company's compliance with the VCT regulations is continually
monitored by the Manager, who reports regularly to the Board on the
current position. The Company has also reappointed Philip Hare &
Associates LLP to provide regular reviews and advice in this area. In
order to make VCT qualifying investments, the Company has to invest in
small businesses which are often immature. It also has a limited period
in which it must invest the majority of its funds. The Manager follows a
rigorous process in vetting and carefully structuring new investments,
including taking a charge over the assets of the business wherever
possible and, after an investment is made, closely monitoring the
business. The Board is satisfied that these approaches provide
satisfactory management of the key risks.
14. Going concern
The Directors have reviewed the Company's financial resources at the
period end and conclude that the Company is well placed to manage its
business risks.
The Board confirms that it is satisfied that the Company has adequate
resources to continue in business for the foreseeable future. For this
reason, the Board believes that the Company continues to be a going
concern and that it is appropriate to apply the going concern basis in
preparing the financial statements.
15. Copies of the unaudited half-yearly report will be sent to
Shareholders shortly. Further copies can be obtained from the Company's
registered office or will be available for download from
www.downing.co.uk.
(END) Dow Jones Newswires
September 09, 2019 08:17 ET (12:17 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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