TIDMDP3F
Downing THREE VCT plc
Half-Yearly Report
for the six months ended 30 June 2018
LEI: 2138008V2JDU2K6ZHF80
Performance summary
30 Jun 31 Dec 30 Jun
'D' Share pool 2018 2017 2017
Pence Pence Pence
Net asset value per 'D' Share - - 23.7
Net asset value per 'E' Share - - 0.1
Cumulative distributions per 'D' Share 103.79 103.79 80.0
------ ------ ------
Total return per 'D' Share and 'E' Share 103.79 103.79 103.8
====== ====== ======
30 Jun 31 Dec 30 Jun
'F' Share pool 2018 2017 2017
Pence Pence Pence
Net asset value per 'F' Share 53.6 69.6 69.6
Cumulative distributions per 'F' Share 49.0 30.0 27.5
------ ------ ------
Total return per 'F' Share 102.6 99.6 97.1
====== ====== ======
30 Jun 31 Dec 30 Jun
'H' Share pool 2018 2017 2017
Pence Pence Pence
Net asset value per 'H' Share 78.7 82.3 84.6
Cumulative distributions per 'H' Share 22.5 20.0 17.5
------ ------ ------
Total return per 'H' Share 101.2 102.3 102.1
====== ====== ======
30 Jun
'J' Share pool 2018 31 Dec 2017 30 Jun 2017
Pence Pence Pence
Net asset value per 'J' Share 91.2 94.7 95.7
====== =========== ===========
CHAIRMAN'S STATEMENT
Introduction
I am pleased to present the Half-Yearly Report for the six months ended
30 June 2018. The Company has a number of share pools, each of which is
in a different stage in its planned exit life. Generally progress has
been satisfactory over the period for the share pools that have recently
passed or are approaching their planned exit date.
Net asset values and overview
'F' Share pool
The 'F' Share pool launched in 2012 and began exiting from its
investments earlier this year. In April the share class paid its first
dividends in its realisation phase of 19.0p per share.
At 30 June 2018 the net asset value ("NAV") for a holding of one 'F'
Share was 53.6p, an increase of 3.0p (4.3%) over the period. Total
Return (NAV plus dividends paid to date) is now 102.6p for a combined
holding, compared to the original cost, net of income tax relief, of 70p
per share.
The pool still holds 12 investments, but plans are being progressed for
exits from each of them.
Since the period end one further exit has been achieved. As a result,
the Share pool will pay a further dividend of 18.0p per 'F' Share on 9
November 2018. This will bring total distributions to 67.0p and leave a
remaining NAV of 35.6p.
The task of exiting the remaining investments is likely to take some
time to complete, although we expect significant progress to be made
over the remainder of the year. The Manager does not, however, expect to
be in a position to make the final distribution until 2019.
'H' Share pool
The 'H' Share pool raised funds in 2014 and has now completed its
initial investment phase. The target date to start realising investments
is 2019.
At 30 June 2018, the net asset value ("NAV") for a holding of one 'H'
Share was 78.7p which represents a net decrease of 1.1p (1.3%) over the
period after adjusting for the dividends paid out. Total Return (NAV
plus dividends paid to date) is now 101.2p, compared to the initial NAV,
before income tax relief, of 100.0p.
'J' Share pool
The 'J' Share pool raised funds in 2015 and is continuing to build its
initial investment portfolio. The target date to start realising
investments is 2020.
At 30 June 2018, the net asset value ("NAV") and total return for a
holding of one 'J' Share was 91.2p which represents a net decrease of
3.5p (3.7%) over the period, compared to the initial NAV, before income
tax relief, of 100.0p. This deficit has arisen partly due to a provision
that has been required against one investment.
Due to the VCT regulations, the 'J' Share pool is effectively prohibited
from paying dividends in its first three years. The Share pool will
therefore commence returning funds to shareholders in 2019.
The Investment Manager's Report 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 18.0p per share
'H' Shares 2.5p per share
The 'F' Share dividend will be paid on 9 November 2018 to Shareholders
on the register at 19 October 2018. The 'H' Share dividend will be paid
on 14 December 2018 to Shareholders on the register at 23 November 2018
Share buybacks
The Company has a general policy in the first five years after the
launch of a share class, of buying in its own shares that become
available in the market for cancellation. As a result, the Company will
currently buy 'H' Shares and 'J' Shares that become available in the
market and will, subject to liquidity and regulatory constraints, buy at
prices approximately equal to net asset value i.e. with no discount.
During the period to 30 June 2018, the Company repurchased and
subsequently cancelled 19,400 'H' Shares and 19,725 'J' Shares for an
aggregate consideration of GBP15,940 and GBP18,677 respectively, being
an average price of 82.0p per 'H' Share and 94.5p per 'J' Share.
No share buybacks in respect of any other share classes were undertaken
during the period.
Outlook
Over the remainder of the year we expect to see significant headway made
in realising most of the remaining investments in the 'F' Share pool. As
the process of realising investments usually includes transactions with
third parties, timings can be unpredictable, and Shareholders should
note that the exit process will take time to complete. While the Manager
is focussing on delivering exits in a timely manner, the Board is keen
to see that full value is achieved for all investments even if this may
sometimes take longer to deliver.
In respect of the 'H' Share pool and 'J' Share pool, we expect this to
be a stable period with the Manager focussing on nurturing the
investments such that they will be well positioned to deliver successful
exits when the time comes.
I look forward to updating Shareholders on progress in my statement with
the year end report to 31 December 2018 but will also communicate
additionally with 'F' Shareholders as and when there is any news of
further distributions.
Michael Robinson
Chairman
INVESTMENT MANAGER'S REPORT
'F' SHARE POOL
As at 30 June 2018, the 'F' Share pool holds 12 investments and focus
has now shifted to the process of realising its investments in order to
return funds to 'F' Shareholders.
Investment activity
During the period, the full exit of Goonhilly Earth Station Limited
completed and resulted in a good outcome for 'F' Shareholders generating
proceeds of GBP1.2 million and an uplift over cost of GBP216,000.
Partial disposals also completed in two of the smaller portfolio
companies. There was a partial loan note redemption in the Scottish
licensed leisure company, Fubar Stirling Limited which generated a total
gain over carrying value of GBP4,000.
There was also a partial loan note redemption in Fresh Green Power
Limited, the domestic rooftop solar company, which was redeemed at par.
The majority of the portfolio investments remain valued at or above cost
with there being several valuation movements in the period which
generated an uplift over opening value of GBP104,000.
The most significant increase in valuation was in Merlin Renewables
Limited, the anaerobic digestion plant in Norfolk. In August 2018, the
plant was exited and the carrying value was uplifted to reflect the sale
price at the period end.
An uplift of GBP20,000 was recognised in Atlantic Dogstar Limited, which
owns a group of London pubs, following a revaluation of the sites.
Downing Pub EIS One Limited, which acquired the holdings of Pabulum Pubs
Limited and Augusta Pub Company Limited in the prior year, was uplifted
by GBP18,000 supported by independent sales valuations from industry
specialists.
Other smaller movements in the portfolio included an uplift of GBP10,000
in Lambridge Solar Limited and GBP3,000 in Fresh Green Power Limited.
One valuation write down took place in the period. Green Energy
Production UK Limited, the operator of rooftop solar assets in
Lincolnshire, had a reduction in value of GBP24,000 following a period
of recurring operational issues.
Realisation plans
The pool's second most significant investment holding is Merlin
Renewables Limited, the anaerobic digestion plant in Norfolk. Following
the period end, an exit was achieved which delivered a significant
return to the pool.
Plans are in place for the successful exit of the remaining portfolio
companies however we anticipate that the exercise will take some time to
complete in full.
Net asset value, results and dividend
At 30 June 2018, the net asset value ("NAV") for a holding of one 'F'
Share was 53.6p, an increase of 3.0p (4.3%) over the period. Total
Return (NAV plus dividends paid to date) is now 102.6p for a combined
holding.
The gain on ordinary activities for the 'F' Shares, after taxation was
GBP333,000 for the period, comprising a revenue profit of GBP9,000 and a
capital gain of GBP324,000.
The Company will pay an interim dividend of 18.0p per 'F' Share on 9
November 2018 to 'F' Shareholders on the register at 19 October 2018.
Outlook
The focus for the 'F' Share portfolio remains on exiting from its
remaining investments. Progress continues to be made however exact
timing on the final exit is dependent on transactions involving third
parties.
Downing LLP
SUMMARY OF INVESTMENT PORTFOLIO
'F' SHARE POOL
as at 30 June 2018
Unrealised % of
gain/(loss) portfolio
Cost Valuation in period by value
GBP'000 GBP'000 GBP'000
VCT qualifying and
partially qualifying
investments
Apex Energy Limited 1,000 1,000 - 17.2%
Merlin Renewables
Limited 500 718 77 12.3%
Downing Pub EIS One
Limited 490 607 18 10.4%
Lambridge Solar Limited 500 605 10 10.4%
Pearce and Saunders
Limited 497 497 - 8.5%
Atlantic Dogstar
Limited 200 255 20 4.4%
Fresh Green Power
Limited 189 231 3 4.0%
Green Energy Production
UK Limited 100 76 (24) 1.3%
Fubar Stirling Limited 95 5 - 0.1%
Non-qualifying investments
Baron House Developments
LLP 481 481 - 8.3%
London City Shopping
Centre Limited 66 66 - 1.1%
Pearce and Saunders
DevCo Limited 46 46 - 0.8%
4,164 4,587 104 78.8%
Cash at bank and
in hand 1,234 21.2%
Total 5,821 100.0%
SUMMARY OF INVESTMENT MOVEMENTS
'F' SHARE POOL
as at 30 June 2018
Market Gain Total
value Disposal against realised
Disposals Cost at 01/01/18 proceeds cost gain
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
VCT qualifying
and partially
qualifying investments
Goonhilly Earth
Station Limited 955 955 1,171 216 216
Fubar Stirling
Limited 6 2 6 - 4
Fresh Green Power
Limited 11 11 11 - -
972 968 1,188 216 220
======= ========= ==========
INVESTMENT MANAGER'S REPORT
'H' SHARE POOL
The 'H' Share pool raised funds in 2014 and has made good progress in
building its VCT qualifying portfolio and is now fully qualifying.
Investment activity
With the pool being fully invested, no new investments were made in the
period.
Valuations movements during the period totalled an unrealised loss of
GBP318,000, mainly due to the significant write down in value in
Quadrate Spa Limited. The non qualifying investment owns and operates a
health club business in The Cube complex in Birmingham and has been
written down by GBP458,000 at the period end as a result of poor
performance.
This movement has been partially offset by the valuation uplifts in the
period that totalled GBP140,000.
Atlantic Dogstar Limited, which owns a group of London Pubs, was
uplifted by GBP102,000 following a revaluation of the sites.
Oak Grove Renewables Limited, which operates an anaerobic digestion
plant in Norwich, was exited during the period, however is awaiting the
receipt of deferred consideration from the sale. As the likelihood of
receiving this payment has now increased, the carrying value was
uplifted by GBP21,000.
Net asset value and results
At 30 June 2018, the net asset value per 'H' Share was 78.7p, a net
decrease of 1.1p (1.3%) over the period. Total Return (NAV plus
dividends paid to date) is now 101.2p.
Results and dividend
The loss on ordinary activities for the 'H' Shares, after taxation, for
the period was GBP146,000, comprising a revenue profit of GBP172,000 and
a capital loss of GBP318,000.
The Company will pay an interim dividend of 2.5p per 'H' Share, on 14
December 2018 to Shareholders on the register at 23 November 2018.
Outlook
The 'H' Share pool is now fully invested and our focus is now on close
monitoring and support of the portfolio companies in order to nurture
growth before reaching its five year anniversary at the end of 2019.
Downing LLP
SUMMARY OF INVESTMENT PORTFOLIO
'H' SHARE POOL
as at 30 June 2018
Unrealised % of
gain/(loss) portfolio
Cost Valuation in period by value
GBP'000 GBP'000 GBP'000
VCT qualifying investments
Hermes Wood Pellets
Limited 1,500 1,500 - 14.2%
Apex Energy Limited 1,300 1,300 - 12.3%
Atlantic Dogstar
Limited 1,000 1,279 102 12.1%
Zora Energy Renewables
Limited 1,000 1,000 - 9.4%
Quadrate Catering
Limited 850 850 - 8.0%
Ironhide Generation
Limited 613 613 - 5.8%
Indigo Generation
Limited 613 613 - 5.8%
Antelope Pub Limited 500 500 - 4.7%
Rockhopper Renewables
Limited 492 492 - 4.6%
SF Renewables (Solar)
Limited 281 281 - 2.6%
Oak Grove Renewables
Limited 420 252 21 2.4%
Pearce and Saunders
Limited 193 193 - 1.8%
Non-qualifying investments
Hedderwick Limited 1,250 1,320 17 12.5%
Quadrate Spa Limited 850 392 (458) 3.7%
10,862 10,585 (318) 99.9%
Cash at bank and
in hand 11 0.1%
Total 10,596 100%
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 this share pool is on the
close monitoring of the investee companies.
Investment activity
During the period, three adjustments were made to the valuations,
leading an unrealised loss totalling GBP288,000.
Oak Grove Renewables Limited, which operates an anaerobic digestion
plant in Norwich, was fully exited after the period end. As a result,
the carrying value was uplifted by GBP22,000 to reflect the pending exit
proceeds.
Ormsborough Limited, who own several pubs and restaurants across
Yorkshire, had a reduction in value of GBP312,000 due to overspend on
recent developments.
Net asset value and results
At 30 June 2018, the net asset value per 'J' Share was 91.2p, a net
decrease of 3.5p (3.7%) over the period.
The loss on ordinary activities for the 'J' Shares, after taxation, was
GBP369,000 for the period, comprising a revenue loss of GBP81,000 and a
capital loss of GBP288,000.
Outlook
The emphasis for the 'J' share pool now gradually shifts to the close
monitoring of the Share pool's investments as we seek to optimise growth
over the planned exit life, however we also expect there to be a small
number of further additions to utilise the remaining cash of the pool.
Downing LLP
SUMMARY OF INVESTMENT PORTFOLIO
'J' SHARE POOL
as at 30 June 2018
Unrealised
gain/ % of
(loss) portfolio
Cost Valuation in period by value
GBP'000 GBP'000 GBP'000
VCT qualifying investments
Pilgrim Trading Limited 1,297 1,297 - 13.9%
Jito Trading Limited 1,000 1,000 - 10.7%
Yamuna Renewables
Limited 800 800 - 8.5%
Ormsborough Limited 1,000 735 (312) 7.8%
Indigo Generation
Limited 613 613 - 6.5%
Ironhide Generation
Limited 613 613 - 6.5%
Exclusive Events
Venues Limited 500 500 - 5.3%
Rockhopper Renewables
Limited 492 492 - 5.3%
Garthcliff Shipping
Limited 400 400 - 4.3%
Managed Storage Services
(1) Limited 400 400 - 4.3%
Zora Energy Renewables
Limited 300 300 - 3.2%
SF Renewables (Solar)
Limited 281 281 - 3.0%
Oak Grove Renewables
Limited 420 252 22 2.7%
Mosaic Spa and Healthclubs
Limited 27 29 2 0.3%
Non-qualifying investments
Fenkle Street LLP 287 287 - 3.1%
Snow Hill Developments
LLP 43 43 - 0.5%
London City Shopping
Centre Limited 15 15 - 0.2%
8,488 8,057 (288) 86.1%
Cash at bank and
in hand 1,299 13.9%
Total 9,356 100%
UNAUDITED SUMMARISED BALANCE SHEET
as at 30 June 2018
30 Jun 31 Dec
30 Jun 2018 2017 2017
'D'
Shares 'F' Shares 'H' Shares 'J' Shares Total Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Fixed assets
Unquoted investments - 4,587 10,585 8,057 23,229 29,026 24,699
Current assets
Debtors - 39 35 445 519 324 322
Cash at bank and in hand 7 1,234 11 1,299 2,551 2,486 3,933
7 1,273 46 1,744 3,070 2,810 4,255
Creditors: amounts falling due
within one year (7 ) (56 ) (89 ) (63 ) (215 ) (312 ) (262)
Net current assets - 1,217 (43) 1,681 2,855 2,498 3,993
Net assets - 5,804 10,542 9,738 26,084 31,524 28,692
Capital and reserves
Called up share capital 25 11 13 11 60 60 60
Capital redemption reserve 124 - - - 124 124 124
Special reserve - 5,995 (3,024) - 2,971 8,017 5,146
Share premium account - - 13,608 11,031 24,639 24,639 24,639
Revaluation reserve (249) 463 (279) (432) (497) (481) 1
Capital reserve -- realised - (1,033) - (6) (1,039) (1,039) (1,039)
Revenue reserve 100 368 224 (866) (174) 204 (239)
Total equity shareholders' funds - 5,804 10,542 9,738 26,084 31,524 28,692
Basic and diluted net asset value per:
'D' Share - 23.7p -
'E' Share - 0.1p -
'F' Share 53.6p 69.6p 69.6p
'H' Share 78.7p 84.6p 82.3p
'J' Share 91.2p 95.7p 94.7p
STATEMENT OF CHANGES IN EQUITY
for the period ended 30 June 2018
Called
up Capital Share Capital
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
2017 78 106 9,888 24,639 (790) (1,033) 132 33,020
Total
comprehensive
income - - - - 268 301 108 677
Transactions
with owners
Issue
of new
shares - - - - - - - -
Share
issue
costs - - - - - - - -
Purchase
of
own shares - - - - - - (66) (66)
Transfer
between
reserves - - (4,742) - 523 4,632 (413) -
Cancellation
of
shares (18) 18 - - - - - -
Dividend
paid - - - - - (4,939) - (4,939)
-------- ------------- -------- ----------- ----------- --------
At 31 December
2017 60 124 5,146 24,639 1 (1,039) (239) 28,692
Total comprehensive
income - - - - (502) 220 100 (182)
Transactions
with
owners
Purchase
of own
shares - - - - - - (35) (35)
Transfer
between
reserves - - (2,175) - 4 2,171 - -
Dividend
paid - - - - - (2,391) - (2,391)
Cancellation
of shares - - - - - - - -
-------- ------------- -------- ----------- ----------- --------
At 30 June
2018 60 124 2,971 24,639 (497) (1,039) (174) 26,084
======== ============= ======== =========== =========== ======== ========
INCOME STATEMENT
for the six months ended 30 June 2018
Company Total
Year
ended
Six months ended Six months ended 31 Dec
30 Jun 2018 30 Jun 2017 2017
Revenue Capital Total Revenue Capital Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 514 - 514 556 34 590 1,027
Gains/(losses)
on investments
- realised - 220 220 - 62 62 267
- unrealised - (502) (502) - 290 290 268
514 (282) 232 556 386 942 1,562
Investment
management
fees (239) - (239) (303) - (303) (594)
Other expenses (137) - (137) (146) - (146) (264)
Return/(loss)
on ordinary
activities
before
taxation 138 (282) (144) 107 386 493 704
Tax on total
comprehensive
income and
ordinary
activities (38) - (38) (21) - (21) (27)
Return/(loss)
attributable
to equity
shareholders 100 (282) (182) 86 386 472 677
=======
Return per 'D'
Share - - - (0.2p) 1.0p 0.8p 0.9p
Return per 'E'
Share - - - - - - -
Return per 'F'
Share 0.1p 3.0p 3.1p 0.8p 1.9p 2.7p 5.2p
Return per 'H'
Share 1.3p (2.4p) (1.1p) 0.4p 0.5p 0.9p 1.1p
Return per 'J'
Share (0.8p) (2.7p) (3.5p) (0.3p) 0.2p (0.1p) (1.1p)
INCOME STATEMENT
for the six months ended 30 June 2018
Year
ended
Six months ended Six months ended 31 Dec
'D' Shares 30 Jun 2018 30 Jun 2017 2017
Revenue Capital Total Revenue Capital Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income - - - 9 34 43 46
Gains/(losses)
on investments
- realised - - - - 68 68 59
- unrealised - - - - (4) (4) -
- - - 9 98 107 105
Investment
management
fees - - - (19) - (19) (32)
Other expenses - - - (17) - (17) (17)
(Loss)/return
on ordinary
activities
before
taxation - - - (27) 98 71 56
Tax on total
comprehensive
income and
ordinary
activities - - - 5 - 5 31
(Loss)/return
attributable
to equity
shareholders - - - (22) 98 76 87
======= ======= =======
INCOME STATEMENT
for the six months ended 30 June 2018
Year
ended
Six months ended Six months ended 31 Dec
'F' Shares 30 Jun 2018 30 Jun 2017 2017
Revenue Capital Total Revenue Capital Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 113 - 113 222 - 222 449
Gains on
investments
- realised - 220 220 - - - 215
- unrealised - 104 104 - 205 205 131
113 324 437 222 205 427 795
Investment
management
fees (58) - (58) (68) - (68) (136)
Other expenses (46) - (46) (47) - (47) (91)
Return on
ordinary
activities
before
taxation 9 324 333 107 205 312 568
Tax on total
comprehensive
income and
ordinary
activities - - - (21) - (21) (7)
Return
attributable
to equity
shareholders 9 324 333 86 205 291 561
======== ========
INCOME STATEMENT
for the six months ended 30 June 2018
Year
ended
Six months ended Six months ended 31 Dec
'H' Shares 30 Jun 2018 30 Jun 2017 2017
Revenue Capital Total Revenue Capital Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 332 - 332 226 - 226 364
Gains/(losses) on investments
- realised - - - - - - -
- unrealised - (318) (318) - 61 61 90
332 (318) 14 226 61 287 454
Investment management fees (102) - (102) (116) - (116) (229)
Other expenses (49) - (49) (43) - (43) (82)
Return/(loss) on ordinary activities before taxation 181 (318) (137) 67 61 128 143
Taxation on total comprehensive income and ordinary
activities (9) - (9) (13) - (13) 5
Return/(loss) attributable to equity shareholders 172 (318) (146) 54 61 115 148
=======
INCOME STATEMENT
for the six months ended 30 June 2018
Year
ended
Six months ended Six months ended 31 Dec
'J' Shares 30 Jun 2018 30 Jun 2017 2017
Revenue Capital Total Revenue Capital Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 69 - 69 99 - 99 168
(Losses)/gains
on investments
- realised - - - - (6) (6) (6)
- unrealised - (288) (288) - 28 28 46
69 (288) (219) 99 22 121 208
Investment
management
fees (79) - (79) (100) - (100) (197)
Other expenses (42) - (42) (39) - (39) (74)
(Loss)/gain on
ordinary
activities
before
taxation (52) (288) (340) (40) 22 (18) (63)
Tax on total
comprehensive
income and
ordinary
activities (29) - (29) 8 - 8 (56)
(Loss)/gain
attributable
to equity
shareholders (81) (288) (369) (32) 22 (10) (119)
UNAUDITED CASH FLOW STATEMENT
for the six months ended 30 June 2018
30 Jun 31 Dec
30 Jun 2018 2017 2017
'D' 'F' 'H'
Shares Shares Shares 'J' Shares Total Total Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Net cash
(outflow)/inflow
from operating
activities 1 (13) 60 234 (425) (144) (41) (71)
Cash flows from investing
activities
Purchase of investments - - - - - (1,501) (3,653)
Sale of investments - 1,188 - - 1,188 3,659 10,325
Net cash inflow from
investing activities - 1,188 - - 1,188 2,158 6,672
Net cash inflow/(outflow)
before financing
activities (13) 1,248 234 (425) 1,044 2,117 6,601
Cash flows from financing
activities
Purchase of own shares - - (16) (19) (35) (14) (66)
Equity dividends paid - (2,056) (335) - (2,391) (1,954) (4,939)
Net cash outflow from
financing - (2,056) (351) (19) (2,426) (1,968) (5,005)
---- ---- ------- ----- ------ ---- ------
Increase/(decrease)
in cash 2 (13) (808) (117) (444) (1,382) 149 1,596
====== ======
NOTES TO THE UNAUDITED CASH FLOW STATEMENT
for the six months ended 30 June 2018
30 Jun 31 Dec
30 Jun 2018 2017 2017
'D' 'F' 'H' 'J'
Shares Shares Shares Shares Total Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
1 Cash (outflow)/inflow from operating activities
and returns on investments
(Loss)/return on ordinary activities before
taxation - 333 (137) (340) (144) 493 704
Corporation tax paid - - - (38) (38) - (18)
Losses/(gains) on investments - (324) 318 288 282 (352) (535)
Decrease/(increase) in other debtors - 85 54 (336) (197) (191) (191)
(Decrease)/increase in other creditors (13) (34) (1) 1 (47) 9 (31)
Net cash (outflow)/inflow from operating
activities (13) 60 234 (425) (144) (41) (71)
===== === ====== ===== === ====== ====== ====== ======
2 Analysis of net funds
Beginning of period 20 2,042 128 1,743 3,933 2,337 2,337
Net cash (outflow)/inflow (13) (808) (117) (444) (1,382) 149 1,596
------
End of period 7 1,234 11 1,299 2,551 2,486 3,933
===== ====
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 2018
and have been prepared in accordance with the Statement of Recommended
Practice "Financial Statements of Investment Trust Companies and Venture
Capital Trusts" revised January 2009 and in accordance with the
accounting policies set out in the statutory accounts for the year ended
31 December 2017, 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 2017 and the year ended 31 December 2017 respectively.
6. Dividends
Year ended
Six months ended 31 Dec
30 June 2018 2017
Per share Revenue Capital Total Total
Paid in period pence GBP'000 GBP'000 GBP'000 GBP'000
'D' Shares
Special 'D'
2017 23.69p - - - 2,361
Special 'E'
2017 0.1p - - - 15
Y/e Dec 2016
Final 13.5p - - - 1,350
- - - 3,726
======= ====== ====== ==========
'F' Shares
Y/E Dec 2017
Final 19.0p - (2,056) (2,056) -
Y/E Dec 2016
Final 2.5p - - - 271
Y/E Dec 2016
Interim 2.5p - - - 270
------- ----------
- (2,056) (2,056) 541
======= ==========
'H' Shares
Y/E Dec 2016
Final 2.5p - (335) (335) -
Y/E Dec 2016
Final 2.5p - - - 336
Y/E Dec 2016
Interim 2.5p - - - 336
- (335) (335) 672
======= ====== ====== ==========
No dividends have been paid or declared in respect of the 'J' Shares.
7. Basic and diluted return per share
Weighted average
number of shares Revenue Capital
in issue (loss)/return return
Per
GBP'000 Per share GBP'000 share
'D' Shares 9,979,109 - - - -
'E' Shares 14,994,862 - - - -
'F' Shares 10,821,660 9 0.1p 324 3.0p
'H' Shares 13,379,978 172 1.3p (318) (2.4p)
'J' Shares 10,674,386 (81) (0.8p) (288) (2.7p)
100 (282)
8. Net asset value per share
Shares in issue Net asset value
GBP'000 Per Share
'D' Shares 9,979,109 - -
'E' Shares 14,994,862 - -
'F' Shares 10,821,660 5,804 53.6p
'H' Shares 13,389,758 10,542 78.7p
'J' Shares 10,675,533 9,738 91.2p
-------
26,084
=======
9. Reserves
Period ended 30 June
2018 Year ended 31 Dec 2017
GBP'000 GBP'000
Capital redemption reserve 124 124
Special reserve 2,971 5,146
Share premium reserve 24,639 24,639
Revaluation reserve (497) 1
Capital reserve-realised (1,039) (1,039)
Revenue reserve (174) (239)
26,024 28,632
==================== ======================
The Special reserve, Capital reserve - realised and Revenue reserve are
all distributable reserves. The Revaluation reserve includes losses of
GBP1,423,000 which are included in the calculation of distributable
reserves. Total distributable reserves are GBP335,000 (31 Dec 2017:
GBP3,148,000).
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 2017.
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 2018 1 2 3 2017
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Loan
notes - - 2,985 2,985 - - 3,283 3,283
Unquoted
equity - - 20,244 20,244 - - 21,416 21,416
- - 23,229 23,229 - - 24,699 24,699
======= ========= ========= ======== ======= ======= ======== =========
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 2017 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 27, 2018 11:13 ET (15:13 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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