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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Downing Three C | LSE:DP3C | London | Ordinary Share | GB00B3D75146 | C SHARES 0.1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 2.505 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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Downing Three VCT plc
FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2015
FINANCIAL HIGHLIGHTS
31 Dec 31 Dec
2015 2014
Pence Pence
'C' Share pool
Net asset value per 'C' Share 53.2 98.2
Net asset value per 'A' Share 0.1 0.1
Cumulative distributions per 'C' Share 75.0 25.0
Adjusted for performance fee estimate (7.4) -
Total return per 'C' Share and 'A' Share 120.9 123.3
'D' Share pool
Net asset value per 'D' Share 51.3 71.3
Net asset value per 'E' Share 0.1 0.1
Cumulative distributions per 'D' Share 49.5 22.5
Total return per 'D' Share and 'E' Share 100.9 93.9
'F' Share pool
Net asset value per 'F' Share 71.5 75.5
Cumulative distributions per 'F' Share 20.0 15.0
Total return per 'F' Share 91.5 90.5
'H' Share pool
Net asset value per 'H' Share 90.5 94.7
Cumulative distribution per 'H' Share 10.0 5.0
Total return per 'H' Share 100.5 99.7
'J' Share pool
Net asset value per 'J' Share 98.5 n/a
Cumulative distribution per 'J' Share - n/a
Total return per 'J' Share 98.5 n/a
CHAIRMAN'S STATEMENT
Introduction
I am pleased to present the Annual Report for the year ended 31 December
2015. The Company currently has five share pools each of which are in
different phases of their expected life.
Since the year end the oldest remaining share pool, the 'C' Share pool,
has completed the task of returning funds to Shareholders and has
delivered an excellent final outcome. The 'D' Share pool has also
recently commenced the process of returning funds to Shareholders
although there is some way to go to complete the task. The 'F' Share
pool is effectively fully invested and is not scheduled to start
realising its investment portfolio for some time yet. The 'H' and 'J'
Share pool are still in their initial investment phase.
A brief summary of each share pool is provided below.
'C' Share pool
The Company's 'C' Shares were originally issued in 2008 and 2009. In
line with the Company's planned exit strategy, the 'C' Share pool exited
from most of its remaining investments in the year, which realised
GBP5.7 million. As at the 31 December 2015, the 'C' Share pool held a
portfolio of 2 investments with a total value of GBP748,000.
At 31 December 2015, the Net Asset Value ("NAV") of a combined holding
of one 'C' Share and one 'A' Share stood at 53.3p, which represents an
increase of 5.1% over the year after adjusting for the dividends of
50.0p per share paid in the year. Dividends paid to date total 75.0p.
Since the year end, realisations from the final two investments in
Quadrate Spa Limited and Quadrate Catering Limited have been achieved,
generating proceeds of GBP748,000. This resulted in the Company
declaring final dividends of 30.5p per 'C' Share and 14.8p per 'A' Share
which were paid on 24 March 2016, triggering a performance fee payable
to the management team equivalent to 7.4p per 'C' Share.
After providing for the performance fee, Total Return (cumulative
dividends to date) will be 120.3p, compared to the initial cost, net of
income tax relief of 70.0p. The Board believes that, considering the
economic climate in which the Investment Manager had to realise much of
the portfolio, this is an excellent return.
Following the final dividend, the task of returning funds to these
Shareholders is considered to be complete and no further dividends are
expected to be paid to 'C' Shareholders. Steps will be taken to wind up
this share class in due course.
'D' Share pool
The 'D' Shares were originally issued in 2010 and at the year end held a
portfolio of 13 investments with a total value of GBP4.4 million.
At 31 December 2015, the Net Asset Value ("NAV") of a combined holding
of one 'D' Share and one 'E' Share stood at 51.4p, which represents an
increase of 9.8% over the year after adjusting for the dividends of
27.0p per share paid in the year. Total Return (NAV plus cumulative
dividends to date) is now 100.9p, compared to the initial NAV of 94.5p.
During the year, the Manager commenced the task of realising the pool's
investment portfolio with a number of investments sold producing
proceeds of GBP3.6 million.
These proceeds were distributed to 'D' Shareholders by way of dividend
paid on 18 December 2015 (27.0p per 'D' share) and on 24 March 2016
(17.0p per 'D' Share). These returns bring total dividends paid since
the launch of the share class to 66.5p per 'D' Share. Since the period
end further investments have been realised generating an additional
GBP1.5 million.
The 'D' Share pool now has five main investments remaining and work is
ongoing to achieve good returns from each of them. The Manager is
optimistic that the majority will be realised before the end of the year,
although is cautious in respect of Aminghurst Limited where it appears
possible that a full exit might take longer. The Board intends to pay
further dividends as soon as a significant level of funds has been
generated by further realisations.
'F' Share pool
The 'F' Share pool was launched in 2012 and now holds a portfolio of 23
investments with a total value of GBP7.4 million.
At 31 December 2015, the 'F' Share NAV stood at 71.5p, which represents
an increase of 1.3% over the year after adjusting for the dividends of
5.0p per share paid in the year. Dividends paid to date total 20.0p such
that Total Return (NAV plus cumulative dividends to date) is now 91.5p,
compared to the initial NAV of 94.5p.
In line with the dividend policy, the Board is proposing to pay a final
dividend of 2.5p per 'F' Share on 24 June 2016 to Shareholders on the
register at the close of business on 20 May 2016.
'H' Share pool
The 'H' Share pool was launched in 2014 and is still in its initial
investment phase. At 31 December 2015, the pool held six VCT qualifying
or partly qualifying investments and a further five non-qualifying
investments, most of which are secured loans.
At 31 December 2015, the 'H' Share NAV stood at 90.5p, which represents
a small increase over the year of 0.8% after adjusting for the dividends
of 5.0p per share paid in the year. Total Return (NAV plus cumulative
dividends to date) is now 100.5p, compared to the initial NAV of 100.0p.
In line with the dividend policy, the Board is proposing to pay a final
dividend of 2.5p per 'H' Share on 24 June 2016 to Shareholders on the
register at the close of business on 20 May 2016.
'J' Share pool
The 'J' Share pool was launched in December 2014 and it is still in its
initial investment phase. At 31 December 2015, the pool held three VCT
qualifying or partly qualifying investments.
At 31 December 2015, the 'J' Share NAV stood at 98.5p, compared to the
initial NAV of 100.0p.
As a result of changes to the VCT regulations in 2014, the 'J' Share
pool is effectively prohibited from paying dividends in its first three
years.
Share buybacks
For share classes within the initial five year period, the Company
operates a general policy of buying in its own shares for cancellation
when any become available in the market. This policy is currently in
place for the 'F' Shares, 'H' Shares and 'J' Shares. During this period,
any such purchases will be undertaken at a price equal to the latest
published NAV (i.e. at nil discount). Any buybacks are subject to
regulatory restrictions and other factors such as the availability of
liquid funds.
The Company is now unlikely to make any further purchases of 'D' Shares
and 'E' Shares as the process of returning funds to those Shareholders
is now underway. No purchases of 'C' Shares and 'A' Shares will be
undertaken as the Shares now have negligible value and steps will be
taken in due course to cancel these share classes.
A resolution to renew the authority for the Company to purchase its own
shares will be proposed at the forthcoming Annual General Meeting.
Fundraising
The 'J' Share pool fundraising closed during the year having raised a
total of GBP11.0 million.
VCT Rules
As Shareholders may be aware, a number of potentially significant
changes to the VCT rules were made in November 2015 and some further
changes announced in the Budget in March 2016. The new rules have
introduced a limit on the age for most new investee companies of seven
years, a lifetime cap of GBP15 million on the total amount of VCT and
similar funding a company can receive and a ban on VCT funds being used
by an investee company to acquire another trade or business. They have
been brought in to bring the VCT scheme into line with the European
Union's Risk Capital Guidelines. In addition, new restrictions on
non-qualifying investments have been introduced and all investments into
power generation businesses are now effectively banned.
The impact of the new rules on most of the share pools is expected to be
minimal as they are not expecting to make any new investments. However,
the remaining 'H' Share and 'J' Share funds will have to be invested
under the new regulations. The Manager believes that, although these new
restrictions will be significant and are unwelcome, it will still be
possible to build a balanced portfolio of good quality investments and
has already started to make progress to that end.
Annual General Meeting ("AGM")
The Company's ninth AGM will be held at Ergon House, Horseferry Road,
London, SW1P 2AL at 10:35 a.m. on 15 June 2016.
One item of special business will be proposed at the AGM in connection
with the authority for the Company to buy back shares as described
(MORE TO FOLLOW) Dow Jones Newswires
April 25, 2016 12:48 ET (16:48 GMT)
above.
Outlook
Following the successful completion of the return of funds to 'C' Share
pool investors, over the coming year, a significant proportion of the
Investment Manager's activity will be on seeking to exit the remaining
'D' Share investments in a timely manner and at optimal value.
Investment activity is expected to be limited over the coming year in
the 'F' Share pool, which is fully invested and will not start seeking
to exit its portfolio until 2018. The Manager will continue to monitor
those investments closely during the remaining period to ensure that
value is built before the exit dates. We expect to see a significant
number of new qualifying investments added to the 'H' Share pool and 'J'
Share pool over the year as the process of building the initial
investment portfolio is due to complete by the end of 2016 and 2017. A
number of new investments have already been competed since the year end.
Although there will be challenges faced by each share pool, generally we
believe that the Company is well positioned to deliver satisfactory
results to each group of Shareholders over the full life of their
investment. I look forward to updating Shareholders of all share pools
in my statement in the Half Yearly Report.
Michael Robinson
Chairman
25 April 2016
INVESTMENT MANAGER'S REPORT- 'C' SHARE POOL
Introduction
Soon after the year end, the 'C' Share pool completed the task of
realising its investments and, on 24 March 2016, paid final dividends.
Final outcome
Over the life of their investment, investors in the 'C' Share pool
received total dividends of 105.51p per 'C' Share and 14.85p per 'A'
Share making a total return of 120.36p for an original investment of
100p (70p net of income tax relief.) This equates to a return of 9.7%
per annum over the life of the investment, which we believe represents a
very good return to Shareholders.
'C' Share pool - investment activity
Investment activity throughout the year was almost exclusively focussed
on realisations. Total disposal proceeds of GBP5,671,000 were received
in the year.
The sale of Atlantic Dogstar Limited, AEW Pubs No 1 Limited, East
Dulwich Tavern Limited and Westow House Limited completed in January
2015, generating capital proceeds to the 'C' share pool of GBP2,400,000
as well as a dividend of GBP509,000. In total, this equates to a gain
against original cost of GBP1.2 million.
Domestic Solar Limited, the installer of domestic solar panels across
the UK, was sold and generated an uplift over original cost of
GBP165,000 on proceeds of GBP665,000.
Redmed Limited, the Lincoln bar operator, generated proceeds of
GBP610,000 which represented an uplift over original cost of GBP102,000.
Vermont Developments Limited sold a property development site in Salford,
which was its only remaining asset, and generated proceeds for the 'C'
Share pool of GBP156,000 and a gain against cost of GBP131,000.
The Thames Club Limited generated proceeds equivalent to its original
cost of GBP500,000.
The GBP210,000 non-qualifying loan in Hoole Hall Country Club Holdings
Limited was repaid at par.
Unfortunately, not all exit proceeds exceeded original cost and two were
sold at discounts in order to provide liquidity within an acceptable
timeframe. These included Future Biogas (SF) Limited which cost
GBP697,000 and had proceeds of GBP442,000; and Mosaic Spa and Health
Clubs Limited which cost GBP125,000 and had proceeds of GBP46,000.
The 3D Pub Co Limited which cost GBP267,000 and had proceeds of
GBP233,000 and Ecossol Limited which cost GBP250,000 and had proceeds of
GBP238,000 were both realised in the period at values marginally below
cost due to underperformance of the investments.
Several smaller exits also completed including Honeycombe Pubs VCT
Limited for GBP66,000, Chapel Street Services Limited, Chapel Street
Food and Beverage Limited and Chapel Street Hotel Limited for a combined
total of GBP105,000.
Quadrate Spa Limited and Quadrate Catering Limited were the last
remaining investments and were sold in January 2016 at a value of
GBP55,000 above original costs.
Outlook
We are very satisfied with the final performance of the 'C' Share pool.
Following the payment of the final dividends on 24 March 2016, the 'C'
Share pool now has negligible valued and no further dividends are
expected. In due course, steps will be taken to cancel the 'C' Share and
'A' Share classes.
Downing LLP
25 April 2016
REVIEW OF INVESTMENTS - 'C' SHARE POOL
Portfolio of investments
The following investments, all of which are incorporated in England and
Wales, were held at 31 December 2015:
'C' Share pool
Valuation
movement % of
Cost Valuation in year portfolio
GBP'000 GBP'000 GBP'000
VCT qualifying investments and partially qualifying
investments
Quadrate Spa Limited* 364 381 17 10.3%
Quadrate Catering Limited 330 367 8 9.9%
694 748 25 20.2%
694 748 25 20.2%
Cash at bank and in hand 2,962 79.8%
Total investments 3,710 100%
*Part-qualifying investment
Summary of investment movements
Additions
Cost
VCT qualifying and partially qualifying investments GBP'000
Redmed Limited 158
Total 'C' Share pool 158
Disposals
Gain
Disposal against Total realised
Cost MV at 01/01/15 proceeds cost gain during the year
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
VCT qualifying and partially qualifying
investments
Domestic Solar
Limited 500 560 665 165 105 **
Chapel Street
Food and
Beverage
Limited 50 13 45 (5) 32
Chapel Street
Services
Limited 50 13 42 (8) 29
Ecossol Limited 250 213 238 (12) 25
The 3D Pub Co
Limited 267 227 233 (34) 6
Redmed Limited 508 609 610 102 1
Atlantic Dogstar
Limited 663 1,260 1,260 597 -
Future Biogas
(SF) Limited 697 476 442 (255) (34)
Mosaic Spa and
Health Clubs
Limited 125 96 46 (79) (50)
East Dulwich
Tavern Limited 644 734 541 (103) (193) **
Westow House
Limited 429 606 338 (91) (268) **
Non-qualifying
investments
Vermont
Developments
Limited 25 120 156 131 36
Chapel Street
Hotel Limited 2 1 18 16 17
The Thames Club
Limited 500 500 500 - -
Hoole Hall
Country Club
Holdings
Limited 210 210 210 - -
Honeycombe Pubs
VCT Limited 188 66 66 (122) -
AEW Pubs No1
Limited - 261 261 261 -
Westow House Pub
No1 Limited - 15 - - (15) **
East Dulwich
Tavern Pub No1
Limited - 30 - - (30) **
5,108 6,010 5,671 563 (339)
* Adjusted for additions in the year
** Disposal proceeds were supplemented by dividends totalling GBP517,000
INVESTMENT MANAGER'S REPORT- 'D' SHARE POOL
Introduction
The 'D' Share pool holds investments in 13 companies and is fully
invested. The focus this year has been on realisations and ten full
exits have completed in the period. We are in the process of developing
realisation plans for the remainder of the portfolio.
Net asset value and results
At 31 December 2015, the 'D' Share NAV stood at 51.3p and the 'E' Share
NAV at 0.1p, giving a combined NAV of 51.4p. Total Return (NAV plus
cumulative dividends to date) was 100.9p for a combined holding of one
'D' and one 'E' Share. This represents a net increase of 7.0p over the
period (after adjusting for dividends paid during the period of 27.0p
per 'D' Share), equivalent to an increase of 9.8%.
The return on ordinary activities for the 'D' Shares for the period was
a gain of GBP690,000 (2014: loss GBP59,000) being a revenue profit of
GBP306,000 (2014: GBP233,000) and a capital gain of GBP384,000 (2014:
loss GBP292,000).
(MORE TO FOLLOW) Dow Jones Newswires
April 25, 2016 12:48 ET (16:48 GMT)
'D' Share pool - investment activity
Two small new investments completed in the period, Redmed Limited, the
owner and operator of a bar in Lincoln for GBP194,000; and Future Biogas
(SF) Limited, the operator of a biogas plant in Norfolk for GBP169,000.
Ten full exits occurred in the period generating proceeds of
GBP2,900,000 and a realised gain over the opening 2015 valuation of
GBP294,000.
Domestic Solar Limited, the installer of domestic solar panels across
the UK, was sold and generated an uplift over original cost of
GBP132,000 on proceeds of GBP532,000.
The investment in Alpha Schools Holdings Limited was realised in the
period for GBP513,000, an uplift of GBP146,000 over original cost
Liverpool Nurseries (Holdings) Limited generated proceeds of GBP427,000
and an uplift over the brought forward market value of GBP40,000,
although marginally below original investment cost of GBP435,000.
Green Electricity Generation Limited was sold at an uplift over cost of
GBP65,000 and generated proceeds of GBP315,000.
Other full exits in the period that generated proceeds above cost
include: Slopingtactic Limited which cost GBP196,000 and had proceeds of
GBP248,000; Progressive Energies Limited which cost GBP170,000 and had
proceeds of GBP203,000; and Ridgeway Pub Company Limited which cost
GBP137,000 and had proceeds GBP150,000.
The exit of West Tower Property Limited returned the original cost of
GBP250,000 to the Share pool.
Unfortunately not all exits exceeded original cost and some were sold at
discounts due to performance issues. These included Ecossol Limited
which cost GBP250,000 and had proceeds of GBP237,000 and Kilmarnock
Monkey Bar Limited which had cost GBP42,000 and had proceeds of
GBP25,000.
Partial exits totalling GBP650,000 also took place during the period.
The most significant of these were Future Biogas (Reepham Road) Limited
with proceeds equivalent to cost of GBP261,000 and Redmed Limited which
cost GBP166,000 and received proceeds of GBP176,000.
'D' Share pool - portfolio valuation
The majority of the 'D' Share portfolio performed in line with
expectations during the year. There were a small number of valuation
movements which resulted in a net unrealised profit of GBP87,000.
Fenkle Street LLP, is a property development company based in Newcastle.
The hotel is trading well and an uplift in the value of GBP98,000 has
been recognised.
Quadrate Catering Limited and Quadrate Spa Limited were in an exit
process at the period end date and have subsequently completed. The
investments have been valued at the full amount of exit proceeds
received which represented a total uplift of GBP81,000 across both
companies.
Kidspace Adventures Holdings Limited, the owner of three well
established children's play areas in Croydon, Romford and Epsom
continues to perform well and an increase in the valuation of GBP17,000
has been recognised in the period.
Future Biogas (Reepham Road) Limited, the owner and operator of a biogas
plant in Norfolk, has not performed in line with initial expectations
and while the issues have now been resolved, performance to date is
notably below plan. This has resulted in a decrease in the valuation of
GBP65,000.
Small movements in value were also made on two investments: GBP47,000
decrease to Mosaic Spa and Health Clubs Limited; and a GBP7,000 uplift
on Avon Solar Limited.
Outlook
The realisation of the 'D' share pool investments has continued well and
exit plans for the remaining investments are progressing. We believe
that there are good prospects for the majority of the remaining
investment portfolio to be realised by the end of 2016, although we are
cautious in respect of Aminghurst, where it make take more time to
finally exit.
Downing LLP
25 April 2016
REVIEW OF INVESTMENTS - 'D' SHARE POOL
Portfolio of investments
The following investments, all of which are incorporated in England and
Wales, were held at 31 December 2015:
'D' Share pool
Valuation %
movement of
Cost Valuation in year portfolio
GBP'000 GBP'000 GBP'000
VCT qualifying and partially
qualifying investments
Quadrate Catering Limited 441 538 57 10.8%
Quadrate Spa Limited* 496 520 24 10.4%
Kidspace Adventures Holdings
Limited 375 465 17 9.3%
Mosaic Spa and Health Clubs
Limited* 521 346 (47) 6.9%
Westcountry Solar Solutions
Limited 250 250 - 5.0%
Avon Solar Limited 210 218 7 4.4%
Future Biogas (Reepham Road)
Limited 581 196 (65) 3.9%
Camandale Limited* 422 2 (1) 0.0%
3,296 2,535 (8) 50.7%
Non-qualifying investments
Aminghurst Limited 1,321 1,321 - 26.4%
Fenkle Street LLP 122 220 98 4.4%
Future Biogas (SF) Limited 169 169 - 3.4%
Commercial Street Hotel Limited 100 100 - 2.0%
Redmed Limited 27 24 (3) 0.5%
1,739 1,834 95 36.7%
5,035 4,369 87 87.4%
Cash at bank and in hand 629 12.6%
Total investments 4,998 100%
*Part-qualifying investment
Summary of investment movements
Additions
Cost
GBP'000
VCT qualifying and partially qualifying investments
Mosaic Spa and Health Clubs Limited 46
Camandale Limited 8
Non-qualifying investments
Redmed Limited 194
Future Biogas (SF) Limited 169
Total 'D' Share pool 417
Disposals
Total
realised
Gain gain
Disposal against during
Cost MV at 01/01/15 proceeds cost the year
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
VCT qualifying
and partially
qualifying
investments
Domestic Solar
Limited 400 448 532 132 84 **
Alpha Schools
Holdings
Limited 367 438 513 146 75
Liverpool
Nurseries
(Holdings)
Limited 435 387 427 (8) 40
Ecossol Limited 250 213 237 (13) 24
Ridgeway Pub
Company
Limited 137 126 150 13 24
Slopingtactic
Limited 196 226 248 52 22
Progressive
Energies
Limited 170 190 203 33 13
Green
Electricity
Generation
Limited 250 303 315 65 12
Future Biogas
(Reepham Road)
Limited 261 261 261 - -
West Tower
Property
Limited 250 250 250 - -
Camandale
Limited 102 35 28 (74) (7)
Non-qualifying
investments
Redmed Limited 166 166 176 10 10
Aminghurst
Limited 185 185 185 - -
Kilmarnock
Monkey Bar
Limited 42 25 25 (17) -
Total 'D' Share
pool 3,211 3,253 3,550 339 297
* Adjusted for additions in the year
** Disposal proceeds were supplemented by dividends totalling GBP7,000
INVESTMENT MANAGER'S REPORT- 'F' SHARE POOL
Introduction
The 'F' Share pool is fully invested in a portfolio focussed on asset
backed businesses and those with predictable revenue streams. In the
period, two new qualifying investments were made at a total cost of
GBP1.2m. Three qualifying follow on investments totalling GBP456,000
were also made.
Four non-qualifying investments were realised in the period, generating
total proceeds of GBP326,000.
Net asset value and results
At 31 December 2015, the 'F' Share NAV stood at 71.5p. Total Return (NAV
plus cumulative dividends to date) for Shareholders who invested in the
original share offer is now 91.5p. This represents a net increase of
1.0p per share over the period (after adjusting for dividends paid
during the period of 5.0p per Share), equivalent to an increase of 1.4%.
The return on ordinary activities for the 'F' Share pool for the period
was a gain of GBP108,000 (2014: GBP71,000) being a revenue profit of
GBP165,000 (2014: GBP82,000) and a capital loss of GBP57,000 (2014:
GBP11,000).
'F' Share pool - investment activity
A new investment of GBP1,000,000 was made in Apex Energy Limited. The
company is seeking to undertake the build and operation of electricity
(MORE TO FOLLOW) Dow Jones Newswires
April 25, 2016 12:48 ET (16:48 GMT)
generation power plants.
GBP258,000 of non-qualifying loan was replaced with a qualifying
investment in Pearce and Saunders Limited, the freehold pub company that
operates three sites in south east London. A further GBP46,000 was also
invested in a new company, Pearce and Saunders DevCo Limited that will
be used to take advantage of a related development opportunity.
GBP200,000 was invested in Atlantic Dogstar Limited, the owner and
operator of five London pubs.
A further qualifying investment of GBP65,000 was also made in Vulcan
Renewables Limited.
Two further partially qualifying and non-qualifying investments were
made in the period: Redmed Limited for GBP87,000 and London City
Shopping Centre Limited for GBP23,000.
One full exit of a qualifying company occurred in the period: Tor Solar
Limited, the operator of a solar farm in the south west of England,
generated proceeds of GBP753,000 and a GBP73,000 profit over the
original investment cost.
The partial exit of Redmed Limited generated proceeds of GBP329,000 in
the period. This represented a small uplift of GBP10,000 over cost.
During the year, several realisations of non-qualifying loans were made:
Hoole Hall Hotel Limited for GBP84,000; Dominions House Limited for
GBP59,000; and The 3D Pub Co Limited for GBP55,000.
'F' Share pool - portfolio valuation
The majority of the 'F' Share pool investments have performed in line
with expectations over the period and continue to be valued at original
cost. There have however been several adjustments made which have
resulted in a net unrealised loss of GBP136,000 in the year.
Following a further round of financing the valuation of Vulcan
Renewables Limited was increased by GBP126,000.
Lambridge Solar Limited, the owner of a solar farm in Lincolnshire is
performing well and the valuation has been increased by GBP43,000.
After third party valuations of the sites at two of our freehold London
pub companies, Pabulum Pubs Limited and Augusta Pub Company Limited, the
valuations were increased by GBP29,000 and GBP34,000 respectively.
Kidspace Adventures Holdings Limited, which owns three well established
children's play areas in Croydon, Romford and Epsom continues to perform
well. As a result the valuation has been increased by GBP11,000.
Unfortunately, these increases were offset by three value reductions.
The pubs owned and operated by Pearce and Saunders Limited have
experienced underperformance in the year and the valuation has been
reduced by GBP248,000.
Performance at two of the Share pool's Scottish nightclubs, Fubar
Stirling Limited and City Falkirk Limited has continued to operate below
expectations and value reductions of GBP99,000 and GBP30,000
respectively have been made. Whilst we continue to work closely with the
management of both clubs to bring trading back on track, it is clear
that the depressed economic conditions in the region are a major
contributing factor to the weak performance.
Outlook
The focus now for the 'F' Share portfolio is on close monitoring and
support of the portfolio companies to ensure that prospects for growth
are optimised in the period until the realisation process commences in
2018.
Downing LLP
25 April 2016
REVIEW OF INVESTMENTS - 'F' SHARE POOL
Portfolio of investments
The following investments, all of which are incorporated in England and
Wales, were held at 31 December 2015:
Valuation
movement % of
'F' Share pool Cost Valuation in year portfolio
GBP'000 GBP'000 GBP'000
VCT qualifying and partially
qualifying investments
Apex Energy Limited 1,000 1,000 - 12.9%
Vulcan Renewables Limited 653 779 126 10.1%
Goonhilly Earth Station Limited 760 760 - 9.8%
Lambridge Solar Limited 500 543 43 7.0%
Merlin Renewables Limited 500 500 - 6.5%
Grasshopper 2007 Limited 378 378 - 4.9%
Augusta Pub Company Limited 290 324 34 4.2%
Kidspace Adventures Holdings
Limited 250 310 11 4.0%
Pearce and Saunders Limited* 497 248 (248) 3.2%
Pabulum Pubs Limited 200 229 29 3.0%
Atlantic Dogstar Limited 200 200 - 2.6%
Fresh Green Power Limited 200 200 - 2.6%
City Falkirk Limited 422 177 (30) 2.3%
Fubar Stirling Limited 268 169 (99) 2.2%
Green Energy Production UK
Limited 100 100 - 1.3%
Cheers Dumbarton Limited 48 17 - 0.2%
Redmed Limited* 18 13 (2) 0.2%
Lochrise Limited 13 - - 0.0%
6,297 5,947 (136) 77.0%
Non-qualifying investments
Aminghurst Limited 839 839 - 10.8%
Baron House Developments LLP 481 481 - 6.2%
London City Shopping Centre
Limited 66 66 - 0.9%
Pearce and Saunders DevCo
Limited 46 46 - 0.6%
Southampton Hotel Developments
Limited 298 - 0.0%
1,730 1,432 - 18.5%
8,027 7,379 (136) 95.5%
Cash at bank and in hand 349 4.5%
Total investments 7,728 100%
*Part-qualifying investment
Summary of investment movements
Additions
Cost
GBP'000
VCT qualifying and partially qualifying investments
Apex Energy Limited 1,000
Pearce and Saunders Limited 304
Atlantic Dogstar Limited 200
Redmed Limited 87
Vulcan Renewables Limited 65
Non-qualifying investments
Pearce and Saunders DevCo Limited 46
London City Shopping Centre Limited 23
Total 'F' Share pool 1,725
Disposals
Total
Gain realised
Disposal against gain during
Cost MV at 01/01/15 proceeds cost the year
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
VCT qualifying
and partially
qualifying
investments
Tor Solar PV
Limited 680 680 753 73 73
Redmed Limited 319 323 329 10 6
Pearce and
Saunders
Limited 257 257 257 - - **
Non-qualifying
investments
Aminghurst
Limited 128 128 128 - -
Hoole Hall Hotel
Limited 84 84 84 - -
Dominions House
Limited 59 59 59 - -
The 3D Pub Co
Limited 55 55 55 - -
Total 'F' Share
pool 1,582 1,586 1,665 83 79
* Adjusted for additions in the year
** Disposal proceeds were supplemented by dividends totalling GBP46,000
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.
Net asset value and results
At 31 December 2015, the net asset value per 'H' Share was 90.5p. Total
Return (NAV plus cumulative dividends to date) for Shareholders who
invested in the original share offer is now 100.5p. This represents a
net increase of 0.8p per share over the year (after adjusting for
dividends paid during the year of 5.0p per Share), equivalent to an
increase of 0.8%.
The return on ordinary activities for the 'H' Share pool for the year
was a gain of GBP112,000 (2014: loss GBP46,000) being a revenue profit
of GBP217,000 (2014: loss GBP46,000) and a capital loss of GBP105,000
(2014: nil).
Investment activity
The pool made six qualifying investments in the period, as well as three
non-qualifying investments. Details are set out below:
A new investment of GBP1,300,000 was made in Apex Energy Limited. The
company is seeking to undertake the build and operation of electricity
generation power plants.
The 'H' Share pool invested GBP1,084,000 in Kidspace Adventures Holdings
Limited, which owns three well established children's play areas in
Croydon, Romford and Epsom.
GBP1,250,000 has been invested in Hedderwick Limited, which is seeking a
suitable leisure-based site.
GBP1,000,000 was invested in Atlantic Dogstar Limited, in January 2015.
The company owns and operates five freehold pubs in London.
Antelope Pub Limited owns and operates a pub of the same name in Tooting,
(MORE TO FOLLOW) Dow Jones Newswires
April 25, 2016 12:48 ET (16:48 GMT)
London. GBP500,000 has been invested in the company in the period.
Oak Grove Renewables Limited operates an anaerobic digestion plant in
Norfolk. GBP420,000 has been invested in the company in the period.
In addition to the above, a number of non-qualifying investments were
made in the form of secured loans. These help to generate investment
income on funds ahead of them being employed in VCT qualifying
investments. The most significant of these was Hobblers Heath Limited,
which is building a children's adventure playground in Hounslow, West
London. GBP727,000 has been invested in this company.
A non-qualifying loan of GBP200,000 was made to UK Solar (Hartwell) LLP
to fund the construction of a solar plant in Northamptonshire.
GBP155,000 non-qualifying loan was made to Augusta Pub Company Limited,
an owner and operator of freehold London pubs.
Six non-qualifying loans were fully or partially repaid in the period
and generated total proceeds of GBP5,767,000. Of these, five were fully
repaid and generated total proceeds of GBP5,735,000.
Full repayment was made on: Deeside Solar Farms Limited of GBP1.8m;
Woodbridge Solar Limited of GBP1.8m; Vulcan Renewables Limited of
GBP1.4m, Future Biogas (SF) Limited of GBP525,000; and UK Solar
(Hartwell) Limited of GBP200,000.
The 'H' Share pool investments have performed in line with expectations
over the period and the majority continue to be valued at original cost
with only one valuation reduction of GBP105,000 on Oak Grove Renewables
Limited due to performance issues at the anaerobic digestion plant.
Outlook
The task of building the 'H' Share portfolio is now well underway. We
continue to have a good pipeline of potential investment opportunities
from which we expect to be able to expand the qualifying portfolio over
the next four years whilst closely monitoring the current investments.
Downing LLP
25 April 2016
REVIEW OF INVESTMENTS - 'H' SHARE POOL
Portfolio of investments
The following investments, all of which are incorporated in England and
Wales, were held at 31 December 2015:
Valuation
movement % of
'H' Share pool Cost Valuation in year portfolio
GBP'000 GBP'000 GBP'000
VCT qualifying and partially
qualifying investments
Apex Energy Limited 1,300 1,300 - 10.6%
Hedderwick Limited 1,250 1,250 - 10.2%
Kidspace Adventures Holdings
Limited 1,084 1,084 - 8.8%
Atlantic Dogstar Limited 1,000 1,000 - 8.1%
Antelope Pub Limited 500 500 - 4.1%
Oak Grove Renewables Limited 420 315 (105) 2.6%
5,554 5,449 (105) 44.4%
Non-qualifying investments
Pub People Limited 984 984 - 8.0%
Hobblers Heath Limited 727 727 - 6.0%
Ludlow Taverns Springhill
Limited 388 388 - 3.2%
Pearce and Saunders Limited 193 193 - 1.6%
Augusta Pub Company Limited 155 155 - 1.2%
2,447 2,447 - 20.0%
8,001 7,896 (105) 64.4%
Cash at bank and in hand 4,360 35.6%
Total investments 12,256 100%
*Part-qualifying investment
Summary of investment movements
Additions
Cost
GBP'000
VCT qualifying and partially qualifying investments
Apex Energy Limited 1,300
Hedderwick Limited 1,250
Kidspace Adventures Holdings Limited 1,084
Atlantic Dogstar Limited 1,000
Antelope Pubs Limited 500
Oak Grove Renewables Limited 420
Non-qualifying investments
Hobblers Heath Limited 727
UK Solar (Hartwell) LLP 200
Augusta Pub Company Limited 155
Total 'H' Share pool 6,636
Disposals
Total
Gain realised
Disposal against gain during
Cost MV at 01/01/15 proceeds cost the year
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Non-qualifying
investments
Deeside Solar
Farm Limited 1,800 1,800 1,800 - -
Woodbridge
Solar Limited 1,800 1,800 1,800 - -
Vulcan
Renewables
Limited 1,410 1,410 1,410 - -
Future Biogas
(SF) Limited 525 525 525 - -
UK Solar
(Hartwell)
Limited 200 200 200 - -
Ludlow Taverns
Springhill
Limited 32 32 32 - -
5,767 5,767 5,767 - -
* Adjusted for additions in the year
INVESTMENT MANAGER'S REPORT- 'J' SHARE POOL
Fundraising
The 'J' Share fundraising launched in December 2014 and has raised GBP11
million. 10,733,377 'J' Shares were allotted in the year at an average
price of 102.8p per share. The task of investing these new funds is now
underway.
Net asset value and results
At 31 December 2015, the net asset value per 'J' Share was 98.5p, a
decrease of 1.5p on the initial price resulting from the initial "cash
drag" from holding uninvested funds.
Results and dividend
The return on ordinary activities for the 'J' Share, after taxation, for
the period was GBP158,000, being a revenue loss of GBP53,000 and a
capital loss of GBP105,000.
Investment activity
Four initial investments were made in the period being a qualifying
investment of GBP1,000,000 in Cedarville Limited, GBP1,000,000 in
Pilgrim Trading Limited, GBP420,000 in Oak Grove Renewables Limited and
a non-qualifying secured loan investment of GBP410,000 in UK Solar
(Lower Newton) LLP.
The loan in to UK Solar (Lower Newton) has subsequently been repaid,
leaving the fund with three qualifying investments and no non-qualifying
investments at 31 December 2015.
Unfortunately one investment in the Share pool has had a valuation
reduction due to performance issues. Oak Grove Renewables was reduced in
value by GBP105,000.
Outlook
The task of building the 'J' Share portfolio has very recently begun. We
have a good pipeline of potential investment opportunities from which we
expect to be able to build a solid qualifying portfolio with good
potential for growth over the planned life of the share pool.
Accordingly, we expect to complete a number of new qualifying and
non-qualifying investments for the share pool in the coming year.
Downing LLP
25 April 2016
REVIEW OF INVESTMENTS - 'J' SHARE POOL
Portfolio of investments
The following investments, all of which are incorporated in England and
Wales, were held at 31 December 2015:
Valuation
movement % of
'J' Share pool Cost Valuation in year portfolio
GBP'000 GBP'000 GBP'000
VCT qualifying and partially
qualifying investments
Cedarville Limited 1,000 1,000 - 9.4%
Pilgrim Trading Limited 1,000 1,000 - 9.4%
Oak Grove Renewables Limited 420 315 (105) 3.0%
2,420 2,315 (105) 21.8%
2,420 2,315 (105) 21.8%
Cash at bank and in hand 8,279 78.2%
Total investments 10,594 100%
Summary of investment movements
Additions
Cost
GBP'000
VCT qualifying and partially qualifying investments
Cedarville Limited 1,000
Pilgrim Trading Limited 1,000
Oak Grove Renewables Limited 420
Non-qualifying investments
UK Solar (Lower Newton) LLP 410
Total 'J' Share pool 2,830
Disposals
Gain
Disposal against Total realised
Cost MV at 01/01/15 proceeds cost gain during the year
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Non-qualifying
investments
UK Solar (Lower
Newton) LLP 410 410 410 - -
410 410 410 - -
(MORE TO FOLLOW) Dow Jones Newswires
April 25, 2016 12:48 ET (16:48 GMT)
* Adjusted for additions in the year
Directors' responsibilities statement
The Director's are responsible for preparing the Strategic Report, The
Report of the Directors, the Directors' Remuneration Report and the
financial statements in accordance with applicable law and regulations.
They are also responsible for ensuring that the Annual Report includes
information required by the Listing Rules of the Financial Conduct
Authority.
Company law requires the directors to prepare financial statements for
each financial year. Under that law the directors have elected to
prepare the financial statements 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). Under company law the directors must not approve
the financial statements unless they are satisfied that they give a true
and fair view of the state of affairs of the company and of the profit
or loss of the company for that period.
In preparing these financial statements the Directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and
prudent;
-- state whether applicable UK accounting standards have been followed,
subject to any material departures disclosed and explained in the
financial statements; and
-- prepare the financial statements on the going concern basis unless it
is inappropriate to presume that the company will continue in business.
The Directors are responsible for keeping adequate accounting records
that are sufficient to show and explain the company's transactions, to
disclose with reasonable accuracy at any time the financial position of
the company and to enable them to ensure that the financial statements
comply with the Companies Act 2006. They are also responsible for
safeguarding the assets of the company and hence for taking reasonable
steps for the prevention and detection of fraud and other
irregularities.
In addition, each of the Directors considers that the Annual Report,
taken as a whole, is fair, balanced and understandable and provides the
information necessary for Shareholders to assess the Company's
performance, business model and strategy.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the company's website.
Legislation in the United Kingdom governing the preparation and
dissemination of the financial statements and other information included
in annual reports may differ from legislation in other jurisdictions.
Statement as to disclosure of information to Auditor
The Directors in office at the date of the report have confirmed, as far
as they are aware, that there is no relevant audit information of which
the Auditor is unaware. Each of the Directors has confirmed that they
have taken all the steps that they ought to have taken as Directors in
order to make themselves aware of any relevant audit information and to
establish that it has been communicated to the Auditor.
INCOME STATEMENT
for the year ended 31 December 2015
Year ended 31 December 2015 Year ended 31 December 2014
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 2,449 - 2,449 1,466 - 1,466
(Loss)/gain on investments - (200) (200) - 226 226
2,449 (200) 2,249 1,466 226 1,692
Investment management fees (695) - (695) (564) - (564)
Other expenses (275) - (275) (296) - (296)
Return/(loss) on ordinary activities
before tax 1,479 (200) 1,279 606 226 832
Tax on total comprehensive income
and ordinary activities (162) - (162) (155) - (155)
Return/(loss) attributable to equity
shareholders 1,317 (200) 1,117 451 226 677
Basic and diluted return/(loss) per:
'C' Share 9.5p (4.4p) 5.1p 2.5p 7.4p 9.9p
'A' Share - - - - - -
'D' Share 3.1p 3.8p 6.9p 2.3p (2.9p) (0.6p)
'E' Share - - - - - -
'F' Share 1.5p (0.5p) 1.0p 0.8p (0.1p) 0.7p
'H' Share 1.6p (0.8p) 0.8p (0.5p) - (0.5p)
'J' Share (0.8p) (1.6p) (2.4p) n/a n/a n/a
All Revenue and Capital items in the above statement derive from
continuing operations. No operations were acquired or discontinued
during the year. The total column within the Income Statement represents
the Statement of Total Comprehensive Income of the Company prepared in
accordance with Financial Reporting Standards ("FRS 102"). The
supplementary revenue 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").
Other than revaluation movements arising on investments held at fair
value through the profit and loss, there were no differences between the
return/loss as stated above and at historical cost.
INCOME STATEMENT (ANALYSED BY SHARE POOL)
for the year ended 31 December 2015
'C' Share pool
Year ended 31 December Year ended 31 December
2015 2014
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 815 - 815 391 - 391
(Loss)/gain on investments - (317) (317) - 529 529
815 (317) 498 391 529 920
Investment management fees (56) - (56) (89) - (89)
Other expenses (41) - (41) (64) - (64)
Return/(loss) on ordinary activities
before tax 718 (317) 401 238 529 767
Tax on total comprehensive
income and ordinary activities (36) - (36) (56) - (56)
Return/(loss) attributable to
equity shareholders 682 (317) 365 182 529 711
'D' Share pool
Year ended 31 December Year ended 31 December
2015 2014
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 528 - 528 473 - 473
Gain/(loss) on investments - 384 384 - (292) (292)
528 384 912 473 (292) 181
Investment management fees (97) - (97) (103) - (103)
Other expenses (54) - (54) (67) - (67)
Return/(loss) on ordinary activities
before tax 377 384 761 303 (292) 11
Tax on total comprehensive
income and ordinary activities (71) - (71) (70) - (70)
Return/(loss) attributable to
equity shareholders 306 384 690 233 (292) (59)
'F' Share pool
Year ended 31 December Year ended 31 December
2015 2014
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 407 - 407 424 - 424
Loss on investments - (57) (57) - (11) (11)
407 (57) 350 424 (11) 413
Investment management fees (144) - (144) (184) - (184)
Other expenses (85) - (85) (117) - (117)
Return/(loss) on ordinary activities
before tax 178 (57) 121 123 (11) 112
Tax on total comprehensive
income and ordinary activities (13) - (13) (41) - (41)
Return/(loss) attributable to
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April 25, 2016 12:48 ET (16:48 GMT)
equity shareholders 165 (57) 108 82 (11) 71
'H' Share pool
Year ended 31 December Year ended 31 December
2015 2014
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 594 - 594 178 - 178
Loss on investments - (105) (105) - - -
594 (105) 489 178 - 178
Investment management fees (253) - (253) (188) - (188)
Other expenses (69) - (69) (48) - (48)
Return/(loss) on ordinary activities
before tax 272 (105) 167 (58) - (58)
Tax on total comprehensive - (55)
income and ordinary activities (55) 12 - 12
Return/(loss) attributable to
equity shareholders 217 (105) 112 (46) - (46)
'J' Share pool
Year ended 31 December Year ended 31 December
2015 2014
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 104 - 104 - - -
Loss on investments - (105) (105) - - -
104 (105) (1) - - -
Investment management fees (144) - (144) - - -
Other expenses (26) - (26) - - -
Loss on ordinary activities before
tax (66) (105) (171) - - -
Tax on total comprehensive
income and ordinary activities 13 - 13 - - -
Loss attributable to equity
shareholders (53) (105) (158) - - -
BALANCE SHEET
as at 31 December 2015
2015 2014
GBP000 GBP000
Fixed assets
Investments 22,707 28,204
Current assets
Debtors 632 417
Cash at bank and in hand 16,578 7,182
17,210 7,599
Creditors: amounts falling due within one year (494) (734)
Net current assets 16,716 6,865
Net assets 39,423 35,069
Capital and reserves
Called up share capital 78 67
Capital redemption reserve 106 106
Special reserve 15,749 22,268
Share premium reserve 24,639 13,608
Revaluation reserve (1,466) (289)
Capital reserve - realised (1,033) (1,033)
Revenue reserve 1,350 342
Total equity shareholders' funds 39,423 35,069
Basic and diluted net asset value per Share:
'C' Share 53.2p 98.2p
'A' Share 0.1p 0.1p
'D' Share 51.3p 71.3p
'E' Share 0.1p 0.1p
'F' Share 71.5p 75.5p
'H' Share 90.5p 94.7p
'J' Share 98.5p n/a
BALANCE SHEET (ANALYSED BY SHARE POOL)
as at 31 December 2015
'C' Shares
2015 2014
GBP000 GBP000
Fixed assets
Investments 748 6,576
Current assets
Debtors 174 67
Cash at bank and in hand 2,962 503
3,136 570
Creditors: amounts falling due within one year (71) (109)
Net current assets 3,065 461
Net assets 3,813 7,037
Capital and reserves
Called up share capital 18 18
Capital redemption reserve 106 106
Special reserve 2,733 5,761
Share premium reserve - -
Revaluation reserve 55 932
Capital reserve - realised - -
Revenue reserve 901 220
Total equity shareholders' funds 3,813 7,037
'D' Shares
2015 2014
GBP000 GBP000
Fixed assets
Investments 4,369 7,119
Current assets
Debtors 251 152
Cash at bank and in hand 629 31
880 183
Creditors: amounts falling due within one year (124) (172)
Net current assets 756 11
Net assets 5,125 7,130
Capital and reserves
Called up share capital 25 25
Capital redemption reserve - -
Special reserve 5,206 7,562
Share premium reserve - -
Revaluation reserve (667) (713)
Capital reserve - realised - -
Revenue reserve 561 256
Total equity shareholders' funds 5,125 7,130
'F' Shares
2015 2014
GBP000 GBP000
Fixed assets
Investments 7,379 7,377
Current assets
Debtors 129 139
Cash at bank and in hand 349 792
478 931
Creditors: amounts falling due within one year (115) (134)
Net current assets 363 797
Net assets 7,742 8,174
Capital and reserves
Called up share capital 11 11
Capital redemption reserve - -
Special reserve 9,155 9,617
Share premium reserve - -
Revaluation reserve (644) (508)
Capital reserve - realised (1,033) (1,033)
Revenue reserve 253 87
Total equity shareholders' funds 7,742 8,174
'H' Shares
2015 2014
GBP000 GBP000
Fixed assets
Investments 7,896 7,132
Current assets
Debtors 49 59
Cash at bank and in hand 4,360 5,856
4,409 5,915
Creditors: amounts falling due within one year (138) (319)
Net current assets 4,271 5,596
Net assets 12,167 12,728
Capital and reserves
Called up share capital 13 13
Capital redemption reserve - -
Special reserve (1,345) (672)
Share premium reserve 13,608 13,608
Revaluation reserve (105) -
Capital reserve - realised - -
Revenue reserve (4) (221)
Total equity shareholders' funds 12,167 12,728
'J' Shares
2015 2014
GBP000 GBP000
Fixed assets
Investments 2,315 -
Current assets
Debtors 28 -
Cash at bank and in hand 8,279 -
8,307 -
Creditors: amounts falling due within one year (46) -
Net current assets 8,261 -
Net assets 10,576 -
Capital and reserves
Called up share capital 11 -
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April 25, 2016 12:48 ET (16:48 GMT)
Capital redemption reserve - -
Special reserve - -
Share premium reserve 11,031 -
Revaluation reserve (105) -
Capital reserve - realised - -
Revenue reserve (361) -
Total equity shareholders' funds 10,576 -
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2015
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
Year ended 31 December 2014
At 1 January
2014 54 106 14,001 10,160 (517) (1,033) 66 22,837
Gain on
investments - - - - 226 - - 226
Retained
revenue - - - - - - 451 451
Issue of new
shares 13 - - 13,608 - - - 13,621
Share issue
costs - - - - - - (175) (175)
Share
premium
cancellation - - 10,160 (10,160) - - - -
Transfer
between
reserves - - (1,893) - 2 1,891 - -
Dividend
paid - - - - - (1,891) - (1,891)
At 31
December
2014 67 106 22,268 13,608 (289) (1,033) 342 35,069
Year ended 31 December 2015
At 1 January
2015 67 106 22,268 13,608 (289) (1,033) 342 35,069
(Loss)/gain
on
investments - - - - (234) 34 - (200)
Retained
revenue - - - - - - 1,317 1,317
Issue of new
shares 11 - - 11,031 - - - 11,042
Share issue
costs - - - - - - (309) (309)
Transfer
between
reserves - - (6,519) - (943) 7,462 - -
Dividend
paid - - - - - (7,496) - (7,496)
At 31
December
2015 78 106 15,749 24,639 (1,466) (1,033) 1,350 39,423
CASH FLOW STATEMENT
for the year ended 31 December 2015
Year ended 31 December 2015
'J'
'C' Share 'D' Share 'F' Share 'H' Share Share
pool pool pool pool pool Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Net cash inflow/(outflow) from
operating activities 536 159 156 46 (35) 862
Cash flows from investing activities
Purchase of investments (158) (416) (1,724) (6,636) (2,830) (11,764)
Sale of investments 5,669 3,550 1,665 5,767 410 17,061
Net cash inflow/(outflow) from
investing activities 5,511 3,134 (59) (869) (2,420) 5,297
Net cash inflow/(outflow)
before
financing activities 6,047 3,293 97 (823) (2,455) 6,159
Cash flows from financing activities
Equity
dividends
paid (3,588) (2,695) (540) (673) - (7,496)
Proceeds from share
issue - - - - 11,042 11,042
Share issue costs - - - - (309) (309)
Net cash inflow/(outflow) from
financing activities (3,588) (2,695) (540) (673) 10,733 3,237
Increase/(decrease) in cash 2,459 598 (443) (1,496) 8,278 9,396
Year ended 31 December 2014
Net cash inflow from operating
activities 150 215 53 215 - 633
Cash flow from investing activities
Purchase of investments (650) - (2,181) (7,582) - (10,413)
Sale of investments 371 143 1,189 450 - 2,153
Net cash (outflow)/inflow
from investing
activities (279) 143 (992) (7,132) - (8,260)
Net cash outflow before financing
activities (129) 358 (939) (6,917) - (7,627)
Cash flows from financing activities
Equity dividends paid (179) (499) (541) (672) - (1,891)
Proceeds from share
issue - - - 13,621 - 13,621
Share issue costs - - - (175) - (175)
Net cash inflow from
financing activities (179) (499) (541) 12,774 - 11,555
(Decrease)/increase in cash
(308) (141) (1,480) 5,857 - 3,928
NOTES
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 Company has prepared its financial statements under FRS 102 'The
Financial Reporting Standard applicable in the UK and Republic of
Ireland' and in accordance with the Statement of Recommended Practice
("SORP") for investment trust companies and venture capital trusts
issued by the Association of Investment Companies ("AIC") revised
November 2014.
The Company implements new Financial Reporting Standards ("FRS") issued
by the Financial Reporting Council when required.
This is the first year in which the Financial Statements have been
prepared under FRS 102, however it has not been necessary to restate
comparatives as the treatment previously applied aligns with the
requirements of FRS 102. As a result, there are no reconciling
differences between the previous financial reporting framework and the
current financial reporting framework and the comparative figures
represent the position under both current and previous financial
reporting frameworks.
The financial statements are presented in Sterling (GBP).
Presentation of Income Statement
In order to better reflect the activities of a venture capital trust and
in accordance with the SORP, supplementary information which analyses
the Income Statement between items of a revenue and capital nature has
been presented alongside the Income Statement. The return on ordinary
activities is the measure the Directors believe appropriate in assessing
the Company's compliance with certain requirements set out in Part 6 of
the Income Tax Act 2007.
Investments
Venture capital investments are designated as "fair value through profit
or loss" assets due to investments being managed and performance
evaluated on a fair value basis. A financial asset is designated within
this category if it is both acquired and managed on a fair value basis,
with a view to selling after a period of time, in accordance with the
Company's documented investment policy. The fair value of an investment
upon acquisition is deemed to be cost. Thereafter investments are
measured at fair value in accordance with the International Private
Equity and Venture Capital Valuation Guidelines ("IPEV") together with
FRS 102 sections 11 and 12.
For unquoted investments, fair value is established using the IPEV
guidelines. The valuation methodologies for unquoted entities used by
the IPEV to ascertain the fair value of an investment are as follows:
-- Price of recent investment;
-- Multiples;
-- Net assets;
-- Discounted cash flows or earnings (of underlying business);
-- Discounted cash flows (from the investment); and
-- Industry valuation benchmarks.
The methodology applied takes account of the nature, facts and
circumstances of the individual investment and uses reasonable data,
market inputs, assumptions and estimates in order to ascertain fair
value.
Gains and losses arising from changes in fair value are included in the
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Income Statement for the year as a capital item and transaction costs on
acquisition or disposal of the investment are expensed. Where an
investee company has gone into receivership, liquidation or
administration (where there is little likelihood of recovery), the loss
on the investment, although not physically disposed of, is treated as
being realised.
It is not the Company's policy to exercise significant influence over
investee companies. Therefore the results of these companies are not
incorporated into the Income Statement except to the extent of any
income accrued. This is in accordance with the SORP and FRS 102 sections
14 and 15 that does not require portfolio investments, where the
interest held is greater than 20%, to be accounted for using the equity
method of accounting.
Income
Dividend income from investments is recognised when the Shareholders'
rights to receive payment has been established, normally the ex-dividend
date.
Interest income is accrued on a time apportionment basis, by reference
to the principal sum outstanding and at the effective rate applicable
and only where there is reasonable certainty of collection in the
foreseeable future.
Expenses
All expenses are accounted for on an accruals basis. In respect of the
analysis between revenue and capital items presented within the Income
Statement, all expenses have been presented as revenue items except as
follows:
-- Expenses which are incidental to the disposal of an investment are
deducted from the disposal proceeds of the investment.
-- Expenses are split and presented partly as capital items where a
connection with the maintenance or enhancement of the value of the
investments held can be demonstrated. The Company has adopted the policy
of allocating Investment Manager's fees 100% as revenue.
-- Expenses and liabilities not specific to a share class are generally
allocated pro rata to the net assets.
-- Performance incentive fees arising from the disposal of investments
are deducted as a capital item.
Taxation
The tax effects on different items in the Income Statement are allocated
between capital and revenue on the same basis as the particular item to
which they relate using the Company's effective rate of tax for the
accounting year.
Due to the Company's status as a Venture Capital Trust and the continued
intention to meet the conditions required to comply with Part 6 of the
Income Tax Act 2007, no provision for taxation is required in respect of
any realised or unrealised appreciation of the Company's investments
which arise.
Deferred taxation which is not discounted is provided in full on timing
differences that result in an obligation at the balance sheet date to
pay more tax, or a right to pay less tax, at a future date, at rates
expected to apply when they crystallise based on current tax rates and
law. Timing differences arise from the inclusion of items of income and
expenditure in taxation computations in periods different from those in
which they are included in the accounts. Deferred taxation is not
discounted.
Other debtors and other creditors
Other debtors (including accrued income) and other creditors are
included within the accounts at amortised cost.
Issue costs
Issue costs in relation to the shares issued for each share class have
been deducted from the share premium account for the relevant share
class.
3. Basic and diluted return per share
'C' 'A' 'D' 'E' 'F' 'H' 'J'
Shares Shares Shares Shares Shares Shares Shares
Revenue return/
(loss) 682 - 306 - 165 217 (53)
(GBP'000)
Weighted
average 7,158,326 10,750,064 9,979,109 14,994,862 10,821,660 13,446,972 6,718,727
number
of shares
in issue
Net
capital (317) - 384 - (57) (105) (105)
(loss)
/gain for
the year
(GBP'000)
As the Company has not issued any convertible securities or share
options, there is no dilutive effect on return per share for any of the
share classes. The return per share disclosed therefore represents both
the basic and diluted return per share for all share classes.
4. Basic and diluted net asset value per share
31 Dec 2015 31 Dec 2014
Shares in issue
Net asset value Net asset value
per
31 Dec 2015 31 Dec 2014 per share GBP'000 share GBP'000
'C' 53.2p
Shares 7,158,326 7,158,326 3,802 98.2p 7,026
'A'
Shares 10,750,064 10,750,064 0.1p 11 0.1p 11
'D' 51.3p
Shares 9,979,109 9,979,109 5,110 71.3p 7,115
'E'
Shares 14,994,862 14,994,862 0.1p 15 0.1p 15
'F' 71.5p
Shares 10,821,660 10,821,660 7,742 75.5p 8,174
'H' 90.5p
Shares 13,446,972 13,446,972 12,167 94.7p 12,728
'J' 98.5p
Shares 10,733,377 - 10,576 - -
39,423 35,069
5. Principal risks
The Company's financial instruments comprise investments held at fair
value through profit and loss, being equity and loan stock investments
in unquoted companies, loans and receivables consisting of short term
debtors, cash deposits and financial liabilities, being creditors
arising from its operations. The main purpose of these financial
instruments is to generate cashflow and revenue and capital appreciation
for the Company's operations. The Company has no gearing or other
financial liabilities apart from short-term creditors and does not use
any derivatives.
The fair value of cash deposits and short term debtors and creditors
equates to their carrying value in the Balance Sheet.
Loans and receivables and other financial liabilities are stated at
amortised cost which the Directors consider is equivalent to fair value.
The Company's investment activities expose the Company to a number of
risks associated with financial instruments and the sectors in which the
Company invests. The principal financial risks arising from the
Company's operations are:
-- Investment risks
-- Credit risk
-- Liquidity risk
The Board regularly reviews these risks and the policies in place for
managing them. There have been no significant changes to the nature of
the risks that the Company is exposed to over the year and there have
also been no significant changes to the policies for managing those
risks during the year.
The risk management policies used by the Company in respect of the
principal financial risks and a review of the financial instruments held
at the year end are provided below:
Investment risks
As a VCT, the Company is exposed to investment risks in the form of
potential losses and gains that may arise on the investments it holds in
accordance with its investment policy. The management of these
investment risks is a fundamental part of investment activities
undertaken by the Investment Manager and overseen by the Board. The
Manager monitors investments through regular contact with management of
investee companies, regular review of management accounts and other
financial information and attendance at investee company board meetings.
This enables the Manager to manage the investment risk in respect of
individual investments. Investment risk is also mitigated by holding a
diversified portfolio spread across various business sectors and asset
classes.
The key investment risks to which the Company is exposed are:
-- Investment price risk
-- Interest rate risk
Investment price risk
Investment price risk arises from uncertainty about the valuation of
financial instruments held in accordance with the Company's investment
objectives. It represents the potential loss that the Company might
suffer through changes in the fair value of unquoted investments that it
holds.
Interest rate risk
The Company accepts exposure to interest rate risk on floating-rate
financial assets through the effect of changes in prevailing interest
rates. The Company receives interest on its cash deposits at a rate
agreed with its bankers. Investments in loan stock attract interest
predominately at fixed rates. A summary of the interest rate profile of
the Company's investments is shown below.
There are three categories in respect of interest which are attributable
to the financial instruments held by the Company as follows:
-- "Fixed rate" assets represent investments with predetermined yield
targets and comprise certain loan note investments.
-- "Floating rate" assets predominantly bear interest at rates linked to
Bank of England base rate or LIBOR and comprise cash at bank and
liquidity fund investments and certain loan note investments.
-- "No interest rate" assets do not attract interest and comprise equity
investments and debtors.
The Company monitors the level of income received from fixed and
floating rate assets and, if appropriate, may make adjustments to the
allocation between the categories, in particular, should this be
required to ensure compliance with the VCT regulations.
Credit risk
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Credit risk is the risk that a counterparty to a financial instrument is
unable to discharge a commitment to the Company made under that
instrument. The Company is exposed to credit risk through its holdings
of loan stock in investee companies, cash deposits and debtors.
The Manager manages credit risk in respect of loan stock with a similar
approach as described under "Investment risks" above. In addition the
credit risk is partially mitigated by registering floating charges over
the assets of certain investee companies. The strength of this security
in each case is dependent on the nature of the investee company's
business and its identifiable assets. Similarly the management of credit
risk associated with interest, dividends and other receivables is
covered within the investment management procedures.
Cash is mainly held by Bank of Scotland plc and Royal Bank of Scotland
plc, both of which are A-rated financial institutions and both also
ultimately part-owned by the UK Government. Consequently, the Directors
consider that the credit risk associated with cash deposits is low.
There have been no changes in fair value during the year that are
directly attributable to changes in credit risk.
Liquidity risk
Liquidity risk is the risk that the Company encounters difficulties in
meeting obligations associated with its financial liabilities. Liquidity
risk may also arise from either the inability to sell financial
instruments when required at their fair values or from the inability to
generate cash inflows as required. As the Company has a relatively low
level of creditors, (GBP494,000, 2014: GBP734,000) and has no borrowings,
the Board believes that the Company's exposure to liquidity risk is low.
The Company always holds sufficient levels of funds as cash in order to
meet expenses and other cash outflows as they arise. For these reasons,
the Board believes that the Company's exposure to liquidity risk is
minimal.
The Company's liquidity risk is managed by the Investment Manager in
line with guidance agreed with the Board and is reviewed by the Board at
regular intervals.
6. Related party transactions
Downing Managers 3 Limited ("DM3"), a wholly owned subsidiary, is the
Company's Investment Manager.
During the year ended 31 December 2015, GBP695,000 (2014: 564,000) was
payable to DM3 in respect of Investment management fees. Additionally,
DM3 provides accounting, secretarial and administrative services for an
annual fee of GBP56,000 (2014: GBP55,000). At the year end a balance of
GBP199,000 (2014: GBP193,000) was due to DM3.
7. Events after the end of the reporting period
Following the end of the reporting period, Downing Corporate Finance
Limited exercised their option to purchase the entire legal and
beneficial ownership of 2 ordinary shares of GBP1 each in the capital of
Downing Managers 3 Limited for consideration of GBP1,058, which shares
constitute the entire issued share capital of the Company.
Immediately following this, the investment management and admin
agreement was novated from Downing Managers 3 Limited to Downing LLP,
resulting in Downing LLP becoming the investment manager.
In addition, the remaining funds attributable to the 'C' Shares and 'A'
Shares were distributed by way of dividends of 30.5p per 'C' Share and
14.8p per 'A' Share on 24 March 2016. This equated to a payment of
GBP2.2 million to 'C' Shareholders and GBP1.6 million to 'A'
Shareholders (including GBP532,000 on the 'A' Shares held by members of
the management team). Following this, the 'C' Share pool will have
negligible remaining value and is expected to be delisted and wound up
in due course.
ANNOUNCEMENT BASED ON AUDITED ACCOUNTS
The financial information set out in this announcement does not
constitute the Company's statutory financial statements in accordance
with section 434 Companies Act 2006 for the year ended 31 December 2015,
but has been extracted from the statutory financial statements for the
year ended 31 December 2015 which were approved by the Board of
Directors on 25 April 2015 and will be delivered to the Registrar of
Companies. The Independent Auditor's Report on those financial
statements was unqualified and did not contain any emphasis of matter
nor statements under s 498(2) and (3) of the Companies Act 2006.
The statutory accounts for the period ended 31 December 2014 have been
delivered to the Registrar of Companies and received an Independent
Auditors report which was unqualified and did not contain any emphasis
of matter nor statements under s 498(2) and (3) of the Companies Act
2006.
A copy of the full annual report and financial statements for the year
ended 31 December 2015 will be printed and posted to shareholders
shortly. Copies will also be available to the public at the registered
office of the Company at Ergon House, London, SW1P 2AL and will be
available for download from www.downing.co.uk.
This announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the information
contained therein.
Source: Downing THREE VCT plc via Globenewswire
HUG#2006546
(END) Dow Jones Newswires
April 25, 2016 12:48 ET (16:48 GMT)
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