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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Downing Three Vct Plc | LSE:DP3F | London | Ordinary Share | GB00B6ZS1P26 | F SHS 0.1P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 13.50 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
TIDMDP3F Downing THREE VCT PLC FINAL RESULTS FOR THE YEARED 31 DECEMBER 2017 LEI: 2138008V2JDU2K6ZHF80 FINANCIAL HIGHLIGHTS 31 Dec 31 Dec 2017 2016 Pence Pence 'D' Share pool Net asset value per 'D' Share - 36.4 Net asset value per 'E' Share - 0.1 Cumulative distributions per 'D' Share 103.79 66.5 Total return per 'D' Share and 'E' Share 103.79 103.0 'F' Share pool Net asset value per 'F' Share 69.6 69.4 Cumulative distributions per 'F' Share 30.0 25.0 Total return per 'F' Share 99.6 94.4 'H' Share pool Net asset value per 'H' Share 82.3 86.2 Cumulative distribution per 'H' Share 20.0 15.0 Total return per 'H' Share 102.3 101.2 'J' Share pool Net asset value per 'J' Share 94.7 95.8 Cumulative distribution per 'J' Share - - Total return per 'J' Share 94.7 95.8 CHAIRMAN'S STATEMENT Introduction I am pleased to present the Annual Report for the year ended 31 December 2017. During the year, the task of returning proceeds to the 'D' Share pool investors was completed. The Company now has one share pool that is starting to return funds to investors, one that will seek to start the return of capital process in approximately two years' time and one where the task of building the initial investment portfolio has recently been completed. Progress across the various share pools over the year has been satisfactory. A brief summary of each share pool is provided below. More detailed reviews are provided in the Investment Manager's Report and Review of Investments. 'D' Share pool The final distribution to 'D' Shareholders was made in December 2017. Total Return (NAV plus cumulative dividends to date) to those investors was 103.79p per Share compared to the original cost net of income tax relief of 70.0p. The Board considers this to be a fair return for investors. 'F' Share pool The 'F' Share pool was launched in 2012 and now holds a portfolio of 13 investments with a total value of GBP5.4 million. At 31 December 2017, the 'F' Share NAV stood at 69.6p, which represents an increase of 7.5% over the year after adjusting for the dividends of 5.0p per share paid in the year. Dividends paid to date total 30.0p per share such that Total Return (NAV plus cumulative dividends to date) is now 99.6p, compared to the initial cost to original subscribers net of income tax relief of 70.0p. The increase in NAV across the period benefitted from the realised gains on disposal of the group of Scottish nightclubs and Vulcan Renewables Limited as well as receiving large loan stock receipts which were previously provided for. Now that the fifth anniversary of the close of the original 'F' Share offer for subscription has passed, the process of realising investments to return funds to shareholders has commenced. A first major distribution of 19.0p per F Share will be paid on 24 April 2018. Further distributions will be paid as further investments are realised. H' Share pool The 'H' Share pool was launched in 2014 and completed its initial investment phase this year. At 31 December 2017, the pool held 14 investments with a total value of GBP10.9 million. At 31 December 2017, the 'H' Share NAV stood at 82.3p, which represents an increase over the year of 1.3% after adjusting for the dividends of 5.0p per share paid in the year. Total Return (NAV plus cumulative dividends to date) is now 102.3p, 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 15 June 2018 to Shareholders on the register at the close of business on 11 May 2018. 'J' Share pool The 'J' Share Pool was launched in December 2014 and is now fully qualifying as at the year end. At 31 December 2017, the pool held 17 VCT qualifying investments with a total value of GBP8.3 million. At 31 December 2017, the 'J' Share NAV stood at 94.7p, compared to the initial NAV of 100.0p. Due to VCT regulations the 'J' Share pool is effectively prohibited from paying dividends in its first three years and will commence returning funds to shareholders in 2019. Share buybacks For share classes where all investors are still within the initial five year period (currently the 'H' Share and 'J' Share classes), the Company operates a general policy of buying in its own shares for cancellation when any become available in the market. 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 'F' Shares. The process of returning funds to 'F' Shareholders is now underway. A resolution to renew the buyback authority for the Company to purchase its own shares will be proposed at the forthcoming Annual General Meeting. VCT Rule changes The Government's Budget announcement in November 2017 introduced some further changes to the VCT regulations. Although the changes refocus the VCT more heavily on younger business in the future, the Board and Manager do not expect these to have a major impact on the Company. The most significant changes will be in respect of new investments and, with most of the share pools already fully invested, new investment activity is likely to be at a relatively low level in future. Annual General Meeting ("AGM") The Company's tenth AGM will be held at St. Magnus House, 3 Lower Thames Street, London, EC3R 6HD at 10.50 a.m. on 7 June 2018. Two items of special business will be proposed at the AGM. As mentioned above, the Company will seek to renew the authority for the Company to buy back shares. Additionally, the Company will seek to cancel the Company's share premium account. Outlook In the coming year, we expect to see a significant level of activity in the 'F' Share portfolio with plans being progressed for the sale of all the remaining investments. The task of exiting from all investments is likely to take some time especially as it generally involves third party purchasers. However, the Manager is optimistic that good progress can be made over the remainder of the year. In respect of the other share pools, the Manager's focus will be on monitoring and support of the investee companies over the year in order to ensure that they deliver their full potential before the planned exit date arrives. I look forward to updating Shareholders on progress in my statement with the Half Yearly Report to 30 June 2018. I will also communicate with 'F' Shareholders as and when there is news about further dividends. Michael Robinson Chairman 4 April 2018 INVESTMENT MANAGER'S REPORT- 'D' SHARE POOL Introduction The focus for this year has been on realisations with the 'D' Share pool completing the task of realising its investments in November 2017, and on 22 December 2017, paid its final dividends. Realisations During the year, total proceeds of GBP2.4 million were received for the remaining eight investments within the 'D' Share portfolio, generating a total gain over opening value of GBP59,000. Net asset value and results Over the life of their investment, investors in the 'D' Share pool received total dividends of 103.69p per 'D' Share and 0.1p per 'E' Shares, making a total return of 103.79p for an original investment of 100p (70p net of income tax relief). We believe that this represents a fair return to Shareholders and brings the investment by 'D' Shareholders to a close. Outlook We are satisfied with the final performance of the 'D' Share pool. Following the payment of the final dividends on 22 December 2017, the 'D' Share pool had negligible value at the period end and, in line with the Articles of the Company, the Company is taking steps to cancel the share class. Downing LLP 4 April 2018 REVIEW OF INVESTMENTS - 'D' SHARE POOL Further details of the main investments: Summary of investment movements Disposals Total gain/ Total (loss) realised MV at Disposal against gain during Cost 01/01/17 proceeds cost the year GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 VCT qualifying and partially Qualifying investments Avon Solar Energy Limited 210 240 264 54 24 Mosaic Spa and Health Clubs Limited* 521 300 287 (234) (13) Westcountry Solar Solutions Limited 250 250 223 (27) (27) Non-qualifying investments Snow Hill Developments LLP - - 43 43 43 Fenkle Street LLP 122 269 287 165 18 London City Shopping Centre Limited - - 14 14 14 Gara Rock Resort Limited 1,322 1,322 1,322 - - Future Biogas (Reepham Road) Limited 320 - - (320) - Total 'D' Share pool 2,745 2,381 2,440 (305) 59
* Part-qualifying investment INVESTMENT MANAGER'S REPORT- 'F' SHARE POOL Introduction The 'F' Share pool holds 13 investments and is fully invested in a portfolio focussed on asset backed businesses and those with predictable revenue streams. Net asset value and results At 31 December 2017, the 'F' Share NAV stood at 69.6p. Total Return (NAV plus cumulative dividends to date) for Shareholders who invested in the original share offer is now 99.6p. This represents a net increase of 5.2p per share over the year (after adjusting for dividends paid during the year of 5.0p per Share), equivalent to an increase of 7.5%. The return on ordinary activities for the 'F' Share pool for the year was a gain of GBP561,000 (2016: GBP308,000) being a revenue gain of GBP215,000 (2016: loss GBP107,000) and a capital gain of GBP346,000 (2016: GBP415,000). 'F' Share pool - investment activity With the pool being fully invested, no new investments were made in the period although one further investment was made in Goonhilly Earth Station Limited for GBP194,000. This was part of a larger funding round which included other Downing VCTs and totalled over GBP969,000. This funding was to enhance the operational capacity of the site and provide working capital for the business. Downing Pub EIS One Limited acquired the holdings of Pabulum Pubs Limited and Augusta Pub Company Limited for GBP200,000 and GBP290,000 respectively during the year. Vulcan Renewables Limited, the anaerobic digestion plant in Doncaster, was sold during the summer and generated proceeds of GBP903,000 for the Share pool. This represented an uplift over cost of GBP249,000. Funds had previously been invested in four companies: Brownfields Trading Limited; Morava Limited; Rhodes Solutions Limited; and Vectis Alpha Limited to explore business opportunities in specific sectors. The companies were unable to find suitable opportunities, therefore the GBP700,000 of funds invested were returned to the Share pool. In addition to the above, proceeds of GBP435,000 were generated from the sale of a group of licensed leisure companies, Cheers Dumbarton Limited, City Falkirk Limited, Lochrise Limited and Fubar Stirling Limited compared to a cost of GBP648,000. A full exit also completed in the period of a non-qualifying loan to Gara Rock Resort Limited, formerly Aminghurst Limited, which generated proceeds of GBP258,000. 'F' Share pool - portfolio valuation The majority of investments remain valued at or above cost and there were several valuation movements in the period. This generated an uplift over opening value of GBP132,000. Merlin Renewables Limited, the anaerobic digestion plant in Norfolk continues to perform well and the valuation was increased by GBP67,000. An uplift of GBP39,000 was recognised in the period on Fresh Green Power Limited. The domestic rooftop solar company is generating profits in line with our expectations and we are now exploring options to sell the investment. The valuation of Lambridge Solar Limited, the owner of commercial solar arrays in Lincolnshire, has been increased by GBP26,000 as it continues to perform well. Other smaller movements in the portfolio included an uplift on Atlantic Dogstar Limited of GBP7,000 and a decrease on Fubar Stirling Limited of GBP10,000. Outlook The focus now for the 'F' Share portfolio is on close monitoring and support of the portfolio companies as the process for planning investment realisations begins following the five year anniversary of the close of the 'F' Share offer. Downing LLP 4 April 2018 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 2017: 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 - 13.3% Goonhilly Earth Station Limited 954 954 - 12.7% Merlin Renewables Limited 500 642 67 8.7% Lambridge Solar Limited 500 595 26 7.9% Downing Pub EIS One Limited 490 588 3 7.8% Pearce and Saunders Limited 497 497 - 6.6% Fresh Green Power Limited 200 239 39 3.2% Atlantic Dogstar Limited 200 235 7 3.2% Green Energy Production UK Limited 100 100 - 1.3% Fubar Stirling Limited 101 8 (10) 0.1% 4,542 4,858 132 64.8% Non-qualifying investments Baron House Developments LLP 481 481 - 6.4% London City Shopping Centre Limited 66 66 - 0.9% Pearce and Saunders DevCo Limited 46 46 - 0.6% 593 593 - 7.9% 5,135 5,451 132 72.7% Cash at bank and in hand 2,042 27.3% Total investments 7,493 100.0% Summary of investment movements Additions Cost GBP'000 VCT qualifying and partially qualifying investments Downing Pub EIS One Limited 490 Goonhilly Earth Station Limited 194 Total 'F' Share pool 684 Disposals Gain/ Total (loss) realised MV at Disposal against gain during Cost 01/01/17 proceeds cost the year GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 VCT qualifying and partially qualifying investments Cheers Dumbarton Limited 48 17 28 (20) 11 City Falkirk Limited 421 177 243 (178) 66 Lochrise Limited 12 - 7 (5) 7 Fubar Stirling Limited 167 151 157 (10) 6 Vulcan Renewables Limited 654 779 903 249 124 Augusta Pub Company Limited** 290 290 290 - - Pabulum Pubs Limited** 200 200 200 - - Non-qualifying investments Gara Rock Resort Limited 258 258 258 - - Investments wound up without commencing a trade Morava Limited 125 125 125 - - Brownfields Limited 150 150 150 - - Rhodes Solutions Limited 125 125 125 - - Vectis Alpha Limited 300 300 300 - - Total 'F' Share pool 2,750 2,572 2,786 36 214 * Part-qualifying investment ** Augusta Pub Company Limited and Pabulum Pubs Limited engaged in a share for share exchange for shares in Downing PUB EIS One Limited during the year ended 31 December 2017. 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 fully qualifying as at 31 December 2017. Net asset value and results At 31 December 2017, the net asset value per 'H' Share was 82.3p. Total Return (NAV plus cumulative dividends to date) for Shareholders who invested in the original share offer is now 102.3p. This represents a net increase of 1.1p per share over the year (after adjusting for dividends paid during the year of 5.0p per share), equivalent to an increase of 1.3%. The return on ordinary activities for the 'H' Share pool for the year was a gain of GBP148,000 (2016: GBP97,000) being a revenue profit of GBP58,000 (2016: GBP44,000) and a capital gain of GBP90,000 (2016: GBP53,000). Investment activity The pool is fully qualifying and no new qualifying investments were made in the period. One full exit took place in the year, the repayment of a loan to Augusta Pub Company Limited for GBP155,000. 'H' Share pool - portfolio valuation The majority of investments remain valued at or above cost and there were two valuation uplifts in the period totalling a gain of GBP90,000. Atlantic Dogstar Limited continues to perform to plan and a valuation uplift of GBP38,000 has been recognised in the period. Two freehold pubs are owned by Hedderwick Limited, one is open and trading and the other is being redeveloped. The open site is trading in line with expectations and an uplift has been recognised of GBP52,000. 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 the ultimate exit date. Downing LLP 4 April 2018 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 2017: Valuation movement % of 'H' Share pool Cost Valuation in year portfolio GBP'000 GBP'000 GBP'000 VCT qualifying investments and partially qualifying investments Hermes Wood Pellets Limited 1,500 1,500 - 13.6% Apex Energy Limited 1,300 1,300 - 11.8% Atlantic Dogstar Limited 1,000 1,176 38 10.7% Zora Energy Renewables Limited 1,000 1,000 - 9.1% Quadrate Catering Limited 850 850 - 7.7% Ironhide Generation Limited 613 613 - 5.6% Indigo Generation Limited 613 613 - 5.6% Antelope Pub Limited 500 500 - 4.5% Rockhopper Renewables Limited 492 492 - 4.5% SF Renewables (Solar) Limited 281 281 - 2.5% Oak Grove Renewables Limited 420 231 - 2.1% 8,569 8,556 38 77.7% Non-qualifying investments Hedderwick Limited 1,250 1,303 52 11.8% Quadrate Spa Limited 850 850 - 7.7% Pearce and Saunders Limited 193 193 - 1.7% 2,293 2,346 52 21.2% 10,862 10,902 90 98.9% Cash at bank and in hand 128 1.1% Total investments 11,030 100.0% Summary of investment movements Disposals Total Gain realised MV at Disposal against gain during Cost 01/01/17 proceeds cost the year GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Non-qualifying investments Augusta Pub Company Limited 155 155 155 - - 155 155 155 - - INVESTMENT MANAGER'S REPORT- 'J' SHARE POOL Introduction 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 as at the year end and the Share pool is now fully qualifying. Net asset value and results At 31 December 2017, the net asset value and total return per 'J' Share was 94.7p. This represents a net decrease of 1.1p per share over the year, equivalent to a decrease of 1.1%. The loss on ordinary activities for the 'J' Share, after taxation, for the period was GBP119,000 (2016: loss GBP294,000), being a revenue loss of GBP159,000 (2016: loss GBP210,000) and a capital gain of GBP40,000 (2016: loss GBP84,000). Investment activity During the period, five new qualifying investments were made totalling GBP2.3 million and three non-qualifying investments were made totalling GBP345,000. The qualifying investments include a GBP1.0 million investment in Ormsborough Limited. The company owns several pubs and restaurants across Yorkshire and this investment supported their continued expansion. A GBP500,000 investment was made in Exclusive Events Venues Limited, in order to acquire and develop a wedding venue site in Chester. GBP400,000 was invested in Garthcliff Shipping Limited who recently completed the acquisition of the Sentosa container ship. The vessel will be chartered to third parties to transport containers to and from European ports. A GBP400,000 investment was made in Managed Storage Services (1) Limited. The investment was made to support the acquisition, redevelopment and operations of a managed storage business in central London. A small qualifying investment of GBP27,000 was made in Mosaic Spa and Health Clubs Limited, a provider of gym and spa management services. In addition to the above, one further investment of GBP297,000 was made in Pilgrim Trading Limited. The company acquired two sites to be converted into children's nurseries, one of which has recently been opened in Twickenham and the other is in the construction stage. Funds had previously been invested in five companies, Brownfields Trading Limited, Cedarville Limited, Morava Limited, Rhodes Solutions Limited and Vectis Alpha Limited to explore business opportunities in specific sectors. The companies were unable to find suitable opportunities, therefore the GBP4.9 million of funds invested were returned to the Share pool in order to invest in new qualifying investments. There were no other disposals in the period. One valuation adjustment was made in the period on Ormsborough Limited following good overall performance of the group which resulted in an uplift in valuation of GBP46,000. Outlook The task of building the 'J' Share portfolio is complete. A number of new businesses have been backed which we believe have good potential for growth over the planned life of the share pool and focus has now shifted to close monitoring and support of the portfolio companies in order to nurture growth before the ultimate exit date. Downing LLP 4 April 2018 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 2017: Valuation movement % of 'J' Share pool Cost Valuation in year portfolio GBP'000 GBP'000 GBP'000 VCT qualifying investments and partially qualifying investments Pilgrim Trading Limited 1,297 1,297 - 12.9% Ormsborough Limited 1,000 1,046 46 10.4% Jito Trading Limited 1,000 1,000 - 9.9% Yamuna Renewables Limited 800 800 - 7.9% Indigo Generation Limited 613 613 - 6.1% Ironhide Generation Limited 613 613 - 6.1% Exclusive Events Venues Limited 500 500 - 5.0% Rockhopper Renewables Limited 492 492 - 4.9% Garthcliff Shipping Limited 400 400 - 4.0% Managed Storage Services (1) Limited 400 400 - 4.0% Zora Energy Renewables Limited 300 300 - 3.0% SF Renewables (Solar) Limited 281 281 - 2.8% Oak Grove Renewables Limited 420 232 - 2.3% Mosaic Spa and Healthclubs Limited 27 27 - 0.2% 8,143 8,001 46 79.5% Non-qualifying investments Fenkle Street LLP 287 287 - 2.8% Snow Hill Developments LLP 43 43 - 0.4% London City Shopping Centre Limited 15 15 - 0.1% 345 345 - 3.3% 8,488 8,346 46 82.8% Cash at bank and in hand 1,743 17.2% Total investments 10,089 100.0% Summary of investment movements Additions Cost GBP'000 VCT qualifying investments Ormsborough Limited 1,000 Exclusive Events Venues Limited 500 Garthcliff Shipping Limited 400 Managed Storage Services (1) Limited 400 Pilgrim Trading Limited 297 Mosaic Spa and Healthclubs Limited 27 Non-qualifying investments Fenkle Street LLP 287 Snow Hill Developments LLP 43 London City Shopping Centre Limited 15 Total 'J' Share pool 2,969 Disposals Gain/ (loss) Total realised MV at Disposal against gain during Cost 01/01/17 proceeds cost the year GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Investments wound up without commencing a trade Brownfields Limited 900 900 901 1 1 Rhodes Solutions Limited 1,000 1,000 1,000 - - Vectis Alpha Limited 900 900 900 - - Morava Limited 1,150 1,150 1,148 (2) (2)
Cedarville Limited 1,000 1,000 995 (5) (5) Total 'J' Share pool 4,950 4,950 4,944 (6) (6) Directors' responsibilities statement The Directors 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 position and 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 2017 Year ended 31 December 2017 Year ended 31 December 2016* Revenue Capital Total Revenue Capital Total GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Income 993 34 1,027 585 40 625 Gain/(loss) on investments - 535 535 - 580 580 993 569 1,562 585 620 1,205 Investment management fees (594) - (594) (643) - (643) Other expenses (264) - (264) (296) - (296) (Loss)/return on ordinary activities before tax 135 569 704 (354) 620 266 Tax on total comprehensive income and ordinary activities (27) - (27) 21 - 21 (Loss)/return for the year attributable to equity shareholders 108 569 677 (333) 620 287 Basic and diluted return/ (loss) per: 'C' Share - - - (0.4p) - (0.4p) 'A' Share - - - - - - 'D' Share - 0.9p 0.9p (0.3p) 2.3p 2.0p 'E' Share - - - - - - 'F' Share 2.0p 3.2p 5.2p (1.0p) 3.8p 2.8p 'H' Share 0.4p 0.7p 1.1p 0.3p 0.4p 0.7p 'J' Share (1.5p) 0.4p (1.1p) (2.0p) (0.8p) (2.8p) All Revenue and Capital items in the above statement are derived 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 and updated January 2017 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 historical cost. * The comparative Income Statement as at 31 December 2016 includes the 'C' Share pool which has subsequently been cancelled. INCOME STATEMENT (ANALYSED BY SHARE POOL) for the year ended 31 December 2017 'D' Share pool Year ended 31 December Year ended 31 December 2017 2016 Revenue Capital Total Revenue Capital Total GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Income 12 34 46 83 40 123 Gain on investments - 59 59 - 196 196 12 93 105 83 236 319 Investment management fees (32) - (32) (52) - (52) Other expenses (17) - (17) (31) - (31) Return on ordinary activities before tax (37) 93 56 - 236 236 Tax on total comprehensive income and ordinary activities 31 - 31 (30) - (30) (Loss)/return attributable to equity shareholders (6) 93 87 (30) 236 206 'F' Share pool Year ended 31 December Year ended 31 December 2017 2016 Revenue Capital Total Revenue Capital Total GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Income 449 - 449 99 - 99 Gain on investments - 346 346 - 415 415 449 346 795 99 415 514 Investment management fees (136) - (136) (136) - (136) Other expenses (91) - (91) (73) - (73) (Loss)/return on ordinary activities before tax 222 346 568 (110) 415 305 Tax on total comprehensive income and ordinary activities (7) - (7) 3 - 3 (Loss)/return attributable to equity shareholders 215 346 561 (107) 415 308 'H' Share pool Year ended 31 December Year ended 31 December 2017 2016 Revenue Capital Total Revenue Capital Total GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Income 364 - 364 355 - 355 Gain on investments - 90 90 - 53 53 364 90 454 355 53 408 Investment management fees (229) - (229) (239) - (239) Other expenses (82) - (82) (61) - (61) Return/(loss) on ordinary activities before tax 53 90 143 55 53 108 Tax on total comprehensive income and ordinary activities 5 - 5 (11) - (11) Return/(loss) attributable to equity shareholders 58 90 148 44 53 97
'J' Share pool Year ended 31 December Year ended 31 December 2017 2016 Revenue Capital Total Revenue Capital Total GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Income 168 - 168 42 - 42 Gain/(loss) on investments - 40 40 - (84) (84) 168 40 208 42 (84) (42) Investment management fees (197) - (197) (208) - (208) Other expenses (74) - (74) (96) - (96) Loss on ordinary activities before tax (103) 40 (63) (262) (84) (346) Tax on total comprehensive income and ordinary activities (56) - (56) 52 - 52 Loss attributable to equity shareholders (159) 40 (119) (210) (84) (294) BALANCE SHEET as at 31 December 2017 2017 2016 GBP000 GBP000 Fixed assets Investments 24,699 30,836 Current assets Debtors 322 133 Cash at bank and in hand 3,933 2,337 4,255 2,470 Creditors: amounts falling due within one year (262) (286) Net current assets 3,993 2,184 Net assets 28,692 33,020 Capital and reserves Called up share capital 60 78 Capital redemption reserve 124 106 Special reserve 5,146 9,888 Share premium reserve 24,639 24,639 Revaluation reserve 1 (790) Capital reserve - realised (1,039) (1,033) Revenue reserve (239) 132 Total equity shareholders' funds 28,692 33,020 Basic and diluted net asset value per Share: 'D' Share - 36.4p 'E' Share - 0.1p 'F' Share 69.6p 69.4p 'H' Share 82.3p 86.2p 'J' Share 94.7p 95.8p BALANCE SHEET (ANALYSED BY SHARE POOL) as at 31 December 2017 'D' Shares 2017 2016 GBP000 GBP000 Fixed assets Investments - 2,382 Current assets Debtors 1 4 Cash at bank and in hand 20 1,313 21 1,317 Creditors: amounts falling due within one year (21) (65) Net current assets - 1,252 Net assets - 3,634 Capital and reserves Called up share capital 25 25 Capital redemption reserve 124 - Special reserve - 3,584 Share premium reserve - - Revaluation reserve (249) (507) Capital reserve - realised - - Revenue reserve 100 532 Total equity shareholders' funds - 3,634 'F' Shares 2017 2016 GBP000 GBP000 Fixed assets Investments 5,451 7,207 Current assets Debtors 123 25 Cash at bank and in hand 2,042 357 2,165 382 Creditors: amounts falling due within one year (88) (80) Net current assets 2,077 302 Net assets 7,528 7,509 Capital and reserves Called up share capital 11 11 Capital redemption reserve - - Special reserve 7,835 8,321 Revaluation reserve 356 64 Capital reserve - realised (1,033) (1,033) Revenue reserve 359 146 Total equity shareholders' funds 7,528 7,509 'H' Shares 2017 2016 GBP000 GBP000 Fixed assets Investments 10,902 10,967 Current assets Debtors 89 104 Cash at bank and in hand 128 609 217 713 Creditors: amounts falling due within one year (82) (88) Net current assets 135 625 Net assets 11,037 11,592 Capital and reserves Called up share capital 13 13 Capital redemption reserve - - Special reserve (2,689) (2,017) Share premium reserve 13,608 13,608 Revaluation reserve 38 (52) Capital reserve - realised - - Revenue reserve 67 40 Total equity shareholders' funds 11,037 11,592 'J' Shares 2017 2016 GBP000 GBP000 Fixed assets Investments 8,346 10,280 Current assets Debtors 109 - Cash at bank and in hand 1,743 32 1,852 32 Creditors: amounts falling due within one year (71) (30) Net current assets 1,781 2 Net assets 10,127 10,282 Capital and reserves Called up share capital 11 11 Capital redemption reserve - - Special reserve - - Share premium reserve 11,031 11,031 Revaluation reserve (144) (189) Capital reserve - realised (6) - Revenue reserve (765) (571) Total equity shareholders' funds 10,127 10,282 STATEMENT OF CHANGES IN EQUITY for the year ended 31 December 2017 Capital Called up Capital Share reserve share redemption Special premium Revaluation - 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 2016 78 106 15,749 24,639 (1,466) (1,033) 1,350 39,423 Total comprehensive income - - - - 406 214 (333) 287 Transactions with owners Issue of new shares - - - - - - - - Share issue costs - - - - - - - - Transfer between Reserves* - - (5,861) - 270 6,476 (885) - Dividend paid - - - - - (6,690) - (6,690) At 31 December 2016 78 106 9,888 24,639 (790) (1,033) 132 33,020 Total comprehensive income - - - - 268 301 108 677 Transactions with owners 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 CASH FLOW STATEMENT for the year ended 31 December 2017 Year ended 31 December 2017 'D' 'F' Share Share 'H' 'J' pool pool Share pool Share pool Total GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Net cash inflow/(outflow) from operating activities (33) 124 66 (228) (71) Cash flow from investing activities Purchase of investments - (684) - (2,969) (3,653) Sale of investments 2,440 2,786 155 4,944 10,325 Net cash inflow/(outflow) from investing activities 2,440 2,102 155 1,975 6,672 Net cash inflow/(outflow) before financing activities 2,407 2,226 221 1,747 6,601 Cash flows from financing activities Equity dividends paid 8(3,726) (541) (672) - (4,939) Purchase of own shares - - (30) (36) (66) Net cash outflow from
financing activities (3,726) (541) (702) (36) (5,005) (Decrease)/increase in cash (1,319) 1,685 (481) 1,711 1,596 Cash and cash equivalents at start of year 1,339 357 609 32 2,337 Cash and cash equivalents at end of year 20 2,042 128 1,743 3,933 Cash and cash equivalents comprise Cash at bank and in hand 20 2,042 128 1,743 3,933 Total cash and cash equivalents 20 2,042 128 1,743 3,933 Year ended 31 December 2016 'C' 'D' 'F' 'H' 'J' Share Share Share Share Share pool pool pool pool pool Total GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Net cash inflow/(outflow) from operating activities 95 199 (38) (62) (197) (3) Cash flow from investing activities Purchase of investments - - (700) (6,200) (8,050) (14,950) Sale of investments 749 2,182 1,287 3,183 - 7,401 Net cash inflow/(outflow) from investing activities 749 2,182 587 (3,017) (8,050) (7,549) Net cash inflow/(outflow) before financing activities 844 2,381 549 (3,079) (8,247) (7,552) Cash flows from financing activities Equity dividends paid (3,780) (1,697) (541) (672) - (6,690) Net cash outflow from financing activities (3,780) (1,697) (541) (672) - (6,690) (Decrease)/increase in cash (2,936) 684 8 (3,751) (8,247) (14,242) Cash and cash equivalents at start of year 2,962 629 349 4,360 8,279 16,579 Cash and cash equivalents at end of year 26 1,313 357 609 32 2,337 Cash and cash equivalents comprise Cash at bank and in hand 26 1,313 357 609 32 2,337 Total cash and cash equivalents 26 1,313 357 609 32 2,337 NOTES TO THE ACCOUNTS for the year ended 31 December 2017 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, and its registered office is St. Magnus House, 3 Lower Thames Street, London, EC3R 6HD. 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 and updated January 2017 as well as the Companies Act 2006. The financial statements are presented in Sterling (GBP) and rounded to thousands. 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 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. Distributions from investments in limited liability partnerships ("LLPs") are recognised as they are paid to the Company. Where such items are considered capital in nature they are recognised as capital profits. 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 financial statements. 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 revenue reserve account for the relevant share class. Significant estimates and judgements Disclosure is required of judgements and estimates made by management in applying the accounting policies that have a significant effect on the financial statements. The area involving a higher degree of judgement and estimates is the valuation of unquoted investments as explained in the investment accounting policy above. 3. Basic and diluted return per share 'D' Shares 'E' Shares 'F' Shares 'H' Shares 'J' Shares Revenue return/ (loss) (GBP'000) (6) - 215 58 (159) Net capital (loss)/gain for the year (GBP'000) 93 - 346 90 40 Total return/ (loss) after taxation (GBP'000) 87 - 561 148 (119) Weighted average
number of shares in issue 9,979,109 14,994,862 10,821,660 13,405,535 10,624,578 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 2017 2016 Shares in issue Net asset value Net asset value 31 Dec 31 Dec per 2017 2016 per share GBP'000 share GBP'000 'C' Shares - 7,158,326 - - - 3 'A' Shares - 10,750,064 - - - - 'D' Shares 9,979,109 9,979,109 - - 36.4p 3,619 'E' Shares 14,994,862 14,994,862 - - 0.1p 15 'F' Shares 10,821,660 10,821,660 69.6p 7,528 69.4p 7,509 'H' shares 13,409,158 13,446,972 82.3p 11,037 86.2p 11,592 'J' Shares 10,695,258 10,733,377 94.7p 10,127 95.8p 10,282 28,692 33,020 The 'D' Share pool, 'F' Share pool, 'H' Share pool and 'J' Share pool are treated as separate investment pools. Within the 'D' Share pool the Directors allocate the assets and liabilities of the Company between the 'D' Shares and 'E' Shares such that each share class has sufficient net assets to represent its dividend and return of capital rights. 5. Principal risk 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 investments is determined using the detailed accounting policy. 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: - Market 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: Market 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 in addition to the appropriateness of the valuation method used. 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 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 "Market risks" above. In addition the credit risk is mitigated for all investments in loan stocks by taking security, covering the full par value of the loan stock in the form of fixed and floating charges over the assets of the 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. 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. Of the investments in loan stock above, as at 31 December 2017 GBP960,000 relates to the principal of loan notes where, although the principal remains within term, the investee company is not fully servicing the interest obligations under the loan note and is thus in arrears. 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, (GBP322,000, 2016: GBP286,000) 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. 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 2017, but has been extracted from the statutory financial statements for the year ended 31 December 2017 which were approved by the Board of Directors on 4 April 2018 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 2016 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 2017 will be printed and posted to shareholders shortly. Copies will also be available to the public at the registered office of the Company at St. Magnus House, London, EC3R 6HD and will be available for download from www.downing.co.uk. This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq 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
(END) Dow Jones Newswires
April 04, 2018 12:27 ET (16:27 GMT)
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