DP3C Downing Three C

 
TIDMDP3C 
 
 
   Downing THREE VCT plc 
 
   Final results for the period ended 31 December 2013 
 
 
 
 
                                            31 Dec   31 Jan 
FINANCIAL HIGHLIGHTS                         2013     2013 
                                            Pence    Pence 
'C' Share pool 
Net asset value per 'C' Share                 90.7     94.7 
Net asset value per 'A' Share                  0.1      0.1 
Cumulative distributions per 'C' Share        22.5     17.5 
Total return per 'C' Share and 'A' Share     113.3    112.3 
 
'D' Share pool 
Net asset value per 'D' Share                 76.9     79.7 
Net asset value per 'E' Share                  0.1      0.1 
Cumulative distributions per 'D' Share        17.5     12.5 
Total return per 'D' Share and 'E' Share      94.5     92.3 
 
'F' Share pool 
Net asset value per 'F' Share                 79.9     88.5 
Cumulative distributions per 'F' Share        10.0      5.0 
Total return per 'F' Share                    89.9     93.5 
 
   CHAIRMAN'S STATEMENT 
 
   Introduction 
 
   I am pleased to present my first Annual Report as chairman of Downing 
THREE VCT. It has been another busy year for your Company with four 
existing share pools, two of which are in their initial investment phase, 
and, at the end of the year, the launch of the new 'H' Share pool 
fundraising. 
 
   Change of name and change of year end 
 
   On 17 December 2013, the Company changed its name from Downing Planned 
Exit VCT 3 plc to Downing THREE VCT plc. The Company also changed its 
year end from 31 January to 31 December. This report therefore covers 
the 11 month period to 31 December 2013. These changes align the Company 
with other VCTs in the Downing stable. 
 
   Directorate 
 
   On 17 December 2013, Hugh Gillespie resigned from the Board in order to 
enhance Board independence. Hugh continues as the non-executive chairman 
of Downing TWO VCT. The Board would like to thank Hugh for the 
substantial significant contribution he has made to the Company since 
its launch in 2005. 
 
   On the same date I took over as Chairman of the Company and Roger Jeynes 
also joined the Board as a non-executive director. Roger is chairman of 
AIM-quoted Zoo Digital Group plc, Professor of Management Practice in 
the Lord Ashcroft International Business School of Anglia Ruskin 
University and a director of mxData Holdings Limited, Keycom plc and 
Charborough Capital Limited. He was formerly Chief Operating Officer of 
Interregnum plc and his early career included a number of senior 
technical, marketing and general management roles for IBM, EMC and 
Pyramid Technology. He was previously also a director of Downing 
Distribution VCT 1 plc (now renamed Downing ONE VCT plc). We would like 
to welcome Roger to the Board and believe his vast experience will be a 
significant asset to the Company. 
 
   'H' Share fundraising 
 
   The Company launched an 'H' Share offer for subscription in December 
2013, seeking to raise up to GBP10 million. As at the date of this 
report GBP11 million had been raised. 
 
   As the first allotment of 'H' Shares did not take place until after the 
period end, there is very limited coverage of the 'H' Share in the 
report.  The Half-Yearly Report to 30 June 2014 will report on the 
initial progress in investing the new funds. 
 
   Share pools 
 
   During the period the Company had three active share pools, with total 
net assets of GBP22.8 million.  Each of the share pools raised funds in 
different years and are, therefore, at various stages in their planned 
exit life. 
 
   'C' Share pool 
 
   The Company's 'C' Shares were originally issued in 2008 and 2009. The 
'C' Share pool is effectively fully invested and holds a portfolio of 18 
investments, of which 13 are VCT qualifying or partially qualifying. 
 
   There were a number of small investment valuation adjustments during the 
period which resulted in a minor net decrease in value, however, overall 
the portfolio performed satisfactorily, generating a reasonable level of 
investment income. 
 
   At 31 December 2013, the net asset value ("NAV") of a combined holding 
of one 'C' Share and one 'A' Share stood at 90.8p, an increase of 1.0% 
over the period after adding back dividends of 5.0p paid in the period. 
'C' Share dividends paid to date total 22.5p such that Total Return (NAV 
plus cumulative dividends to date) is now 113.3p, 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 'C' Share on 27 June 2014 to Shareholders on the 
register at the close of business on 16 May 2014. 
 
   'D' Share pool 
 
   The 'D' Shares were originally issued in 2010. The 'D' Share pool is now 
also effectively fully invested and holds a portfolio of 21 investments, 
of which 17 are qualifying or partially qualifying. 
 
   As with the 'C' Share pool, there were a number of small investment 
valuation movements in the period, with increases effectively cancelling 
out decreases. The portfolio produced a steady flow of investment income 
over the period and is generally making satisfactory progress. 
 
   At 31 December 2013, the NAV of a combined holding of one 'D' Share and 
one 'E' Share stood at 77.0p, an increase of 2.8% over the period after 
adding back dividends of 5.0p per share paid in the period. 'D' Share 
dividends paid to date total 17.5p such that Total Return (NAV plus 
cumulative dividends to date) is now 94.5p. Initial NAV was 94.5p. 
 
   In line with the dividend policy, the Board is proposing to pay a final 
dividend of 2.5p per 'D' Share on 27 June 2014 to Shareholders on the 
register at the close of business on 16 May 2014. 
 
   'F' Share pool 
 
   The 'F' Share pool was launched in 2012 and it still in its initial 
investment phase. At 31 December 2013, the pool held 13 VCT qualifying 
or partly qualifying investments and a further 8 non-qualifying 
investments, most of which are in the form of secured loans. 
 
   The 'F' Share portfolio suffered setbacks in respect of two investments 
during the period which has depressed overall performance. Despite this, 
the remainder of the portfolio has performed reasonably in line with 
plan and has the potential to make up lost ground as the investments 
mature. 
 
   At 31 December 2013, the 'F' Share NAV stood at 79.9p, which represents 
a decrease of 4.1% over the period after adjusting for the dividends of 
5p per share paid in the period. Total Return (NAV plus cumulative 
dividends to date) is now 89.9p, 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 27 June 2014 to Shareholders on the 
register at the close of business on 16 May 2014. 
 
   Share buybacks 
 
   The Company operates a general policy of buying in its own shares for 
cancellation when any become available in the market. The current policy 
is to buy in 'C' Shares, 'A' Shares, 'D' Shares or 'E' Shares at 
approximately a 10% discount to the latest published NAV of those share 
classes. In respect of the 'F' Shares in the initial years after issue, 
any such purchases will be undertaken at a price equal to the latest 
published NAV (i.e. at nil discount). All buybacks are subject to 
regulatory restrictions and other factors such as the availability of 
liquid funds. 
 
   During the period, the Company repurchased shares as follows: 
 
 
 
 
Share class  Number  Average price  Total consideration 
'D' Shares   15,000  71.5p          GBP10,781 
 
 
   A resolution to renew the authority for the Company to purchase its own 
shares will be proposed at the forthcoming AGM. 
 
   Annual General Meeting 
 
   The Company's eighth AGM will be held at 10 Lower Grosvenor Place, 
London SW1W 0EN at 11:00 a.m. on 17 June 2014. 
 
   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 
above. 
 
   Outlook 
 
   During the latter part of the current financial year the task of seeking 
realisations from the 'C' Share pool investments will commence in order 
to return funds to Shareholders. Although this process is generally 
challenging, the Manager is optimistic that a good proportion of exits 
can be achieved within the first 12 months of the start of the process. 
 
   The commencement of the realisation phase in respect of the 'D' Share 
pool is scheduled to commence in April 2015. Over the next year the 
Manager will be developing plans that can provide exits when the time 
comes. 
 
   The 'F' Share pool is still in its initial investment phase and, along 
with the new 'H' Share pool, expects to make a number of new VCT 
qualifying investments over the next year as they build their investment 
portfolios. 
 
   Despite a small number of problem investments overall the Board is 
satisfied with the investment portfolios across the various share pools 
and believes that the general improvement in the outlook for the economy 
should assist in delivering satisfactory outcomes for each group of 
Shareholders. 
 
   Michael Robinson 
 
   Chairman 
 
   INVESTMENT MANAGER'S REPORT- 'C' SHARE POOL 
 
   Introduction 
 
   The 'C' Share pool holds investments in 18 companies and is now fully 
invested. The majority of the 'C' Share pool investments have performed 
in line with expectations. There have, however, been a number of 
adjustments which resulted in a small overall fall in value. 
 
   Net asset value and results 
 
   At 31 December 2013, the 'C' Share NAV stood at 90.7p and the 'A' Share 
NAV at 0.1p, giving a combined NAV of 90.8p. Total Return (NAV plus 
cumulative dividends to date) was 113.3p for a combined holding of one 
'C' and one 'A' Share. This represents a net increase of 1.0p over the 
period (after adjusting for dividends paid during the period of 5.0p per 
'C' Share), equivalent to an increase of 1.1%. 
 
   The return on ordinary activities of the 'C' Share pool for the period 
was GBP75,000 (2013: GBP585,000), comprising a revenue profit of 

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