Downing Three VCT Downing Three Vct 3 Plc : Final -3-
April 28 2014 - 1:58PM
UK Regulatory
GBP25,000 after one of the two pubs owned by the Company was transferred
into a new investment, Kilmarnock Monkey Bar Limited. The new valuation
of Camandale reflects the standalone valuation of the remaining pub, The
Riverbank.
Outlook
After some setbacks in the portfolio, the 'D' share pool is now starting
to show signs of improved performance with a number of valuation uplifts
recognised for investments that are performing to plan. We are satisfied
with progress and believe there is good potential for growth ahead of
2015, when the pool will start realising its investments.
Downing Managers 3 Limited
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 2013:
'D' Share pool
Valuation
movement % of
Cost Valuation in period portfolio
GBP'000 GBP'000 GBP'000
VCT qualifying and partially qualifying
investments
Future Biogas (Reepham Road)
Limited 842 842 - 10.9%
Quadrate Catering Limited 441 481 40 6.2%
Domestic Solar limited 400 448 - 5.8%
Kidspace Adventures Holdings
Limited 375 409 34 5.3%
Alpha Schools Holdings Limited 367 402 22 5.2%
Liverpool Nurseries (Holdings)
Limited 435 400 (35) 5.2%
Mosaic Spa and Health Clubs
Limited* 475 387 (88) 5.0%
Green Electricity Generation
Limited 250 303 46 3.9%
Westcountry Solar Solutions
Limited 250 250 - 3.2%
West Tower Property Limited 250 250 - 3.2%
Ecossol Limited 250 213 - 2.8%
Avon Solar Energy Limited 210 210 - 2.8%
Slopingtactic Limited 195 195 - 2.5%
Progressive Energies Limited 170 170 - 2.2%
Ridgeway Pub Company Limited 136 126 - 1.6%
Camandale Limited* 516 58 (25) 0.8%
6,058 5,640 (6) 73.0%
Non-qualifying investments
Aminghurst Limited 1,650 1,650 - 21.4%
Fenkle Street LLP 122 122 - 1.6%
Commercial Street Hotel Limited 100 100 - 1.3%
Kilmarnock Monkey Bar Limited 42 42 - 0.5%
1,914 1,914 - 24.8%
7,972 7,554 (6) 97.8%
Cash at bank and in hand 173 2.2%
Total investments 7,727 100%
* Part-qualifying investment
Summary of investment movements
Additions
Cost
GBP'000
VCT qualifying investments
Future Biogas (Reepham Road) Limited 94
Non-qualifying investments
Kilmarnock Monkey Bar Limited 42
Total 'D' Share pool 136
Disposals
MV at Loss
01/02/13 Disposal against Total realised
Cost ** proceeds cost gain during the period
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
VCT qualifying and
partially qualifying
investments
Avon Solar
Energy
Limited 40 40 40 - -
Non-qualifying
investments
Aminghurst
Limited 500 500 500 - -
Camandale
Limited 45 32 32 (13) -
Liverpool
Nurseries
(Holdings)
Limited 32 32 32 - -
Total 'D' Share
pool 617 604 604 (13) -
** Adjusted for additions in the period
INVESTMENT MANAGER'S REPORT- 'F' SHARE POOL
Introduction
The 'F' share pool has started to build a qualifying investment
portfolio with a focus on asset backed businesses and those with
predictable revenue streams. In the period, four new qualifying
investments were made, as well as two non-qualifying investments, at a
total cost of GBP2,052,000. Two follow on investments totalling
GBP105,000 were also made in the period.
Net asset value and results
At 31 December 2013, the 'F' Share NAV stood at 79.9p. Total Return (NAV
plus cumulative dividends to date) for shareholders who invested in the
original share offer is now 89.9p. This represents a net decrease of
3.6p over the period (after adjusting for dividends paid during the
period of 5.0p per Share), equivalent to a decrease of 4.1%.
The return on ordinary activities for the 'F' Share pool for the period
was a loss of GBP389,000 (2013: loss GBP105,000) being a revenue profit
of GBP15,000 (2013: loss GBP10,000) and a capital loss of GBP404,000
(2013: loss GBP95,000).
'F' Share pool - investment activity
In September 2013, a new investment totalling GBP644,000 was made in
Pearce and Saunders Limited, a new freehold pub company that will be
managed by the Antic London team.
In May 2013, the 'F' Share pool invested GBP311,000 in Redmed Limited to
allow the company to complete the purchase and refurbishment of a high
street bar in Lincoln city centre. The bar was refurbished and
re-launched in September 2013 as Craft Bar & Kitchen. Since September,
loan stock redemptions of GBP35,000 have been received, total investment
cost is now GBP276,000.
GBP200,000 was invested in Pabulum Pubs Limited in April 2013 and a
total of GBP290,000 invested in Augusta Pub Company Limited, both
companies have purchased freehold pubs in London.
In July 2013, a GBP500,000 loan was made to Pub People Limited which
owns and operates 50 pubs in the East Midlands. This non-qualifying
investment is secured against five freehold pubs in the company's
estate.
A GBP107,000 non-qualifying investment was made in Dominions House
Limited in March 2013 in a building in Cardiff.
'F' Share pool - portfolio valuation
The majority of the 'F' Share pool investments have performed in line
with expectations over the period and continued to be valued at original
cost, however, there have been four adjustments.
A full provision was made against Southampton Hotel Developments Limited
following the contractor going in to administration. With significant
doubts as to whether any value can be recovered, the investment has been
written down by GBP300,000 to nil.
Performance of the nightclub owned by City Falkirk Limited has
unfortunately continued to operate below expectation and a further
reduction in value of GBP96,000 has been made. We are working closely
with the club's management in order to try to bring the trading back on
track, however, it is clear that the depressed economic conditions are a
major contributing factor to the weak performance.
A reduction of GBP31,000 has been made to Cheers Dumbarton Limited
following a period of below budget trading. The company was set up to
purchase the freehold trade and assets of Cheers nightclub in Dumbarton,
Scotland.
On the positive side, Kidspace Adventures Holdings Limited, which owns
three well established children's play areas in Croydon, Romford and
Epsom, continues to perform well. As such the valuation has been
increased by GBP23,000.
In total the portfolio produced unrealised losses of GBP404,000 in the
year.
Outlook
The 'F' Share portfolio is still at a relatively early stage and the
initial setbacks in the portfolio are disappointing. The focus for the
coming year will be to identify further good quality qualifying
investments to utilise remaining funds and to continue building a
portfolio with good potential for growth over the next four years when
the commencement of the realisations are planned.
Downing Managers 3 Limited
Portfolio of investments
The following investments, all of which are incorporated in England and
Wales, were held at 31 December 2013:
Valuation
movement % of
'F' Share pool Cost Valuation in period portfolio
GBP'000 GBP'000 GBP'000
VCT qualifying and partially qualifying
investments
Tor Solar PV Limited 680 680 - 7.9%
Pearce and Saunders Limited* 644 644 - 7.4%
Vulcan Renewables Limited 588 588 - 6.8%
Augusta Pub Company Limited 290 290 - 3.3%
Redmed Limited* 276 276 - 3.2%
Kidspace Adventures Holdings
Limited 250 273 23 3.1%
Fubar Stirling Limited 268 268 - 3.1%
City Falkirk Limited 421 244 (96) 2.8%
Pabulum Pubs Limited 200 200 - 2.3%
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