Downing Three VCT Downing Three Vct 3 Plc : Final -2-
28 Avril 2014 - 7:58PM
UK Regulatory
GBP162,000 (2013: GBP286,000) and a capital loss of GBP87,000 (2013:
GBP299,000).
'C' Share pool - investment activity
During the year, the Company made two small follow on investments for a
total of GBP83,000. There was also a transfer of GBP61,000 on Redmed
Limited from the 'C' share pool to the 'F' share pool being part of the
GBP79,000 disposed of in total.
The Company sold its holding in Bijou Wedding Venues, the exclusive
wedding venue located in Chertsey, generating proceeds of GBP925,000.
'C' Share pool - portfolio valuation
The majority of the investments within the 'C' Share pool performed
satisfactorily throughout the year and the values of several of these
have been modestly uplifted at the year end. There have, however, also
been a number of significant negative adjustments to value resulting in
overall unrealised losses of GBP76,000.
The 3D Pub Co Limited owns two pubs in Surrey: The Jolly Farmers in
Reigate; and The Fox Revived in Horley. Recent performance has been
encouraging and the valuation has been increased by GBP40,000.
A GBP30,000 increase in value was recognised for Quadrate Catering
Limited which owns the Marco Pierre White Steakhouse located in the
iconic Cube building in Birmingham. Performance of the restaurant is
ahead of projections.
Further increases in value were recognised in Westow House Limited,
GBP9,000 and East Dulwich Tavern, GBP21,000. These were partially offset
by small reductions in value on Mosaic, GBP20,000, and Redmed GBP4,000.
Future Biogas (SF) Limited, the owner and operator of a biogas plant in
Norfolk, has experienced significant operational issues which have
resulted in unplanned downtime. The issues have now all been resolved
however cumulative performance to date is notably below plan. This has
resulted in a small decrease in the valuation of GBP42,000, although the
investment remains valued above original cost.
Chapel Street Services Limited, Chapel Street Food and Beverage Limited
and Chapel Street Hotel Limited were written down by GBP37,000,
GBP37,000 and GBP1,000 respectively. The businesses all trade from the
Hotel Indigo in Liverpool. Occupancy at the hotel has been lower than
forecast as a result of stiff competition, and as a result each of the
businesses is trading behind their original business plan.
A GBP35,000 write down in value was made to Honeycombe Pubs VCT Limited
which owns a bar in Burnley, Lancashire. The pub is in the process of
being sold and the reduced valuation reflects the anticipated net
proceeds due on disposal.
Outlook
Although the British economy remains in a fragile state, we believe that
the 'C' Share portfolio is reasonably resilient and will produce good
results over the remaining planned life of the share pool.
We will be seeking to start returning funds to 'C' Shareholders later
this year, being 5 years after the close of the 'C' Share offer, and
have started planning investment realisations.
Downing Managers 3 Limited
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 2013:
'C' Share pool
Valuation
movement % of
Cost Valuation in period portfolio
GBP'000 GBP'000 GBP'000
VCT qualifying investments and partially qualifying
investments
Future Biogas (SF) Limited* 697 731 (42) 11.1%
Atlantic Dogstar Limited 438 728 - 11.1%
Domestic Solar Limited 500 560 - 8.5%
Redmed Limited 350 451 (4) 6.8%
Westow House Limited 304 427 9 6.5%
East Dulwich Tavern Limited 344 406 21 6.2%
Quadrate Spa Limited* 363 363 - 5.5%
Quadrate Catering Limited 330 359 30 5.5%
The 3D Pub Company Limited 267 227 40 3.5%
Ecossol Limited 250 212 - 3.2%
Mosaic Spa and Health Clubs
Limited* 125 105 (20) 1.6%
Chapel Street Food and Beverage
Limited 50 13 (37) 0.2%
Chapel Street Services Limited 50 13 (37) 0.2%
4,068 4,595 (40) 69.9%
Non-qualifying investments
Hoole Hall Country Club Holdings
Limited 581 581 - 8.8%
The Thames Club Limited 500 500 - 7.6%
Honeycombe Pubs VCT plc 188 66 (35) 1.0%
Vermont Developments Limited 25 25 - 0.4%
Chapel Street Hotel Limited 2 1 (1) 0.0%
1,296 1,173 (36) 17.8%
5,364 5,768 (76) 87.7%
Cash at bank and in hand 809 12.3%
Total investments 6,577 100%
* Part-qualifying investment
Summary of investment movements
Additions
Cost
GBP'000
VCT qualifying investments
Future Biogas (SF) Limited 70
Non-qualifying investments
Honeycombe Pubs VCT Limited 13
Total 'C' Share pool 83
Disposals
MV at Gain Total realised
01/02/13 Disposal against gain during
Cost ** proceeds cost the period
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
VCT qualifying
investments
Bijou Wedding Venues
Limited 815 901 925 110 24
Non-qualifying
investments
Redmed Limited 79 79 79 - -
894 980 1,004 110 24
* Part-qualifying investment
** Adjusted for additions in the period
INVESTMENT MANAGER'S REPORT- 'D' SHARE POOL
Introduction
The 'D' Share pool holds investments in 21 companies and is now fully
invested. The portfolio has experienced continued stable performance
with one new investment being made and relatively small movements in
value.
Net asset value and results
At 31 December 2013, the 'D' Share NAV stood at 76.9p and the 'E' Share
NAV at 0.1p, giving a combined NAV of 77.0p. Total Return (NAV plus
cumulative dividends to date) was 94.5p for a combined holding of one
'D' and one 'E' Share. This represents a net increase of 2.2p over the
period (after adjusting for dividends paid during the period of 5.0p per
'D' Share), equivalent to an increase of 2.8%.
The return on ordinary activities for the 'D' Shares for the period was
a return of GBP215,000 (2013: GBP151,000) being a revenue profit of
GBP221,000 (2013: GBP175,000) and a capital loss of GBP6,000 (2013 loss:
GBP24,000).
'D' Share pool - investment activity
During the year, the Company made a small number of investments
totalling GBP136,000. One new investment of GBP42,000 in Kilmarnock
Monkey Bar Limited, after one of the two pubs owned by Camandale was
transferred in to the Company. The Monkey Bar is now let to a third
party manager, who pays a regular rent to the company. Additionally, a
further investment of GBP94,000 was made in to Future Biogas (RR)
Limited.
In addition to the above, GBP500,000 of loan stock was transferred from
the 'D' share pool to the 'G' share pool in Aminghurst, the property
development company in South Devon.
'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 loss of GBP6,000.
Green Electricity Generation Limited owns a portfolio of solar panels on
the rooftops of domestic properties across the UK. The panels continue
to generate income and have established a good track record, resulting
in an uplift of GBP46,000.
A GBP40,000 increase in value was recognised for Quadrate Catering
Limited which owns the Marco Pierre White Steakhouse located in the
iconic Cube building in Birmingham. Performance of the restaurant is
ahead of projections.
Kidspace Adventures Holdings Limited owns three well established
children's play areas in Croydon, Romford and Epsom. The company
continues to perform well and as such the valuation has been increased
by GBP34,000.
Additionally, a small increase in value of GBP22,000 was recognised on
Alpha Schools to reflect that the business is performing to plan.
On the negative side, Mosaic Spa and Health Clubs Limited owns and
manages two health clubs: The Shrewsbury Club, in Shrewsbury; and Holmer
Park in Hereford. It also provides gym and spa management services to
hotels, universities and corporate clients. Both Holmer Park and the
Shrewsbury club have underperformed against expectations throughout the
period and the value has been reduced by GBP88,000.
A GBP35,000 reduction in value was recognised for Liverpool Nurseries
(Holdings) Limited. This cautionary reduction in value reflects that the
business is performing behind budget.
A further reduction in value was recognised on Camandale Limited of
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