Downing THREE VCT plc
Half-Yearly Report for the six months ended 30 June 2016
PERFORMANCE SUMMARY
'C' Share pool | 30 Jun 2016 | 31 Dec 2015 | 30 Jun 2015 | ||
Pence | Pence | Pence | |||
Net asset value per 'C' Share | - | 53.2 | 49.3 | ||
Net asset value per 'A' Share | - | 0.1 | 0.1 | ||
Cumulative distributions per 'C' Share | 120.36 | 75.0 | 75.0 | ||
Adjusted for estimated performance fee | - | (7.4) | (7.0) | ||
Total return per 'C' Share and 'A' Share | 120.36 | 120.9 | 117.4 |
'D' Share pool | 30 Jun 2016 | 31 Dec 2015 | 30 Jun 2015 | ||
Pence | Pence | Pence | |||
Net asset value per 'D' Share | 34.7 | 51.3 | 72.9 | ||
Net asset value per 'E' Share | 0.1 | 0.1 | 0.1 | ||
Cumulative distributions per 'D' Share | 66.5 | 49.5 | 22.5 | ||
Total return per 'D' Share and 'E' Share | 101.3 | 100.9 | 95.5 |
'F' Share pool | 30 Jun 2016 | 31 Dec 2015 | 30 Jun 2015 | ||
Pence | Pence | Pence | |||
Net asset value per 'F' Share | 69.7 | 71.5 | 71.7 | ||
Cumulative distributions per 'F' Share | 22.5 | 20.0 | 17.5 | ||
Total return per 'F' Share | 92.2 | 91.5 | 89.2 |
'H' Share pool | 30 Jun 2016 | 31 Dec 2015 | 30 Jun 2015 | ||
Pence | Pence | Pence | |||
Net asset value per 'H' Share | 88.9 | 90.5 | 93.3 | ||
Cumulative distributions per 'H' Share | 12.5 | 10.0 | 7.5 | ||
Total return per 'H' Share | 101.4 | 100.5 | 100.8 |
'J' Share pool | 30 Jun 2016 | 31 Dec 2015 | 30 Jun 2015 | ||
Pence | Pence | Pence | |||
Net asset value per 'J' Share | 97.7 | 98.5 | 99.9 |
CHAIRMAN'S STATEMENT
Introduction
I am pleased to present the Half-Yearly Report for the six months ended 30 June 2016. The period has seen the Company complete the process of returning capital to 'C' Shareholders and make a start in returning funds to investors in the 'D' Share pool.
Net asset values and overview
'C' Share pool
The task of returning funds to investors in the 'C' Share pool was completed with final dividends paid on 24 March 2016. The Total Return to Shareholders was 120.36p for a holding of one 'C' Share and one 'A' Share, compared to the cost net of income tax relief in 2009 of 70p.
The Company is now taking steps to cancel the 'C' Shares and 'A' Shares and will update relevant Shareholders on progress shortly.
'D' Share pool
The 'D' Share pool has now commenced the process of exiting from its investments. During the period sufficient realisations were completed to allow the payment of a dividend of 17.0p per 'D' Share in March 2016.
At 30 June 2016, the remaining net asset value ("NAV") for a combined holding of one 'D' Share and one 'E' Share was 34.8p, an increase of 0.4p (0.8%) over the period. Total Return (NAV plus dividends paid to date) is now 101.3p for a combined holding, compared to the original cost, net of income tax relief, of 70p per share.
'F' Share pool
The 'F' Share pool launched in 2012 and is scheduled to start exiting from investments in early 2018.
At 30 June 2016, the NAV for a holding of one 'F' Share was 69.7p, a net increase of 0.7p (1.0%) over the period (after adjusting for dividends paid during the period of 2.5p per 'F' Share). Total Return (NAV plus dividends paid to date) is now 92.2p, compared to the original cost, net of income tax relief, of 70p per share.
'H' Share pool
The 'H' Share pool raised funds in 2014 and is in the process of building its VCT qualifying portfolio. The target date to start realising investments is 2019.
At 30 June 2016, the NAV for a holding of one 'H' Share was 88.9p. This represents a net increase of 0.9p (1.0%) over the period (after adjusting for the dividends paid during the period of 2.5p per 'H' Share). Total Return (NAV plus dividends paid to date) is now 101.4p, compared to the initial NAV of 100p and the original cost to investors (net of income tax relief) of between 70.4p and 80.1p (depending on initial costs).
'J' Share pool
The 'J' Share pool raised funds in 2015 and is in the process of building its VCT qualifying portfolio. The target date to start realising investments is 2020.
At 30 June 2016, the NAV for a holding of one 'J' Share was 97.7p, compared to the initial NAV of 100p and the original cost to investors (net of income tax relief) of between 70.0p and 76.5p (depending on initial costs).
A full review for each share pool is covered in the specific Investment Manager's Reports.
Dividends
In line with the Company's stated policies, interim dividends will be paid as follows:
'F' Shares 2.5p per share
'H' Shares 2.5p per share
Each of the above dividends will be paid on 16 December 2016 to Shareholders on the register at 18 November 2016.
No interim dividend is being declared in respect of the 'D' Shares as further return of capital dividends will be declared once further investment realisation have been completed.
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
The Company has a general policy in the first five years after the launch of a share class of buying in its own shares that become available in the market for cancellation. As a result, the Company will buy 'F' Shares, 'H' Shares and 'J' Shares that become available in the market and will, subject to liquidity and regulatory constraints, buy at prices approximately equal to net asset value i.e. with no discount.
No shares were purchased in the six month period to 30 June 2016.
Outlook
The Board is pleased to have delivered a good final outcome for 'C' Shareholders and the Manager's focus has now shifted to the exit process for the 'D' Share pool. Over the remainder of the year we expect to see significant progress in exiting from the remaining 'D' Share pool investments and hope to be in a position to declare a further dividend later in 2016 or early 2017. 'D' Shareholders should note that the exit process may well present some challenges which could result in the exit process taking some time to complete.
We expect investment activity in the 'F' Share pool to be reasonably low during the remainder of the year as we look to the portfolio companies to develop further ahead of the planned exit date.
The 'H' Share and 'J' Share pools have invested in a number of companies that are preparing to commence trading and so these will require close monitoring as they start to establish businesses.
In terms of the general outlook for small businesses, the result of the EU Referendum appears to have created a period of uncertainty for the UK economy and some volatility in stock markets. With a large proportion of the Company's funds already invested, the Board believes that any possible negative impact on the Company's performance will be limited. A weaker longer term economy could result in greater difficulty in exiting from investments at the appropriate time, however the Directors feel that this is not a major risk. The Board will, of course, continue to monitor developments closely.
I look forward to updating Shareholders in my statement with the Annual Report to 31 December 2016.
Michael Robinson
Chairman
INVESTMENT MANAGER'S REPORT
'C' SHARE POOL
The 'C' Share pool completed the task of realising its investments in January 2016, and on 24 March 2016, paid final dividends.
Net asset value and results
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). We believe that this represents a very good return to Shareholders and brings the investment by 'C' Shareholders to a close.
Investment activity in the period
The 'C' Share pool had two investments at the start of the period. Both Quadrate Spa Limited and Quadrate Catering Limited were sold generating gains over original cost of £160,000.
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 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. We will notify Shareholders of progress in due course.
Downing LLP
SUMMARY OF INVESTMENT MOVEMENTS
'C' SHARE POOL
for the six months ended 30 June 2016
Disposals | Cost | Marketvalue at01/01/16 | Disposalproceeds | Gainagainstcost | TotalRealisedgain |
£'000 | £'000 | £'000 | £'000 | £'000 | |
VCT qualifying and partially qualifying investments | |||||
Quadrate Spa Limited | 258 | 381 | 381 | 123 | - |
Quadrate Catering Limited | 330 | 367 | 367 | 37 | - |
588 | 748 | 748 | 160 | - |
INVESTMENT MANAGER'S REPORT
'D' SHARE POOL
The 'D' Share pool is in the process of seeking to realise its investments in order to return funds to 'D' Shareholders.
Investment activity
During the period under review, there were three full disposals and four partial disposals which produced proceeds of £1.5 million and showed a gain against previous carrying value of £109,000.
At 30 June 2016, the pool held 11 investments with a valuation of £3.0 million. One minor valuation change was made at the period end resulting in a total valuation reduction of £58,000 in Mosaic Spa and Health Clubs Limited. The carrying values adopted at the end of the period are consistent with the values at which we believe the investments can be exited.
The majority of investments have performed to plan although a small number which have underperformed historically are yet to fully recover.
Realisation plans
There are exit plans in place for the remaining 11 investments. The significant holdings in Kidspace Adventures Holdings Limited, Westcountry Solar Solutions Limited and Avon Solar Energy Limited are expected to exit in the next few months.
Although Gara Rock Resort Limited, formerly Aminghurst Limited, was sold in March 2016, the timing of the loan repayments depends on when the underlying apartments are sold. We are exploring some options to draw the investment to a conclusion earlier than might otherwise be the case.
Net asset value and results
At 30 June 2016, the net asset value ("NAV") for a combined holding of one 'D' Share and one 'E' Share was 34.8p, an increase of 0.4p (0.8%) over the period. Total Return (NAV plus dividends paid to date) is now 101.3p for a combined holding.
The profit on ordinary activities for the 'D' Shares, after taxation, for the period was £38,000, comprising a revenue loss of £13,000 and a capital profit of £51,000.
Outlook
The remainder of the year will be a busy period in terms of investment realisations and we expect the next major distribution to Shareholders to be made before the end of the year or early 2017.
Downing LLP
SUMMARY OF INVESTMENT PORTFOLIO
'D' SHARE POOL
as at 30 June 2016
Cost | Valuation | Unrealisedloss inperiod | % ofPortfolioby value | |
£'000 | £'000 | £'000 | | |
| ||||
VCT qualifying and partially qualifying investments | | |||
Kidspace Adventure Holdings Limited | 375 | 465 | - | 13.0% |
Mosaic Spa and Health Clubs Limited * | 521 | 288 | (58) | 8.1% |
Westcountry Solar Solutions Limited | 250 | 250 | - | 7.0% |
Avon Solar Energy Limited | 210 | 218 | - | 6.1% |
Future Biogas (Reepham Road) Limited | 451 | 98 | - | 2.7% |
Camandale Limited* | 422 | 2 | - | 0.1% |
Quadrate Spa Limited | 144 | - | - | 0.0% |
| ||||
Non-qualifying investments | | |||
Gara Rock Resort Limited | 1,322 | 1,322 | - | 37.1% |
Fenkle Street LLP | 122 | 220 | - | 6.2% |
Future Biogas (SF) Limited | 84 | 84 | - | 2.4% |
Redmed Limited | 21 | 19 | - | 0.5% |
| ||||
3,922 | 2,966 | (58) | 83.2% | |
| ||||
Cash at bank and in hand | 597 | 16.8% | ||
| ||||
Total | 3,563 | 100% |
* Partially qualifying investment
SUMMARY OF INVESTMENT MOVEMENTS
'D' SHARE POOL
for the six months ended 30 June 2016
Disposals | Cost | Marketvalue at01/01/16 | DisposalProceeds * | Gain/(loss)againstcost | TotalRealisedgain |
£'000 | £'000 | £'000 | £'000 | £'000 | |
VCT qualifying and partially qualifying investments | |||||
Quadrate Catering Limited | 441 | 539 | 581 | 140 | 42 |
Future Biogas (Reepham Road) Limited | 130 | 97 | 130 | - | 33 |
Liverpool Nurseries (Holdings) Limited | - | - | 11 | 11 | 11 |
Quadrate Spa Limited | 352 | 520 | 520 | 168 | - |
Non-qualifying investments | |||||
Future Biogas (SF) Limited | 85 | 85 | 102 | 17 | 17 |
Kilmarnock Monkey Bar Limited | - | - | 6 | 6 | 6 |
Commercial Street Hotel Limited | 100 | 100 | 100 | - | - |
Redmed Limited | 6 | 5 | 5 | (1) | - |
1,114 | 1,346 | 1,455 | 341 | 109 |
* Adjusted for additions in the year
INVESTMENT MANAGER'S REPORT
'F' SHARE POOL
The 'F' Share pool is fully invested in a portfolio focussed on asset backed businesses and those with predictable revenue streams. The 'F' Share pool is scheduled to start realising investments in 2017 in order to return funds to shareholders in 2018.
Investment activity
Four new investments were made in the period totalling £700,000. £300,000 was invested into Vectis Power Generation Limited which is seeking to build and develop renewable energy plants; £150,000 was invested into Brownfields Energy Limited which is seeking to develop small-scale waste disposal projects; £125,000 was invested into both Rhodes Renewables Limited and Morava Renewables Limited which are both exploring opportunities in the wood refinery sector.
One full exit was completed in the period for Grasshoppper 2007 Limited, the company that owns The Grasshopper Inn, a public house near Westerham, Kent which was sold and generated proceeds equivalent to the original cost of £378,000.
One notable partial divestment took place in the period being the part repayment of a non-qualifying loan to Gara Rock Resort Limited, formerly Aminghurst Limited, which generated proceeds of £494,000.
The majority of investments remain valued at or above cost and there was one small valuation movement in the period on Atlantic Dogstar Limited. The company owns a group of London pubs which are performing to plan and as such the valuation has been increased by £18,000.
Net asset value, results and dividend
At 30 June 2016, the net asset value ("NAV") for a holding of one 'F' Share was 69.7p, an increase of 0.7p (1.0%) over the period. Total Return (NAV plus dividends paid to date) is now 92.2p for a combined holding.
The gain on ordinary activities for the 'F' Shares, after taxation, for the period was £71,000, comprising a revenue profit of £53,000 and a capital gain of £18,000.
The Company will pay an interim dividend of 2.5p per 'F' Share, on 16 December 2016 to 'F' Shareholders on the register at 18 November 2016.
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 2017.
Downing LLP
SUMMARY OF INVESTMENT PORTFOLIO
'F' SHARE POOL
as at 30 June 2016
Cost | Valuation | Unrealisedgain inperiod | % ofPortfolioby value | |
£'000 | £'000 | £'000 | | |
| ||||
VCT qualifying and partially qualifying investments | | |||
Apex Energy Limited | 1,000 | 1,000 | - | 13.3% |
Vulcan Renewables Limited | 653 | 778 | - | 10.4% |
Goonhilly Earth Station Limited | 760 | 760 | - | 10.1% |
Lambridge Solar Limited | 500 | 543 | - | 7.2% |
Merlin Renewables Limited | 500 | 500 | - | 6.7% |
Augusta Pub Company Limited | 290 | 324 | - | 4.3% |
Kidspace Adventures Holdings Limited | 250 | 310 | - | 4.1% |
Vectis Power Generation Limited | 300 | 300 | - | 4.0% |
Pearce and Saunders Limited | 497 | 248 | - | 3.3% |
Pabulum Pubs Limited | 200 | 229 | - | 3.1% |
Atlantic Dogstar Limited | 200 | 218 | 18 | 2.9% |
Fresh Green Power Limited | 200 | 200 | - | 2.7% |
City Falkirk Limited | 422 | 177 | - | 2.4% |
Fubar Stirling Limited | 268 | 169 | - | 2.3% |
Brownfields Energy Limited | 150 | 150 | - | 2.0% |
Rhodes Renewables Limited | 125 | 125 | - | 1.7% |
Morava Renewables Limited | 125 | 125 | - | 1.7% |
Green Energy Production UK Limited | 100 | 100 | - | 1.4% |
Cheers Dumbarton Limited | 48 | 17 | - | 0.2% |
Redmed Limited * | 13 | 11 | - | 0.1% |
Lochrise Limited | 13 | - | - | 0.0% |
| ||||
Non-qualifying investments | | |||
Baron House Developments LLP | 481 | 481 | - | 6.4% |
Gara Rock Resort Limited | 345 | 345 | - | 4.6% |
London City Shopping Centre Limited | 66 | 66 | - | 0.9% |
Pearce and Saunders DevCo Limited | 46 | 46 | - | 0.6% |
Southampton Hotel Development Limited | 298 | - | - | 0.0% |
| ||||
7,850 | 7,222 | 18 | 96.4% | |
| ||||
Cash at bank and in hand | 269 | 3.6% | ||
| ||||
Total | 7,491 | 100.0% |
* Partially qualifying investment
SUMMARY OF INVESTMENT MOVEMENTS
'F' SHARE POOL
as at 30 June 2016
Additions | £'000 |
Qualifying investments | |
Vectis Power Generation Limited | 300 |
Brownfields Energy Limited | 150 |
Rhodes Renewables Limited | 125 |
Morava Renewables Limited | 125 |
Total | 700 |
Disposals | Cost | Marketvalue at01/01/16 * | Disposalproceeds | Lossagainstcost | TotalRealisedgain |
£'000 | £'000 | £'000 | £'000 | £'000 | |
VCT qualifying and partially qualifying investments | |||||
Grasshopper 2007 Limited | 378 | 378 | 378 | - | - |
Redmed Limited | 5 | 3 | 3 | (2) | - |
Non-qualifying investments | |||||
Gara Rock Resort Limited | 494 | 494 | 494 | - | - |
877 | 875 | 875 | (2) | - |
* adjusted for purchases made in the period
INVESTMENT MANAGER'S REPORT
'H' SHARE POOL
The 'H' Share pool raised funds in 2014 and has made good progress in building the initial VCT qualifying portfolio. The fund is expected to be fully qualifying by 31 December 2016.
Investment activity
During the last six months, six qualifying investments were made totalling £4.4 million and one non-qualifying investment for £850,000 as we continue to build the qualifying portfolio of the 'H' Share pool.
The qualifying investments include £1.5 million in Hermes Renewables Limited, which is seeking to build and operate a wood pelleting plant.
£850,000 was invested in Quadrate Catering Limited which operates a restaurant in the iconic Cube Complex in Birmingham.
£613,000 was invested in both Ironhide Generation Limited and £614,000 into Indigo Generation Limited. £492,000 was invested in Rockhopper Renewables Limited and £281,000 in SF Renewables (Solar) Limited. All of the above investments are in the process of acquiring land in India to build and operate 15MW ground mounted solar arrays.
One non-qualifying investment was made in Quadrate Spa Limited for £850,000 which owns and operates a health club business in The Cube complex in Birmingham.
Two non-qualifying loans were repaid in full in the period being Pub People Limited, the public house operator in the East Midlands, repaid £984,000 and Ludlow Taverns Limited which repaid £388,000.
The majority of investments remain valued at cost and there was one small valuation movement in the period on Atlantic Dogstar. The company owns a group of London pubs which are performing to plan and as such the valuation has been increased by £88,000.
Net asset value and results
At 30 June 2016, the net asset value per 'H' Share was 88.9p, a net increase of 0.9p (1.0%) over the period. Total Return (NAV plus dividends paid to date) is now 101.4p.
Results and dividend
The gain on ordinary activities for the 'H' Shares, after taxation, for the period was £128,000, comprising a revenue profit of £40,000 and a capital gain of £88,000.
The Company will pay an interim dividend of 2.5p per 'H' Share, on 16 December 2016 to 'H' Shareholders on the register at 18 November 2016.
Outlook
The 'H' Share pool will become fully qualifying at the year end and as a result our focus will shift to the close monitoring and support of the portfolio companies in order to nurture growth before the planned exit date.
Downing LLP
SUMMARY OF INVESTMENT PORTFOLIO
'H' SHARE POOL
as at 30 June 2016
Cost | Valuation | Unrealisedgain inperiod | % ofPortfolioby value | |
£'000 | £'000 | £'000 | | |
VCT qualifying investments | | |||
Hermes Renewables Limited | 1,500 | 1,500 | - | 12.5% |
Apex Energy Limited | 1,300 | 1,300 | - | 10.8% |
Hedderwick Limited | 1,250 | 1,250 | - | 10.4% |
Atlantic Dogstar Limited | 1,000 | 1,088 | 88 | 9.1% |
Kidspace Adventures Holdings Limited | 1,085 | 1,085 | - | 9.1% |
Quadrate Catering Limited | 850 | 850 | - | 7.1% |
Ironhide Generation Limited | 613 | 613 | - | 5.1% |
Indigo Generation Limited | 613 | 613 | - | 5.1% |
Antelope Pub Limited | 500 | 500 | - | 4.2% |
Rockhopper Renewables Limited | 492 | 492 | - | 4.1% |
Oak Grove Renewables Limited | 420 | 315 | - | 2.6% |
SF Renewables (Solar) Limited | 281 | 281 | - | 2.3% |
| ||||
Non-qualifying investments | | |||
Quadrate Spa Limited | 850 | 850 | - | 7.1% |
Hobblers Heath Limited | 727 | 727 | - | 6.1% |
Pearce and Saunders Limited | 193 | 193 | - | 1.6% |
Augusta Pub Company Limited | 155 | 155 | - | 1.3% |
| ||||
11,829 | 11,812 | 88 | 98.5% | |
| ||||
Cash at bank and in hand | 183 | 1.5% | ||
| ||||
Total | 11,995 | 100% |
SUMMARY OF INVESTMENT MOVEMENTS
'H' SHARE POOL
as at 30 June 2016
Additions | £'000 |
Qualifying investments | |
Hermes Renewables Limited | 1,500 |
Quadrate Catering Limited | 850 |
Ironhide Generation Limited | 614 |
Indigo Generation Limited | 613 |
Rockhopper Renewables Limited | 492 |
SF Renewables (Solar) Limited | 281 |
Non-qualifying investments | |
Quadrate Spa Limited | 850 |
Total | 5,200 |
Disposals | Cost | Marketvalue at01/01/16 * | Disposalproceeds | Gainagainstcost | TotalRealisedgain |
£'000 | £'000 | £'000 | £'000 | £'000 | |
Non-qualifying investments | |||||
Pub People Limited | 984 | 984 | 984 | - | - |
Ludlow Taverns Springhill Limited | 388 | 388 | 388 | - | - |
1,372 | 1,372 | 1,372 | - | - |
* adjusted for purchases made in the period
INVESTMENT MANAGER'S REPORT
'J' SHARE POOL
The fundraising for the 'J' Share pool was launched in December 2014 and raised £11 million prior to closing in 2015. The majority of these funds have now been invested as at the period end and is due to become qualifying by the end of 2017.
Investment activity
During the last six months, ten qualifying investments have been made totalling £7.8m as we start to build the qualifying portfolio of the 'J' Share pool.
The qualifying investments include £900,000 in Vectis Power Generation Limited which is seeking to build and develop renewable energy plants.
£900,000 was also invested in Brownfields Energy Limited which is seeking to develop small-scale waste disposal projects.
£800,000 was invested in Yamuna Renewables Limited who are seeking investment opportunities in the wood refinery sector.
£613,000 was invested in Ironhide Generation Limited and £614,000 into Indigo Generation Limited. £492,000 was invested into Rockhopper Renewables Limited and £281,000 into SF Renewables (Solar) Limited. All of the above investments are in the process of acquiring land in India to build and operate 15MW ground mounted solar arrays.
Jito Renewables Limited, Rhodes Renewables Limited and Morava Renewables Limited are all exploring opportunities in the wood refinery sector following investments of £1 million, £1 million and £1.2 million respectively.
No valuation adjustments have been made in the period with all investments remaining at cost.
Net asset value and results
At 30 June 2016, the net asset value per 'J' Share was 97.7p, a net decrease of 0.8p (0.8%) over the period.
The loss on ordinary activities for the 'J' Shares, after taxation, for the period was £90,000, being wholly related to revenue.
Outlook
The task of building the 'J' Share portfolio is progressing well. 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 over the remainder of the year.
Downing LLP
SUMMARY OF INVESTMENT PORTFOLIO
'J' SHARE POOL
as at 30 June 2016
Cost | Valuation | Unrealisedgain inperiod | % ofPortfolioby value | |
£'000 | £'000 | £'000 | | |
VCT qualifying and partially qualifying investments | | |||
Morava Renewables Limited | 1,150 | 1,150 | - | 10.9% |
Jito Renewables Limited | 1,000 | 1,000 | - | 9.5% |
Rhodes Renewables Limited | 1,000 | 1,000 | - | 9.5% |
Cedarville Limited | 1,000 | 1,000 | - | 9.5% |
Pilgrim Pubs Limited | 1,000 | 1,000 | - | 9.5% |
Brownfields Energy Limited | 900 | 900 | - | 8.6% |
Vectis Power Generation Limited | 900 | 900 | - | 8.6% |
Yamuna Power Generation Limited | 800 | 800 | - | 7.6% |
Indigo Generation Limited | 614 | 614 | - | 5.8% |
Ironhide Generation Limited | 613 | 613 | - | 5.8% |
Rockhopper Renewables Limited | 492 | 492 | - | 4.7% |
Oak Grove Renewables Limited | 420 | 315 | - | 3.0% |
SF Renewables (Solar) Limited | 281 | 281 | - | 2.7% |
| ||||
10,170 | 10,065 | - | 95.7% | |
| ||||
Cash at bank and in hand | 457 | 4.3% | ||
| ||||
Total | 10,522 | 100% |
SUMMARY OF INVESTMENT MOVEMENTS
'J' SHARE POOL
as at 30 June 2016
Additions | £'000 |
Qualifying investments | |
Morava Renewables Limited | 1,150 |
Jito Renewables Limited | 1,000 |
Rhodes Renewables Limited | 1,000 |
Brownfields Energy Limited | 900 |
Vectis Power Generations Limited | 900 |
Yamuna Renewables Limited | 800 |
Indigo Generation Limited | 614 |
Ironhide Generation Limited | 613 |
Rockhopper Renewables Limited | 492 |
SF Renewables Limited | 281 |
Total | 7,750 |
UNAUDITED SUMMARISED BALANCE SHEET
as at 30 June 2016
30 Jun 2016 | 30 Jun 2015 | 31 Dec 2015 | ||||||||
| 'C' Shares | 'D' Shares | 'F' Shares | 'H' Shares | 'J' Shares | Total | Total | Total | ||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||
| ||||||||||
Fixed assets | ||||||||||
Unquoted investments | - | 2,966 | 7,222 | 11,812 | 10,065 | 32,065 | 26,046 | 22,707 | ||
Current assets | ||||||||||
Debtors | - | (3) | 153 | 103 | 3 | 256 | 655 | 632 | ||
Cash at bank and in hand | 67 | 597 | 269 | 183 | 457 | 1,573 | 13,044 | 16,578 | ||
67 | 594 | 422 | 286 | 460 | 1,829 | 13,699 | 17,210 | |||
Creditors: amounts falling due within one year | (64) | (92) | (102) | (139) | (40) | (437) | (1,019) | (494) | ||
Net current assets | 3 | 502 | 320 | 147 | 420 | 1,392 | 12,680 | 16,716 | ||
Net assets | 3 | 3,468 | 7,542 | 11,959 | 10,485 | 33,457 | 38,726 | 39,423 | ||
Capital and reserves | ||||||||||
Called up share capital | 18 | 25 | 11 | 13 | 11 | 78 | 75 | 78 | ||
Capital redemption reserve | 106 | - | - | - | - | 106 | 106 | 106 | ||
Special reserve | - | 3,850 | 8,885 | (1,681) | - | 11,054 | 17,348 | 15,749 | ||
Share premium account | - | - | - | 13,608 | 11,031 | 24,639 | 21,367 | 24,639 | ||
Revaluation reserve | (105) | (956) | (627) | (17) | (105) | (1,810) | (1,504) | (1,466) | ||
Capital reserve - realised | - | - | (1,033) | - | - | (1,033) | 301 | (1,033) | ||
Revenue reserve | (16) | 549 | 306 | 36 | (452) | 423 | 1,033 | 1,350 | ||
Total equity shareholders' funds | 3 | 3,468 | 7,542 | 11,959 | 10,485 | 33,457 | 38,726 | 39,423 | ||
Basic and diluted net asset value per: | ||||||||||
'C' Share | - | 49.3p | 53.2p | |||||||
'A' Share | - | 0.1p | 0.1p | |||||||
'D' Share | 34.7p | 72.9p | 51.3p | |||||||
'E' Share | 0.1p | 0.1p | 0.1p | |||||||
'F' Share | 69.7p | 71.7p | 71.5p | |||||||
'H' Share | 88.9p | 93.3p | 90.5p | |||||||
'J' Share | 97.7p | 99.9p | 98.5p |
STATEMENT OF CHANGES IN EQUITY
for the period ended 30 June 2016
Called up share capital | Capital redemption reserve | Special reserve | Share premium reserve | Revaluation reserve | Capital reserve - realised | Revenue reserve | Total | |
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
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 |
Gain on investments | - | - | - | - | 47 | 110 | - | 157 |
Retained revenue | - | - | - | - | - | - | (40) | (40) |
Transfer between reserves | - | - | (4,695) | - | (391) | 5,973 | (887) | - |
Dividend paid | - | - | - | - | - | (6,083) | - | (6,083) |
At 30 June 2016 | 78 | 106 | 11,054 | 24,639 | (1,810) | (1,033) | 423 | 33,457 |
INCOME STATEMENT
for the six months ended 30 June 2016
Company Total
Six months ended 30 Jun 2016 | Six months ended 30 Jun 2015 | YearEnded31 Dec2015 | |||||||
Revenue | Capital | Total | | Revenue | Capital | Total | Total | ||
£'000 | £'000 | £'000 | | £'000 | £'000 | £'000 | £'000 | ||
Income | 435 | - | 435 | 1,411 | - | 1,411 | 2,449 | ||
Gains/(losses) on investments | |||||||||
- realised | - | 110 | 110 | - | (362) | (362) | 34 | ||
- unrealised | - | 47 | 47 | - | (244) | (244) | (234) | ||
435 | 157 | 592 | 1,411 | (606) | 805 | 2,249 | |||
Investment management fees | (328) | - | (328) | (332) | - | (332) | (695) | ||
Other expenses | (164) | - | (164) | (148) | - | (148) | (275) | ||
Return/(loss) on ordinary activities before taxation | (57) | 157 | 100 | 931 | (606) | 325 | 1,279 | ||
Tax on total comprehensive income and ordinary activities | 17 | - | 17 | (84) | - | (84) | (162) | ||
Return/(loss) attributable to equity shareholders | (40) | 157 | 117 | 847 | (606) | 241 | 1,117 | ||
Return per 'C' Share | (0.4p) | - | (0.4p) | 7.7p | (6.5p) | 1.2p | 5.1p | ||
Return per 'A' Share | - | - | - | - | - | - | - | ||
Return per 'D' Share | (0.1p) | 0.5p | 0.4p | 1.2p | 0.4p | 1.6p | 6.9p | ||
Return per 'E' Share | - | - | - | - | - | - | - | ||
Return per 'F' Share | 0.5p | 0.2p | 0.7p | 0.3p | (1.7p) | (1.4p) | 1.0p | ||
Return per 'H' Share | 0.3p | 0.7p | 1.0p | 1.2p | - | 1.2p | 0.8p | ||
Return per 'J' Share | (0.8p) | - | (0.8p) | (0.2p) | - | (0.2p) | (2.4p) |
A Statement of Total Recognised Gains and Losses has not been prepared as all gains/losses are recognised in the Income Statement as noted above.
INCOME STATEMENT
for the six months ended 30 June 2016
'C' Shares | Six months ended 30 Jun 2016 | Six months ended 30 Jun 2015 | Year ended 31 Dec 2015 | ||||||
Revenue | Capital | Total | | Revenue | Capital | Total | Total | ||
£'000 | £'000 | £'000 | | £'000 | £'000 | £'000 | £'000 | ||
Income | 6 | - | 6 | 621 | - | 621 | 815 | ||
Gains/(losses) on investments | |||||||||
- realised | - | - | - | - | (412) | (412) | (342) | ||
- unrealised | - | - | - | - | (53) | (53) | 25 | ||
6 | - | 6 | 621 | (465) | 156 | 498 | |||
Investment management fees | (8) | - | (8) | (31) | - | (31) | (56) | ||
Other expenses | (35) | - | (35) | (24) | - | (24) | (41) | ||
Return/(loss) on ordinary activities before taxation | (37) | - | (37) | 566 | (465) | 101 | 401 | ||
Tax on total comprehensive income and ordinary activities | 7 | - | 7 | (12) | - | (12) | (36) | ||
Return/(loss) attributable to equity shareholders | (30) | - | (30) | 554 | (465) | 89 | 365 |
INCOME STATEMENT
for the six months ended 30 June 2016
'D' Shares | Six months ended 30 Jun 2016 | Six months ended 30 Jun 2015 | YearEnded31 Dec2015 | ||||||
Revenue | Capital | Total | | Revenue | Capital | Total | Total | ||
£'000 | £'000 | £'000 | | £'000 | £'000 | £'000 | £'000 | ||
Income | 19 | - | 19 | 227 | - | 227 | 528 | ||
Gains/(losses) on investments | |||||||||
- realised | - | 109 | 109 | - | 50 | 50 | 297 | ||
- unrealised | - | (58) | (58) | - | (11) | (11) | 87 | ||
19 | 51 | 70 | 227 | 39 | 266 | 912 | |||
Investment management fees | (27) | - | (27) | (49) | - | (49) | (97) | ||
Other expenses | (16) | - | (16) | (32) | - | (32) | (54) | ||
Return/(loss) on ordinary activities before taxation | (24) | 51 | 27 | 146 | 39 | 185 | 761 | ||
Tax on total comprehensive income and ordinary activities | 11 | - | 11 | (31) | - | (31) | (71) | ||
Return/(loss) attributable to equity shareholders | (13) | 51 | 38 | 115 | 39 | 154 | 690 |
INCOME STATEMENT
for the six months ended 30 June 2016
'F' Shares | Six months ended 30 Jun 2016 | Six months ended 30 Jun 2015 | YearEnded31 Dec2015 | ||||||
Revenue | Capital | Total | | Revenue | Capital | Total | Total | ||
£'000 | £'000 | £'000 | | £'000 | £'000 | £'000 | £'000 | ||
Income | 171 | - | 171 | 153 | - | 153 | 407 | ||
Losses on investments | |||||||||
- realised | - | - | - | - | - | - | 79 | ||
- unrealised | - | 18 | 18 | - | (180) | (180) | (136) | ||
171 | 18 | 189 | 153 | (180) | (27) | 350 | |||
Investment management fees | (69) | - | (69) | (73) | - | (73) | (144) | ||
Other expenses | (36) | - | (36) | (46) | - | (46) | (85) | ||
Return/(loss) on ordinary activities before taxation | 66 | 18 | 84 | 34 | (180) | (146) | 121 | ||
Tax on total comprehensive income and ordinary activities | (13) | - | (13) | (2) | - | (2) | (13) | ||
Return/(loss) attributable to equity shareholders | 53 | 18 | 71 | 32 | (180) | (148) | 108 |
INCOME STATEMENT
for the six months ended 30 June 2016
'H' Shares | Six months ended 30 Jun 2016 | Six months ended 30 Jun 2015 | YearEnded31 Dec2015 | ||||||
Revenue | Capital | Total | | Revenue | Capital | Total | Total | ||
£'000 | £'000 | £'000 | | £'000 | £'000 | £'000 | £'000 | ||
Income | 202 | - | 202 | 359 | - | 359 | 594 | ||
Gains/(losses) on investments | |||||||||
- realised | - | - | - | - | - | - | - | ||
- unrealised | - | 88 | 88 | - | - | - | (105) | ||
202 | 88 | 290 | 359 | - | 359 | 489 | |||
Investment management fees | (120) | - | (120) | (128) | - | (128) | (253) | ||
Other expenses | (32) | - | (32) | (36) | - | (36) | (69) | ||
Return on ordinary activities before taxation | 50 | 88 | 138 | 195 | - | 195 | 167 | ||
Taxation on total comprehensive income and ordinary activates | (10) | - | (10) | (41) | - | (41) | (55) | ||
Return attributable to equity shareholders | 40 | 88 | 128 | 154 | - | 154 | 112 |
INCOME STATEMENT
for the six months ended 30 June 2016
'J' Shares | Six months ended 30 Jun 2016 | Six months ended 30 Jun 2015 | YearEnded31 Dec2015 | ||||||
Revenue | Capital | Total | | Revenue | Capital | Total | Total | ||
£'000 | £'000 | £'000 | | £'000 | £'000 | £'000 | £'000 | ||
Income | 37 | - | 37 | 51 | - | 51 | 104 | ||
Gains/(losses) on investments | |||||||||
- realised | - | - | - | - | - | - | - | ||
- unrealised | - | - | - | - | - | - | (105) | ||
37 | - | 37 | 51 | - | 51 | (1) | |||
Investment management fees | (104) | - | (104) | (51) | - | (51) | (144) | ||
Other expenses | (45) | - | (45) | (10) | - | (10) | (26) | ||
Loss on ordinary activities before taxation | (112) | - | (112) | (10) | - | (10) | (171) | ||
Tax on total comprehensive income and ordinary activities | 22 | - | 22 | 2 | - | 2 | 13 | ||
Loss attributable to equity shareholders | (90) | - | (90) | (8) | - | (8) | (158) |
UNAUDITED CASH FLOW STATEMENT
for the six months ended 30 June 2016
| 30 Jun 2016 | 30 Jun 2015 | 31 Dec 2015 | ||||||||
'C' Shares | 'D' Shares | 'F' Shares | 'H' Shares | 'J' Shares | Total | Total | Total | ||||
Note | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |||
Net cash inflow/ (outflow) from operating activities | 1 | 137 | 210 | 16 | (13) | (72) | 278 | 893 | 862 | ||
Cash flows from investing activities | |||||||||||
Purchase of investments | - | - | (700) | (5,200) | (7,750) | (13,650) | (3,227) | (11,766) | |||
Sale of investments | 748 | 1,455 | 875 | 1,372 | - | 4,450 | 4,780 | 17,063 | |||
Net cash inflow/(outflow) from investing activities | 748 | 1,455 | 175 | (3,828) | (7,750) | (9,200) | 1,553 | 5,297 | |||
Net cash inflow/(outflow) before financing activities | 885 | 1,665 | 191 | (3,841) | (7,822) | (8,922) | 2,446 | 6,159 | |||
Cash flows from financing activities | |||||||||||
Equity dividends paid | (3,780) | (1,696) | (271) | (336) | - | (6,083) | (4,195) | (7,496) | |||
Proceeds from share issue | - | - | - | - | - | - | 7,767 | 11,042 | |||
Share issue costs | - | - | - | - | - | - | (156) | (309) | |||
Net cash (outflow)/inflow from financing | (3,780) | (1,696) | (271) | (336) | - | (6,083) | 3,416 | 3,237 | |||
(Decrease)/increase in cash | 2 | (2,895) | (31) | (80) | (4,177) | (7,822) | (15,005) | 5,862 | 9,396 |
NOTES TO THE UNAUDITED CASH FLOW STATEMENT
for the six months ended 30 June 2016
| 30 Jun 2016 | 30 Jun 2015 | 31 Dec 2015 | |||||||
| 'C' Shares | 'D' Shares | 'F' Shares | 'H' Shares | 'J' Shares | Total | Total | Total | ||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||
1 Cash inflow from operating activities and returns on investments | ||||||||||
Return/(loss) on ordinary activities before taxation | (37) | 27 | 84 | 138 | (112) | 100 | 325 | 1,279 | ||
Corporation tax paid | 5 | 7 | - | - | - | 12 | - | (132) | ||
Losses/(gains) on investments | - | (51) | (18) | (88) | - | (157) | 606 | 200 | ||
Decrease/(increase) in other debtors | 174 | 254 | (24) | (54) | 25 | 375 | (238) | (216) | ||
(Decrease)/increase in other creditors | (5) | (27) | (26) | (9) | 15 | (52) | 200 | (269) | ||
Net cash inflow/(outflow) from operating activities | 137 | 210 | 16 | (13) | (72) | 278 | 893 | 862 | ||
2 Analysis of net funds | ||||||||||
Beginning of period | 2,962 | 628 | 349 | 4,360 | 8,279 | 16,578 | 7,182 | 7,182 | ||
Net cash (outflow)/inflow | (2,895) | (31) | (80) | (4,177) | (7,822) | (15,005) | 5,862 | 9,396 | ||
End of period | 67 | 597 | 269 | 183 | 457 | 1,573 | 13,044 | 16,578 |
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
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 unaudited half-yearly results cover the six months to 30 June 2016 and have been prepared in accordance with the Statement of Recommended Practice "Financial Statements of Investment Trust Companies and Venture Capital Trusts" revised January 2009 and in accordance with the accounting policies set out in the statutory accounts for the year ended 31 December 2015, which were prepared 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).
3. All revenue and capital items in the Income Statement derive from continuing operations.
4. The Company has only one class of business and derives its income from investments made in shares, securities and bank deposits.
5. The comparative figures are in respect of the six month period ended 30 June 2015 and the year ended 31 December 2015 respectively.
6. Dividends
Six months ended 30 June 2016 | Year ended 31 Dec 2015 | ||||||
Per share | Revenue | Capital | Total | Total | |||
Paid in period | pence | £'000 | £'000 | £'000 | £'000 | ||
'C' Shares | |||||||
Special 'C' 2016 | 30.5p | - | 2,184 | 2,184 | - | ||
Special 'A' 2016 | 14.8p | - | 1,596 | 1,596 | - | ||
Y/E Dec 2014 Final | 50.0p | - | - | - | 3,588 | ||
- | 3,780 | 3,780 | 3,588 | ||||
'D' Shares | |||||||
Y/E Dec 2015 Final | 17.0p | - | 1,696 | 1,696 | - | ||
Y/E Dec 2014 Interim | 27.0p | - | - | - | 2,695 | ||
- | 1,696 | 1,696 | 2,695 | ||||
'F' Shares | |||||||
Y/E Dec 2015 Final | 2.5p | - | 271 | 271 | - | ||
Y/E Dec 2015 Interim | 2.5p | - | - | - | 270 | ||
Y/E Dec 2014 Final | 2.5p | - | - | - | 270 | ||
- | 271 | 271 | 540 | ||||
'H' Shares | |||||||
Y/E Dec 2015 Final | 2.5p | - | 336 | 336 | - | ||
Y/E Dec 2015 Interim | 2.5p | - | - | - | 337 | ||
Y/E Dec 2014 Final | 2.5p | - | - | - | 336 | ||
- | 336 | 336 | 673 |
No dividends have been paid or declared in respect of the 'E' Shares or 'J' Shares.
7. Basic and diluted return per share
| Weighted average number of shares in issue | Revenue return/(loss) | Capital return | ||||
£'000 | Per share | £'000 | Per share | ||||
'C' Shares | 7,158,326 | (30) | (0.4p) | - | - | ||
'A' Shares | 10,750,064 | - | - | - | - | ||
'D' Shares | 9,979,109 | (13) | (0.1p) | 51 | 0.5p | ||
'E' Shares | 14,994,862 | - | - | - | - | ||
'F' Shares | 10,821,660 | 53 | 0.5p | 18 | 0.2p | ||
'H' Shares | 13,446,972 | 40 | 0.3p | 88 | 0.7p | ||
'J' Shares | 10,733,377 | (90) | (0.8p) | - | - | ||
| (40) | 157 |
8. Net asset value per share
| Shares in issue | Net asset value | |||
£'000 | Per Share | ||||
| | ||||
'C' Shares | 7,158,326 | 3 | - | ||
'A' Shares | 10,750,064 | - | - | ||
'D' Shares | 9,979,109 | 3,453 | 34.7p | ||
'E' Shares | 14,994,862 | 15 | 0.1p | ||
'F' Shares | 10,821,660 | 7,542 | 69.7p | ||
'H' Shares | 13,446,972 | 11,959 | 88.9p | ||
'J' Shares | 10,733,377 | 10,485 | 97.7p | ||
| | 33,457 |
9. Reserves
Period ended 30 June 2016 | Year ended 31 Dec 2015 | ||
£'000 | £'000 | ||
Capital redemption reserve | 106 | 106 | |
Special reserve | 11,054 | 15,749 | |
Share premium reserve | 24,639 | 24,639 | |
Revaluation reserve | (1,810) | (1,466) | |
Capital reserve-realised | (1,033) | (1,033) | |
Revenue reserve | 423 | 1,350 | |
33,379 | 39,345 |
The Special reserve, Capital reserve - realised and Revenue reserve are all distributable reserves. The Revaluation reserve includes losses of £2,414,000 which are included in the calculation of distributable reserves. Total distributable reserves are £8,030,000 (31 Dec 2015: £13,911,000).
- The fair value of investments is determined using the detail accounting policy set out in the statutory accounts for the year ended 31 December 2015.
The Company has categorised its financial instruments using the fair value hierarchy as follows:
Level a: Reflects financial instruments quoted in an active market;
Level b: Reflects financial instruments that have prices that are observable either directly or indirectly; and
Level c:
i) Reflects financial instruments that use valuation techniques that are based on observable market date.
ii) Reflects financial instruments that use valuation techniques that are not based on observable market data (unquoted equity investments and loan note investments).
Level a | Level b | Level c (ii) | Period ended 30 June 2016 | Level a | Level b | Level c (ii) | Year ended 31 Dec 2015 | ||
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||
Loan notes | - | - | 7,928 | 7,928 | - | - | 11,318 | 11,318 | |
Unquoted equity | - | - | 24,137 | 24,137 | - | - | 11,389 | 11,389 | |
- | - | 32,065 | 32,065 | - | - | 22,707 | 22,707 |
11. The unaudited condensed financial statements set out herein do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006 and have not been delivered to the Registrar of Companies. The figures for the year ended 31 December 2015 have been extracted from the financial statements for that year, which have been delivered to the Registrar of Companies; the Auditor's report on those financial statements was unqualified.
12. The Directors confirm that, to the best of their knowledge, the half-yearly financial statements have been prepared in accordance with the "Statement: Half-Yearly Financial Reports" issued by the UK Accounting Standards Board and the half-yearly financial report includes a fair review of the information required by:
a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the year; and
b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period, and any changes in the related party transactions described in the last annual report that could do so.
13. Risks and uncertainties
Under the Disclosure and Transparency Directive, the Board is required, in the Company's half-yearly results, to report on principal risks and uncertainties facing the Company over the remainder of the financial year.
The Board concluded that the key risks facing the Company over the remainder of the financial period are as follows:
(i) Compliance risk of failure to maintain approval as a VCT; and
(ii) Investment risk associated with investing in small and immature businesses.
The Company's compliance with the VCT regulations is continually monitored by the Manager, who reports regularly to the Board on the current position. The Company has also reappointed Philip Hare & Associates LLP to provide regular reviews and advice in this area. In order to make VCT qualifying investments, the Company has to invest in small businesses which are often immature. It also has a limited period in which it must invest the majority of its funds. The Manager follows a rigorous process in vetting and careful structuring of new investments, including taking a charge over the assets of the business wherever possible and, after an investment is made, closely monitoring the business. The Board is satisfied that these approaches provide satisfactory management of the key risks.
14. Going concern
The Directors have reviewed the Company's financial resources at the period end and conclude that the Company is well placed to manage its business risks.
The Board confirms that it is satisfied that the Company has adequate resources to continue in business for the foreseeable future. For this reason, the Board believes that the Company continues to be a going concern and that it is appropriate to apply the going concern basis in preparing the financial statements.
- Copies of the unaudited half-yearly report will be sent to Shareholders shortly. Further copies can be obtained from the Company's registered office or will be available for download from www.downing.co.uk.