TIDMDP3F 
 
   Downing THREE VCT plc 
 
   LEI: 2138008V2JDU2K6ZHF80 
 
   Half-Yearly Report 
 
   for the six months ended 30 June 2020 
 
   Performance summary 
 
 
 
 
                                         30 Jun  31 Mar  31 Dec  30 Jun 
'F' Share pool                            2020    2020    2019    2019 
                                         Pence   Pence   Pence   Pence 
Net asset value per 'F' Share              18.5    21.3    24.5    30.3 
Cumulative distributions per 'F' Share     72.0    72.0    72.0    67.0 
                                         ------  ------  ------  ------ 
Total return per 'F' Share                 90.5    93.3    96.5    97.3 
                                         ======  ======  ======  ====== 
 
 
 
 
 
 
                                         30 Jun  31 Mar  31 Dec  30 Jun 
'H' Share pool                            2020    2020    2019    2019 
                                         Pence   Pence   Pence   Pence 
Net asset value per 'H' Share              23.3    22.3    33.2    43.5 
Cumulative distributions per 'H' Share     35.0    35.0    35.0    30.0 
                                         ------  ------  ------  ------ 
Total return per 'H' Share                 58.3    57.3    68.2    73.5 
                                         ======  ======  ======  ====== 
 
 
 
 
 
 
                                30 Jun  31 Mar 
'J' Share pool                   2020    2020   31 Dec 2019  30 Jun 2019 
                                Pence   Pence      Pence        Pence 
Net asset value per 'J' Share     37.6    43.8         50.3         68.3 
Cumulative distributions per 
 'J' Share                         7.5     5.0          5.0          2.5 
                                ------  ------  -----------  ----------- 
Total return per 'J' Share        45.1    48.8         55.3         70.8 
                                ======  ======  ===========  =========== 
 
 
   Forthcoming dividends 
 
 
 
 
                                                'H' Shares  'J' Shares 
Interim 2020 -- Payable 27 November 2020              4.5p       10.0p 
 
 
   CHAIRMAN'S STATEMENT 
 
   Introduction 
 
   I present the Half-Yearly Report for the six months ended 30 June 2020. 
 
   As Shareholders will be aware, a number of the Company's portfolio 
businesses have faced some significant challenges over the last couple 
of years. With significant exposure to the hospitality sector, the 
coronavirus pandemic has unfortunately further impacted a number of the 
portfolio companies 
 
   The Company has three share pools, two of which are in process of 
realising investments and one which is preparing to start the 
realisation process. 
 
   A brief summary of each share pool is provided below. 
 
   Net asset values and overview 
 
   'F' Share pool 
 
   The 'F' Share pool launched in 2012 and is currently in its realisation 
phase. Exits from a number of investments have been effectively put on 
hold as a result of the ongoing pandemic, however the Manager is still 
working on a number of possible divestments in order to return funds to 
Shareholders. 
 
   At 30 June 2020, the net asset value ("NAV") for a holding of one 'F' 
Share was 18.5p, a decrease of 6.0p (24.5%) over the period. Total 
Return (NAV plus dividends paid to date) is now 90.5p, compared to the 
original cost, net of income tax relief, of 70p per share. 
 
   The 'F' Share pool still holds nine investments, with plans resuming for 
exits from each of them. 
 
   The task of exiting from the remaining investments is dependent on third 
parties and it is therefore difficult to accurately estimate when this 
process will complete. A number of investments in the portfolio are in 
industries that have been severely impacted by the effective lockdown in 
the UK, and as a result have suffered delays in the divestment timeline. 
 
   The Investment Manager notes that it is currently unclear when further 
exits will be achieved, although are seeking opportunities where 
possible. The Manager anticipates that the next major distribution will 
be paid in 2021. 
 
   'H' Share pool 
 
   The 'H' Share pool was launched in 2014 and the process of returning 
funds to investors was scheduled to commence in 2020, however as a 
result of the effective lockdown there have been a number of hurdles 
which have arisen and have unfortunately delayed this process. 
 
   At 30 June 2020, the net asset value ("NAV") for a holding of one 'H' 
Share was 23.3p which represents a net decrease of 9.9p (29.8%) over the 
period. Total Return (NAV plus dividends paid to date) is now 58.3p, 
compared to the initial NAV, before income tax relief, of 100.0p (or 
original cost, net of income tax relief, which was typically between 
70.0p and 75.0p, depending on costs). In view of the poor performance, 
as reported previously, the Board has agreed with the Investment Manager 
such that no further management fees will be paid in respect of the H 
Share pool. 
 
   In line with the dividend policy, the Board is proposing to pay a 
dividend of 4.5p per 'H' Share on 27 November 2020, to Shareholders on 
the register at the close of business on 6 November 2020. 
 
   'J' Share pool 
 
   The 'J' Share pool raised funds in 2015 and completed its initial 
investment phase in 2019. At 30 June 2020, the pool held 13 investments 
with a total value of GBP2.5 million. 
 
   At 30 June 2020, the net asset value ("NAV") for a holding of one 'J' 
Share was 37.6p which represents a net decrease of 10.2p (20.3%) over 
the period after adjusting for the dividends paid out of 2.5p. Total 
Return (NAV plus dividends paid to date) is now 45.1p, compared to the 
initial NAV, before income tax relief, of 100.0p (or original cost, net 
of income tax relief, of 70.0p and 75.0p, depending on costs). 
 
   The Board acknowledges that overall performance of the 'J' Share pool is 
very poor. As noted previously, the Board has reached agreement with the 
Investment Manager such that no further management fees will be paid in 
respect of the J Share pool. 
 
   In line with the dividend policy, the Board is proposing to pay a final 
dividend of 10.0p per 'J' Share on 27 November 2020, to Shareholders on 
the register at the close of business on 6 November 2020. 
 
   Dividends 
 
   In line with the Company's stated policies, interim dividends will be 
paid as follows: 
 
   'H' Shares 4.5p per share 
 
   'J' Shares  10.0p per share 
 
   Each of the above dividends will be paid on 27 November 2020, to 
Shareholders on the register at 6 November 2020. 
 
   Share buybacks 
 
   The Company is now unlikely to make any further purchases of any of its 
shares as the process of returning funds to all groups of shareholders 
is progressing. 
 
   No share buybacks in respect of any share class were undertaken during 
the period. 
 
   Outlook 
 
   The further losses of value on all pools since the valuation at 31 March 
2020 are extremely disappointing. Although there is the possibility of 
recoveries in value, the recent increase in coronavirus infections in 
the UK may further harm the sectors in which many of the portfolio 
companies operate and could result in further losses. 
 
   The Board has given consideration to the best way forward from this 
position. The Board does not consider that a change of manager at this 
stage is practical or would be in the best interest of shareholders, but 
believes that continuing to work closely with the existing manager to 
ensure everything is done to recover value is the best route. 
 
   The Board does not expect to raise any new funds for the Company in 
future and so is now considering putting proposals to Shareholders for 
the Company to take advantage of the VCT winding up regulations which 
involves entering into a members' voluntary liquidation.  This will 
allow the company to reduce its running cost while it realises the 
investments across all share pools. The Board intends to prepare 
proposals for shareholder approval in the coming months. 
 
   Michael Robinson 
 
   Chairman 
 
   30 September 2020 
 
   INVESTMENT MANAGER'S REPORT 
 
   'F' SHARE POOL 
 
   As at 30 June 2020, the 'F' Share pool held nine investments. Focus for 
the 'F' Share pool remains on the realisation of its investments and 
maximising Shareholder returns which has been delayed due to the ongoing 
coronavirus pandemic. 
 
   Net asset value, results and dividend 
 
   At 30 June 2020, the net asset value ("NAV") for a holding of one 'F' 
Share was 18.5p, an decrease of 6.0p (24.5%) over the period. Total 
Return (NAV plus dividends paid to date) is now 90.5p. 
 
   The loss on ordinary activities for the 'F' Shares, after taxation was 
GBP639,000 for the period, comprising a revenue loss of GBP30,000 and a 
capital loss of GBP609,000. 
 
   'F' Share pool -- Portfolio valuation 
 
   The period to 30 June 2020 has seen a number of unforeseen developments 
which has impacted the 'F' Share portfolio. The portfolio companies are 
heavily exposed to the effective lockdown in the UK economy, resulting 
in an unrealised loss of GBP609,000. 
 
   The most significant decreases in valuation were in respect of Pearce 
and Saunders Limited and Downing Pub EIS ONE Limited which both operate 
in the pub and hospitality industry. 
 
   Pearce and Saunders Limited, the owner of freehold pubs in south east 
London, was decreased by GBP457,000 to reflect the forced closure of the 
site and the wider economic impact of COVID-19. 
 
   Downing Pub EIS ONE Limited, which acquired the holdings of two other 
pub companies in 2017, was decreased in value by GBP134,000 following 
the collapse of the proposed management buy out that was due to complete 
in March 2020. 
 
   The Investment Manager has supported both of the above investee 
companies during this difficult time as well as ensuring the businesses 
have taken advantage of the Government support that has been made 
available. 
 
   There were a small number of valuation increases in the period. The most 
notable being a GBP42,000 increase in value to Fresh Green Power Limited, 
the domestic rooftop solar company, which was increased due to improved 
operating performance over the period. 
 
   Realisation plans 
 
   A number of the investment companies within the portfolio had proposed 
exit plans in place which have now been effectively paused or have 
collapsed as a result of the ongoing pandemic and have forced the 
Investment Manager to seek other opportunities to exit. 
 
   Despite the divestment timeline suffering, the Investment Manager is 
hopeful that there are reasonable prospects for completion from a small 
number of the investee companies across the remainder of the year if 
conditions improve, although shareholders should note it is currently 
unclear when and if these will be achieved. The exact timing will be 
dependent on third parties and a number of external factors. 
 
   Outlook 
 
   Valuations of investments within the 'F' Share pool have been impacted 
as a result of the ongoing coronavirus pandemic. The pool is exposed to 
a number of the sectors which have suffered heavily from the effective 
lockdown in the UK. Focus for the Investment Manager remains on the exit 
of the final nine investments in the portfolio as well as continuing to 
support all investee companies during this difficult period. 
 
   Downing LLP 
 
   30 September 2020 
 
   SUMMARY OF INVESTMENT PORTFOLIO 
 
   'F' SHARE POOL 
 
   as at 30 June 2020 
 
 
 
 
                                                    Unrealised       % of 
                                                    gain/(loss)   Portfolio by 
                                Cost    Valuation    in period       value 
                               GBP'000   GBP'000     GBP'000 
 
VCT qualifying and partially 
qualifying investments 
Downing Pub EIS ONE Limited        490        522         (134)          26.7% 
Fresh Green Power Limited          189        273            42          14.0% 
Atlantic Dogstar Limited           200        179          (79)           9.2% 
Pearce and Saunders Limited        497         93         (457)           4.7% 
Green Energy Production UK 
 Limited                           100         64            10           3.3% 
Apex Energy Limited              1,000         26             9           1.3% 
 
 
Non-qualifying investments 
Baron House Developments LLP       481        673             -          34.4% 
London City Shopping Centre 
 Limited                            66          -             -           0.0% 
Pearce and Saunders DevCo 
 Limited                            44          -             -           0.0% 
 
                                 3,067      1,830         (609)          93.6% 
                               =======             ============ 
 
Cash at bank and in hand                      126                         6.4% 
                                        ---------                ------------- 
 
Total                                       1,956                       100.0% 
                                        =========                ============= 
 
   SUMMARY OF INVESTMENT MOVEMENTS 
 
   'F' SHARE POOL 
 
   as at 30 June 2020 
 
 
 
 
                                     Market                 Gain       Total 
                                     value at  Disposal    against    realised 
Disposals                   Cost     01/01/20   proceeds    cost        gain 
                           GBP'000   GBP'000    GBP'000   GBP'000    GBP'000 
 
Pearce and Saunders DevCo 
 Limited                         2          2          2         -           - 
 
                                 2          2          2         -           - 
                           =======  =========  =========  ========  ========== 
 
 
   INVESTMENT MANAGER'S REPORT 
 
   'H' SHARE POOL 
 
   The 'H' Share pool raised funds in 2014 and the task of building the 
initial VCT qualifying portfolio is complete. During the period, the 
share pool suffered some further provisions in respect of its 
investments within the leisure and hospitality industry which have been 
severely impacted by the ongoing coronavirus pandemic. 
 
   Investment activity 
 
   During the period a partial exit was successfully completed from Pearce 
and Saunders Limited, the owner of freehold pubs in south east London. 
Proceeds of GBP230,000 were generated, which represented an uplift over 
cost of GBP172,000. 
 
   'H' Share pool -- Portfolio valuation 
 
   The period to 30 June 2020 has seen a number of disappointing valuation 
movements, resulting in an unrealised loss of GBP1.7 million. 
 
   A significant portion of the unrealised loss for the period related to 
three investments which have been severely impacted by the effective 
lockdown within the UK and its resulting consequences. Further details 
on each is noted below. 
 
   Atlantic Dogstar Limited, owns a group of London pubs. As a result of 
the lockdown restrictions, the two London pubs were forced to close and 
the planned management buy out that was due to complete in March 2020 
collapsed, leading to a reduction in value of GBP394,000. 
 
   The investments in Quadrate Spa Limited and Quadrate Catering Limited, 
which own and operate a health club business and a top floor restaurant 
in The Cube complex in Birmingham were both written down to nil, 
generating a combined loss of GBP1.1 million. 
 
   A sale and leaseback transaction was due to complete in February 2020. 
However as a result of the coronavirus pandemic, both companies are not 
operational following government-imposed lockdown measures and the offer 
has been withdrawn. We continue to monitor the situation and are 
assisting management where possible. 
 
   Realisation plans 
 
   Prior to the unforeseen coronavirus pandemic, there were a number of 
realisation plans in place for the exit of several portfolio companies. 
As a result of the ongoing situation, these plans have either collapsed 
or have been delayed. It is currently unclear when further exits will be 
achieved, although the manager is seeking opportunities where possible. 
 
   Net asset value and results 
 
   At 30 June 2020, the net asset value per 'H' Share was 23.3p, a net 
decrease of 9.9p (29.8%) over the period. Total Return (NAV plus 
dividends paid to date) is now 58.3p. The loss on ordinary activities 
for the 'H' Shares, after taxation, for the period was GBP1.3 million, 
comprising a revenue profit of GBP217,000 and a capital loss of GBP1.5 
million. 
 
   The Company will pay an interim dividend of 4.5p per 'H' Share, on 27 
November 2020 to Shareholders on the register at 6 November 2020. 
 
   Outlook 
 
   Regrettably, the coronavirus pandemic has further hit investment 
valuations during the period to 30 June 2020, with a large number of 
portfolio companies within the leisure and hospitality sectors being 
impacted most severely. We will continue to assist and support each 
investee company within the portfolio as much as possible, seeking to 
position them as well as we can to facilitate an exit when feasible. 
 
   Downing LLP 
 
   30 September 2020 
 
   SUMMARY OF INVESTMENT PORTFOLIO 
 
   'H' SHARE POOL 
 
   as at 30 June 2020 
 
 
 
 
                                                    Unrealised       % of 
                                                    gain/(loss)   portfolio by 
                                Cost    Valuation    in period       value 
                               GBP'000   GBP'000     GBP'000 
VCT qualifying investments 
Altantic Dogstar Limited         1,000        898         (394)          32.5% 
SF Renewables (Solar) Limited      281        243          (10)           8.8% 
Hermes Wood Pellets Limited      1,500        228             -           8.2% 
Rockhopper Renewables Limited      492        185          (61)           6.7% 
Indigo Generation Limited          613        149          (66)           5.4% 
Pearce and Saunders Limited        136        136             -           4.9% 
Ironhide Generation Limited        613        134          (80)           4.9% 
Zora Energy Renewables 
 Limited                         1,000         65          (25)           2.4% 
Apex Energy Limited              1,300         33            11           1.2% 
Quadrate Catering Limited          850          -         (701)           0.0% 
 
Non-qualifying investments 
Quadrate Spa Limited               850          -         (392)           0.0% 
 
                                 8,635      2,071       (1,718)          75.0% 
                               =======             ============ 
 
Cash at bank and in hand                      693                        25.0% 
                                        ---------                ------------- 
 
Total                                       2,764                         100% 
                                        =========                ============= 
 
   SUMMARY OF INVESTMENT MOVEMENTS 
 
   'H' SHARE POOL 
 
   as at 30 June 2020 
 
 
 
 
                                                            Gain       Total 
                                 Market value  Disposal    against    realised 
Disposals                Cost     at 01/01/20   proceeds    cost        gain 
                        GBP'000    GBP'000      GBP'000   GBP'000    GBP'000 
 
Pearce and Saunders 
 Limited                     58            58        230       172         172 
 
                             58            58        230       172         172 
                        =======  ============  =========  ========  ========== 
 
   INVESTMENT MANAGER'S REPORT 
 
   'J' SHARE POOL 
 
   At the period end, the 'J' Share pool held 13 investments across a range 
of industries. It is disappointing to have to report that several 
investee companies have suffered further setbacks which have required 
significant provisions for the six months to 30 June 2020 
 
   'J' Share pool -- Portfolio valuation 
 
   As noted in the year end accounts, the portfolio faced a number of 
challenges in the first few months of 2020, leading to an unrealised 
loss of GBP932,000 as at 30 June 2020. 
 
   A significant portion of the unrealised loss for the period related to 
three investments. Further details on each is noted below. 
 
   The most notable provision is in respect of Garthcliff Shipping Limited, 
which owns a feeder container vessel that is chartered to third parties 
to transport containers to and from ports. Following a period of reduced 
demand for container vessels as worldwide economies suffered as a result 
of the coronavirus pandemic, a buyer for the vessel has been sought and 
the value has been reduced by GBP322,000 in line with anticipated exit 
proceeds. 
 
   Pilgrim Trading Limited, the operator of two children's nurseries in 
London, were closed from March 2020 as a result of the Government 
imposed lockdown, leading to a provision of GBP218,000 to reflect the 
forced closure of the sites and the wider impact of COVID-19. 
 
   Exclusive Events Venues Limited, the operator of an exclusive use 
wedding venue in Chester, England, completed refurbishment in February 
2020. In line with government imposed measures, the venue was forced to 
postpone events, resulting in a provision of GBP157,000. 
 
   We continue to work closely and support each of the portfolio companies, 
ensuring that they have benefited from the Government aid that is 
available and take sensible decisions as they deal with these 
extraordinary circumstances. 
 
   Realisation plans 
 
   As a result of the unforeseen coronavirus pandemic, several of the 
realisation plans that were in place have either collapsed or have been 
delayed. It is currently unclear when further exits will be achieved, 
although the manager is seeking opportunities where possible. 
 
   Net asset value, results and dividend 
 
   At 30 June 2020, the net asset value per 'J' Share was 37.6p, a net 
decrease of 10.2p (20.3%) over the period, after adding back dividends 
paid in the period of 2.5p. Total return (NAV plus dividends paid to 
date) is 45.1p. The loss on ordinary activities for the 'J' Share pool, 
after taxation, was GBP1.1 million for the period, comprising a revenue 
loss of GBP158,000 and a capital loss of GBP932,000. 
 
   The Company will pay an interim dividend of 10.0p per 'J' Share on 27 
November 2020, to Shareholders on the register at 6 November 2020. 
 
   Outlook 
 
   The falls in value experienced by the 'J' Share pool during the year are 
extremely disappointing. Businesses in the leisure, hospitality and 
children's nurseries sectors have clearly suffered heavily from the 
lockdown and provisions have been required as a result. We continue to 
dedicate substantial resources to supporting the investee companies 
through these difficult and unprecedented times as we look to continue 
the process of realising investments and return funds to investors. 
 
   Downing LLP 
 
   30 September 2020 
 
   SUMMARY OF INVESTMENT PORTFOLIO 
 
   'J' SHARE POOL 
 
   as at 30 June 2020 
 
 
 
 
                                                       Unrealised      % of 
                                                       (loss)/gain   portfolio 
                                   Cost    Valuation    in period    by value 
                                  GBP'000   GBP'000     GBP'000 
VCT qualifying investments 
Pilgrim Trading Limited             1,297      1,079         (218)       27.0% 
Exclusive Events Venues Limited       500        343         (157)        8.6% 
SF Renewables (Solar) Limited         281        243          (10)        6.1% 
Rockhopper Renewables Limited         492        185          (61)        4.6% 
Indigo Generation Limited             613        149          (66)        3.7% 
Ironhide Generation Limited           613        135          (80)        3.4% 
Garthcliff Shipping Limited           400         78         (322)        2.0% 
Zora Energy Renewables Limited        300         20           (7)        0.5% 
Ormsborough Limited                 1,000          -             -        0.0% 
Jito Trading Limited                1,000          -             -        0.0% 
Yamuna Renewables Limited             800          -             -        0.0% 
 
 
Non-qualifying investments 
Fenkle Street LLP                     287        306          (11)        7.7% 
London City Shopping Centre 
 Limited                               15          -             -        0.0% 
 
                                    7,598      2,538         (932)       63.6% 
                                  =======             ============ 
 
Cash at bank and in hand                       1,454                     36.4% 
                                           ---------                ---------- 
 
Total                                          3,992                      100% 
                                           =========                ========== 
 
 
   UNAUDITED SUMMARISED BALANCE SHEET 
 
   as at 30 June 2020 
 
 
 
 
                                                                                           30 Jun   31 Dec 
                                                          30 Jun 2020                       2019      2019 
 
                                         'F' Shares    'H' Shares   'J' Shares    Total     Total     Total 
                                         GBP'000       GBP'000       GBP'000    GBP'000   GBP'000   GBP'000 
 
Fixed assets 
Unquoted investments                          1,830         2,071        2,538     6,439    13,118    9,758 
 
Current assets 
Debtors                                          93           460            6       559       588      678 
Cash at bank and in hand                        126           693        1,454     2,273     2,949    2,193 
                                       ------------  ------------  -----------  --------  --------  ------- 
                                                219         1,153        1,460     2,832     3,537    2,871 
 
Creditors: amounts falling due within 
 one year                                      (41)         (105)           14     (132)     (250)    (164) 
                                       ------------  ------------  -----------  --------  --------  ------- 
 
Net current assets                              178         1,048        1,474     2,700     3,287    2,707 
 
Net assets                                    2,008         3,119        4,012     9,139    16,405   12,465 
                                       ============  ============  ===========  ========  ========  ======= 
 
Capital and reserves 
Called up share capital                          11            13           11        35        35       35 
Capital redemption reserve                      149             -            -       149       149      149 
Special reserve                               3,903         9,077       10,741    23,721    24,714   23,726 
Share premium account                             -             -            -         -         -        - 
Revaluation reserve                         (1,379)       (6,565)      (2,247)  (10,191)   (7,007)  (6,932) 
Capital reserve -- realised                 (1,099)             -      (3,349)   (4,448)   (1,300)  (4,447) 
Revenue reserve                                 423           594      (1,144)     (127)     (186)     (66) 
                                       ------------  ------------  -----------  --------  --------  ------- 
 
  Total equity shareholders' funds            2,008         3,119        4,012     9,139    16,405   12,465 
                                       ============  ============  ===========  ========  ========  ======= 
 
Basic and diluted net asset value per: 
'F' Share                                     18.5p                                          30.3p    24.5p 
'H' Share                                                   23.3p                            43.5p    33.2p 
'J' Share                                                                37.6p               68.3p    50.3p 
 
   STATEMENT OF CHANGES IN EQUITY 
 
   for the six months ended 30 June 2020 
 
 
 
 
                   Called up      Capital               Share                   Capital 
                       share     redemption  Special    premium  Revaluation    reserve    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 2019         35            149    25,206         -      (4,748)      (1,029)     (187)   19,426 
Total 
 comprehensive 
 income                    -              -         -         -      (4,888)          220       121  (4,547) 
Realisation of 
 impaired 
 valuations                -              -         -         -        2,881      (2,881)         -        - 
Transactions with 
owners 
Transfer between 
 reserves                  -              -   (1,480)         -        (177)        1,657         -        - 
Dividend paid              -              -         -         -            -      (2,414)         -  (2,414) 
                   ---------  -------------  --------  --------  -----------  -----------  --------  ------- 
At 31 December 
 2019                     35            149    23,726         -      (6,932)      (4,447)      (66)   12,465 
Total 
 comprehensive 
 income                    -              -         -         -      (3,259)          172        29  (3,058) 
Transactions with 
owners 
Purchase of own 
shares                     -              -         -         -            -            -         -        - 
Transfer between 
 reserves                  -              -       (5)         -            -            5         -        - 
Dividend paid              -              -         -         -            -        (178)      (90)    (268) 
At 30 June 2020           35            149    23,721         -     (10,191)      (4,448)     (127)    9,139 
                   =========  =============  ========  ========  ===========  ===========  ========  ======= 
 
 
 
   INCOME STATEMENT 
 
   for the six months ended 30 June 2020 
 
   Company Total 
 
 
 
 
 
                        Six months ended            Six months ended       Year ended 
                           30 Jun 2020                30 Jun 2019          31 Dec 2019 
                   Revenue  Capital   Total   Revenue  Capital   Total       Total 
                   GBP'000  GBP'000  GBP'000  GBP'000  GBP'000  GBP'000     GBP'000 
 
  Income               866        -      866      296       16       312           670 
 
  Gains/(losses) 
  on investments 
  - realised             -      172      172        -       88        88           204 
  - unrealised           -  (3,259)  (3,259)        -  (2,189)   (2,189)       (4,888) 
                       866  (3,087)  (2,221)      296  (2,085)   (1,789)       (4,014) 
 
  Investment 
   management 
   fees               (19)        -     (19)    (180)        -     (180)         (307) 
  Other expenses     (797)        -    (797)    (129)        -     (129)         (250) 
 
  Return/(loss) 
   on ordinary 
   activities 
   before 
   taxation             50  (3,087)  (3,037)     (13)  (2,085)   (2,098)       (4,571) 
 
Tax on total 
 comprehensive 
 income and 
 ordinary 
 activities           (21)        -     (21)       14        -        14            24 
 
  Return/(loss) 
   attributable 
   to equity 
   shareholders         29  (3,087)  (3,058)        1  (2,085)   (2,084)       (4,547) 
                   =======  =======  =======  =======  =======  ========  ============ 
 
  Return per 'F' 
   Share            (0.3p)   (5.6p)   (5.9p)     0.1p     1.9p      2.0p          1.0p 
  Return per 'H' 
   Share              1.6p  (11.5p)   (9.9p)     0.1p   (2.8p)    (2.7p)        (8.0p) 
  Return per 'J' 
   Share            (1.5p)   (8.7p)  (10.2p)   (0.2p)  (17.9p)   (18.1p)       (33.6p) 
 
   INCOME STATEMENT (analysed by Share pool) 
 
   for the six months ended 30 June 2020 
 
 
 
 
 
                        Six months ended           Six months ended       Year ended 
  'F' Shares               30 Jun 2020                30 Jun 2019         31 Dec 2019 
                   Revenue  Capital   Total   Revenue  Capital   Total      Total 
                   GBP'000  GBP'000  GBP'000  GBP'000  GBP'000  GBP'000    GBP'000 
 
  Income               111        -      111       75        -       75           105 
 
  Gains/(losses) 
  on investments 
  - realised             -        -        -        -        -        -           110 
  - unrealised           -    (609)    (609)        -      201      201          (10) 
                       111    (609)    (498)       75      201      276           205 
 
  Investment 
   management 
   fees               (19)        -     (19)     (24)        -     (24)          (49) 
  Other expenses     (117)        -    (117)     (27)        -     (27)          (52) 
 
  Return/(loss) 
   on ordinary 
   activities 
   before 
   taxation           (25)    (609)    (634)       24      201      225           104 
 
  Tax on total 
   comprehensive 
   income and 
   ordinary 
   activities          (5)        -      (5)     (17)        -     (17)            10 
 
  Return 
   attributable 
   to equity 
   shareholders       (30)    (609)    (639)        7      201      208           114 
                   =======  =======  =======  =======  =======  =======  ============ 
 
   INCOME STATEMENT (analysed by Share pool) 
 
   for the six months ended 30 June 2020 
 
 
 
 
 
                        Six months ended           Six months ended       Year ended 
  'H' Shares               30 Jun 2020                30 Jun 2019         31 Dec 2019 
                   Revenue  Capital   Total   Revenue  Capital   Total      Total 
                   GBP'000  GBP'000  GBP'000  GBP'000  GBP'000  GBP'000    GBP'000 
 
  Income               671        -      671      134        -      134           382 
 
  Gains/(losses) 
  on investments 
  - realised             -      172      172        -       88       88            88 
  - unrealised           -  (1,718)  (1,718)        -    (463)    (463)       (1,293) 
                       671  (1,546)    (875)      134    (375)    (241)         (823) 
 
  Investment 
   management 
   fees                  -        -        -     (76)        -     (76)         (131) 
  Other expenses     (403)        -    (403)     (46)        -     (46)          (91) 
 
  Return/(loss) 
   on ordinary 
   activities 
   before 
   taxation            268  (1,546)  (1,278)       12    (375)    (363)       (1,045) 
 
  Tax on total 
   comprehensive 
   income and 
   ordinary 
   activities         (51)        -     (51)      (1)        -      (1)          (28) 
 
  Return/(loss) 
   attributable 
   to equity 
   shareholders        217  (1,546)  (1,329)       11    (375)    (364)       (1,073) 
                   =======  =======  =======  =======  =======  =======  ============ 
 
   INCOME STATEMENT (analysed by Share pool) 
 
   for the six months ended 30 June 2020 
 
 
 
 
 
                        Six months ended           Six months ended       Year ended 
  'J' Shares               30 Jun 2020                30 Jun 2019         31 Dec 2019 
                   Revenue  Capital   Total   Revenue  Capital   Total      Total 
                   GBP'000  GBP'000  GBP'000  GBP'000  GBP'000  GBP'000    GBP'000 
 
  Income                84        -       84       87       16      103           183 
 
  (Losses)/gains 
  on investments 
  - realised             -        -        -        -        -        -             5 
  - unrealised           -    (932)    (932)        -  (1,927)  (1,927)       (3,584) 
                        84    (932)    (848)       87  (1,911)  (1,824)       (3,396) 
 
  Investment 
   management 
   fees                  -        -        -     (80)        -     (80)         (127) 
  Other expenses     (277)        -    (277)     (56)        -     (56)         (107) 
 
  Loss on 
   ordinary 
   activities 
   before 
   taxation          (193)    (932)  (1,125)     (49)  (1,911)  (1,960)       (3,630) 
 
  Tax on total 
   comprehensive 
   income and 
   ordinary 
   activities           35        -       35       32        -       32            42 
 
  Loss 
   attributable 
   to equity 
   shareholders      (158)    (932)  (1,090)     (17)  (1,911)  (1,928)       (3,588) 
                   =======  =======  =======  =======  =======  =======  ============ 
 
   UNAUDITED CASH FLOW STATEMENT 
 
   for the six months ended 30 June 2020 
 
 
 
 
                                                                   30 Jun   31 Dec 
                                       30 Jun 2020                   2019     2019 
 
                            'F'       'H' 
                           Shares    Shares   'J' Shares    Total   Total     Total 
                         GBP'000   GBP'000     GBP'000    GBP'000  GBP'000  GBP'000 
 
Net cash 
 (outflow)/inflow from 
 operating activities        (57)       230         (57)      116      204      147 
 
Cash flows from 
investing activities 
Purchase of 
investments                     -         -            -        -        -        - 
Sale of investments             2       230            -      232    1,920    2,698 
                         --------  --------  -----------  -------  -------  ------- 
Net cash inflow from 
 investing activities           2       230            -      232    1,920    2,698 
                         --------  --------  -----------  -------  -------  ------- 
 
Net cash 
 (outflow)/inflow 
 before financing 
 activities                  (55)       460         (57)      348    2,124    2,845 
 
Cash flows from 
financing activities 
Purchase of own 
shares                          -         -            -        -        -        - 
Equity dividends paid           -         -        (268)    (268)    (937)  (2,414) 
Net cash outflow from 
 financing                      -         -        (268)    (268)    (937)  (2,414) 
                         --------  --------  -----------  ------- 
(Decrease)/increase in 
 cash                        (55)       460        (325)       80    1,187      431 
                         ========  ========  ===========  =======  =======  ======= 
 
   NOTES TO THE UNAUDITED CASH FLOW STATEMENT 
 
   for the six months ended 30 June 2020 
 
 
 
 
                                                                                                    30 Jun   31 Dec 
                                                                 30 Jun 2020                          2019     2019 
                                                                  'F'      'H'      'J' 
                                                                 Shares   Shares   Shares    Total    Total    Total 
                                                                GBP'000  GBP'000  GBP'000  GBP'000  GBP'000  GBP'000 
 Cash (outflow)/inflow from operating activities and 
  returns on investments 
   Return/(loss) on ordinary activities before taxation           (634)  (1,278)  (1,125)  (3,037)  (2,098)  (4,571) 
   Corporation tax paid                                               -        -        -        -       29     (17) 
   (Gains)/losses on investments                                    609    1,546      932    3,087    2,101    4,684 
   (Increase)/decrease in other debtors                            (24)      (9)      153      120      190      102 
   (Decrease)/increase in other creditors                           (8)     (29)     (17)     (54)     (18)     (51) 
   Net cash (outflow)/inflow from operating activities             (57)      230     (57)      116      204      147 
                                                                =======  =======  =======  =======  =======  ======= 
 
 Analysis of net funds 
   Beginning of period                                              181      233    1,779    2,193    1,762    1,762 
   Net cash (outflow)/inflow                                       (55)      460    (325)       80    1,187      431 
                                                                -------  -------  -------  -------  -------  ------- 
   End of period                                                    126      693    1,454    2,273    2,949    2,193 
                                                                =======  =======  =======  =======  =======  ======= 
 
 
   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 2020 
and have been prepared in accordance with the Statement of Recommended 
Practice "Financial Statements of Investment Trust Companies and Venture 
Capital Trusts" issued in February 2018 ("AIC SORP") and in accordance 
with the accounting policies set out in the statutory accounts for the 
year ended 31 December 2019, 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 2019 and the year ended 31 December 2019 respectively. 
 
   6. Dividends 
 
 
 
 
                                                                    Year 
                                                                    ended 
                                             Six months ended       31 Dec 
                                               30 June 2020          2019 
                            Per share   Revenue  Capital   Total    Total 
    Paid in period              pence   GBP'000  GBP'000  GBP'000  GBP'000 
 
    'F' Shares 
    Y/E Dec 2019 Interim          5.0p        -        -        -      541 
                                              -        -        -      541 
                                        =======  =======  =======  ======= 
 
    'H' Shares 
    Y/E Dec 2019 Interim          5.0p        -        -        -      670 
    Y/E Dec 2018 Final            5.0p        -        -        -      669 
                                        -------  -------  -------  ------- 
                                              -        -        -    1,339 
                                        =======  =======  =======  ======= 
 
    'J' Shares 
    Y/E Dec 2019 Interim          2.5p       90      178      268        - 
    Y/E Dec 2019 Interim          2.5p        -        -        -      267 
    Y/E Dec 2018 Final            2.5p        -        -        -      267 
                                        -------  -------  -------  ------- 
                                             90      178      268      534 
                                        =======  =======  =======  ======= 
 
 
   7. Basic and diluted return per share 
 
 
 
 
              Weighted average 
             number of shares in         Revenue              Capital 
                    issue             return/(loss)        return/(loss) 
                                                                     Per 
                                    GBP'000  Per share    GBP'000   share 
 
'F' Shares            10,821,660       (30)     (0.3p)      (609)   (5.6p) 
'H' Shares            13,389,758        217       1.6p    (1,546)  (11.5p) 
'J' Shares            10,675,533      (158)     (1.5p)      (932)   (8.7p) 
                                  ---------             --------- 
                                         29               (3,087) 
                                  =========             ========= 
 
 
   8. Net asset value per share 
 
 
 
 
             Shares in issue    Net asset value 
 
                                GBP'000  Per Share 
 
'F' Shares        10,821,660      2,008      18.5p 
'H' Shares        13,389,758      3,119      23.3p 
'J' Shares        10,675,533      4,012      37.6p 
                              --------- 
                                  9,139 
                              ========= 
 
 
   9. Reserves 
 
 
 
 
                             Period ended  Year ended 
                                30 June      31 Dec 
                                 2020         2019 
                               GBP'000      GBP'000 
 
Capital redemption reserve            149         149 
Special reserve                    23,721      23,726 
Revaluation reserve              (10,191)     (6,932) 
Capital reserve - realised        (4,448)     (4,447) 
Revenue reserve                     (127)        (66) 
                                    9,104      12,430 
                             ============  ========== 
 
 
   The Special reserve, Capital reserve - realised and Revenue reserve are 
all distributable reserves. The Revaluation reserve includes losses of 
GBP10,558,000 which are included in the calculation of distributable 
reserves. Total distributable reserves are GBP8,588,000 (31 Dec 2019: 
GBP11,400,000). 
 
   10. The fair value of investments is determined using the detailed 
accounting policy set out in the statutory accounts for the year ended 
31 December 2019. 
 
   The Company has categorised its financial instruments using the fair 
value hierarchy as follows: 
 
   Level 1     Reflects financial instruments quoted in an active market; 
 
   Level 2     Reflects financial instruments that have prices that are 
observable either directly or indirectly; and 
 
   Level 3     Reflects financial instruments that use valuation techniques 
that are not based on 
 
   observable market data (unquoted equity investments and loan note 
investments). 
 
 
 
 
                                                Period                                 Year 
                                                 ended                                 ended 
                  Level                         30 June    Level    Level    Level     31 Dec 
                    1      Level 2    Level 3    2020        1        2        3        2019 
                GBP'000   GBP'000    GBP'000   GBP'000   GBP'000  GBP'000  GBP'000    GBP'000 
 
     Loan 
      notes           -          -      1,943     1,943        -        -    2,494      2,494 
     Unquoted 
      equity          -          -      4,496     4,496        -        -    7,264      7,264 
                      -          -      6,439     6,439        -        -    9,758      9,758 
                =======  =========  =========  ========  =======  =======  =======  ========= 
 
 
   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 2019 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 as well as in accordance with FRS 104 Interim 
Financial Reporting 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 impact of the coronavirus pandemic has created heightened 
uncertainty but has not changed the nature of these risks. 
 
   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. The impact of the 
coronavirus pandemic has been significant on some portfolio companies 
and, in many cases, the VCT regulations restrict the Company from making 
further investment into these businesses, so the Manager seeks to 
provide whatever other support they can to these businesses, including 
encouraging them to take advantage of government support that may be 
available. The Company also has a limited period in which it must invest 
the majority of its funds. The Manager follows a rigorous process in 
vetting and carefully structuring 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 despite the current economic outlook and impact of the 
COVID-19 pandemic that is still being experienced. 
 
   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. 
 
   15. 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. 
 
 
 
 
 
 

(END) Dow Jones Newswires

September 30, 2020 13:15 ET (17:15 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.
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