Interim Management Statement


 

TIDMVEN3 
 
RNS Number : 3092E 
Ventus 3 VCT PLC 
17 December 2009 
 

 
 
 
 
 
 
Ventus 3 VCT plc 
17 December 2009 
 
 
VENTUS 3 VCT PLC 
 
 
Interim Management Statement 
 
 
Ventus 3 VCT plc (the 'Company') presents its second interim management 
statement for the financial year ending 28 February 2010, as required by the UK 
Listing Authority's Disclosure and Transparency Rule 4.3. 
 
 
The Company published its most recent Half-yearly Financial Report on 28 October 
2009. This interim management statement summarises the information as at the 
date of the Half-yearly Financial Report and further developments up to the date 
of this statement. The Company also published a regulatory news  announcement on 
1 December 2009 regarding one of its investee companies, Redimo LFG Limited 
("Redimo LFG"). Further information relating to this investment is given in this 
statement. 
 
 
 
 
Net Asset Value and Dividends - Ordinary Shares 
 
 
The Net Asset Value ("NAV") of Company as at 31 August 2009 stood at GBP10.4 
million or 92.7 pence per  ordinary share. 
 
 
As a result of the change to the valuation of the holding in Redimo LFG for the 
reasons explained below, the NAV as at 30 November 2009 stood at GBP9.4 million 
or 83.7 pence per share. There have been no material changes in the valuations 
of any other investments since the date of the last Half-yearly Financial 
Report. 
 
 
An interim dividend for the financial year ending 28 February 2010 of 1.50 pence 
per share was declared on 28 October 2009. This will be paid on 13 January 2010 
to all shareholders on the register as at the close of business on 11 December 
2009. 
 
 
The Company has already announced that it expects to declare a final dividend 
for the financial year ending  28 February 2010.  The proposed final dividend 
will be declared when the Company's Annual Report and Accounts are issued in 
May. In view of the circumstances regarding Redimo LFG the final dividend will 
be lower than the final dividend declared in the previous financial year. 
 
 
The Company's long term objective, which is to pay an annual dividend of between 
6 pence and 10 pence per share once all of its assets are fully operational, 
remains in place. 
 
 
 
 
Investments 
 
 
As at 30 November 2009 the Company held investments valued at GBP8.0 million in 
a total of 18 companies. For further details of completed investments please 
refer to the Investment Manager's Report in the Company's  Half-yearly Financial 
Report dated 28 October 2009. 
 
 
 
 
Redimo LFG Limited 
 
 
The Company holds an investment in Redimo LFG. The Company has invested GBP1 
million into Redimo LFG and has received dividends to date of GBP175,000. Redimo 
LFG owns and operates a portfolio of assets which generate electricity from 
landfill gas. 
 
 
Two of the key variables in Redimo LFG's financial performance are the number of 
operational hours achieved by the engines at each of its sites (and therefore 
the amount of electricity that is generated) and the price at which that 
electricity can be sold. 
 
 
The announcement on 1 December 2009 explained that Redimo LFG has experienced 
operational issues with the generating equipment at the largest site in its 
portfolio. This led to more engine downtime than had been projected in the 
budget at the time the investment was made. Redimo LFG has also experienced gas 
volumes at the smallest of the sites within its portfolio declining at a quicker 
rate than originally forecast. This is resulting in a reduction in energy 
generation at this site. In addition, Redimo LFG is the only operating asset in 
the Company's investment portfolio to have a significant element of electricity 
market risk in its energy offtake contracts. Winter 2009/10 wholesale energy 
prices are much lower than anticipated and this has further contributed to a 
shortfall against Redimo LFG's anticipated revenues. 
 
 
Remedial works have been carried out on the generating equipment at the largest 
site to rectify the operational issues. Reports commissioned by the Investment 
Manager over recent weeks suggest that the works have had a positive effect on 
the level of operational availability. Whilst these indications are encouraging, 
it is still too early to draw any firm conclusions for the longer term. Forward 
projections for wholesale energy prices in 2010 and beyond remain lower than 
originally budgeted and so, notwithstanding the improvement in operating 
performance, Redimo LFG is expected to be operating below its budgeted financial 
performance for the foreseeable future. 
 
 
At the time of the original investment in 2008 Redimo LFG entered into a long 
term bank loan facility, which is secured on its assets. As a result of the 
lower than expected revenues in this financial period Redimo LFG is now in 
breach of certain covenants under the loan facility. The Investment Manager is 
in discussions with the lending bank to agree the most appropriate way forward. 
 
 
The ability of Redimo LFG to trade out of its current position is contingent on 
maintaining the improved levels of operational performance and also on the level 
of future wholesale energy prices. Given the uncertainty on both of these key 
elements and given that Redimo LFG is currently in breach of certain covenants 
under the loan facility, the Company has determined that at the current time it 
is prudent to write down the value of its investment in Redimo LFG to zero. 
 
 
The valuation of Redimo LFG will be reassessed periodically in line with the 
Company's valuation guidelines. The main factors in such a valuation will be 
Redimo LFG's ability to demonstrate that the lending covenants can be met, such 
that there is a reasonable prospect that it can remedy the existing breaches of 
the loan covenants and commence paying dividends to the Company in the future. 
Whilst the current financial position is clearly under pressure, Redimo LFG 
continues to operate its assets and has not ceased trading. 
 
 
The difficulties with the investment in Redimo LFG have had a disproportionate 
effect in the current financial year on the ability of the Company to pay 
dividends. The assets in the Redimo LFG portfolio were already operational when 
the Company invested and therefore this holding has been one of the earlier cash 
generative investments in the portfolio. As such Redimo LFG made a significant 
contribution to the Company's dividend distributions in the last financial year. 
As other investments in the Company's investment portfolio become fully 
operational, it is anticipated that the Company's annual dividends will be less 
sensitive to the performance of individual investee companies. 
 
 
 
 
Top Up Offer 
 
 
On 18 November 2009 the Company launched a joint top up offer with Ventus 2 VCT 
plc to raise up to GBP1.0 million per VCT through an issue of new ordinary 
shares. The joint offer is now oversubscribed. 
 
 
Those who have applied under the offer and have been successful will soon 
receive a communication regarding the offer price and further details of the 
process. As described in the top up offer document, the offer price will be 
adjusted to reflect the updated NAV published in this statement. Applicants who 
have not been successful will be notified shortly. 
 
 
 
 
Other than described above, the Board is not aware of any events during the 
period from 1 September 2009 to the date of this statement which have had a 
material impact on the financial position of the Company. 
 
 
Enquiries should be directed to Steve Read (0207 939 5149) or Matthew Ridley 
(0207 939 5350). 
 
 
Issued on behalf of the Board 
 
 
The City Partnership UK Limited 
Company Secretary 
17 December 2009 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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