Downing Planned Exit VCT 2011 plc Half Yearly Report for the six months ended 31 May 2014 (Correction)
The announcement released by the Company at 17:40 on 28 July 2014, entitled Half Yearly Report, contained an error in respect of the dividend payment date for the forthcoming dividends. The dividends will be paid on 21 November 2014 and not 23 November 2014 as originally stated. The full corrected text of the announcement is as follows:
PERFORMANCE SUMMARY 31 May 30 Nov 31 May 2014 2013 2013
pence pence pence
General pool
Net asset value per General Ordinary Share 77.3 78.0 79.2
Net asset value per General 'A' Share 6.1 6.2 6.3
Cumulative dividends per General Ordinary Share 15.0 12.5 10.0 --------------------- Total return per General Ordinary Share and 'A' Share 98.4 96.7 95.5 ---------------------
Structured pool
Net asset value per Structured Ordinary Share 79.7 80.1 81.7
Net asset value per Structured 'A' Share 6.3 6.3 6.5
Cumulative dividends per Structured Ordinary Share 15.0 12.5 10.0 --------------------- Total return per Structured Ordinary Share and 'A' Share 101.0 98.9 98.2 ---------------------
Low Carbon pool (per £1 invested) *
Net asset value per 1.0695 Low Carbon Ordinary Shares 90.1 89.7 85.8
Cumulative dividends per 1.0695 Low Carbon Ordinary 16.0 13.3 10.7 Shares --------------------- Total return per 1.0695 Low Carbon Ordinary Shares 106.1 103.0 96.5 ---------------------
* Low Carbon Ordinary Shares were originally issued at 93.5p per share. The above figures have been expressed in terms of an original investment of £1, which equates to a holding of 1.0695 shares.
CHAIRMAN'S STATEMENT I am pleased to present the Company's Half-Yearly Report for the six months ended 31 May 2014. The period saw the completion of the task of building the portfolios for the final two share pools and steady progress by most investments.
General Share pool At 31 May 2014, the net asset value ('NAV') of a combined holding of one General Ordinary Share and one General 'A' Share stood at 83.4p, an increase of 1.7p or 2.0% after adjusting for the dividend paid in the period. The Total Return (NAV plus dividends paid to date) now stands at 98.4p compared to the initial cost to subscribers in the share offer, net of income tax relief, of 70.0p.
Most of the General Share pool investments are performing to plan and two have justified uplifts in valuation over the period. In addition, the portfolio has also generated a steady level of investment income. As has been reported previously, three of the leisure sector investments have faced some issues. The Board is satisfied that the Manager is taking appropriate action to address these and to seek to get the businesses back on track.
A full review of the General Share pool is presented below.
Structured Share pool At 31 May 2014, the NAV of a combined holding of one Structured Ordinary Share and one Structured 'A' Share stood at 86.0p, an increase of 2.1p or 2.4% after adjusting for the dividend paid during the period. The Total Return (NAV plus dividend paid to date) now stands at 101.0p compared to the initial cost to subscribers in the share offer, net of income tax relief, of 70.0p.
As with the General Share pool, the majority of investments have continued to perform satisfactorily but three have underperformed and are receiving appropriate attention from the Manager. Gains on the Structured Product investments, along with investment income from the VCT qualifying investments, has combined to produce the increase in NAV.
A full review of the Structured Share pool is presented below.
Low Carbon Share pool The Low Carbon Ordinary Share NAV at 31 May 2014 stood at 84.2p. Shareholders will recall that Low Carbon Ordinary Shares were originally issued at 93.5p per share. Rebasing for an original investment of £1, Total Return (NAV plus dividends paid to date) now stands at 106.1p compared to the initial cost, net of income tax relief, of 70.0p.
The Low Carbon Share portfolio has continued to make progress over the period. The Manager is still dealing with some minor issues in connection with the underlying solar projects, however generally they are now generating electricity at, or close to, expected levels which has resulted in a steady flow of investment income for the share pool and uplifts in two investment valuations.
A full review of the Low Carbon Share pool is presented below.
Dividends In line with the intention set out in the original prospectus, the Company will pay interim dividends of 2.5p per share for each of the General Ordinary Shares, Structured Ordinary Shares and Low Carbon Ordinary Shares.
Each of the dividends will be paid on 21 November 2014 to Shareholders on the register at 17 October 2014.
Share buybacks The Company operates a share buyback policy across all pools whereby, subject to certain restrictions, it intends to buy in any of its own shares that become available in the market for cancellation. In its first five years, the Company has a policy of undertaking any buybacks at a price equal to the latest published NAV i.e. at nil discount.
No shares were bought back in the period.
Outlook The Board is satisfied that, now that the initial investment period is over, each share pool has a good quality and stable portfolio.
Going forward, the Investment Manager's focus will be on monitoring and supporting the existing portfolio companies and also starting to look ahead and giving some preliminary consideration to the exit plans. The fifth anniversary of the close of the fundraising offers occurs in 2016, after which the process of starting to liquidate the portfolios can commence. It is expected that once a number of realisations have been achieved, the Company will start to distribute the proceeds to Shareholders.
The Board and Manager are starting to consider ways in which running costs might be efficiently managed during the realisation process, including whether a merger with one or more other VCTs might be beneficial for Shareholders.
The Board is also conscious of the fact that the economic environment has shifted since the Company was launched and there might now be appetite amongst Shareholders for a longer term investment if it is able to provide an attractive tax-free yield. The Company holds a significant number of renewable energy investments across all the share pools, each of which receives income through UK Government backed, index-linked schemes. Following recent rule changes, VCTs can no longer make qualifying investments in most renewable energy sectors and the Board is starting to give some thought as to whether an option can be offered at the end of the planned exit period to allow Shareholders to continue to benefit from this asset class.
Naturally, if there is any major news in respect of the above before the next Annual Report, I shall write to Shareholders at that time.
Sir Aubrey Brocklebank Chairman
INVESTMENT MANAGER'S REPORT GENERAL SHARE POOL The General Share pool continued to make further VCT qualifying investments during the six months ended 31 May 2014, partly funded by realisations of non- qualifying investments.
Portfolio activity At the period end, the pool held a portfolio of 16 VCT qualifying investments and eight non-qualifying investments. One new qualifying investment was made at a cost of £400,000 into Oak Grove Renewables Limited. One further investment was made in Vulcan Renewables Limited at a cost of £44,000. £128,000 was received to pay down the existing loan in Kidspace Adventures Limited, these proceeds were reinvested into Kidspace Adventures Holdings Limited. Details are below:
Oak Grove Renewables Limited is developing a 2.0MW maize fed biogas plant in Norfolk. Biogas is produced through an anaerobic digestion process, which is then used to generate electricity. £400,000 was invested in to the company during the period.
Vulcan Renewables Limited is developing a similar 2.0MW maize fed biogas plant near Doncaster. At this plant, biogas is produced though an anaerobic digestion process and then goes through additional processing so that it can be injected in to the National Gas Grid. Some of the gas is also used to produce electricity. A further £44,000 was invested in to this company in the period.
During the period, several non-qualifying loan stock investments were realised at par: £350,000 from Future Biogas (SF) Limited, £150,000 from Antelope Pub Limited and £55,000 from South-Western Farms Solar Limited. Proceeds of £2,000 were received in respect of Helcim Limited, an investment which was realised in a previous period. The proceeds were in excess of the amount previously accrued.
Portfolio performance The pool is generally performing satisfactorily and, in time, we expect to see these investments deliver growth, in particular, the various renewable energy investments in the portfolio. There were few valuation movements in the period with a total value decrease of £9,000.
Kidspace Adventures Holdings Limited is the holding company of Kidspace Adventures Limited, which owns three children's play centres. Continued good performance at all three sites has resulted in an increase in value of £129,000.
Residential PV Trading Limited owns solar panels on the rooftops of over 260 domestic properties in the south of the UK. Performance continues to be good and an increase in value of £18,000 has been recognised in the period.
Performance at the nightclub owned by City Falkirk Limited continues to be significantly below expectations and a reduction in value of £61,000 has been made. A reduction of £50,000 has been made to Cheers Dumbarton Limited following a period of below budget trading at the Cheers nightclub in Dumbarton, Scotland.
South-Western Farms Solar Limited owns a portfolio of ground mounted solar panels in the southwest of the UK. Significant remedial costs have been incurred in order to get all sites generating electricity and, consequently, a valuation reduction of £45,000 has been made.
Snow Hill Developments LLP developed the Holiday Inn Express Hotel in Snow Hill, Birmingham. The hotel has been partly funded by The Co-operative Bank and, due to a later opening than planned, the company may now breach banking covenants. The business is trading satisfactorily and the Board believes it remains appropriate to continue to hold the investment at cost, however the investment is not without risk while arrangements with the bank are addressed.
Details of the General Share pool portfolio and investment activity during the period is shown below.
Net asset value At 31 May 2014, NAV per General Ordinary Share stood at 77.3p and the NAV per General 'A' Share stood at 6.1p, producing a combined total of 83.4p. This is an increase of 1.7p per share (2.0%) since 30 November 2013 (after taking into account the 2.5p dividend paid during the period).
The NAV plus cumulative dividends paid to date for one General Ordinary Share and one General 'A' Share amounts to 98.4p, compared to the initial cost to investors net of income tax relief of 70.0p.
Results and dividends The portfolio delivered investment income of £559,000 during the six months. The profit on ordinary activities after taxation for the period was £277,000 (2013: £205,000), comprising a revenue profit of £314,000 (2013: £254,000) and a capital loss of £37,000 (2013: £49,000).
The General Share pool will pay an interim dividend of 2.5p per General Ordinary Share on 21 November 2014 to Shareholders on the register at 17 October 2014.
Outlook The task of building the General Share portfolio is now complete and has resulted in a reasonably well-diversified portfolio which produces a steady ongoing yield and has growth potential.
Our focus will shift towards close monitoring of all portfolio companies so that we are well positioned to provide support if needed as the businesses develop and we work towards the planned exit, which is due to commence in 2016.
Downing LLP
GENERAL SHARE POOL SUMMARY OF INVESTMENT PORTFOLIO as at 31 May 2014 Unrealised % of gain/(loss) portfolio Cost Valuation in period by value
£'000 £'000 £'000
VCT qualifying investments
Vulcan Renewables Limited 1,664 1,664 - 12.5%
Kidspace Adventures Holdings Limited 1,116 1,334 129 10.2%
Mosaic Spa and Health Clubs Limited* 1,500 1,259 - 9.5%
Tooting Tram and Social Limited* 1,067 1,187 - 8.9%
Residential PV Trading Limited 600 762 18 5.7%
Westcountry Solar Solutions Limited 600 600 - 4.5%
South-Western Farms Solar Limited 600 555 (45) 4.2%
Odysian (Holdings) Limited 527 543 - 4.1%
Avon Solar Energy Limited 505 505 - 3.8%
Wickham Solar Limited 472 472 - 3.6%
Fubar Stirling Limited 429 429 - 3.2%
Oak Grove Renewables Limited 400 400 - 3.0%
City Falkirk Limited 674 330 (61) 2.5%
Angel Solar Limited 300 300 - 2.3%
Cheers Dumbarton Limited 76 26 (50) 0.2%
Lochrise Limited 20 - - 0.0% ---------------------------------------- 10,550 10,366 (9) 78.2% ----------------------------------------
Non-qualifying investments
Hoole Hall Hotel Limited 1,200 1,200 - 9.0%
Snow Hill Developments LLP 750 750 - 5.7%
Kidspace Adventures Limited 384 384 - 2.9%
Dominions House Limited 178 178 - 1.3%
Antelope Pub Limited 150 150 - 1.1%
Clean Electricity Limited 70 70 - 0.5%
UK Renewable Power Limited 55 55 - 0.4%
21st Century Energy Limited 22 22 - 0.2% ---------------------------------------- 2,809 2,809 - 21.1% ----------------------------------------
Total 13,359 13,175 (9) 99.3% -------- --------------
Cash at bank and in hand 88 0.7%
----------- ---------- Total investments 13,263 100.0% ----------- ----------
* Part-qualifying investment
GENERAL SHARE POOL SUMMARY OF INVESTMENT MOVEMENTS for the six months ended 31 May 2014
Additions £'000
VCT qualifying investments
Oak Grove Renewables Limited 400
Kidspace Adventures Holdings Limited 128
Vulcan Renewables Limited 44 -------- 572 --------
Disposals Market value at Total 1 Dec 2013 Gain vs. realised Cost ** Proceeds cost gain
£'000 £'000 £'000 £'000 £'000
Non-qualifying investments
Future Biogas (SF) Limited 350 350 350 - -
Antelope Pub Limited 150 150 150 - -
Kidspace Adventures Limited 128 128 128 - -
South-Western Farms Solar Limited 55 55 55 - -
Helcim Limited - - 2 2 2 -------------------------------------------- 683 683 685 2 2 --------------------------------------------
* Part-qualifying investment ** Adjusted for purchases in the period
Of the investments above, Helcim Limited was realised in a prior period but received proceeds in the current period in excess of the amount previously accrued.
INVESTMENT MANAGER'S REPORT STRUCTURED SHARE POOL The Structured Share pool continued to make further VCT qualifying investments during the six months ended 31 May 2014. Funds for the new investments were provided by redemptions from the Structured Product portfolio which produced another solid performance.
VCT qualifying investment activity At the period end, the pool held a portfolio of 16 VCT qualifying or part qualifying investments and two non-qualifying investments. One new qualifying investment was made at a cost of £545,000 into Oak Grove Renewables Limited. One further investment was made into Vulcan Renewables Limited for a cost of £82,000. One non-qualifying investment, Antelope Pub Limited, was transferred in from the General Share pool at a cost of £150,000. £85,000 was received to pay down the existing loan in Kidspace Adventures Limited, these proceeds were reinvested into Kidspace Adventures Holdings Limited. Details are below:
Vulcan Renewables Limited is developing a 2.0MW maize fed biogas plant near Doncaster. Biogas is produced though an anaerobic digestion process and then goes through additional processing so that it can be injected in to the National Gas Grid. Some of the gas is also used to produce electricity. A further £82,000 was invested in to this company in the period.
Antelope Pub Limited is a freehold pub in Tooting, South London. The pool invested £150,000 of non-qualifying loans into the company.
VCT qualifying investment performance The pool is generally performing satisfactorily and, in time, we expect to see these investments deliver growth, in particular, the various renewable energy investments in the portfolio. There were few valuation movements in the period with a total value decrease of £5,000. Details are below.
Kidspace Adventures Holdings Limited is the holding company of Kidspace Adventures Limited which owns three children's play centres. Continued good performance at all three sites has resulted in an increase in value of £86,000.
Residential PV Trading Limited owns solar panels on the rooftops of over 260 domestic properties in the south of the UK. Performance continues to be good and an increase in value of £12,000 has been recognised in the period.
Performance at the nightclub owned by City Falkirk Limited continues to be significantly below expectations and a reduction in value of £40,000 has been made.
A reduction of £33,000 has also been made to Cheers Dumbarton Limited following a period of below budget trading at the Cheers nightclub in Dumbarton, Scotland.
South-Western Farms Solar Limited owns a portfolio of ground mounted solar panels in the South West of the UK. Significant remedial costs have been incurred in order to get all sites generating electricity and, consequently, a valuation reduction of £30,000 has been made.
All other investments are performing satisfactorily and, in time, we expect to see these investments deliver growth, in particular, the various renewable energy investments in the portfolio.
Structured Product portfolio Shareholders will recall that the strategy of the Structured Share pool has been to invest funds not utilised for VCT qualifying investments in a portfolio of defensive Structured Products.
The portfolio has performed in line with expectations over the period, producing unrealised gains of £73,000 and one redemption generating realised gains of £14,000.
Further Structured Products are likely to mature this year and next year. The intention is to reinvest the proceeds into shorter-dated Structured Products or alternative investments, depending on the opportunities available at the time.
Net asset value The NAV per Structured Ordinary Share stood at 79.7p and per Structured 'A' Share stood at 6.3p at the period end, producing a combined total of 86.0p. This is an increase of 2.1p per share (2.4%) since 30 November 2013 (after taking into account the 2.5p dividend paid during the period). The NAV plus cumulative dividends paid to date for one Structured Ordinary Share and one Structured 'A' Share amounts to 101.0p, compared to the initial cost to investors net of income tax relief of 70.0p.
Results and dividend The pool's profit on ordinary activities after taxation for the period was £217,000 (2013: £239,000), comprising a revenue profit of £155,000 (2013: £93,000) and a capital profit of £62,000 (2013: £146,000).
The pool will pay an interim dividend of 2.5p per Structured Ordinary Share on 21 November 2014 to Shareholders on the register at 17 October 2014.
Outlook The task of building the pool's VCT qualifying portfolio is now complete and has resulted in a reasonably well diversified portfolio which produces a steady ongoing yield and has growth potential.
Our focus will shift towards close monitoring of all portfolio companies so that we are well positioned to provide support if needed as the businesses develop and we work towards the planned exit, which is due to commence in 2016.
Downing LLP
STRUCTURED SHARE POOL SUMMARY OF INVESTMENT PORTFOLIO as at 31 May 2014 Unrealised % of gain/(loss) portfolio Cost Valuation in period by value
£'000 £'000 £'000
VCT qualifying investments
Vulcan Renewables Limited 982 982 - 10.5%
Kidspace Adventures Holdings Limited 744 889 86 9.5%
Mosaic Spa and Health Clubs Limited * 920 759 - 8.1%
Tooting Tram and Social Limited 533 613 - 6.5%
Oak Grove Renewables Limited 545 545 - 5.8%
Residential PV Trading Limited 400 508 12 5.7%
Wickham Solar Limited 472 472 - 5.0%
Westcountry Solar Solutions Limited 400 400 - 4.3%
South-Western Farms Solar Limited 400 370 (30) 3.9%
Odysian (Holdings) Limited 351 362 - 3.9%
Avon Solar Energy Limited 336 336 - 3.6%
Fubar Stirling Limited 286 286 - 3.0%
City Falkirk Limited 450 220 (40) 2.3%
Angel Solar Limited 200 200 - 2.1%
Cheers Dumbarton Limited 51 18 (33) 0.2%
Lochrise Limited 13 - - 0.0% --------------------------------------- 7,083 6,960 (5) 74.4% ---------------------------------------
Non-qualifying investments
Kidspace Adventures Limited 256 256 - 2.7%
Antelope Pub Limited 150 150 - 1.7% --------------------------------------- 406 406 - 4.4% ---------------------------------------
Structured Product investments
HSBC 7.1% Defensive Worst-Of-AC 401 423 10 4.5%
RBS 6 Yr Dul Index Synthetic Zero 10.16% 251 364 19 3.9%
Goldman Sachs 8.5% Defensive Worst-Of- AC 251 273 16 2.9%
UBS 7.3% Defensive Worst-Of-AC 251 267 7 2.8%
BNP Paribas Harewood Abs Progression 2 253 267 5 2.8%
Credit Suisse 7% Defensive Worst-Of-AC 251 267 16 2.8% --------------------------------------- 1,658 1,861 73 19.7% ---------------------------------------
Total 9,147 9,227 68 98.5% ------- --------------
Cash at bank and in hand 145 1.5%
----------- ---------- Total investments 9,372 100.0% ----------- ----------
* Part-qualifying investment
STRUCTURED SHARE POOL SUMMARY OF INVESTMENT MOVEMENTS for the six months ended 31 May 2014
Additions £'000
VCT qualifying investments
Oak Grove Renewables Limited 545
Kidspace Adventures Holdings Limited 85
Vulcan Renewables Limited 82 -------- 712
VCT non-qualifying investments
Antelope Pub Limited 150 -------- 150
-------- 862 --------
Disposals Market value at Total 1 Dec 2013 Gain vs. realised Cost ** Proceeds cost gain
£'000 £'000 £'000 £'000 £'000
Non-qualifying investments
Kidspace Adventures Limited 85 85 85 - -
Helcim Limited - - 1 1 1 -------------------------------------------- 85 85 86 1 1 --------------------------------------------
Structured Product investments
Barclays 7.75% Defensive Worst-Of- 351 360 AC 374 23 14 -------------------------------------------- 351 360 374 23 14 --------------------------------------------
436 445 460 24 15 --------------------------------------------
** Adjusted for purchases in the period
Of the investments above, Helcim Limited was realised in a prior period but received proceeds in the current period in excess of the amount previously accrued.
INVESTMENT MANAGER'S REPORT LOW CARBON SHARE POOL The task of building the Low Carbon investment portfolio was completed at an early stage, ahead of deadlines for changes in the Feed-in Tariffs ('FiTs') and other regulations. As a result, there has been no investment activity in the period. Some of the investee companies have now started to establish steady track records and have justified some initial uplifts in value.
Investment activity At 31 May 2014, the share pool had a portfolio of seven investments with a total cost of £6.4 million. All of the investments in which the pool has invested own solar PV panels sited on a mix of commercial and residential rooftops, all of which receive FiTs.
There were no new or further investments in the period nor any realisations.
The majority of the investments are now valued above cost and are consistently generating electricity at the planned levels. Those where the track record is not yet sufficiently established have been held at original cost.
In the case of two investments: Progressive Energies Limited; and PV Generation Limited, yield has been sufficiently proven to justify increasing the carrying values by £60,000 on each investment.
Net asset value At 31 May 2014, the NAV per Low Carbon Ordinary Share stood at 84.2p. This is an increase of 2.9p per share (3.5%) since 30 November 2013 (after taking into account the 2.5p dividend paid during the period).
Low Carbon Ordinary Shares were originally issued at a price of 93.5p each. The equivalent Total Return (NAV plus dividend paid to date) for an original investment of £1 now stands at 106.1p.
Results and dividend The share pool's profit on ordinary activities after taxation for the period was £235,000 (2013: £198,000), comprising a revenue profit of £130,000 (2013: £57,000) and a capital profit of £105,000 (2013: £141,000).
The Company will pay an interim dividend of 2.5p per Low Carbon Ordinary Share on 21 November 2014 to Shareholders on the register at 17 October 2014.
Outlook The share pool remains fully invested in a portfolio of investments which have index-linked returns and significantly higher yields than potential alternative investments. We are satisfied with the progress made by the portfolio companies to date and, over the coming year, expect to see further capital growth.
Downing LLP
LOW CARBON SHARE POOL SUMMARY OF INVESTMENT PORTFOLIO as at 31 May 2014 Unrealised % of gain portfolio Cost Valuation in period by value
£'000 £'000 £'000
VCT qualifying investments
Progressive Energies Limited * 1,400 1,460 60 21.0%
Green Electricity Generation Limited 1,000 1,210 - 17.5%
PV Generation Limited 1,000 1,150 60 16.6%
Progressive Power Generation Limited 800 800 - 11.5%
Clean Electricity Limited 780 780 - 11.3%
UK Renewable Power Limited 780 780 - 11.3%
21st Century Energy Limited 600 708 - 10.2% ------------------------------------- Total 6,360 6,888 120 99.4% -------------------------------------
Cash at bank and in hand 45 0.6%
----------- ---------- Total investments 6,933 100.0% ----------- ----------
* Part qualifying investment
There were no additions or disposals in the period.
UNAUDITED SUMMARISED BALANCE SHEET as at 31 May 2014 31 May 2014 31 May 30 Nov 2013 2013
General Structured Low Carbon Share pool Share pool Share pool Total Total Total
£'000 £'000 £'000 £'000 £'000 £'000
Fixed assets
Investments 13,175 9,227 6,888 29,290 26,490 28,806 ----------------------------------------- -------- -------
Current assets
Debtors 331 113 75 519 369 292
Cash at bank and in 88 145 45 278 3,194 1,351 hand ----------------------------------------- -------- ------- 419 258 120 797 3,563 1,643
Creditors: amounts falling due within (344) (164) (183) (691) (419) (920) one year ----------------------------------------- -------- -------
Net current assets 75 94 (63) 106 3,144 723
----------------------------------------- -------- ------- Net assets 13,250 9,321 6,825 29,396 29,634 29,529 ----------------------------------------- -------- -------
Capital and reserves
Called up Ordinary 16 11 8 35 35 35 Share capital
Called up 'A' Share 18 13 - 31 31 31 capital
Revaluation reserve (185) 90 528 433 473 254
Capital reserve - - 365 - 365 - 365 realised
Special reserve 13,284 8,937 6,041 28,262 29,288 28,613
Revenue reserve 117 (95) 248 270 (193) 231
----------------------------------------- -------- ------- Equity shareholders' 13,250 9,321 6,825 29,396 29,634 29,529 funds ----------------------------------------- -------- -------
Net asset value per:
General Ordinary 77.3p 79.2p 78.0p Share
General 'A' Share 6.1p 6.3p 6.2p
Structured Ordinary 79.7p 81.7p 80.1p Share
Structured 'A' Share 6.3p 6.5p 6.3p
Low Carbon Ordinary 84.2p 80.3p 83.8p Share
UNAUDITED INCOME STATEMENT for the six months ended 31 May 2014 Year Six months ended Six months ended ended 31 May 2014 31 May 2013 30 Nov 2013
Company Total Revenue Capital Total Revenue Capital Total Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Income 1,109 - 1,109 855 - 855 2,027
Gain on investments
- realised - 17 17 - 75 75 168
- unrealised - 179 179 - 283 283 429 ----------------------- ----------------------- ------ 1,109 196 1,305 855 358 1,213 2,624
Investment management fees (199) (66) (265) (202) (68) (270) (534)
Other expenses (138) - (138) (131) (52) (183) (395) ----------------------- ----------------------- ------
Return on ordinary activities before taxation 772 130 902 522 238 760 1,695
Taxation (173) - (173) (118) - (118) (289)
----------------------- ----------------------- ------ Return attributable to equity shareholders 599 130 729 404 238 642 1,406 ----------------------- ----------------------- ------
Return per:
General Ordinary Share 2.0p (0.2p) 1.8p 1.6p (0.3p) 1.3p 2.5p
General 'A' Share - - - - - - -
Structured Ordinary 1.5p 0.6p 2.1p 0.9p 1.3p 2.2p 3.1p Share
Structured 'A' Share - - - - - - -
Low Carbon Ordinary 1.6p 1.3p 2.9p 0.7p 1.7p 2.4p 8.5p Share
A Statement of Total Recognised Gains and Losses has not been prepared as all gains and losses are recognised in the Income Statement as noted above.
Analysed by share pool: Year Six months ended Six months ended ended 31 May 2014 31 May 2013 30 Nov 2013
General Share pool Revenue Capital Total Revenue Capital Total Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Income 559 - 559 504 - 504 1,003
Gain/(loss) on investments
- realised - 2 2 - - - 16
- unrealised - (9) (9) - 14 14 (45) ----------------------- ----------------------- ------ 559 (7) 552 504 14 518 974
Investment management fees (91) (30) (121) (93) (31) (124) (245)
Other expenses (63) - (63) (60) (32) (92) (190) ----------------------- ----------------------- ------
Return on ordinary activities before taxation 405 (37) 368 351 (49) 302 539
Taxation (91) - (91) (97) - (97) (146)
----------------------- ----------------------- ------ Return attributable to equity shareholders 314 (37) 277 254 (49) 205 393 ----------------------- ----------------------- ------
Structured Share pool Revenue Capital Total Revenue Capital Total Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Income 306 - 306 205 - 205 463
Gain on investments
- realised - 15 15 - 75 75 152
- unrealised - 68 68 - 113 113 66 ----------------------- ----------------------- ------ 306 83 389 205 188 393 681
Investment management fees (62) (21) (83) (65) (22) (87) (172)
Other expenses (44) - (44) (42) (20) (62) (130) ----------------------- ----------------------- ------
Return on ordinary activities before taxation 200 62 262 98 146 244 379
Taxation (45) - (45) (5) - (5) (53)
----------------------- ----------------------- ------ Return attributable to equity shareholders 155 62 217 93 146 239 326 ----------------------- ----------------------- ------
Year Six months ended Six months ended ended 31 May 2014 31 May 2013 30 Nov 2013
Low Carbon Share pool Revenue Capital Total Revenue Capital Total Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Income 244 - 244 146 - 146 561
Gain on investments
- unrealised - 120 120 - 156 156 408 ----------------------- ----------------------- ------ 244 120 364 146 156 302 969
Investment management fees (46) (15) (61) (44) (15) (59) (117)
Other expenses (31) - (31) (29) - (29) (75) ----------------------- ----------------------- ------
Return/(loss) on ordinary activities before taxation 167 105 272 73 141 214 777
Taxation (37) - (37) (16) - (16) (90)
----------------------- ----------------------- ------ Return/(loss) attributable to equity shareholders 130 105 235 57 141 198 687 ----------------------- ----------------------- ------
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS for the six months ended 31 May 2014 31 May 30 Nov 31 May 2014 2013 2013
General Structured Low Carbon Share pool Share pool Share pool Total Total Total
£'000 £'000 £'000 £'000 £'000 £'000
Opening Shareholders' 13,365 9,372 6,792 29,529 29,865 29,865 funds
Dividends (392) (268) (202) (862) (863) (1,725)
Shares bought back - - - - (10) (17)
Total recognised gain 277 217 235 729 642 1,406 for the period ------------------------------------- -------- -------- Closing Shareholders' 13,250 9,321 6,825 29,396 29,634 29,529 funds ------------------------------------- -------- --------
UNAUDITED CASH FLOW STATEMENT for the six months ended 31 May 2014 31 May 30 Nov 31 May 2014 2013 2013
General Structured Low Share pool Share pool Carbon Total Total Total Share pool
Note £'000 £'000 £'000 £'000 £'000 £'000
Cash inflow/(outflow) from operating activities
and returns on 1 35 (16) 59 78 192 1,377 investments
Taxation
Corporation tax paid - - - - - (81)
Capital expenditure
Purchase of (572) (862) - (1,434) (2,686) investments (7,332)
Sale of investments 685 460 - 1,145 3,673 6,241 ----------------------------------- --------- -------- Net cash (outflow)/inflow from 113 (402) - (289) 987 (1,091) capital expenditure ----------------------------------- --------- --------
Equity dividends paid (392) (268) (202) (862) (863) (1,725) ----------------------------------- --------- --------
Net cash (outflow)/inflow before (244) (686) (143) (1,073) 316 (1,520) financing
Financing
Purchase of own shares - - - - (10) (17) ----------------------------------- --------- -------- Net cash outflow from - - - - (10) (17) financing ----------------------------------- --------- -------- (Decrease)/increase in 2 (244) (686) (143) (1,073) 306 (1,537) cash ----------------------------------- --------- --------
Notes to the cash flow statement:
1 Cash (outflow)/inflow from operating activities and returns on investments
Return on ordinary activities before 404 286 272 962 760 1,695 taxation
Gain on investments (29) (107) (120) (256) (358) (597)
(Increase) in other (116) (38) (73) (227) (79) (3) debtors
(Decrease)/increase in other creditors (224) (157) (20) (401) (131) 281 ----------------------------------- --------- -------- Net cash inflow/(outflow) from 35 (16) 59 78 192 1,376 operating activities ----------------------------------- --------- --------
2 Analysis of net funds
Beginning of period 332 831 188 1,351 2,888 2,888
Net cash (244) (686) (143) (1,073) 306 (1,537) (outflow)/inflow ----------------------------------- --------- -------- End of period 88 145 45 278 3,194 1,351 ----------------------------------- --------- --------
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS 1. The unaudited half yearly financial results cover the six months to 31 May 2014 and have been prepared in accordance with the accounting policies set out in the statutory accounts for the year ended 30 November 2013, which were prepared under UK Generally Accepted Accounting Practice ('UK GAAP') and in accordance with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies' revised January 2009 ('SORP').
2. All revenue and capital items in the Income Statement derive from continuing operations.
3. The Company has only one class of business and derives its income from investments made in shares, securities and bank deposits.
4. The comparative figures were in respect of the period ended 31 May 2013 and the year ended 30 November 2013 respectively.
5. Dividends 31 May 2014
Revenue Capital Total
£'000 £'000 £'000
General Ordinary Shares
Paid in period
2013 Final (196) (196) (392) ----------- ----------- --------
Structured Ordinary Shares
Paid in period
2013 Final (162) (106) (268) ----------- ----------- --------
Low Carbon Ordinary Shares
Paid in period
2013 Final (202) - (202) ----------- ----------- --------
6. Reserves Capital Special reserve Revaluation Revenue reserve - realised reserve reserve
£'000 £'000 £'000 £'000
At 1 December 2013 28,613 365 254 231
Expenses capitalised - (66) - -
Gains on investments - 17 179 -
Transfer between reserves (351) 351 - -
Retained net revenue for the period - - - 599
Dividends paid - (302) - (560) --------------------------------------- At 31 May 2014 28,262 365 433 270 ---------------------------------------
The Special reserve, Capital reserve - realised and Revenue reserve are all distributable reserves. Revaluation reserve includes losses of £1,121,000 which are included in the calculation of distributable reserves. Total distributable reserves are £27,776,000.
7. Net asset value per share has been calculated on 15,679,241 General Ordinary Shares, 18,453,789 General 'A' Shares; 10,703,725 Structured Ordinary Shares, 12,597,594 Structured 'A' Shares; and 8,102,222 Low Carbon Ordinary Shares, being the shares in issue at the period end.
8. Return per share for the period has been calculated on 15,684,891 General Ordinary Shares, 18,461,489 General 'A' Shares; 10,709,375 Structured Ordinary Shares, 12,605,294 Structured 'A' Shares; and 8,109,363 Low Carbon Ordinary Shares, being the weighted average number of shares in issue during the period.
9. The unaudited 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 30 November 2013 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.
10. Risk and uncertainties Under the Disclosure and Transparency Directive, the Board is required in the Company's half year results to report on principal risks and uncertainties facing the Company over the remainder of the financial year.
The Board has concluded that the key risks facing the Company over the remainder of the financial period are as follows:
(i) investment risk associated with investing in small and immature businesses; (ii) market risk in respect of the various assets held by the investee companies; and (iii) failure to maintain approval as a VCT.
In order to make VCT qualifying investments, the Company has to invest in small businesses which are often immature. The Manager follows a rigorous process in vetting and careful structuring of new investments and, after an investment is made, close monitoring of the business. The Manager also seeks to diversify the portfolio to some extent by holding investments which operate in various sectors. The Board is satisfied with this approach.
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 also retains PricewaterhouseCoopers to provide regular reviews and advice in this area. The Board considers that this approach reduces the risk of a breach of the VCT regulations to a minimal level.
11. 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.
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. Copies of the unaudited half yearly financial reports will be sent to Shareholders shortly. Further copies can be obtained from the Company's Registered Office and will be available for download from www.downing.co.uk.
This announcement is distributed by GlobeNewswire on behalf of GlobeNewswire clients. The owner of this announcement warrants that: (i) the releases contained herein are protected by copyright and other applicable laws; and (ii) they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Downing Planned Exit VCT 2011 plc via GlobeNewswire [HUG#1842050]
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