Downing P.E VCT 9 DOWNING PLANNED EXIT VCT 9 PLC : Half-yearly report
August 17 2012 - 9:18AM
UK Regulatory
TIDMDPV9
Downing Planned Exit VCT 9 plc
Half-Yearly Report for the six months ended 30 June 2012
PERFORMANCE SUMMARY
30 Jun 31 Dec 30 Jun
2012 2011 2011
Pence Pence Pence
Net asset value per Ordinary Share 80.8 82.3 84.7
Net asset value per 'A' Share 0.1 0.1 0.1
Cumulative distributions per Ordinary Share 10.0 7.5 7.5
-------- -------- -------
Total return per Ordinary Share and 'A' Share 90.9 89.9 92.3
-------- -------- -------
CHAIRMAN'S STATEMENT
I am pleased to present the Company's Half-Yearly Report for the period ended
30 June 2012. With the Company fully invested, there has been very little
investment activity during the period. Shareholders will recall that the Company
has a small number of investments that have underperformed to date. During the
last six month period, these investments have generally stabilised, while other
investments have made progress.
Net asset value and results
At 30 June 2012, the NAV per Ordinary Share stood at 80.8p and the NAV per 'A'
Share stood at 0.1p, producing a combined total of 80.9p. This is an increase of
1.0p per share (1.2%) since 31 December 2011 (after adjusting for the 2.5p
dividend paid during the period) and has partly resulted from the steady flow of
investment income that the portfolio has generated. Total Return (NAV plus
cumulative dividends paid to date) is now 90.9p for a combined holding of one
Ordinary Share and one 'A' Share.
The profit on ordinary activities after taxation for the period was GBP82,000.
Investment review
During the period, the Company made one small follow-on investment of GBP25,000 in
The Thames Club Limited and had two loan stock redemptions producing proceeds of
GBP456,000.
The Board has undertaken a review of the investment valuations at the period end
and made two adjustments from the carrying values from the previous year end.
Crossco (1135) Limited owns and operates several children's nurseries which
trade as Complete Childcare. The business is continuing to develop and, as a
result, the valuation has been uplifted by GBP49,000.
The Thames Club owns and operates a health and fitness club in Staines. The
original investment was made in mid-2008, a much more buoyant period for health
club valuations than now. Soon after the investment was made, a major
refurbishment was undertaken and, since then, the company has been working hard
to try to rebuild membership numbers and re-establish itself. The company is
making progress but a further small investment was needed for some extra
reconfiguration work to the club. The valuation has been adjusted downwards by
the amount of the additional investment, GBP25,000, such that it is now carried at
a value GBP645,000 below original cost.
A further two of the Company's investments remain valued below original cost.
Horsham Bowl operates a nightclub and bowling alley in Horsham. The company has
found trading difficult in the current economic climate but has recently been
making some progress. The investment continues to be valued at GBP180,000 below
original cost.
West Tower Holdings owns and operates a wedding venue in Lancashire. The
business is developing well but it remains some GBP400,000 below the value when it
was original acquired in early 2008 which, we now know, was very near the peak
of the market.
All other investments are making satisfactory progress and are valued above or
at original cost.
Share buybacks
The Company operates a policy, subject to certain restrictions, of buying its
own shares which become available in the market. Buybacks will generally be
undertaken at a 10% discount to the latest NAV, but the Directors regularly
review this discount level and make adjustments if they believe it is
appropriate.
During the period, the Company purchased 47,300 Ordinary Shares at a price of
74.0p per share and 33,000 'A' Shares at a price of 0.1p per share. These shares
were subsequently cancelled.
Outlook
The Company's target is to start returning funds to Shareholders during 2013.
Conditions for realising investments are currently far from ideal, with the
ongoing lack of bank finance being a particular hindrance. However, the Manager
is already starting to explore potential exit routes and will be looking to
develop these in due course. The Manager's overriding objective will be to
ensure that exit values are optimised and, in some cases, this may mean that
they take longer to achieve than would otherwise be the case.
Hugh Gillespie
Chairman
UNAUDITED BALANCE SHEET
as at 30 June 2012
30 Jun 30 Jun 31 Dec
2012 2011 2011
GBP'000 GBP'000 GBP'000
Fixed assets
Investments 6,347 6,853 6,754
Current assets
Debtors 145 442 196
Cash at bank and in hand 632 261 344
---------------------------
777 703 540
Creditors: amounts falling due within one year (154) (207) (155)
---------------------------
Net current assets 623 496 385
---------------------------
Net assets 6,970 7,349 7,139
---------------------------
Capital and reserves
Called up Ordinary Share capital 9 9 9
Called up 'A' Share capital 13 13 13
Deferred share capital 3 3 3
Special reserve 7,739 7,818 7,817
Revaluation reserve (912) (781) (936)
Capital reserve - realised 44 9 44
Revenue reserve 74 278 189
---------------------------
Equity shareholders' funds 6,970 7,349 7,139
---------------------------
Net asset value per Ordinary Share 80.8p 84.7p 82.3p
Net asset value per 'A' Share 0.1p 0.1p 0.1p
---------------------------
80.9p 84.8p 82.4p
---------------------------
UNAUDITED INCOME STATEMENT
for the six months ended 30 June 2012
Year
ended
Six months ended Six months ended 31 Dec
30 Jun 2012 30 Jun 2011 2011
Revenue Capital Total Revenue Capital Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 177 - 177 519 - 519 495
Gains/(losses) on - 24 24 - - - (120)
investments
----------------------- ----------------------- --------
177 24 201 519 - 519 375
Investment management (36) - (36) (42) - (42) (85)
fees
Other expenses (67) - (67) (63) - (63) (126)
----------------------- ----------------------- --------
Return on ordinary
activities before
taxation 74 24 98 414 - 414 164
Taxation (16) - (16) (114) - (114) (73)
----------------------- ----------------------- --------
Return attributable to
equity shareholders 58 24 82 300 - 300 91
----------------------- ----------------------- --------
Return per Ordinary 0.7p 0.3p 1.0p 3.4p - 3.4p 1.0p
Share
Return per 'A' 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.
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the six months ended 30 June 2012
30 Jun 30 Jun 31 Dec
2012 2011 2011
GBP'000 GBP'000 GBP'000
Opening Shareholders' funds 7,139 7,265 7,265
Total recognised profit/(loss) for the period 82 300 (217)
Dividends paid (216) (216) 91
Purchase of own shares (35) - -
---------------------------
Closing Shareholders' funds 6,790 7,349 7,139
---------------------------
UNAUDITED CASH FLOW STATEMENT
for the six months ended 30 June 2012
30 Jun 30 Jun 31 Dec
2012 2011 2011
Note GBP'000 GBP'000 GBP'000
Cash inflow from operating activities and returns on
investments
1 108 108 213
---------------------
Taxation
Corporation tax paid - - -
Capital expenditure
Purchase of investments (25) (275) (744)
Sale of investments 456 328 776
---------------------
Net cash inflow from capital expenditure 431 53 32
---------------------
Equity dividends paid (216) (216) (217)
---------------------
Net cash inflow/(outflow) before financing 323 (55) 28
Financing
Purchase of own shares (35) - -
---------------------
Net cash outflow from financing (35) - -
---------------------
Increase/(decrease) in cash 2 288 (55) 28
---------------------
Notes to the cash flow statement:
1 Cash inflow from operating activities and returns on
investments
Return on ordinary activities before taxation 98 414 164
(Gains)/losses on investments (24) - 120
Decrease/(increase) in other debtors 51 (329) (83)
(Decrease)/increase in other creditors (14) (13) 6
(Decrease)/increase in amounts due to subsidiary
undertaking
(3) 36 6
---------------------
Net cash inflow from operating activities 108 108 213
---------------------
2 Analysis of net funds
Beginning of period 344 316 316
Net cash inflow/(outflow) 288 (55) 28
---------------------
End of period 632 261 344
---------------------
SUMMARY OF INVESTMENT PORTFOLIO
as at 30 June 2012
Unrealised % of
gain/ Portfolio
Cost Valuation (loss) by value
GBP'000 GBP'000 GBP'000
VCT qualifying
Hoole Hall Country Club Holdings Limited * 1,094 1,161 - 16.6%
Crossco (1135) Limited t/a Complete
Childcare 998 1,130 49 16.2%
Cadbury House Holdings Limited 700 763 - 10.9%
West Tower Holdings Limited 1,150 750 - 10.8%
Hoole Hall Spa and Leisure Club Limited 562 613 - 8.8%
The Thames Club Limited * 1,100 455 (25) 6.5%
Horsham Bowl Limited * 861 681 - 9.8%
Chapel Street Food and Beverage Limited 50 50 - 0.7%
Chapel Street Services Limited 50 50 - 0.7%
--------------------------------------
6,565 5,653 24 81.0%
--------------------------------------
Non-qualifying
Future Biogas (SF) Limited 350 350 - 5.0%
Snow Hill Developments LLP 250 250 - 3.6%
Fenkle Street LLP 92 92 - 1.3%
Chapel Street Hotel Limited 2 2 - 0.0%
Brunswick International Associates Limited - - - 0.0%
The New Swan Holding Company Limited - - - 0.0%
Hoole Hall Hotel Limited - - - 0.0%
--------------------------------------
694 694 - 9.9%
--------------------------------------
Total investments 7,259 24 90.9%
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Cash at bank and in hand 632 9.1%
----------- -----------
Total 6,979 100.0%
----------- -----------
* partly non-qualifying
SUMMARY OF INVESTMENT MOVEMENTS
as at 30 June 2012
Additions
GBP'000
Non-qualifying investments
The Thames Club Limited 25
--------
Disposals
Gain/ Profit/(loss)
Cost Proceeds (loss) in period
GBP'000 GBP'000 GBP'000 GBP'000
Non-qualifying investments loan stock
redemptions:
Kings Gap Group Limited 400 400 - -
Sanguine Hospitality Limited 56 56 - -
------- ---------- -------- ------------
456 456 - -
------- ---------- -------- ------------
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
1. The unaudited half-yearly financial results cover the six months to 30 June
2012 and have been prepared in accordance with the accounting policies set out
in the statutory accounts for the year ended 31 December 2011 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 and Venture Capital Trusts" 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. Net asset value per share at the period end has been calculated on 8,610,373
Ordinary Shares and 12,953,507 'A' Shares, being the number of shares in issue
at the period end.
5. Return per share for the period has been calculated on 8,657,562 Ordinary
Shares and 12,986,429 'A' Shares, being the weighted average number of shares in
issue during the period.
6. Reserves
Special Revaluation Capital reserve Revenue
reserve reserve - realised reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 31 December 2011 7,817 (936) 44 189 7,114
Gains on investments - 24 - - 24
Distributions paid (43) - - (173) (216)
Purchase of own shares (35) - - - (35)
Retained net revenue - - - 58 58
--------------------------------------------------
At 30 June 2012 7,739 (912) 44 74 6,945
--------------------------------------------------
The Revenue reserve and Special reserve are distributable reserves.
7. 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.
8. 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;
and
(ii) failure to maintain provisional approval as a VCT.
In order to make VCT qualifying investments, the Company has to invest in small
businesses which are often immature. The Investment Manager has followed 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 monitors the business. The Board is satisfied that
this approach reduces the investment risks described in (i) as far as reasonably
possible.
The Company's compliance with the VCT regulations is continually monitored by
the Administration 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 an acceptable level.
9. Going concern
The Company has sufficient financial resources at the period end, and holds a
diversified portfolio of investments. As a consequence, the Directors believe
that the Company is well placed to manage its business risks successfully
despite the uncertain economic outlook.
The Directors confirm that they are satisfied that the Company has adequate
resources to continue in business for the foreseeable future. For this reason,
they believe 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.
10. 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 current
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.
11. Copies of the Half-Yearly Report will be sent to Shareholders shortly.
Further copies can be obtained from the Company's registered office or can be
downloaded from www.downing.co.uk.
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters 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 9 PLC via Thomson Reuters ONE
[HUG#1634721]
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