Downing Plan VCT 7 Downing Planned Exit Vct 7 Plc : Half-yearly Report
28 Agosto 2014 - 5:10PM
UK Regulatory
TIDMDPV7
Downing Planned Exit VCT 7 plc
Half-Yearly Report for the six months ended 31 July 2014
Performance summary
31 Jul 31 Jan 31 Jul
2014 2014 2013
pence pence pence
Net asset value per Ordinary Share 59.2 63.10 64.80
Cumulative distributions per Ordinary Share 17.75 13.75 13.75
Total return per Ordinary Share 76.95 76.85 78.55
CHAIRMAN'S STATEMENT
I present the Company's Half-Yearly Report for the six month period
ended 31 July 2014. With the Company effectively fully invested, there
was limited investment activity during the period and the net asset
value has remained stable.
Venture capital investments
The Company now holds eight investments with a positive carrying value
and the investments in Cadbury House Holdings and the two Hoole Hall
companies now represent a large proportion of the net assets.
Cadbury House Holdings owns and operates conferencing and leisure
facilities at the DoubleTree by Hilton Bristol South site. The Hoole
Hall companies similarly own and operate conferencing and leisure
facilities at the DoubleTree by Hilton Chester. Each of the businesses
is trading reasonably and an exercise is now being undertaken to
establish how strong the current market is for such assets and whether
this might be an opportune time to exit. The outcome of this work will
become clear over the next few months and might lead to an exit from one
or more of the investments.
The health club in Staines owned by The Thames Club Limited continues to
make progress in the right direction, but at a slower rate than hoped. A
further small provision of GBP35,000 has been made against the
investment as a result of the weaker trading results and the interest
burden of prior ranking debt.
Snow Hill Developments developed a Holiday Inn Express in Birmingham.
The development has been partly funded by Co-Op Bank, who, as a result
of their internal issues, are now encouraging the company to seek
alternative sources of funding. Good progress is now being made in
securing new debt funding.
Gatewales and Fenkle Street hold rights to profit shares from
development projects. The various projects are performing reasonably in
line with plan and the profit shares are expected to be paid in due
course.
The investment in Vermont Developments is represented by a charge over
some development land in Salford. There has been increased interest in
the land in recent months and an offer is now being progressed. The
investment has been uplifted by GBP13,000.
There were two small redemptions in the period. The investment in
Moebius Two Limited arose as a means of providing deferred consideration
from the disposal of Crossco (1135) Limited, which traded as Complete
Childcare. The final payment was made in July, coming in at GBP22,000
above the carrying value. GBP96,000 of loan stock was also redeemed at
par by Gatewales Limited.
Overall the realised and unrealised movements on the portfolio netted
off to nil for the period.
Net asset value and results
At 31 July 2014, the net asset value ("NAV") per share stood at 59.2p.
After adding back the dividend of 4p per share paid in July, there is no
change in NAV over the six month period.
Total dividends paid to date by the Company are 17.75p per share. Total
Return (NAV plus dividends paid to date) at 31 July 2014 is 76.95p per
share compared to the original cost, net of income tax relief, of
approximately 70.0p per share.
The profit on ordinary activities after taxation for the period, as set
out in the Income Statement, was GBP5,000, comprising wholly of revenue
profit. In line with the Company's policy, no interim dividend will be
paid.
Share buybacks
The Board recognises that some Shareholders who remain invested in the
Company did not participate in the Share Realisation and Reinvestment
Scheme ("SRRP") in January 2013 and are now therefore able to sell their
shares without losing income tax relief. The Board will therefore
consider undertaking share buybacks from time to time and expects to
undertake these at a very small discount to latest net asset value. Any
buybacks will be subject to the relevant regulations and liquidity
considerations.
The Company purchased 51,447 shares in the period at a price of 62.5p
per share. These shares were subsequently cancelled.
Outlook
There are developments in several portfolio companies that might lead to
realisations over the remainder of the year. If these do arise, the
Manager may need to consider making some new investments to ensure that
funds are fully invested over the next three or so years before
Shareholders who participated in the SRRP are able to exit their
investments without losing income tax relief. The Manager reports good
deal flow which should be able to provide suitable new investments if
needed.
As the Company is now small for a VCT, the running costs have increased
to the maximum level of 2.9% of net assets per annum. Any excess costs
are now being paid by the Manager. Although Shareholders are protected
from any further increases, the Board is continuing to give
consideration to options that might exist for the Company to merge with
one or more other VCTs. A merger may reduce running costs below the
current level and provide other benefits for Shareholders. If there is
any news to this end, I will communicate with Shareholders at that time.
Hugh Gillespie
Chairman
UNAUDITED SUMMARISED BALANCE SHEET
as at 31 July 2014
31 Jul 31 Jul 31 Jan
2014 2013 2014
GBP'000 GBP'000 GBP'000
Fixed assets
Investments 2,918 3,910 3,164
Current assets
Debtors 218 197 163
Cash at bank and in hand 487 1,788 592
705 1,985 755
Creditors: amounts falling due within one year (58) (90) (84)
Net current assets 647 1,895 671
Net assets 3,565 5,805 3,835
Capital and reserves
Called up Ordinary Share Capital 6 9 6
Deferred shares 17 17 17
Capital redemption reserve 7 4 7
Share premium 1,126 2,823 1,126
Special reserve 4,638 5,048 4,670
Revenue reserve 186 261 181
Revaluation reserve (1,265) (2,507) (1,243)
Capital reserve - realised (1,150) 150 (929)
Equity shareholders' funds 3,565 5,805 3,835
Net asset value per Ordinary Share 59.2p 64.8p 63.1p
UNAUDITED INCOME STATEMENT
for the six months ended 31 July 2014
Year
ended
Six months ended 31 Jul Six months ended 31 Jul 31 Jan
2014 2013 2014
Revenue Capital Total Revenue Capital Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 88 - 88 232 - 232 244
Gains/(losses) on
investments
- realised - 22 22 - 94 94 -
- unrealised - (22) (22) - (126) (126) (71)
88 - 88 232 (32) 200 (173)
Investment
management
fees (4) - (4) (15) - (15) (31)
Other expenses (74) - (74) (109) - (109) (208)
Return/(loss)
on ordinary
activities
before
taxation 10 - 10 108 (32) 76 (66)
Taxation (5) - (5) (26) - (26) (3)
Return/(loss)
attributable
to equity
shareholders 5 - 5 82 (32) 50 (69)
Return per
Ordinary
Share 0.1p 0.0p 0.1p 1.0p (0.4p) 0.6p (0.8p)
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 31 July 2014
31 Jul 31 Jul 31 Jan
2014 2013 2014
GBP'000 GBP'000 GBP'000
Opening Shareholders' funds 3,835 6,113 6,113
Purchase of own shares (32) - (1,851)
Dividends paid (243) (358) (358)
Total recognised gains/(losses) for the period 5 50 (69)
Closing Shareholders' funds 3,565 5,805 3,835
UNAUDITED CASH FLOW STATEMENT
for the six months ended 31 July 2014
Six Six
months months Year
ended ended ended
31 Jul 31 Jul 31 Jan
2014 2013 2014
Note GBP'000 GBP'000 GBP'000
Cash inflow from operating activities and returns
on investments 1 (75) 65 24
Taxation
Corporation tax paid - - (13)
Capital expenditure
Purchase of investments - (158) (157)
Proceeds from sale of investments 245 1,474 2,182
Net cash inflow from capital expenditure 245 1,316 2,025
Equity dividends paid (243) (358) (358)
Net cash inflow before financing (73) 1,023 1,678
Financing
Repurchase of own shares (32) - -
Purchase of own shares through tender offer - - (1,851)
Proceeds from share issue - - -
Net cash outflow from financing (32) - (1,851)
(Decrease)/increase in cash 2 (105) 1,023 (173)
Notes to the cash flow statement:
1 Cash inflow from operating activities and returns
on investments
Net revenue before taxation 10 76 (66)
Losses on investments - 32 71
(Increase)/decrease in other debtors (55) 23 57
(Decrease)/increase in other creditors (20) (49) (22)
(Decrease)/increase in amounts due to subsidiary
undertaking (10) (17) (16)
Net cash (outflow)/inflow from operating
activities (75) 65 24
2 Analysis of net funds
Beginning of period 592 765 765
Net cash (outflow)/inflow (105) 1,023 (173)
End of period 487 1,788 592
SUMMARY OF INVESTMENT PORTFOLIO
as at 31 July 2014
Unrealised % of
loss in portfolio
Cost Valuation period by value
GBP'000 GBP'000 GBP'000
Qualifying investments
Hoole Hall Country Club Holdings
Limited 750 817 - 24.0%
Cadbury House Holdings Limited 654 771 - 22.6%
Hoole Hall Spa and Leisure Club
Limited 563 613 - 18.0%
The Thames Club Limited* 1,075 245 (35) 7.2%
Gatewales Limited 146 146 - 4.4%
Coast Constructors Limited 933 - - 0.0%
4,121 2,592 (35) 76.2%
Non-qualifying investments
Snow Hill Developments LLP 250 250 - 7.3%
Fenkle Street LLP 38 38 - 1.1%
Vermont Developments Limited 451 38 13 1.1%
Aminghurst Limited 207 - - 0.0%
946 326 13 9.5%
Total 5,067 2,918 (22) 85.7%
Cash at bank and in hand 487 14.3%
Total investments 3,405 100.0%
*partially non-qualifying investment
SUMMARY OF INVESTMENT MOVEMENTS
for the six months ended 31 July 2014
Disposals
Total
Market realised
value Gain gain
at vs. in
Cost 01/02/14 Proceeds cost period
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Qualifying investments
Gatewales Limited 96 96 96 - -
96 96 96 - -
Non-qualifying investments
Moebius Two Limited 127 127 149 22 22
127 127 149 22 22
223 223 245 22 22
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
1. The unaudited half-yearly results cover the six months to 31 July
2014 and have been prepared in accordance with the accounting policies
set out in the statutory accounts for the year ended 31 January 2014
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. Net asset value per share has been calculated on 6,023,592
Ordinary Shares, being the shares in issue at the period end.
5. Return per share for the period has been calculated on 6,035,464
Ordinary Shares, being the weighted average number of shares in issue
during the period.
6. Dividends
31 Jul 2014 31 Jan 2014
Revenue Capital Total Total
GBP'000 GBP'000 GBP'000 GBP'000
Paid in year
2014 Final - 243 243 -
2013 Final - - - 358
- 243 243 358
7. Reserves
Capital Share Capital
redemption Premium Special Revenue Revaluation reserve-
reserve Account Reserve reserve reserve realised
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 February
2014 7 1,126 4,670 181 (1,243) (929)
Purchase of
own shares - - (32) - - -
Net
(loss)/gains
on
investments - - - - (22) 22
Transfer
between
reserves - - - - - -
Dividends paid - - - - - (243)
Retained net
revenue - - - 5 - -
At 31 July
2014 7 1,126 4,638 186 (1,265) (1,150)
The Special reserve, Capital reserve - realised and Revenue reserve are
all distributable reserves. Revaluation reserve includes losses of
GBP1,501,000 which are included in the calculation of distributable
reserves. Total distributable reserves at 31 July 2014 were
GBP2,173,000.
8. 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.
9. Risks and uncertainties
The Board has reviewed the principal risks and uncertainties facing the
Company over the remainder of the financial period and concluded that
the key risks are:
*investment risk associated with investing in small and immature
businesses; and
*failure to maintain approval as a VCT.
In both cases the Board is satisfied with the Company's approach to
these risks. The strategy of, where possible, taking charges over assets
to secure its investments helps to limit any potential losses which
could arise from the failure of an investee business.
The Company continually monitors its compliance with the VCT regulations
and 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.
10. Going concern
The Directors have reviewed the Company's financial resources at the
period end and concluded that the Company is well placed to manage its
business risks.
11. 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 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 January 2014 have been
extracted from the financial statements for that year, which have been
delivered to the Registrar of Companies; the auditors' report on those
financial statements was unqualified.
13. Copies of the unaudited half-yearly results 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 NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the information
contained therein.
Source: Downing Planned Exit VCT 7 PLC via Globenewswire
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