TIDMD1GO
Downing Planned Exit VCT 2011 plc
Half Yearly Report for the six months ended 31 May 2012
PERFORMANCE SUMMARY
31 May 30 Nov 31 May At
2012 2011 2011 launch
Pence Pence Pence Pence
General pool
Net asset value per General Ordinary Share 82.8 87.1 88.1 88.4
Net asset value per General 'A' Share 6.6 6.9 6.1 6.1
Cumulative dividends per General Ordinary Share 5.0 - - -
-----------------------------
Total return per General Ordinary Share and 'A' 94.4 94.0 94.2 94.5
Share
-----------------------------
Structured pool
Net asset value per Structured Ordinary Share 80.2 82.5 87.9 88.4
Net asset value per Structured 'A' Share 6.4 6.5 6.1 6.1
Cumulative dividends per Structured Ordinary Share 5.0 - - -
-----------------------------
Total return per Structured Ordinary Share and 'A' 91.6 89.0 94.0 94.5
Share
-----------------------------
Low Carbon pool
Net asset value per Low Carbon Ordinary Share 81.0 87.1 87.9 88.4
Cumulative dividends per Low Carbon Ordinary Share 5.0 - - -
-----------------------------
Total return per Low Carbon Ordinary Share 86.0 87.1 87.9 88.4
-----------------------------
CHAIRMAN'S STATEMENT
I am pleased to present the Company's half yearly report for the six months
ended 31 May 2012. Each of the Company's three share pools has seen significant
levels of investment activity during the period as the Manager has continued to
build the various portfolios.
General Share pool
Good progress has been made towards the target of having 75% of the pool's funds
invested in VCT qualifying investments by 30 November 2013. At 31 May 2012,
approximately 38% of the pool's funds were held in VCT qualifying investments.
The pool held 14 investments which were qualifying (or expected to become
qualifying in due course) and a further nine non-qualifying investments.
General pool Shareholders will recall that they received one General Ordinary
Share and General 'A' Share for each GBP1 subscribed. The NAV for a combined
holding of one General Ordinary Share and one General 'A' Share at 31 May 2012
stood at 89.4p. Total Return for the same combined holding now stands at 94.4p,
compared to the initial NAV of 94.5p.
A full review of the General Share pool is presented below.
Structured Share pool
As profitable redemptions provided funds for VCT qualifying investments, the
Structured Share pool gradually reduced its exposure to Structured Products. At
31 May 2012, the pool held a portfolio of 15 venture capital investments with a
total value of GBP3.9 million and a Structured Product portfolio of 11 investments
with a total value of GBP4.8 million.
Structured pool Shareholders received one Structured Ordinary Share and
Structured 'A' Share for each GBP1 subscribed. The NAV for a combined holding of
one Structured Ordinary Share and one Structured 'A' Share at 31 May 2012 stood
at 86.6p. Total Return for the same combined holding now stands at 91.6p,
compared to the initial NAV of 94.5p.
A full review of the Structured Share pool is presented below.
Low Carbon Share pool
The Low Carbon pool effectively completed its investment phase during the
period. Against a background of the Government constantly changing the
legislation, the Manager has done well to achieve this. At 31 May 2012, the pool
held a portfolio comprising seven solar investments with a total valuation of
GBP6.6 million. The portfolio has a good mix of established solar operators and
is balanced between residential and commercial rooftop installations.
The Low Carbon Ordinary Share NAV at 31 May 2012 stood at 81.0p. Total Return
per Low Carbon Ordinary Share now stands at 86.0p, compared to an initial NAV at
launch of 88.4p net of issue costs. The fall in NAV to date arises from the lack
of investment income recognised during the initial investment phase.
A full review of the Low Carbon Share pool is presented below.
Dividends
The Board intends to continue to pay interim dividends as set out in the policy
in the Company's prospectus as follows:
General Ordinary Shares 2.5p
Structured Ordinary Shares 2.5p
Low Carbon Ordinary Shares 2.5p
Each of the dividends will be paid on 30 November 2012 to Shareholders on the
register at 2 November 2012.
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 initial years, the Company has
a policy of undertaking any buybacks at a price equal to the latest published
NAV (i.e. at nil discount).
During the period, the Company bought 15,000 of its own General Ordinary Shares
at a price of 87.5p per share and 15,000 of its own General 'A' Shares at a
price of 6.5p per share. All Shares purchased were cancelled.
Outlook
The Board is pleased with the progress made by the Manager in investing the
funds of each of the share pools to date.
We expect to see the General and Structured pools continue to make qualifying
investments over the remainder of the financial year as those pools work towards
the VCT qualification target of having at least 70% of their funds employed in
qualifying investments by 30 November 2013. At 31 May, the Company as a whole
had 48% of its funds invested in qualifying investments.
As the Low Carbon pool is already fully invested, the focus will shift towards
careful monitoring of the investee companies to ensure that they stay on track
to deliver the expected returns. Over the coming year, the Company's solar
investments will become fully established and start receiving FiTs payments.
Assuming electricity generation is as planned, we expect to see uplifts in the
value of these investments across all pools.
Sir Aubrey Brocklebank
Chairman
INVESTMENT MANAGER'S REPORT
GENERAL SHARE POOL
The General Share pool has been an active investor over the six month period
ended 31 May 2012 as it has continued develop its VCT qualifying portfolio while
also taking advantage of further non-qualifying opportunities.
Portfolio activity
The pool made 11 qualifying investments (including partially qualifying
investments or investments that will become qualifying in due course) during the
period at a total cost of GBP5.7 million.
Brief details of the largest of these investments are as follows:
A GBP1.4 million investment was made in Tooting Tram and Social Limited. The
company owns and operates the Tooting Tram and Social pub in Tooting, South
London. The pub is managed by Antic Limited, an experienced pub operator, which
is also the investment partner.
GBP1.0 million was invested in South-Western Farms Solar Limited, which has
installed solar PV panels on commercial rooftops in Devon and earns Feed-in
Tariffs as a result. The investment partner is Isis Solar, a leading operator.
Three investments were made in City Falkirk Limited, Fubar Stirling Limited and
Cheers Dumbarton Limited totalling GBP1.2 million. Each of these companies owns
and operates a Scottish nightclub. The clubs are managed by Lochrise Limited
which is associated with the Castle Leisure Group, an experienced operator in
the region.
An investment of GBP690,000 was made in Kidspace Adventure Holdings Limited, which
owns and operates children's indoor play centres in Croydon and Romford.
GBP600,000 was invested in Odysian (Holdings) Limited. The funding supported the
purchase of the freehold of the Cruise nightclub in Chester, which is owned and
operated by the company.
There was also a reasonable level of activity within the non-qualifying
portfolio, with loan stock redemptions from three investments raising proceeds
of GBP1.8 million and four new non-qualifying investments being made at a total
cost of GBP2.2 million.
All of the investments have, so far, performed more or less to plan with one
exception. Helcim Group Limited organises and manages housing for vulnerable
tenants, by working with local authorities and private landlords. The company
has not been able to fulfil its ambitious expansion plans and, as a result, the
investment has been written down by a further GBP146,000 in the period. All other
investments have been valued at cost at the period end.
Details of the General Share pool portfolio and investment activity during the
period is below.
Net asset value
At 31 May 2012, the net asset value ("NAV") per General Ordinary Share stood at
82.8p and the NAV per General 'A' Share stood at 6.6p, producing a combined
total of 89.4p. This is an increase of 0.4p per share (0.4%) since 30 November
2011 (after taking into account the 5.0p dividend paid during the period).
Net asset value (continued)
The NAV plus cumulative dividends paid to date for one General Ordinary Share
and one General 'A' Share amounts to 94.4p, compared to the initial NAV of
94.5p.
Results and dividends
The profit on ordinary activities after taxation for the period was GBP54,000
(2011: loss GBP40,000), comprising a revenue profit of GBP234,000 (2011: loss
GBP28,000) and a capital loss of GBP180,000 (2011: GBP12,000).
The General Share pool will pay an interim dividend of 2.5p per General Ordinary
Share on 30 November 2012 to Shareholders on the register at 2 November 2012.
Outlook
The General Share pool now has a reasonably well diversified qualifying
portfolio, which includes investments in nightclubs, renewable energy projects,
pubs and healthclubs. Against the backdrop of a challenging economic
environment, we continue to see attractive investment opportunities and expect
to see the General Share pool complete a number of new investments over the
remainder of the financial year.
Downing LLP
30 July 2012
SUMMARY OF INVESTMENT PORTFOLIO
GENERAL SHARE POOL
as at 31 May 2012
% of
Unrealised portfolio
loss in
Cost Valuation period by value
GBP'000 GBP'000 GBP'000
VCT qualifying investments
Tooting Tram and Social Limited* 1,440 1,440 - 10.4%
Kidspace Adventures Holdings Limited* 690 690 - 4.9%
City Falkirk Limited* 674 674 - 4.8%
Residential PV Trading Limited* 639 639 - 4.6%
South-Western Farms Solar Limited 600 600 - 4.3%
Odysian (Holdings) Limited 600 600 - 4.3%
Avon Solar Energy Limited 600 600 - 4.3%
Westcountry Solar Solutions Limited* 600 600 - 4.3%
Fubar Stirling Limited** 429 429 - 3.1%
Mosaic Spa and Health Club (Shrewsbury) -
Limited 360 360 2.6%
Angel Solar Limited 300 300 - 2.2%
Cheers Dumbarton Limited** 77 77 - 0.6%
Helcim Group Limited** 286 32 (146) 0.2%
Lochrise Limited** 20 20 - 0.1%
--------------------------------------
7,315 7,061 (146) 50.7%
--------------------------------------
Non-qualifying investments
Lullingstone Limited 1,792 1,792 - 12.9%
West Tower Holdings Limited 1,320 1,320 - 9.5%
Hoole Hall Hotel Limited 1,200 1,200 - 8.6%
Kidspace Adventures Limited 810 810 - 5.8%
Future Biogas (SF) Limited 350 350 - 2.5%
Antelope Pub Limited 300 300 - 2.2%
UK Renewable Power Limited 145 145 - 1.0%
Clean Electricity Limited 145 145 - 1.0%
Mosaic Spa and Health Clubs Limited 120 120 - 0.9%
--------------------------------------
6,182 6,182 - 44.4%
--------------------------------------
-------- ------------
Total 13,497 13,243 (146) 95.1%
-------- ------------
Cash at bank and in hand 686 4.9%
----------- ----------
Total investments 13,929 100.0%
----------- ----------
* Part-qualifying investment
** Currently non-qualifying but will become qualifying in due course
SUMMARY OF INVESTMENT MOVEMENTS
GENERAL SHARE POOL
for the six months ended at 31 May 2012
Additions
GBP'000
VCT qualifying investments
Tooting Tram and Social Limited* 1,440
South-Western Farms Solar Limited 1,000
Kidspace Adventures Holdings Limited* 690
City Falkirk Limited* 674
Odysian (Holdings) Limited 600
Fubar Stirling Limited** 429
Mosaic Spa and Health Club (Shrewsbury) Limited 360
Residential PV Trading Limited* 339
Cheers Dumbarton Limited** 77
Helcim Group Limited** 67
Lochrise Limited** 20
--------
5,696
Non-qualifying investments
Lullingstone Limited 1,792
UK Renewable Power Limited 145
Clean Electricity Limited 145
Mosaic Spa and Health Clubs Limited 120
--------
2,202
--------
7,898
--------
Market Total
value at Gain realised
Disposals Cost 1 Dec 2011*** Proceeds vs. cost gain
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
VCT qualifying investments
(All loan stock redemptions)
South-Western Farms Solar 400 400 400
Limited - -
Angel Solar Limited 300 300 300 - -
Westcountry Solar Solutions 112 112 112
Limited* - -
------------------------------------------------
812 812 812 - -
Non-qualifying investments
Manor Capital LLP 1,000 1,000 1,000 - -
West Tower Holdings Limited 780 780 780 - -
Antelope Pub Limited 38 38 38 - -
------------------------------------------------
1,818 1,818 1,818 - -
------------------------------------------------
2,630 2,630 2,630 - -
------------------------------------------------
* Part-qualifying investment
** Currently non-qualifying but will become qualifying in due course
*** Adjusted for purchases in the year
INVESTMENT MANAGER'S REPORT
STRUCTURED SHARE POOL
The Structured Share pool was active in continuing to build its VCT qualifying
portfolio over the six months ended 31 May 2012.
Investment activity
The pool made 12 qualifying investments (including partially qualifying
investments or investments that will become qualifying in due course) during the
period at a total cost of GBP3.6 million.
Brief details of the largest of these investments are as follows:
A GBP160,000 million investment was made in Tooting Tram and Social Limited. The
company owns and operates the Tooting Tram and Social pub in Tooting, South
London. The pub is managed by Antic Limited, an experienced pub operator, which
is also the investment partner.
GBP400,000 million was invested in South-Western Farms Solar Limited, which has
installed solar PV panels on commercial rooftops in Devon and earns Feed-in
Tariffs as a result. The investment partner is Isis Solar, a leading operator.
Three investments were made in City Falkirk Limited, Fubar Stirling Limited and
Cheers Dumbarton Limited totalling GBP770,000. Each of these companies owns and
operates a Scottish nightclub. The clubs are managed by Lochrise Limited which
is associated with the Castle Leisure Group, an experienced operator in the
region.
An investment of GBP460,000 was made in Kidspace Adventure Holdings Limited, which
owns and operates children's indoor play centres in Croydon and Romford.
GBP1.2 million was invested in Odysian (Holdings) Limited. The funding supported
the purchase of the freehold of the Cruise nightclub in Chester, which is owned
and operated by the company.
During the period, five Structured Product investments were either redeemed or
sold producing gains in the period of GBP203,000 and total proceeds of GBP2.4
million.
All of the venture capital investments have, so far, performed more or less to
plan with one exception. Helcim Group Limited organises and manages housing for
vulnerable tenants, by working with local authorities and private landlords. The
company has not been able to fulfil its ambitious expansion plans and, as a
result, the investment has been written down by a further GBP97,000 in the period.
All other venture capital investments have been valued at cost at the period
end.
The Structured Product portfolio performed well over the period. In addition to
the realised gains noted above, the portfolio showed unrealised gains of
GBP231,000. Although a number of the banks acting as counterparties on our
Structured Products were re-rated by the ratings agencies during the period,
they all remain classified as investment grade and it has not been necessary to
make any adjustments to the portfolio as a result of fears about the quality of
our counterparties.
Details of the Structured Share pool portfolio and investment activity during
the period is shown below.
Net asset value
The NAV per Structured Ordinary Share stood at 80.2p and per Structured 'A'
Share stood at 6.4p at the period end, producing a combined total of 86.6p. This
is an increase of 2.6p per share (2.9%) since 30 November 2011 (after taking
into account the 5.0p 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 91.6p, a small fall from the initial NAV of 94.5p.
Results and dividends
The pool's profit on ordinary activities after taxation for the period was
GBP267,000 (2011: loss GBP57,000), comprising a revenue loss of GBP48,000 (2011:
GBP45,000) and a capital profit of GBP315,000 (2011: loss GBP12,000).
The pool will pay an interim dividend of 2.5p per Structured Ordinary Share on
30 November 2012 to Shareholders on the register at 2 November 2012.
Outlook
We continue to see attractive investment opportunities in a number of sectors
which should allow us to continue to make steady progress in building the
Structured Share pool's venture capital portfolio.
In line with the share pool's strategy, the Structured Product portfolio will
steadily be reduced by redemptions, but also sales if required, ensuring that
there are funds available for further qualifying investments as they arise.
Downing LLP
30 July 2012
SUMMARY OF INVESTMENT PORTFOLIO
STRUCTURED SHARE POOL
as at 31 May 2012
% of
Unrealised portfolio
(loss)/gain
Cost Valuation in period by value
GBP'000 GBP'000 GBP'000
VCT qualifying investments
Kidspace Adventures Holdings Limited* 460 460 - 4.8%
City Falkirk Limited* 450 450 - 4.8%
Residential PV Trading Limited* 426 426 - 4.5%
Westcountry Solar Solutions Limited* 400 400 - 4.2%
South-Western Farms Solar Limited 400 400 - 4.2%
Odysian (Holdings) Limited* 400 400 - 4.2%
Avon Solar Energy Limited 400 400 - 4.2%
Fubar Stirling Limited** 286 286 - 3.1%
Angel Solar Limited 200 200 - 2.2%
Tooting Tram and Social Limited 160 160 - 1.7%
Mosaic Spa and Health Club (Shrewsbury) -
Limited 160 160 1.7%
Mosaic Spa and Health Clubs Limited** 80 80 - 0.8%
Helcim Group Limited** 190 21 (97) 0.2%
Cheers Dumbarton Limited** 51 51 - 0.5%
Lochrise Limited** 13 13 - 0.1%
--------------------------------------
4,076 3,907 (97) 41.2%
--------------------------------------
Structured Product investments
Elders (Merrill Lynch) 10% Def FTSE
Autocall 501 521 25 5.5%
Goldman Sachs GB86 9.6% Res Auto-call 504 514 27 5.4%
Credit Suisse 7% FTSE Autocall 501 505 10 5.3%
JP Morgan 7% Defensive FTSE AC 501 502 13 5.3%
Barclays 10% FTSE/S&P Worst of Defensive
AC 501 501 26 5.3%
SocGen 9.6% Def FTSE Auto-Call (258) 499 495 28 5.2%
Elders Cap Accumulation II 16A (Rollover) 502 484 32 5.1%
Goldman Sachs 10.5% Defensive FTSE 501 475 26 5.0%
Morgan Stanley 11% Def FTSE 352 339 28 3.6%
BNP Paribas Harewood ABS Progression 2 253 235 (6) 2.5%
RBS 6yr Dual Index Synthetic Zero 10.16% 251 233 22 2.4%
--------------------------------------
4,866 4,804 231 50.6
--------------------------------------
------- -------------
Total 8,942 8,711 134 91.8%
------- -------------
Cash at bank and in hand 777 8.2%
----------- ----------
Total investments 9,488 100.0%
----------- ----------
* Part-qualifying investment
** Currently non-qualifying but will become qualifying in due course
SUMMARY OF INVESTMENT MOVEMENTS
STRUCTURED SHARE POOL
for the six months ended at 31 May 2012
Additions
GBP'000
VCT qualifying investments
Odysian (Holdings) Limited* 1,150
Kidspace Adventures Holdings Limited* 460
City Falkirk Limited* 420
South-Western Farms Solar Limited 400
Fubar Stirling Limited** 286
Residential PV Trading Limited* 226
Helcim Group Limited** 190
Tooting Tram and Social Limited 160
Mosaic Spa and Health Club (Shrewsbury) Limited 160
Mosaic Spa and Health Clubs Limited** 80
Cheers Dumbarton Limited** 51
Lochrise Limited** 13
--------
3,596
--------
Market Total
value at Gain vs. realised
Cost 1 Dec 2011 Proceeds cost gain
Disposals ***
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
VCT qualifying investments
(All loan stock redemptions)
Odysian (Holdings) Limited* 750 750 750 - -
Angel Solar Limited 200 200 200 - -
Westcountry Solar Solutions 75 75 75
Limited* - -
----------------------------------------------
1,025 1,025 1,025 - -
Structured Product investments
(All redemptions)
Morgan Stanley 10% Def FTSE 519 497 550 31
Autocall 53
Credit Suisse 7% FTSE Autocall 501 495 522 21 27
HSBC 6Y W/O FTSE/S&P Auto-call 516 489 550 34
(303) 61
JP Morgan 7% Defensive FTSE AC 501 488 516 15 28
RBS Dual Index Defensive Autocall 249 257 291 42 34
----------------------------------------------
2,286 2,226 2,429 143 203
----------------------------------------------
3,311 3,251 3,454 143 203
----------------------------------------------
* Part-qualifying investment
** Currently non-qualifying but will become qualifying in due course
*** Adjusted for purchases in the year
INVESTMENT MANAGER'S REPORT
LOW CARBON SHARE POOL
With key deadlines in respect of the Feed-in Tariff ("FiTs") regime and its
interaction with VCT regulations passing during the period, we are pleased to
report that the Low Carbon Share pool completed the task of investing its funds
before the main changes in the regulations took effect. The pool now holds a
portfolio of investments which, we believe, has excellent prospects for
delivering attractive returns to Shareholders.
Investment activity
During the period, five new investments were made at a total cost of GBP4.1
million. There were also two small disposals in the form of loan stock
redemptions from funds that were not utilised by the investee company.
At 31 May 2012, the share pool had a portfolio of seven investments with a total
cost of GBP6.6 million, all of which receive FiTs from the production of
electricity from rooftop solar PV panels. The investments are well spread across
five different operators/installers and the panels are on a mix of commercial
and residential rooftops.
Each of the investee companies' projects has received accreditation for FiTs,
however, it is still relatively early days in terms of establishing whether the
projects will produce the anticipated levels of power and resulting income. At
the current time, all investments have therefore been valued at original cost.
Shareholders may be aware of the defeat in March of the Government's attempt to
enforce lower FiTs from 12 December 2011. Following the rejection of the
Government appeal, higher tariffs will be paid on projects accredited up to 3
March 2012. This will have a positive impact on a number of our investments,
which were modelled so as to be viable based on the lower tariff but will
ultimately receive the higher tariff.
Net asset value
At 31 May 2012, the NAV per Low Carbon Ordinary Share stood at 81.0p. This is a
decrease of 1.1p per share (1.3%) since 30 November 2011 (after taking into
account the 5.0p dividend paid during the period). This decrease results from
running costs incurred in a period before the pool has started to recognise
investment income.
The NAV plus cumulative dividends paid to date amounts to 86.0p, compared to the
initial NAV of 88.4p per share.
Results
The share pool's loss on ordinary activities after taxation for the period was
GBP91,000 (2011: GBP36,000), comprising a revenue loss of GBP75,000 (2011: GBP30,000)
and a capital loss of GBP16,000 (2011: GBP6,000). The revenue loss arises from the
fact that most of the investments were made during the period and have not yet
been able to start paying loan stock interest to the VCT. We expect this to
commence shortly for all portfolio companies.
Dividend
The Company will pay an interim dividend of 2.5p per Low Carbon Ordinary Share
on 30 November 2012 to Shareholders on the register at 2 November 2012.
Outlook
With the job of building the investment portfolio now complete, our focus is on
close monitoring of the various projects to ensure that they perform in line
with expectations. Assuming that the pool's investments are able to generate
electricity at the anticipated levels, we expect to see solid growth in NAV as a
result of uplifts in the investment valuations over the next year.
Downing LLP
30 July 2012
SUMMARY OF INVESTMENT PORTFOLIO
LOW CARBON SHARE POOL
as at 31 May 2012
% of
Unrealised portfolio
gain/(loss)
Cost Valuation in period by value
GBP'000 GBP'000 GBP'000
VCT qualifying investments
Progressive Energies Limited* 1,400 1,400 - 21.0%
Green Electricity Generation Limited 1,000 1,000 - 15.0%
PV Generation Limited* 1,000 1,000 - 15.0%
Progressive Power Generation Limited* 950 950 - 14.2%
Clean Electricity Limited* 780 780 - 11.7%
UK Renewable Power Limited* 780 780 - 11.7%
21st Century Energy Limited* 720 720 - 10.8%
----------------------------------------
Total 6,630 6,630 - 99.4%
------- --------------
Cash at bank and in hand 42 0.6%
----------- -----------
Total investments 6,672 100.0%
----------- -----------
SUMMARY OF INVESTMENT MOVEMENTS
LOW CARBON SHARE POOL
for the six months ended at 31 May 2012
Additions GBP'000
VCT qualifying investments
PV Generation Limited* 1,000
Progressive Power Generation Limited* 806
Clean Electricity Limited* 780
UK Renewable Power Limited* 780
21st Century Energy Limited* 720
--------
4,086
--------
Market
value at Total
Cost 1 Dec 2011 Gain vs. realised
Disposals *** Proceeds cost gain
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
VCT qualifying investments
Clean Electricity Limited* 145 145 145 - -
UK Renewable Power Limited* 145 145 145 - -
--------------------------------------------
290 290 290 - -
--------------------------------------------
* Part-qualifying investment
*** Adjusted for purchases in the year
UNAUDITED SUMMARISED BALANCE SHEET
as at 31 May 2012
31 May 2012 31 May 30 Nov
2011 2011
General Structured Low Carbon
Share pool Share pool Share pool Total Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Fixed assets
Investments 13,243 8,711 6,630 28,584 7,603 19,011
Current assets
Debtors 421 59 1 481 44 664
Cash at bank and in 686 777 42 1,505 24,791 12,362
hand
----------------------------------------- ----------------
1,107 836 43 1,986 24,835 13,026
Creditors: amounts
falling due within one (144) (151) (107) (402) (153) (360)
year
----------------------------------------- ----------------
Net current assets 963 685 (64) 1,584 24,682 12,666
----------------------------------------- ----------------
Net assets 14,206 9,396 6,566 30,168 32,285 31,677
----------------------------------------- ----------------
Capital and reserves
Called up Ordinary 16 11 8 35 35 35
Share capital
Called up 'A' Share 18 13 - 31 31 31
capital
Share premium - - - - 32,352 32,352
Revaluation reserve (255) (233) - (488) (4) (537)
Capital reserve - - 233 - 233 (26) (68)
realised
Special reserve 14,238 9,568 6,714 30,520
Revenue reserve 189 (196) (156) (163) (103) (136)
----------------------------------------- ----------------
Equity shareholders' 14,206 9,396 6,566 30,168 32,285 31,677
funds
----------------------------------------- ----------------
Net asset value per:
General Ordinary Share 82.8p 88.1p 87.1p
General 'A' Share 6.6p 6.1p 6.9p
Structured Ordinary 80.2p 87.9p 82.5p
Share
Structured 'A' Share 6.4p 6.1p 6.5p
Low Carbon Ordinary 81.0p 87.9p 87.1p
Share
UNAUDITED INCOME STATEMENT
for the six months ended 31 May 2012
Period
Six months ended Period ended ended
31 May 2012 31 May 2011 30 Nov
2011
Revenue Capital Total Revenue Capital Total Total
Company Total GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 507 - 507 48 - 48 473
Gain/(loss) on
investments
- realised - 203 203 - - - 31
- unrealised - (12) (12) - (4) (4) (537)
------------------------ ------------------------ -------
507 191 698 48 (4) 44 (33)
Investment management
fees (213) (72) (285) (79) (26) (105) (396)
Other expenses (163) - (163) (72) - (72) (312)
------------------------ ------------------------ -------
Return on ordinary
activities before
taxation 131 119 250 (103) (30) (133) (741)
Taxation (20) - (20) - - - -
------------------------ ------------------------ -------
Return attributable to
equity shareholders 111 119 230 (103) (30) (133) (741)
------------------------ ------------------------ -------
Return per General
Ordinary Share 1.5p (1.1p) 0.4p (0.2p) (0.1p) (0.3p) (0.4p)
Return per General 'A' - - -
Share - - - -
Return per Structured
Ordinary Share (0.4p) 2.9p 2.5p (0.4p) (0.1p) (0.5p) (5.5p)
Return per Structured - - - - - - -
'A' Share
Return per Low Carbon
Ordinary Share
(0.9p) (0.2p) (1.1p) (0.4p) (0.1p) (0.5p) (1.3p)
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.
General Share pool Period
Six months ended Period ended ended
31 May 2012 31 May 2011 30 Nov
2011
Revenue Capital Total Revenue Capital Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 431 - 431 42 - 42 378
(Loss)/gains on
investments
- realised - - - - - - -
- unrealised - (146) (146) - - - (109)
----------------------- ----------------------- ------
431 (146) 285 42 - 42 (109)
Investment management fees (100) (34) (134) (37) (12) (49) (184)
Other expenses (77) - (77) (33) - (33) (146)
----------------------- ----------------------- ------
Return on ordinary
activities before taxation 254 (180) 74 (28) (12) (40) (61)
Taxation (20) - (20) - - - -
----------------------- ----------------------- ------
Return attributable to
equity shareholders 234 (180) 54 (28) (12) (40) (61)
----------------------- ----------------------- ------
Structured Share pool Period
Six months Period ended ended
ended
31 May 2011 30 Nov
31 May 2012
2011
Income 68 - 68 3 - 3 42
Gains on investments
- realised - 203 203 - - - 31
- unrealised - 134 134 - (4) (4) (428)
---------------- ---------------- ------
68 337 405 3 (4) (1) (397)
Investment management fees (65) (22) (87) (25) (8) (33) (124)
Other expenses (51) - (51) (23) - (23) (98)
---------------- ---------------- ------
Return on ordinary activities before
taxation (48) 315 267 (45) (12) (57) (577)
Taxation - - - - - - -
---------------- ---------------- ------
Return attributable to equity
shareholders (48) 315 267 (45) (12) (57) (577)
---------------- ---------------- ------
Low Carbon Share pool Period
Six months ended Period ended ended
31 May 2012 31 May 2011 30 Nov
2011
Revenue Capital Total Revenue Capital Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 8 - 8 3 - 3 53
Gains on investments
- realised - - - - - - -
- unrealised - - - - - -
----------------------- ----------------------- ------
8 - 8 3 - 3 -
Investment management fees (48) (16) (64) (17) (6) (23) (88)
Other expenses (35) - (35) (16) - (16) (68)
----------------------- ----------------------- ------
Return on ordinary
activities before taxation (75) (16) (91) (30) (6) (36) (103)
Taxation - - - - - - -
----------------------- ----------------------- ------
Return attributable to
equity shareholders (75) (16) (91) (30) (6) (36) (103)
----------------------- ----------------------- ------
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the six months ended 31 May 2012
31 May 2012 31 May 30 Nov
2011 2011
General Structured Low Carbon
Share pool Share pool Share pool Total Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Opening 14,950 9,665 7,062 31,677
Shareholders' funds
Issue of shares - - - - 34,305 34,305
Share issue costs - - - - (1,887) (1,887)
Repurchase of own (13) (13)
shares
Distributions (785) (536) (405) (1,726) - -
Total recognised
gain/(loss) for the
period 54 267 (91) 230 (133) (741)
------------------------------------------ --------- --------
Closing 14,206 9,396 6,566 30,168 32,285 31,677
Shareholders' funds
------------------------------------------ --------- --------
UNAUDITED CASH FLOW STATEMENT
for the six months ended 31 May 2012
31 May 2012 31 May 30 Nov
2011 2011
General Structured Low
Carbon
Note Share Share Total
Share
pool pool Total Total
pool
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cash outflow from
operating activities
and returns on
investments 1 (101) (82) (53) (236) (20) (539)
Capital
expenditure
Purchase of (7,598) (3,281) (4,376) (15,255) (7,607) (24,680)
investments
Sale of 2,630 3,453 290 6,373 - 5,163
investments
-----------------------------------------------------------
Net cash
(outflow)/inflow from
capital expenditure (4,968) 172 (4,086) (8,882) (7,607) (19,517)
-----------------------------------------------------------
Equity (785) (536) (405) (1,726) - -
dividends
paid
-----------------------------------------------------------
Net cash outflow before (5,854) (446) (4,544) (10,844) (7,627) (20,056)
financing
Financing
Proceeds - - - - 34,305 34,305
from share
issue
Proceeds - - - - 50 13
from
preference
share issue
Redemption of - - - - (50) (13)
preference shares
Share issue - - - - (1,887) (1,887)
costs
Purchase of (13) - - (13) - -
own shares
-----------------------------------------------------------
Net cash inflow from (13) - - (13) 32,418 32,418
financing
-----------------------------------------------------------
Increase in 2 (5,867) (446) (4,544) (10,857) 24,791 12,362
cash
-----------------------------------------------------------
Notes to the cash flow statement:
1 Cash inflow from operating activities and returns on
investments
Return on ordinary 74 267 (91) 250 (133) (741)
activities before
taxation
Loss/(gain) on 146 (337) - (191) 4 506
investments
(Increase)/decrease (278) (50) 11 (317) (44) (664)
in other debtors
(Decrease)/increase (43) 38 27 22 153 360
in other creditors
-----------------------------------------------------------
Net cash (outflow)
from operating
activities (101) (82) (53) (236) (20) (539)
-----------------------------------------------------------
2 Analysis of net funds
Beginning of period 6,553 1,223 4,586 12,362 - -
Net cash inflow (5,867) (446) (4,544) (10,857) 24,791 12,362
-----------------------------------------------------------
End of period 686 777 42 1,505 24,791 12,362
-----------------------------------------------------------
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
1. The unaudited half yearly financial results cover the six months to 31 May
2012 and have been prepared in accordance with the accounting policies set out
in the statutory accounts for the period ended 30 November 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" 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 2011 and
the period ended 30 November 2011 respectively.
5. Dividends
31 May 2012
Revenue Capital Total
General Ordinary Shares GBP'000 GBP'000 GBP'000
Paid in period
2011 Final 138 647 785
----------- ----------- --------
Structured Ordinary Shares
Paid in period
2011 Final - 536 536
----------- ----------- --------
Low Carbon Ordinary Shares
Paid in period
2011 Final - 405 405
----------- ----------- --------
6. Reserves
Capital Share
Special reserve Revaluation Revenue premium
reserve - realised reserve reserve reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 December 2011 - (68) (537) (136) 32,352
Repurchase of shares (13) - - - -
Expenses capitalised - (72) - - -
Gains on investments - 203 (12) - -
Transfer between reserves 30,533 1,758 61 - (32,352)
Retained net revenue for the
period - - - 111 -
Dividend paid - (1,588) - (138) -
------------------------------------------------
At 31 May 2012 30,520 233 (488) (163) -
------------------------------------------------
The Special reserve, Capital reserve - realised and Revenue reserve are all
distributable reserves. Revaluation reserve includes losses of GBP521,000 which
are included in the calculation of distributable reserves. Total distributable
reserves are GBP30,069,000.
7. Net asset value per share has been calculated on 15,690,016 General Ordinary
Shares, 18,461,489 General 'A' Shares; 10,714,500 Structured Ordinary Shares,
12,605,294 Structured 'A' Shares; and 8,109,363 Low Carbon Ordinary Shares,
being the shares in issue at the period end.
8. Return per share for the period has been calculated on 15,704,442 General
Ordinary Shares, 18,475,997 General 'A' Shares; 10,714,500 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 period
ended 30 November 2011 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 Investment 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 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 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 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 2011 plc via Thomson Reuters ONE
[HUG#1630577]
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