Downing Plan 2011 Downing Planned Exit Vct 2011 -6-
28 Março 2014 - 1:21PM
UK Regulatory
guidelines. The valuation methodologies for unquoted entities used by
the IPEV to ascertain the fair value of an investment are as follows:
* Price of recent investment;
* Multiples;
* Net assets;
* Discounted cash flows or earnings (of underlying business);
* Discounted cash flows (from the investment); and
* Industry valuation benchmarks.
The methodology applied takes account of the nature, facts and
circumstances of the individual investment and uses reasonable data,
market inputs, assumptions and estimates in order to ascertain fair
value.
Gains and losses arising from changes in fair value are included in the
Income Statement for the year as a capital item and transaction costs on
acquisition or disposal of the investment are expensed. Where an
investee company has gone into receivership or liquidation, or
administration (where there is likelihood of little recovery), the loss
on the investment, although not physically disposed of, is treated as
being realised.
It is not the Company's policy to exercise significant influence over
investee companies. Therefore, the results of these companies are not
incorporated into the Income Statement except to the extent of any
income accrued. This is in accordance with the SORP that does not
require portfolio investments to be accounted for using the equity
method of accounting.
Income
Dividend income from investments is recognised when the shareholders'
rights to receive payment has been established, normally the ex-dividend
date.
Interest income is accrued on a time apportionment basis, by reference
to the principal sum outstanding and at the effective rate applicable
and only where there is reasonable certainty of collection in the
foreseeable future.
Expenses
All expenses are accounted for on an accruals basis. In respect of the
analysis between revenue and capital items presented within the Income
Statement, all expenses have been presented as revenue items except as
follows:
* Expenses which are incidental to the disposal of an investment are
deducted from the disposal proceeds of the investment.
* Expenses are split and presented partly as capital items where a
connection with the maintenance or enhancement of the value of the
investments held can be demonstrated. The Company has adopted a policy
of charging 75% of the investment management fees to the revenue account
and 25% to the capital account to reflect the Board's estimated split of
investment returns which will be achieved by the company over the long
term.
* Expenses and liabilities not specific to Share class are generally
allocated pro rata to the net assets.
Taxation
The tax effects on different items in the Income Statement are allocated
between capital and revenue on the same basis as the particular item to
which they relate, using the Company's effective rate of tax for the
accounting year.
Due to the Company's status as a Venture Capital Trust and the continued
intention to meet the conditions required to comply with Part 6 of the
Income Tax Act 2007, no provision for taxation is required in respect of
any realised or unrealised appreciation of the Company's investments
which arises.
Deferred taxation, which is not discounted, is provided in full on
timing differences that result in an obligation at the balance sheet
date to pay more tax, or a right to pay less tax, at a future date, at
rates expected to apply when they crystallise based on current tax rates
and law. Timing differences arise from the inclusion of items of income
and expenditure in taxation computations in periods different from those
in which they are included in the accounts.
A net deferred tax asset is regarded as recoverable and therefore
recognised only to the extent that, on the basis of all available
evidence, it can be regarded as more likely than not that there will be
suitable taxable profits from which the future reversal of the
underlying timing differences can be deducted.
Other debtors, other creditors and loan notes
Other debtors (including accrued income), other creditors and loan notes
(other than those held as part of the investment portfolio as set out in
note 9) are included within the accounts at amortised cost.
Issue costs
Issue costs in relation to the shares issued for each share class have
been deducted from the share premium account.
2. Basic and diluted return per share
Return per share is calculated on the following:
Weighted
average Revenue Capital
number return loss/return
Year ended 30 November 2013 of shares in issue GBP'000 GBP'000
General Ordinary Shares 15,682,198 515 (122)
General 'A' Shares 18,436,157 - -
Structured Ordinary Shares 10,706,682 171 155
Structured 'A' Shares 12,601,247 - -
Low Carbon Ordinary Shares 8,105,758 308 379
As the Company has not issued any convertible securities or share
options, there is no dilutive effect on return per share for any of the
share classes. The return per share disclosed therefore represents both
the basic and diluted return per share for all share classes.
3. Basic and diluted net asset value per share
Shares in issue 2013 2012
Pence Pence
per per
2013 2012 share GBP'000 share GBP'000
General Ordinary
Shares 15,679,241 15,684,891 78.0 12,229 80.3 12,595
General 'A' Shares 18,453,789 18,476,489 6.2 1,136 6.3 1,166
Structured
Ordinary Shares 10,703,725 10,709,375 80.1 8,576 81.9 8,770
Structured 'A'
Shares 12,597,594 12,605,294 6.3 796 6.5 818
Low Carbon
Ordinary Shares 8,102,222 8,109,363 83.8 6,792 80.4 6,516
Net assets per
Balance Sheet 29,529 29,865
As the Company has not issued any convertible shares or share options,
there is no dilutive net asset value per share. The net asset value per
share disclosed therefore represents both the basic and diluted net
asset value per share.
4. Principal Risks
The Company's investment activities expose the Company to a number of
risks associated with financial instruments and the sectors in which the
Company invests. The principal financial risks arising from the
Company's operations are:
Market risks;
Credit risk; and
Liquidity risk.
The Board regularly reviews these risks and the policies in place for
managing them. There have been no significant changes to the nature of
the risks that the Company is exposed to over the year and there have
also have been no significant changes to the policies for managing those
risks during the year.
The risk management policies used by the Company in respect of the
principal financial risks and a review of the financial instruments held
at the year end are provided below:
Market risks
As a VCT, the Company is exposed to market risks in the form of
potential losses and gains that may arise on the investments it holds in
accordance with its investment policy. The management of these market
risks is a fundamental part of investment activities undertaken by the
Investment Manager and overseen by the Board. The Manager monitors
investments through regular contact with management of investee
companies, regular review of management accounts and other financial
information and attendance at investee company board meetings. This
enables the Manager to manage the investment risk in respect of
individual investments. Market risk is also mitigated by holding a
diversified portfolio spread across various business sectors and asset
classes.
The key market risks to which the Company is exposed are:
Market price risk
Interest rate risk
Market price risk
Market price risk arises from uncertainty about the future prices and
valuations of financial instruments held in accordance with the
Company's investment objectives. It represents the potential loss that
the Company might suffer through market price movements in respect of
quoted investments and also changes in the fair value of unquoted
investments that it holds.
At 30 November 2013, the structured product portfolio was valued at
GBP2,148,000.
The fair values of structured products are influenced primarily by
changes in the FTSE 100 Index. The Company's sensitivity to fluctuations
in the FTSE 100 Index is summarised below.
* This excludes the BNP Paribas Harewood Absolute Progression 2 which is
not directly linked to FTSE 100 Index performance.
Interest rate risk
The Company accepts exposure to interest rate risk on floating-rate
financial assets through the effect of changes in prevailing interest
rates. The Company receives interest on its cash deposits at a rate
agreed with its bankers. Investments in loan stock attract interest
predominately at fixed rates. A summary of the interest rate profile of
the Company's investments is shown below.
There are four categories in respect of interest which are attributable
to the financial instruments held by the Company as follows:
"Fixed rate" assets represent investments with predetermined yield
targets and comprise certain loan note investments and Preference
Shares.
"Variable rate" assets represent investments with predetermined interest
rates that vary at set dates in accordance with loan agreements.
"Floating rate" assets predominantly bear interest at rates linked to
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