TIDMDA2O
Downing Absolute Income VCT 2 plc
Half-Yearly Report for the six months ended 30 September 2011
PERFORMANCE SUMMARY
30 Sept 31 Mar 30 Sept
2011 2011 2010
pence pence pence
Net asset value per Ordinary Share 84.9 91.2 92.1
Net asset value per 'A' Share 0.1 0.1 0.1
Cumulative distributions per Ordinary Share 7.5 5.0 2.5
------------------------------
Total return per Ordinary Share and 'A' Share 92.5 96.3 94.7
------------------------------
CHAIRMAN'S STATEMENT
I am pleased to present the Company's Half-Yearly Report for the period ended
30 September 2011. During the period, the Company has continued to make
progress in building its VCT-qualifying portfolio and has also seen a
significant level of activity in respect of its non-qualifying investments.
Venture capital investments
During the period, the Company made five new VCT-qualifying investments at a
total cost of GBP1.5 million and also invested GBP1.3 million as non-qualifying
elements in new or existing qualifying investments.
An investment of GBP450,000 was made in Redmed Limited, which purchased The Annexe
nightclub in Lincoln city centre. The club has been refurbished and recently
reopened as Home.
GBP333,000 was invested into Alpha Schools Holdings Limited. The company owns and
operates an independent prep school and is working on the acquisition of a
second school.
An investment of GBP400,000 was made into Gingerbread Pre-School (UK) Limited. The
company owns and operates three children's day nurseries in Liverpool.
Your Company also invested GBP499,000 in Future Biogas (Reepham Road) Limited. The
company is in the process of constructing an anaerobic digestion plant in
Norfolk, which is expected to start initial operations shortly.
The remaining new qualifying investment was GBP200,000 invested into Tracsis plc,
an AIM-quoted software business focussing on data collation software for the
transport sector.
The funds for the above investments were raised by disposals or redemptions of
six non-qualifying investments, which generated proceeds of GBP3.1 million and
total realised gains of GBP18,000.
In addition to the above, the Company also invested a further GBP320,000 into
existing non-qualifying portfolio companies and GBP200,000 in new non-qualifying
companies.
At the period end, the Board reviewed the unquoted investment valuations and
have made a number of adjustments.
Two investments have shown significant negative deviations from plan and
accordingly provisions have been made against their valuations.
Camandale Limited owns and operates two pubs in Kilmarnock, Scotland. It has
recently become clear that one of the pubs has been trading very poorly. The
management has now been replaced and steps are being taken to stabilise the
business. The poor trading has clearly had an impact on the value of the
underlying assets and, as a result, the Board has agreed to make a provision of
GBP503,000 against the investment at this time.
EPI Services Limited is a designer and builder of corporate data rooms.
Historically, the company has generated a significant proportion of its business
from large contracts, however, delays in securing several such contracts have
caused a significant deterioration in the company's trading results. The
company has recently secured a number of new smaller contract wins and is
focused on reducing overheads, however, based on the recent performance, the
investment has been revalued downwards by GBP520,000.
On a positive note, two investments, Tramps Nightclub Limited and Antelope Pub
Company Limited, have made good progress and, as a result, have been revalued
upwards by GBP72,000 and GBP43,000 respectively. Most of the other portfolio
companies have not shown any departures from plan which might impact on their
value and therefore continue to be carried at original cost.
The AIM-quoted investments, Accumuli plc and Tracsis plc, were valued at bid
price at the period end, resulting in a reduction of GBP38,000 and an uplift of
GBP76,000 respectively.
The total unrealised loss for the period was GBP870,000.
Net asset value and results
At 30 September 2011, the net asset value ("NAV") per Ordinary Share stood at
84.9p and the NAV per 'A' Share stood at 0.1p, producing a combined total of
85.0p. This is a decrease of 3.8p per share (4.2%) since the period end of 31
March 2011 (after adjusting for the 2.5p dividend paid during the period). Total
return (NAV plus dividends to date) was 92.5p at 30 September 2011.
The loss on ordinary activities after taxation for the period was GBP768,000,
comprising a profit of GBP166,000 on the revenue account and a loss of GBP934,000 on
the capital account.
Dividends
As set out in the Company's prospectus, the Board intends to pay dividends of
5p per annum.
The next dividend of 2.5p per Ordinary Share will be paid on 30 March 2012 to
Ordinary Shareholders on the register at 24 February 2012.
Share buybacks
The Company operates a share buyback policy 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 will normally
seek to undertake any buybacks at a price equal to the latest published NAV
(i.e. at a nil discount).
During the period, the Company purchased 18,755 each of its own Ordinary Shares
and 'A' Shares at an average price of 80.0p and 0.1p per share respectively.
Risks and uncertainties
Under the Disclosure and Transparency Directive, the Board is required in the
Company's Half-Year Results to report on the 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) compliance risk of failure to maintain approval as a VCT; and
(ii) investment risk associated with investing in small and immature businesses.
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.
In order to make VCT-qualifying investments, the Company has to invest in small
businesses which are often immature. It also has a limited period in which it
must invest the majority of its funds. The Manager follows a rigorous process
in vetting and careful structuring of new investments, including taking a charge
over the assets of the business wherever possible and, after an investment is
made, closely monitoring the business. The Board is satisfied that this approach
reduces the investment risk described in (ii) above as far as is reasonably
possible.
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.
Outlook
The Company is still at an early stage in its life and, although two investments
have been revalued downwards, the performance of most of the investee companies
is satisfactory to date. The economic climate will, no doubt, provide all
portfolio companies with challenges, but, in time, we expect to see the stronger
businesses make progress.
The job of building the qualifying investment portfolio is ongoing. The
continued limited availability of bank funding is helping to increase the flow
of good quality investment opportunities and we therefore expect to see a
reasonably high level of new investment activity over the remainder of the year.
Chad Murrin
Chairman
UNAUDITED SUMMARISED BALANCE SHEET
as at 30 September 2011
30 Sept 30 Sept 31 Mar
2011 2010 2011
Total Total Total
GBP'000 GBP'000 GBP'000
Fixed assets
Investments 14,640 13,100 15,387
Current assets
Debtors 284 646 1,183
Cash at bank and in hand 2,369 4,841 2,025
-----------------------------
2,653 5,487 3,208
Creditors: amounts falling due within one year
(310) (145) (329)
-----------------------------
Net current assets 2,343 5,342 2,879
-----------------------------
Net assets 16,983 18,442 18,266
-----------------------------
Capital and reserves
Called up share capital 20 20 20
Share premium 30 30 30
Special reserve 17,591 18,271 18,188
Revaluation reserve (793) - 77
Capital reserve - realised 18 - -
Revenue reserve 117 121 (49)
-----------------------------
Equity shareholders' funds 16,983 18,442 18,266
-----------------------------
Net asset value per Ordinary Share 84.9 92.1 91.2p
Net asset value per 'A' Share 0.1 0.1 0.1p
UNAUDITED INCOME STATEMENT
for the six months ended 30 September 2011
Period ended Period ended Period
30 Sept 2011 30 Sept 2010 ended
31 Mar
2011
Revenue Capital Total Revenue Capital Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 419 - 419 360 - 360 1,051
Gains on investments
- realised - 18 18 - - - -
- unrealised - (870) (870) - - - 77
----------------------------------------------------
419 (852) (433) 360 - 360 1,128
Investment management fees (82) (82) (164) (88) (89) (177) (344)
Other expenses (136) - (136) (142) - (142) (317)
----------------------------------------------------
Return on ordinary
activities before taxation 201 (934) (733) 130 (89) 41 467
Taxation (35) - (35) (9) - (9) (111)
----------------------------------------------------
Return attributable to
equity shareholders 166 (934) (768) 121 (89) 32 356
----------------------------------------------------
Return per Ordinary Share 0.8p (4.7p) (3.9p) 1.1p (0.8p) 0.3p 2.5p
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 September 2011
30 Sept 30 Sept 31 Mar
2011 2010 2011
GBP'000 GBP'000 GBP'000
Opening Shareholders' funds 18,266 - -
Issue of shares - 20,010 20,010
Share issue costs - (1,100) (1,100)
Purchase of own shares (15) - -
Distributions (500) (500) (1,000)
Total recognised (loss)/gain for the period (768) 32 356
-------------------------------
Closing shareholders' funds 16,983 18,442 18,266
-------------------------------
UNAUDITED CASH FLOW STATEMENT
for the six months ended 30 September 2011
30 Sept 30 Sept 31 Mar
2011 2010 2011
Note GBP'000 GBP'000 GBP'000
Cash inflow from operating activities and
returns on investments 1 1,074 (469) (575)
--------------------------
Taxation
Corporation tax paid (110) - -
Capital expenditure
Purchase of investments (3,294) (13,100) (17,991)
Sale of investments 3,189 - 2,681
--------------------------
Net cash outflow from capital expenditure (105) (13,100) (15,310)
--------------------------
Equity dividends paid (500) (500) (1,000)
--------------------------
Net cash outflow before financing 359 (14,069) (16,885)
Financing
Proceeds from Ordinary Share issue - 19,477 19,980
Proceeds from 'A' Share issue - 30 30
Proceeds from Preference Share issue - 50 50
Redemption of Preference Shares - (50) (50)
Share issue costs - (597) (1,100)
Purchase of own shares (15) - -
--------------------------
Net cash inflow from financing (15) 18,910 18,910
--------------------------
Increase in cash 2 344 4,841 2,025
--------------------------
Notes to the cash flow statement:
1 Cash inflow from operating activities
and returns on investments
(Loss)/return on ordinary activities before
taxation (733) 32 467
Loss/(gain) on investments 852 - (77)
Decrease/(increase) in other debtors 899 (646) (1,183)
Increase in other creditors 56 145 218
--------------------------
Net cash inflow from operating activities 1,074 (469) (575)
--------------------------
2 Analysis of net funds
Beginning of period 2,025 - -
Net cash inflow 344 4,841 2,025
--------------------------
End of period 2,369 4,841 2,025
--------------------------
SUMMARY OF INVESTMENT PORTFOLIO
as at 30 September 2011
Unrealised % of
gain/(loss) Portfolio
Cost Valuation in period by value
GBP'000 GBP'000 GBP'000
VCT-qualifying
Helcim Group Limited* 1,460 1,460 - 8.6%
Tramps Nightclub Limited* 1,349 1,421 72 8.4%
Antelope Pub Company Limited* 1,088 1,131 43 6.6%
EPI Services Limited* 1,500 980 (520) 5.8%
Quadrate Catering Limited* 835 835 - 4.9%
Quadrate Spa Limited* 740 740 - 4.4%
Rostima Limited* 682 682 - 4.0%
Camandale Limited* 1,136 633 (503) 3.7%
The 3D Pub Co Limited 517 517 - 3.0%
Future Biogas (Reepham Road) Limited* 499 499 - 2.9%
Redmed Limited 450 450 - 2.6%
Gingerbread Pre-School (UK) Limited* 400 400 - 2.4%
Domestic Solar Limited* 400 400 - 2.4%
Slopingtactic Limited 380 380 - 2.2%
Alpha Schools Holdings Limited 333 333 - 2.0%
Accumuli plc 250 288 (38) 1.7%
Tracsis plc 200 276 76 1.6%
Chapel Street Services Limited 250 250 - 1.5%
Chapel Street Food and Beverage Limited 250 250 - 1.5%
Mosaic Spa and Health Clubs Limited* 250 250 - 1.5%
Ridgeway Pub Company Limited* 136 136 - 0.8%
---------------------------------------
13,105 12,311 (870) 72.5%
---------------------------------------
Non VCT-qualifying
Lullingstone Limited 1,238 1,238 - 7.3%
Retallack Surfpods Limited 500 500 - 2.9%
Fenkle Street LLP 346 346 - 2.0%
Kidspace Adventures Limited 200 200 - 1.1%
Commercial Street Hotel Limited 35 35 - 0.2%
Chapel Street Hotel Limited 10 10 - 0.1%
---------------------------------------
2,329 2,329 - 13.6%
---------------------------------------
Total 15,434 14,640 (870) 86.1%
-------- -------------
Cash at bank and in hand 2,369 13.9%
----------- ----------
Total investments 17,009 100.0%
----------- ----------
*partly non qualifying
SUMMARY OF INVESTMENT MOVEMENTS
for the six months ended 30 September 2011
Additions
Qualifying investments GBP'000
Future Biogas (Reepham Road) Limited* 499
Redmed Limited 450
Gingerbread Pre-School (UK) Limited* 400
Alpha Schools Holdings Limited 333
Tracsis plc 200
--------
1,882
Non-qualifying investments
Helcim Group Limited 460
Rostima Limited 232
Domestic Solar Limited 200
Kidspace Adventures Limited 200
Edison House Limited 118
Lullingstone Limited 114
Woolmer Properties Limited 65
Looe Road Student Accommodation 23
--------
1,412
--------
Total 3,294
--------
Disposals
Market Gain Total
value at Disposal against realised
Cost 01/04/11 proceeds cost gain
Non-qualifying investments GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Edison House Limited 1,384 1,384 - - -
Woolmer Properties Limited 1,211 1,229 18 18 18
Looe Road Student Accommodation 403 403 - - -
Lullingstone Limited 100 100 - - -
Tramps Nightclub Limited 72 72 - - -
Bowman Care Homes Limited 1 1 - - -
------------------------------------------
Total 3,171 3,189 18 18 18
------------------------------------------
* includes a non qualifying element. GBP249,000 for Future Biogas (Reepham Road)
Limited and GBP120,400 for Gingerbread Pre-School (UK) Limited.
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
1. The unaudited half-yearly results cover the six months to 30 September 2011
and have been prepared in accordance with the Statement of Recommended Practice
"Financial Statements of Investment Trust Companies and Venture Capital Trusts"
revised January 2009 ("SORP") and in accordance with the accounting policies set
out in the statutory accounts for the period ended 31 March 2011, which were
prepared under UK Generally Accepted Accounting Practice ("UK GAAP").
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 are in respect of the eight-month period ended 30
September 2010 and the fourteen month period ended 31 March 2011 respectively.
5. Net Asset Value per share has been calculated on 19,981,245 Ordinary Shares
and 29,981,245 'A' Shares, being the number of shares in issue at the period
end.
6. Return per share has been calculated on 19,995,672 Ordinary Shares and
29,995,672 'A' Shares, being the weighted average number of shares during the
period.
7. Dividends
Period
ended
Six months ended 31 March
30 September 2011 2011
Per Revenue Capital Total Total
share GBP'000 GBP'000 GBP'000 GBP'000
Paid in year
2011 Final 2.5p - 500 500 -
2011 Second Interim 2.5p - - - 500
2011 First Interim 2.5p - - - 500
----------------------------- -----------
- 500 500 1,000
----------------------------- -----------
No dividends have been paid or declared in respect of the 'A' Shares.
8. Reserves
Capital
Special Revaluation reserve Revenue
reserve reserve -realised reserve
GBP'000 GBP'000 GBP'000 GBP'000
At 1 April 2011 18,188 77 - (49)
Realised gain on investments - - 18 -
Unrealised loss on investments - (870) - -
Purchase of own shares (15) - - -
Expenses capitalised - - (82) -
Transfer between reserves (582) - 582 -
Distributions - - (500) -
Retained revenue - - - 166
----------------------------------------------
At 30 September 2011 17,591 (793) 18 117
----------------------------------------------
The Revenue reserve, Special reserve and Capital reserve - realised are
distributable reserves. The revaluation reserve includes losses of GBP1,023,000
which are included in the calculation of distributable reserves. Distributable
reserves at 30 September 2011 were GBP16,703,000.
9. 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
period ended 31 March 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. 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.
11. Copies of the unaudited half-yearly report will be sent to Shareholders
shortly. Further copies can be obtained from the Company's Registered Office or
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 Absolute Income VCT 2 Plc via Thomson Reuters ONE
[HUG#1565368]
Downing Abs.2 (LSE:DA2O)
Gráfico Histórico do Ativo
De Mai 2024 até Jun 2024
Downing Abs.2 (LSE:DA2O)
Gráfico Histórico do Ativo
De Jun 2023 até Jun 2024
