Downing Plan VCT 7 Downing Planned Exit Vct 7 Plc : Second Interim Report
June 23 2015 - 1:14PM
UK Regulatory
TIDMDPV7
Downing Planned Exit VCT 7 plc
Second interim report for the twelve months ended 31 January 2015
PERFORMANCE SUMMARY
31 Jan 31 Jul 31 Jan
2015 2014 2014
pence pence pence
Net asset value per Ordinary Share 63.50 59.20 63.10
Cumulative distributions per Ordinary Share 17.75 17.75 13.75
Total return per Ordinary Share 81.25 76.95 76.85
CHAIRMAN'S STATEMENT
I am pleased to present a second interim report for the Company covering
the twelve month period ended 31 January 2015.
Proposed Merger
As Shareholders will be aware, the Company has recently announced
proposals to merge the Company with three other VCTs. Should Shareholder
approval be given by all the companies involved, the merger will
complete on 20 July and you will be issued with new shares in what will
be known as "Downing FOUR VCT plc".
Shareholders should note that the merger will not have any impact on the
VCT status of your investment and the planned exit strategy will be
unaltered. It is proposed that Downing Planned Exit VCT 7 plc shares are
merged into a new share class with those of Downing Planned Exit VCT 6
plc, which is the sister company and holds an identical portfolio and
therefore has a very similar net asset value.
Downing Planned Exit VCT 7 plc by itself is now very small for a VCT and
running costs are at their maximum level. The merger will make the
company part of a VCT with in excess of GBP60 million of net assets.
This will deliver pro-rata savings on running costs and provide some
additional flexibility in continuing to comply with the VCT regulations
and also when it comes to exiting from investments. It is expected that
approximately 6%, being GBP25,000, of the total costs of merger will be
borne by the Company, with 50% being contributed by the Manager, Downing
LLP, and the remainder by the other merging companies. The costs are
expected to be recouped in reduced running costs in a short period.
The Board believes that the merger is a positive development, which will
put Shareholders in an improved position over the next two and a half
years or so as the Company works towards the scheduled commencement of
the exit process in 2018.
In view of these merger proposals, the Board decided to extend the
Company's year end from 31 January to 31 July. This report has therefore
been produced to update Shareholders on portfolio development up to 31
January 2015, the original year end date.
Net asset value and results
At 31 January 2015, the net asset value ("NAV") per share stood at
63.5p. This represents an increase of 4.4p per share (7.0%) over the 12
month period (after adding back the dividend of 4p per share paid in
July 2014).
Total dividends paid to date by the Company are 17.75p per share. Total
Return (NAV plus dividends paid to date) at 31 January 2015 is 81.25p
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 12 month period,
as set out in the Income Statement, was GBP264,000, comprising of a
revenue profit of GBP276,000 and a capital loss of GBP12,000.
In line with the normal policy, the Company will pay a dividend of 4.0p
per share on 20 July 2015 to Shareholders on the register at 3 July
2015. It is intended that this dividend policy will be unchanged by the
proposed merger.
Venture capital investments
There has been a reasonable level of investment activity during the
period and also in the months since the period end.
The most notable transaction was the disposal of two Hoole Hall
companies which took place in February 2015. These generated proceeds
of GBP1.3 million at a small deficit to original cost. However, the
disposal also allowed the Company to collect GBP377,000 of accrued loan
stock interest, much of which had not previously been recognised in the
Income Statement.
Also since the period end, the holding in Vermont Developments was sold
at GBP130,000 above the previous carrying value.
Three new investments were made since the period end, each in renewable
energy opportunities. A VCT qualifying investment of GBP410,000 was made
in Oak Grove Renewables Limited, which is developing an anaerobic
digestion plant. Two short-term non-qualifying loans were also made,
totalling GBP610,000, in two ground-mounted solar operators, UK Solar
(Lower Newton) LLP and UK Solar (Hartwell) LLP.
Following the disposal of Hoole Hall and Vermont, the Company now has a
portfolio comprising 10 investments with a value of GBP2.3 million. The
remaining investments are all performing in line with current
expectations.
Share buybacks
The Company purchased 51,447 shares in the period at a price of 62.5p
per share and 10,000 shares in the period at a price of 59.0p per share.
These shares were subsequently cancelled.
It is intended that the Company's Share buyback policy will continue
unchanged following the proposed merger, in that the Company will,
subject to liquidity, regulatory and other constraints, purchase shares
that become available in the market at a price close to net asset value.
Outlook
The Board is pleased with the improved performance shown by the
portfolio in recent months and the fact that disposals of some of the
larger investments have now been achieved. With some funds being
reinvested, the portfolio now contains a mix of newer and older
investments, which the Manager believes has prospects for further
growth.
The small size of the Company has been a concern for the Board for some
time. The Board believes that the merger proposals address these
concerns and will provide you with the prospect of enhanced returns over
the remaining planned exit life of your investment.
Hugh Gillespie
Chairman
23 June 2015
UNAUDITED SUMMARISED BALANCE SHEET
as at 31 January 2015
31 Jan 31 Jan
2015 2014
GBP'000 GBP'000
Fixed assets
Investments 2,907 3,164
Current assets
Debtors 557 163
Cash at bank and in hand 467 592
1,024 755
Creditors: amounts falling due within one year (113) (84)
Net current assets 911 671
Net assets 3,818 3,835
Capital and reserves
Called up Ordinary Share Capital 6 6
Deferred shares 17 17
Capital redemption reserve 7 7
Share premium 1,126 1,126
Special reserve 4,632 4,670
Revenue reserve 457 181
Revaluation reserve (1,277) (1,243)
Capital reserve - realised (1,150) (929)
Equity shareholders' funds 3,818 3,835
Net asset value per Ordinary Share 63.5p 63.1p
UNAUDITED INCOME STATEMENT
for the twelve months ended 31 January 2015
Year ended 31 Jan 2015 Year ended 31 Jan 2014
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 451 - 451 244 - 244
Net loss on
investments - (12) (12) - (71) (71)
451 (12) 439 244 (71) 173
Investment
management fees 7 - 7 (31) - (31)
Other expenses (99) - (99) (208) - (208)
Return/(loss) on
ordinary
activities before
taxation 359 (12) 347 5 (71) (66)
Taxation (83) - (83) (3) - (3)
Return/(loss)
attributable to
equity
shareholders 276 (12) 264 2 (71) (69)
Return per
Ordinary Share 4.6p (0.2p) 4.4p 0.0p (0.8p) (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 twelve months ended 31 January 2015
31 Jan 31 Jan
2015 2014
GBP'000 GBP'000
Opening Shareholders' funds 3,835 6,113
Purchase of own shares (38) (1,851)
Dividends paid (243) (358)
Total recognised gains/(losses) for the period 264 (69)
Closing Shareholders' funds 3,818 3,835
UNAUDITED CASH FLOW STATEMENT
for the twelve months ended 31 January 2015
Year Year
ended ended
31 Jan 31 Jan
2015 2014
Note GBP'000 GBP'000
Cash (outflow)/inflow from operating activities and
returns on investments 1 (77) 24
Taxation
Corporation tax paid (12) (13)
Capital expenditure
Purchase of investments - (157)
Proceeds from sale of investments 245 2,182
Net cash inflow from capital expenditure 245 2,025
Equity dividends paid (243) (358)
Net cash (outflow)/inflow before financing (87) 1,678
Financing
Repurchase of own shares (38) -
Purchase of own shares through tender offer - (1,851)
Net cash outflow from financing (38) (1,851)
(Decrease) in cash 2 (125) (173)
Notes to the cash flow statement:
1 Cash (outflow)/inflow from operating activities
and returns on investments
Net revenue before taxation 347 (66)
Losses on investments 12 71
(Increase)/decrease in other debtors (378) 57
(Decrease) in other creditors (18) (22)
(Decrease) in amounts due to subsidiary undertaking (40) (16)
Net cash (outflow)/inflow from operating activities (77) 24
2 Analysis of net funds
Beginning of period 592 765
Net cash (outflow) (125) (173)
End of period 467 592
SUMMARY OF INVESTMENT PORTFOLIO
as at 31 January 2015
Unrealised % of portfolio by
Cost Valuation loss in period value
GBP'000 GBP'000 GBP'000
Qualifying
investments
Cadbury House
Holdings Limited 654 771 - 22.9%
Hoole Hall Country
Club Holdings
Limited 750 743 (74) 22.0%
Hoole Hall Spa and
Leisure Club
Limited 563 558 (55) 16.5%
The Thames Club
Limited* 1,125 245 (35) 7.3%
Gatewales Limited 146 146 - 4.3%
Coast Constructors
Limited 933 - - 0.0%
4,171 2,463 (164) 73.0%
Non-qualifying
investments
Snow Hill
Developments LLP 250 250 - 7.4%
Vermont Developments
Limited 451 156 130 4.6%
Fenkle Street LLP 38 38 - 1.1%
Aminghurst Limited 207 - - 0.0%
946 444 130 13.1%
Total 5,117 2,907 (34) 86.1%
Cash at bank and in
hand 467 13.9%
Total investments 3,374 100.0%
*partially non-qualifying investment
SUMMARY OF INVESTMENT MOVEMENTS
for the twelve months ended 31 January 2015
Disposals in the year ended 31 January 2015
Total
Market Gain realised
Cost value at 01/02/14 Proceeds vs. cost gain in 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
Additions in the three month period to 30 April 2015
GBP'000
VCT qualifying investments
Oak Grove Renewables Limited 410
410
Non-qualifying investments
UK Solar (Lower Newton) LLP 410
UK Solar (Hartwell) LLP 200
610
1,020
Disposals in the three month period to 30 April 2015
Total
Market realised
value at Gain (loss)/gain in
Cost 01/02/15 Proceeds vs. cost period
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Qualifying
investments
Hoole Hall
Country Club
Holdings
Limited 750 743 743 (7) -
Hoole Hall Spa
and Leisure
Limited 563 558 558 (5) -
Cadbury House
Holdings
Limited 51 66 81 30 15
1,364 1,367 1,382 18 15
Non-qualifying
investments
Vermont
Developments
Limited 451 156 156 (295) -
451 156 156 (295) -
1,815 1,523 1,538 (277) 15
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
1. The unaudited results cover the twelve months to 31 January 2015 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 6,013,592 Ordinary
Shares, being the shares in issue at the period end.
5. Return per share for the period has been calculated on 6,048,693
Ordinary Shares, being the weighted average number of shares in issue
during the period.
6. Dividends
31 Jan 2015 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
Share
Premium Special Revenue Revaluation Capital
Capital redemption reserve Account Reserve 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 - - (38) - - -
Net (loss)/gains
on investments - - - - (34) 22
Transfer between
reserves - - - - - -
Dividends paid - - - - - (243)
Retained net
revenue - - - 276 - -
At 31 January
2015 7 1,126 4,632 457 (1,277) (1,150)
The Special reserve, Capital reserve - realised and Revenue reserve are
all distributable reserves. Revaluation reserve includes losses of
GBP1,445,000 which are included in the calculation of distributable
reserves. Total distributable reserves at 31 January 2015 were
GBP2,494,000.
8. The Directors confirm that, to the best of their knowledge, the
second interim report has been prepared in accordance with the
"Statement: Half-Yearly Financial Reports" issued by the UK Accounting
Standards Board and the second interim 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 second six
months of the financial period and their impact on the condensed set of
financial statements, and a description of the principal risks and
uncertainties for the remaining period; and
b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related
party transactions that have taken place in the second six months of the
current financial period 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 has appointed Robertson Hare LLP 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 results for the twelve months ended 31
January 2015 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
HUG#1930817
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