Downing Plnd Ext 5 plc Downing Planned Exit VCT 5 PLC :Shareholder and Portfolio Update

 
TIDMDPV5 
 
Downing Planned Exit VCT 5 plc 
Shareholder and Portfolio Update 
24 January 2012 
 
The  Company  has  today  issued  a  Shareholder Update updating Shareholders on 
developments within the Company and its plans for winding up as follows: 
 
"Portfolio Update 
Shareholders  will be aware that the  majority of the Company's investments have 
been  realised and that 74.0p per  share of funds have  already been paid out as 
dividends.  The remaining  portfolio investments  are, unsurprisingly,  the more 
difficult  investments and  it is  disappointing to  report that there have been 
some  negative developments over recent months. A review of these investments is 
presented below. 
 
Coast Constructors Limited/Aminghurst Limited 
Coast is undertaking a contract to build a residential and hotel complex at Gara 
Rock,  near Salcombe in Devon,  a site owned by  Aminghurst. Much of the work on 
the  residential units is complete but further  work is required to complete the 
hotel. Market conditions for these types of properties have deteriorated greatly 
since the investment was first made and, despite a significant marketing effort, 
sales  of residential units during 2011 have been very poor. It is believed that 
completion  of the on-site  hotel will make  the residential units significantly 
more  attractive to purchasers;  however, as a  result of the  lack of sales and 
cost overruns, additional funding will be needed to complete the build. 
 
At  this  time,  the  Board  believes  that  it  is  necessary to make a further 
provision  against these two  investments. The Board  will review the merits and 
practicalities  of providing further funds with  the Investment Manager once the 
options  become clear. In any event, the Board will ensure the Manager continues 
to  stay closely involved with Coast and  Aminghurst in order to seek to extract 
as much value as possible. 
 
Heyford Contracting (South) Limited 
Heyford  has built  two commercial  office developments;  North Gate in Banbury, 
Oxfordshire   and  Uppingham  Gate  in  Uppingham,  Rutland.  Exits  from  these 
investments  will be  achieved when  the various  units are  sold or let. Market 
conditions  have  again  resulted  in  slow  progress  although  the company has 
recently  been able to return  GBP285,000 of the remaining value as a result of the 
sale  of one  of the  buildings. Both  sites will  continue to be marketed until 
purchasers  or tenants can  be found. The  Board has reviewed  the valuation and 
believe  it  is  appropriate  to  release  some of the provision previously made 
against the investment. 
 
Future Films Production Services Limited 
Futures  Films Production Services  provided services for  a number of films and 
has  already repaid most of  its investment. A small  part of the investment has 
remained  and was expected to be repaid once an outstanding debt and a final tax 
credit  were collected.  Collectability of  these amounts  now appears uncertain 
and,  accordingly, the  Board believes  it is  prudent to  make a full provision 
against the investment. 
 
Vermont Developments Limited 
Shareholders  will recall that Vermont  Developments went into administration in 
2008 and  subsequently into  liquidation; however,  the Company's  investment is 
secured  on some development land in Salford. A third party has been progressing 
some development proposals for the site, but it is the Manager's view that these 
are  now unlikely to proceed. If so,  further options will be explored, with one 
possible  route being a student accommodation  development. Until any firm plans 
are  in place, it is difficult to estimate the value and timing of any exit from 
this  investment. For the time  being, the investment is  being held at the most 
recent  third party valuation of the land, which is substantially below original 
cost. 
 
Summary 
The Company's unaudited summarised balance sheet and portfolio as at 31 December 
2011 are summarised as follows: 
 
Unaudited Balance Sheet 
                                              31 Dec 2011   31 May 2011 
 
                                                     GBP'000          GBP'000 
 
 
 Fixed Assets - Venture Capital Investments         1,950         6,362 
 
 
 
 Current assets 
 
 Debtors                                              366           367 
 
 Bank                                                 220           534 
 
 
 
 Current Liabilities - Creditors                     (66)          (99) 
 
 
 
 Long Term Liabilities                               (21)          (21) 
 
 
                                            ---------------------------- 
 Net Assets                                         2,449         7,143 
                                            ---------------------------- 
 
 
                                                    Pence         Pence 
                                                per share     per share 
 
 Net Asset Value per Share                           11.6          33.8 
 
 Dividends paid to date                              74.0          56.0 
 
 Total Return                                        85.6          89.8 
 
 
Unaudited portfolio as at 31 December 2011 
                                            Valuation Valuation 
 
                                            31 Dec 11 31 May 11 Movement* 
 
                                                 GBP'000      GBP'000      GBP'000 
 
Aminghurst Limited                                  -         -         - 
 
Coast Constructors Limited                        475     1,257   (1,279) 
 
Future Films Production Services                    -        64      (64) 
 
Heyford Contracting (South) Limited             1,425     1,000       425 
 
Vermont Developments Limited                       50        50         - 
 
 
Investments sold/redeemed since 31 May 2011         -     3,991         - 
                                           ------------------------------ 
                                                1,950     6,362   (1,640) 
                                           ------------------------------ 
 
* adjusted for additions since 31 May 2011 
 
As  I have said in previous statements, it is difficult to estimate the size and 
timing  of  future  distributions  from  the  Company  as  these  are  driven by 
realisations  of the remaining  investments. Following the  recent return of the 
funds  from Heyford, the Company now has some  cash but no decision has yet been 
made on whether to pay this out as a dividend while the possibility of a further 
investment  in Coast  Constructors Limited  is being  considered. Regardless, it 
will be some time before all remaining investments are realised. By appointing a 
liquidator  and formally entering a winding up  period, the Company will be able 
to reduce the burden of running costs while these investment exits are pursued. 
 
Based  on  the  current  valuations,  the  total return to Shareholders that the 
Company  ultimately achieves  may be  85.6p which, while  it is below the levels 
that  had been targeted, your Board considers to be a reasonable overall result. 
It  would provide Shareholders who invested at the launch of the Company with an 
overall  internal rate of  return on their  investment of approximately 7.5% per 
annum  when measured  against the  original cost  of the  shares of 60.0p net of 
income tax relief, which compares favourably with other forms of investment over 
the same period. 
 
Hugh Gillespie 
Chairman 
 
 
 
 
 
 
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 5 PLC via Thomson Reuters ONE 
 
[HUG#1579724]