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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Down. 4 | LSE:DI4O | London | Ordinary Share | GB00B02WQ616 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 28.25 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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TIDMDI4O
Downing Income VCT 4 plc
Half-Yearly Report for the six months ended 31 March 2013
FINANCIAL HIGHLIGHTS
31 Mar 30 Sep 31 Mar
2013 2012 2012
Pence Pence Pence
Net asset value per share 34.6 34.8 36.8
Cumulative dividends 33.5 31.0 31.0
Total return per share 68.1 65.8 67.8
CHAIRMAN'S STATEMENT
I am pleased to present the Company's half-yearly report for the six
month period ended 31 March 2013.
Investment activity and performance
The process of re-balancing the portfolio has continued over the past
six months. In particular, the Manager has taken opportunities to reduce
the AIM holdings where the Company's shareholding is small or the
investment is not considered to be a long-term hold. At the period end,
the Company held approximately 73% of its funds in quoted investments,
compared to 94% at 31 March 2012.
Proceeds of GBP590,000 were raised from full and partial disposals of 14
investments, producing realised gains of GBP117,000. A proportion of
these proceeds have been reinvested in two new and one follow-on
investment, one of which is unquoted. The Company also acquired a
holding in Redstone plc, valued at GBP73,000, by way of a
share-for-share takeover of Maxima Holdings plc.
In terms of performance, supportive market conditions helped risers
comfortably outweigh fallers in the quoted portfolio, with net
unrealised gains of GBP427,000. There were no movements in the
valuations of the unquoted investments.
Further details of the investment activities of the Company are in the
Investment Manager's Report.
Net asset value, results and dividend
As at 31 March 2013, the Company's Net Asset Value ("NAV") stood at
34.6p per share, an increase of 2.3p per share (6.6%) compared to the
position at 30 September 2012, after adjusting for the dividend of 2.5p
paid during the period.
The return on ordinary activities after taxation for the period recorded
in the Income Statement was GBP478,000, comprising a revenue loss of
GBP45,000 and a capital return of GBP523,000.
The Company paid a final dividend of 2.5p on 15 February 2013 and is not
proposing to pay an interim dividend.
Share Realisation and Reinvestment Programme
As Shareholders will be aware, the Company launched a Share Realisation
and Reinvestment Programme ("SRRP") in December. This was well received
by investors with 5.4 million shares being tendered. The shares were
purchased on 21 March 2013 at 35.0p per share and the proceeds
reinvested in new shares issued at approximately 36.1p per share. A
further GBP49,000 was received in respect of the top-up share offer that
was launched alongside the SRRP, with shares also being issued on the 21
March 2013 at the same price.
Share buyback policy
In the past, the Company has occasionally made market purchases of its
own shares, however, these were never at any fixed discount to NAV and,
consequently, the Company's shares have tended to trade at a large
discount to NAV.
Following the change of Manager last year, the Company has been working
towards adopting a policy of purchasing its own shares at a standard
discount to NAV, subject to liquidity within the fund, close periods and
other regulatory restrictions. Subject to liquidity within the funds,
close periods and other regulatory restrictions, the Company intends to
buy in shares that become available in the market at a 20% discount to
NAV. The Board will review this discount level regularly and, in time,
consider reducing it, should liquidity and market considerations allow.
Shareholders who wish to sell their shares will need to do so through a
stockbroker and are recommended to contact Downing prior to selling.
Downing is able to provide details of the prices at which the Company is
expecting to buy in shares and of close periods when the Company may be
prohibited from making purchases.
Outlook
The Board is satisfied with the progress made by the Manager to date in
refocusing the portfolio and believes that prospects are improving. Over
the remainder of the year, the Manager will continue to seek
opportunities to further rationalise the quoted portfolio and more
unquoted investments that can provide an ongoing yield will be sought.
As I have noted previously, the Company is now becoming relatively small
for a VCT and there is a risk of running costs becoming
disproportionately high. The Board is continuing to explore options for
the longer term future of the Company with the Manager which include
future fundraising and/or a possible merger. I will update Shareholders
when there are any major developments.
Tim How
Chairman
INVESTMENT MANAGER'S REPORT
At 31 March 2013, the Company's venture capital portfolio was valued at
GBP6.6 million.
Investment activity
Consistent with the strategy outlined in the Annual Report and Accounts,
we have been implementing an investment focus that concentrates on a
smaller pool of AIM investments that fully fit our investment criteria.
It is challenging to drive performance from a large number of small
holdings, as has been typical of the portfolio of the Fund. We have been
carefully disposing of those investments that do not meet our strict
investment criteria; however, we have not been hasty in doing so -
seeking to achieve the best possible prices and valuations for these
companies.
A number of realisations were undertaken during the period, reducing the
exposure to those investments where the longer term prospects were not
attractive. Disposal proceeds received thereon were GBP663,000. This
represented a realised gain of GBP117,000 in the interim period but an
overall loss against cost of GBP1.16 million.
Out of the proceeds, one new unquoted investment was made at a total
cost of GBP200,000, as well as two quoted investments totalling
GBP227,000.
An overview of the new investments is as follows:
A partially-qualifying investment of GBP200,000 was made in Mosaic Spa
and Health Clubs Limited, a health club management company which trades
under the name of Fitness Express. The company currently has
approximately 30 management contracts to provide gym and spa management
to hotels, universities and corporate clients and owns a freehold health
club known as Welti near Shrewsbury. In October 2012, a second freehold
club in Hereford, Holmer Park, was purchased by the company.
A further (non-qualifying) investment of GBP116,000 was made in AIM
listed company, Universe Group Plc, which is one of Europe's largest
providers of loyalty, payment and forecourt technology. The Company also
invested GBP40,000 in a loan note which strengthens shareholder rights.
These investments complement the existing qualifying equity investment,
and are consistent with the Company's strategy to take larger holdings
in fewer companies where the Manager believes there is significant
value. In total, Downing managed funds now hold 18.1% of Universe
Group's equity shares.
A small (non-qualifying) position of GBP121,000 was taken in China Food
Group plc which is a manufacturer and distributor of soy sauce and
condiments in Northern China. We believe that this investment has been
made at a significant discount to the intrinsic value of China Food
Group plc.
The Company also acquired a small holding in Redstone plc following a
share-for-share takeover of Maxima Holdings plc in the period. The
holding was sold shortly after the shares were acquired, realising a
gain of GBP10,000.
Investment performance
Overall, the portfolio increased in value by GBP427,000 over the period,
all of which is attributable to a net increase in value of the quoted
investments.
Quoted investments
In the period, there was a positive contribution from a number of the
top holdings within the portfolio. Angle plc, the holding company for a
number of innovative medical technology companies, announced the
proposed launch of Parsortix, a non-invasive cancer diagnostic. This led
to a gain for the Company of GBP102,000 in the period.
Meanwhile, Anpario plc, the manufacturer and distributor of animal feed
additives, saw its share price appreciate on the back of a positive
trading statement and this led to a gain for the Company in the period
of GBP87,000.
Other notable movements outside of the top performing investments were
as follows:
Sanderson Group plc, the software and IT services business specialising
in multichannel retail and manufacturing issued a positive AGM statement
reiterating that sales and profits were ahead of the comparative period
last year. This led to the Company experiencing a gain of GBP80,000 in
the period.
InterQuest Group plc, the specialist IT recruitment group, announced
full year results which saw a restructuring and focusing of the
business. This led to the Company deriving a gain of GBP124,000 in the
period.
Tristel plc, the manufacturer and distributor of disinfectant products
for the human and animal healthcare markets, had another profits warning
as its endoscopy business continued to decline, leading to the decision
to close this division. This led to a loss of GBP65,000 for the Company
in the period. This holding has subsequently been sold after the period
end, reflecting our lack of confidence in the management's ability to
execute a turnaround strategy for Tristel.
Unquoted investments
No changes in valuation have been made to the unquoted investment
portfolio in the period.
Outlook
Overall, the investment portfolio has experienced an encouraging six
months, with modest improvements in the trading outlook of the largest
holdings, while new quoted holdings introduced to the Company have begun
to demonstrate early signs of performance. The change in the emphasis of
the fund into a blend of unquoted and quoted holdings has made continued
progress. Although some yielding unquoted assets have already been
introduced to the portfolio in the interim period, we anticipate that
this momentum will continue in the second half of year.
Downing LLP
SUMMARY OF INVESTMENT PORTFOLIO
as at 31 March 2013
Valuation % of
movement portfolio
Cost Valuation in period by value
GBP'000 GBP'000 GBP'000
Top ten venture capital
investments (by value)
Anpario plc 252 480 87 6.6%
Craneware plc 125 418 19 5.7%
Baron House Developments LLP * 400 400 - 5.4%
Vulcan Renewables Limited * 400 400 - 5.4%
Brooks Macdonald Group plc 35 349 57 4.7%
Vertu Motors plc 500 337 46 4.6%
Angle plc 331 320 102 4.4%
Southampton Hotel Developments
Limited* 300 300 - 4.1%
Universe Group plc 222 271 29 3.7%
Sanderson Group plc 250 265 80 3.6%
2,815 3,540 420 48.2%
Other venture capital investments 6,972 3,071 7 41.8%
9,787 6,611 427 90.0%
Cash at bank and in hand 730 10.0%
Total investments 7,341 100.0%
All venture capital investments are quoted on AIM unless otherwise
stated.
* Unquoted
SUMMARY OF INVESTMENT MOVEMENTS
for the six months ended 31 March 2013
Additions
GBP'000
Quoted (market purchases)
China Food Company plc 121
Redstone plc ** 73
Universe Group plc 156
Other sundry investments 4
Unquoted
Mosaic Spa and Health Clubs Limited 200
554
** Shares received in consideration upon takeover of Maxima Holdings plc
*
Market Realised (Loss)/gain
value at Disposal gain against
Disposals Cost 01/10/12 proceeds in period cost
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Quoted (market sales)
3D Resources plc 105 2 9 7 (96)
AFC Energy plc 25 62 66 4 41
Ant plc 183 29 30 1 (153)
Bglobal plc 41 7 9 2 (32)
Cyan Holdings plc 195 41 77 36 (118)
Energetix Group plc 27 20 21 1 (6)
Hightex Group plc 112 34 38 4 (74)
Photonstar LED Group
plc 34 32 42 10 8
Porta Communications
plc 215 37 38 1 (177)
Pressure Technologies
plc 34 36 41 5 7
Redstone plc 73 73 83 10 10
Tangent Communications
plc 150 104 115 11 (35)
Theo Fennell plc 15 4 5 1 (10)
Unquoted
Consolidated General
Minerals plc 111 - 16 16 (95)
Takeovers
Maxima Holdings plc 506 65 73 8 (433)
1,826 546 663 117 (1,163)
* Adjusted for purchases in the period
UNAUDITED BALANCE SHEET as at 31 March 2013
31 Mar 2013 31 Mar 2012 30 Sep 2012
(Unaudited) (Unaudited) (Audited)
Note GBP'000 GBP'000 GBP'000
Fixed assets
Investments 6,611 7,443 6,176
Current assets
Debtors 7 337 769
Cash at bank and in hand 730 156 406
737 493 1,175
Creditors: amounts falling due
within one year (109) (62) (55)
Net current assets 628 431 1,120
Net assets 7,239 7,874 7,296
Capital and reserves
Called up share capital 7 2,092 2,141 2,095
Capital redemption reserve 8 953 370 416
Share premium 8 102 117 117
Special reserve 8 4,028 10,118 4,899
Capital reserve - realised 8 406 307 862
Capital reserve- unrealised 8 (181) (5,069) (977)
Revenue reserve 8 (161) (110) (116)
Equity shareholders' funds 6 7,239 7,874 7,296
Basic and diluted net asset value 6 34.6p 36.8p 34.8p
per share
UNAUDITED INCOME STATEMENT
for the six months ended 31 March 2013
Year
ended
Six months ended Six months ended 30 Sep
31 March 2013 31 March 2012 2012
Revenue Capital Total Revenue Capital Total Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 52 - 52 33 - 33 108
Gains/(losses) on
investments
- realised - 117 117 - (39) (39) 86
- unrealised - 427 427 - (384) (384) (964)
52 544 596 33 (423) (390) (770)
Investment
management
fees (6) (20) (26) (14) (44) (58) (57)
Other expenses (91) (1) (92) (95) - (95) (177)
Return/(loss)
on ordinary
activities
before
taxation (45) 523 478 (76) (467) (543) (1,004)
Taxation - - - - - - -
Return/(loss)
attributable
to equity
shareholders 4 (45) 523 478 (76) (467) (543) (1,004)
Return/(loss)
per share 4 (0.2p) 2.5p 2.3p (0.4p) (2.1p) (2.5p) (4.7p)
All Revenue and Capital items in the above statement derive from
continuing operations. No operations were acquired or discontinued
during the year. The total column within the Income Statement represents
the profit and loss account of the Company.
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 31 March 2013
31 Mar 31 Mar 30 Sep
2013 2012 2012
Note GBP'000 GBP'000 GBP'000
Opening Shareholders' funds 7,296 8,952 8,952
Issue of shares 7 49 - -
Issue of shares under SRRP 7 1,880 - -
Share issue costs 7 (51) - -
Purchase of own shares - - (117)
Purchase of own shares under SRRP 7 (1,889) - -
Total recognised gains/(losses) for the period 478 (543) (1,004)
Dividends paid 5 (524) (535) (535)
Closing Shareholders' funds 7,239 7,874 7,296
UNAUDITED CASH FLOW STATEMENT
for the six months ended 31 March 2013
31 Mar 31 Mar 30 Sep
2013 2012 2012
Note GBP'000 GBP'000 GBP'000
Cash outflow from operating activities and returns
on investments 9 (22) (118) (146)
Capital expenditure
Purchase of investments (554) (469) (1,728)
Sale of investments 765 1,121 3,417
Net cash inflow from capital expenditure 211 652 1,689
Equity dividends paid (524) (535) (535)
Net cash (outflow)/inflow before financing (335) (1) 1,008
Financing
Proceeds from share issue 49 - -
Proceeds from share issue under SRRP 1,880 - -
Share issue costs (33) - -
Purchase of own shares - - (116)
Purchase of own shares under SRRP (1,880) - -
Funds held on Company's behalf 643 (643)
Net cash inflow/(outflow) from financing 659 - (759)
Increase/(decrease) in cash 10 324 (1) 249
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
for the six months ended 31 March 2013
1. The unaudited half yearly financial results cover the six months to
31 March 2013 and have been prepared in accordance with the accounting
policies set out in the statutory accounts for the year ended 30
September 2012 which were prepared under UK Generally Accepted
Accounting Practice and in accordance with the Statement of Recommended
Practice "Financial Statements of Investment Trust Companies and Venture
Capital Trusts" January 2009.
2. The Company has only one class of business and derives its income
from investments made in shares, securities and bank deposits.
3. The comparative figures were in respect of the six months ended 31
March 2012 and the year ended 30 September 2012.
4. Return per share
Weighted average Revenue Capital
number of shares in issue loss gain/(loss)
GBP'000 GBP'000
Period ended 31 March 2013 20,943,167 (45) 523
Period ended 31 March 2012 21,405,778 (76) (467)
Year ended 30 September 2012 21,291,149 (82) (922)
5. Dividends
Year
Six months ended ended
Paid in the period 31 March 2013 30 Sep 2012
Revenue Capital Total Total
GBP'000 GBP'000 GBP'000 GBP'000
Date paid
2012 Final 15/02/2013: 2.5p - 524 524 -
2011 Final 20/03/2012: 2.5p - - - 535
- 524 524 535
6. Basic and diluted net asset value per share
Shares in issue Net assets NAV per share
GBP'000 pence
Period ended 31 March 2013 20,918,659 7,239 34.6p
Period ended 31 March 2012 21,405,778 7,874 36.8p
Year ended 30 September 2012 20,944,744 7,296 34.8p
7. Called up share capital
Shares in issue GBP'000
Period ended 31 March 2013 20,918,659 2,092
Period ended 31 March 2012 21,405,778 2,141
Year ended 30 September 2012 20,944,744 2,095
On 21 March 2013, the following transactions took place under the Share
Realisation and Reinvestment Programme:
5,370,466 Ordinary Shares were purchased for cancellation at a price of
35.0p per Ordinary Share.
5,209,272 Ordinary Shares were allotted in respect of the shares
tendered for cancellation at a price of approximately 36.1p per Ordinary
Share.
In addition, on 21 March 2013, the Company allotted 135,109 Ordinary
shares at a price of approximately 36.1p per Ordinary share, under the
terms of the top-up offer document. Gross proceeds received thereon
amounted to GBP49,000 with issue costs in respect of the offer amounting
to GBP51,000.
8. Reserves
Capital Capital Capital
redemption Share Special reserve reserve Revenue
reserve premium reserve - realised - unrealised reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 October
2012 416 117 4,899 862 (977) (116)
Issue of new
shares - 36 - - - -
Issue of new
shares under
SRRP - 1,359 - - - -
Share issue
costs - (51) - - - -
Purchase of
own shares
under SRRP 537 (1,835) (54) - - -
Expenses
capitalised - - - (21) - -
Gains on
investments - - - 117 427 -
Realisation of
revaluations
from previous
years - - - (369) 369 -
Dividends paid - - - (524) - -
Transfer
between
reserves - 476 (817) 341 - -
Retained net
revenue - - - - - (45)
At 31 March
2013 953 102 4,028 406 (181) (161)
The Special reserve is available to the Company to enable the purchase
of its own shares in the market without affecting its ability to pay
dividends/capital distributions.
Distributable reserves are calculated as follows:
31 Mar 30 Sep
2013 2012
GBP'000 GBP'000
Special reserve 4,028 4,899
Capital reserve - realised 406 862
Revenue reserve (161) (116)
Unrealised losses (excluding unrealised unquoted gains) (181) (977)
Total distributable reserves 4,092 4,668
9. Reconciliation of return on operating activities before taxation to
net cash flow from operating activities
31 Mar 31 Mar 30 Sep
2013 2012 2012
GBP'000 GBP'000 GBP'000
Return/(loss) on ordinary activities before
taxation 478 (543) (1,004)
(Gains)/losses on investments (544) 423 878
Decrease in other debtors 17 14 -
Increase/(Decrease) in other creditors 27 (12) (20)
Net cash outflow from operating activities (22) (118) (146)
10. Analysis of changes in cash at bank in the period
31 Mar 31 Mar 30 Sep
2013 2012 2012
GBP'000 GBP'000 GBP'000
Beginning of period 406 157 157
Net cash inflow/(outflow) 324 (1) 249
End of period 730 156 406
11. 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 year ended 30 September 2012 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.
12. Going concern
The Company has sufficient financial resources at the period end, and
holds a diversified portfolio of investments. As a consequence, the
Directors believe that the Company is well placed to manage its business
risks successfully, despite the current uncertain economic outlook.
The Directors are confident that the Company has adequate resources to
continue in operational existence for the foreseeable future. Thus, they
continue to adopt the going concern basis of accounting in preparing the
financial statements.
13. Risks and uncertainties
Under the Disclosure and Transparency Rules, 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 are:
(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 regularly reports to the Board on the
current position. The Company also retains PricewaterhouseCoopers to
provide regular reviews and advice in this area.
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 into VCT
qualifying investments. 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 these approaches provide satisfactory
management of the key risks.
14. The Directors confirm that, to the best of their knowledge, the half
yearly financial report has 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 period 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 period; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related
party transactions that have taken place during the first 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.
15. Copies of the unaudited half yearly financial results 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 Income VCT 4 plc via Thomson Reuters ONE
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