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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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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 | |
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0.00 | 0.00% | 28.25 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
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 HUG#1696541
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