We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Register to chat with like-minded investors on our interactive forums.
| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Downing Abs.2 | LSE:DA2O | London | Ordinary Share | GB00B4K0JB10 | ORD 0.1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 64.50 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
Hot Features
Premium
TIDMDA2O
DOWNING ABSOLUTE INCOME VCT 2 PLC
FINAL RESULTS FOR THE YEAR ENDED 31 MARCH 2013
FINANCIAL SUMMARY
Year Year
ended 31 ended 31
March March
2013 2012
Pence Pence
Net asset value per Ordinary Share and 'A' Share 69.8 72.3
Cumulative distributions paid since launch 15.0 10.0
Total Return (net asset value plus dividends paid
since launch) 84.8 82.3
CHAIRMAN'S STATEMENT
Introduction
I present the Company's Annual Report for the year ended 31 March 2013.
After a difficult start to the Company's life, it is pleasing to be able
to report an increase in adjusted net asset value for the year.
Venture capital investments
There has been a fair level of investment activity during the year, with
a number of new and follow on investments and some reorganisations
taking place.
A total of GBP1.2 million was invested in five qualifying, follow-on
investments and three non-qualifying investments. These investments were
funded by proceeds from a number of part disposals, mostly in the form
of loan stock redemptions.
Shareholders will be aware that several of the Company's initial
investments faced significant difficulties, resulting in some large
write downs. After a period of intensive work with each problem
investment, a more stable position has now been reached. In one case the
business has been sold and, in two cases, reorganisations have taken
place that have left the Company with investments in businesses with
reasonable prospects going forward.
In view of the historic losses suffered by the Company on these
investments, Downing LLP offered to waive its investment management and
administration fees for approximately half of the year. In addition,
Nicholas Lewis, the representative of the Downing LLP on the Board, has
waived his non-executive director's fees with effect from July 2012.
In reviewing the investment valuations at the year end, a number of
adjustments were made. Data Centre Response, Redmed and Tramps Night
Club all performed ahead of expectations and were increased in value by
GBP199,000, GBP135,000 and GBP60,000 respectively. The largest increase
was in respect of AIM-quoted, Tracsis, which saw an uplift of
GBP318,000, reflecting strong share price increases.
Some write downs were also required. Rostima, which provides software
for shipping ports, has required further working capital, resulting in a
provision of GBP170,000. Chapel Street Food and Beverages, which
operates a bar and restaurant in the Hotel Indigo in Liverpool, is
trading behind budget, while Chapel Street Services, which provides
management services to the Hotel Indigo has similarly suffered from the
disappointing trading results of the hotel. Both investments have been
written down by GBP121,000. The final significant adjustment has been a
further provision of GBP112,000 against Camandale in view of on-going
weak trading by the Riverbank venue.
In addition, we have decided that it is prudent to make a provision of
GBP211,000 against deferred consideration due on the disposal of the
troubled Helcim investment.
Overall the portfolio showed net unrealised gains of GBP343,000 and net
realised losses of GBP181,000.
Net asset value and results
The net asset value ("NAV") per Ordinary Share at 31 March 2013 stood at
69.7p and NAV per 'A' Share at 0.1p, representing an increase of 2.5p or
3.5% over the year after adjusting for dividends paid during the year of
5.0p per Ordinary Share. Total Return (combined NAV plus cumulative
dividends) stands at 84.8p per holding of one Ordinary and one 'A' Share
compared to the cost to original subscribers of 70p (net of income tax
relief).
The profit on ordinary activities after taxation for the year was
GBP511,000 (2012: Loss GBP2,808,000) comprising a revenue gain of
GBP620,000 (2012: GBP365,000) and a capital loss of GBP109,000 (2012:
GBP3,173,000).
Dividends
It is the Company's intention to pay twice yearly dividends totalling at
least 5.0p per annum in respect of the Ordinary Shares.
In line with this intention, the Board is proposing to pay a final
dividend in respect of the period ended 31 March 2013 of 2.5p per
Ordinary Share on 13 September 2013 to Shareholders on the register at
the close of business on 16 August 2013.
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 has a policy of undertaking any buybacks at a price equal to the
latest published NAV (i.e. at nil discount).
During the year, the Company repurchased 57,150 Ordinary Shares for an
aggregate consideration of GBP41,000 being an average price of 71.3p per
share and which represented 0.18% of the Company's issued Ordinary Share
capital and 41,575 'A' Shares for an aggregate consideration of GBP42
being an average price of 0.1p per share and which represented 0.14% of
the Company's issued 'A' Share Capital. These shares were subsequently
cancelled.
A special resolution to continue this policy is proposed for the
forthcoming Annual General Meeting ("AGM").
Annual General Meeting
The Company's AGM will be held at 10 Lower Grosvenor Place, London SW1W
0EN at 10:15 a.m. on 3 September 2013.
One item of special business, seeking approval for the Company to be
able to buy its own shares as described above, will be proposed.
Outlook
After a difficult start, the Board feels that there is now a more stable
outlook for the portfolio going forward. A number of portfolio companies
have started to make good headway over the last year and with some early
indicators of a strengthening economy on the horizon, we believe that
there is potential for further progress.
Current conditions do, however, remain challenging and the portfolio of
this nature is always to exposed fair degree of risk. Accordingly, the
Board will ensure that the Manager continues to work closely with all
portfolio companies to provide appropriate support as they develop.
Following changes to the VCT regulations last year which allow VCTs to
make larger qualifying investments, there is now a clear trend in the
market towards larger VCTs. These have several attractions, including
reduced running costs. The Board is considering what options might be
available to the Company in this direction.
Chad Murrin
Chairman
INVESTMENT MANAGER'S REPORT
Introduction
At the year end, the Company held 30 venture capital investments and two
AIM-quoted investments and is now fully invested. Further investment
activity will mostly be limited to reinvesting proceeds from divestments
when suitable investment opportunities arise. The majority of the
investments are performing broadly in line with expectations and there
was a net increase in value of the investments of GBP343,000 over the
year.
Investment activity
The Company began the year with GBP13.6 million of investments and ended
with GBP13.9 million, spread across a portfolio of 32 companies. During
the year, the Company made further investments totalling GBP1.6 million
which were offset by divestments of GBP1.6 million and a net valuation
increase of GBP343,000.
The Company made nine investments during the year, five were follow-on
investments and three were new non-qualifying investments. Overviews of
the largest new qualifying or partially qualifying investments made
during the year are detailed below.
A number of transactions took place in respect of the reorganisation of
Gingerbread Pre-School Nurseries, where the trade was ultimately
acquired by Liverpool Nurseries (Holdings) Limited. As part of the
reorganisation, a new manager and investment partner was brought in and
the group is making progress in recovering from the initial difficulties
that the business faced.
A GBP400,000 investment was made in Baron House Developments LLP, a
non-qualifying opportunity. The partnership is developing a new Hampton
by Hilton Hotel in Newcastle. The investment attracts a fixed yield,
along with a share of the development profit.
Camandale Limited underwent a reorganisation whereby, one of its pubs,
the Monkey Bar was transferred to a newly established company,
Kilmarnock Monkey Bar Limited, into which GBP83,000 was invested. The
Monkey Bar has now been let to a third party operator and the company
receives rental income.
Further follow-on investments were also made in the following companies:
Rostima Limited (GBP171,000); Quadrate Spa Limited (GBP149,000) and
Mosaic Spa and Health Clubs Limited (GBP100,000).
Shareholders will recall that the Company's investment in Helcim Group,
a social housing manager, faced major problems and had previously
suffered a large write down in value. After working closely with the
business for an extended period we concluded that prospects were bleak
and finally decided to take advantage of an offer for the business,
albeit for deferred consideration, an element of which is linked to
performance. The offer valued the investment at a minimum of GBP211,000,
which is equal to the level at which it was valued at the previous year
end. In view of some uncertainty about the collectability of the
deferred consideration, a full provision has been made against it and
proceeds will be recognised as they are received.
We have subsequently made a provision against some of the deferred
consideration in view of doubts about its collectability.
Portfolio valuation
In the year end review of investment valuations, there were a number of
adjustments to carrying values, which resulted in a net increase of
GBP343,000.
An uplift of GBP199,000 was recognised in respect of the investment in
Data Centre Response Limited at the year end to reflect the strong
performance of the business, which is ahead of the original business
plan.
Accumuli plc and Tracsis plc, both AIM-quoted investments, were revalued
to reflect the bid share prices at the year end. This resulted in an
uplift of GBP26,000 and GBP318,000 respectively.
The valuation of the investment in Redmed Limited was increased by
GBP135,000. The company owns The Annexe nightclub in Lincoln city centre,
which is producing results that are 40% ahead of the original business
plan.
Domestic Solar Limited owns a portfolio of solar panels on the rooftops
of domestic properties across the UK. The panels have now been
operational for over a year and are starting to establish a track record
of income generation. An uplift of GBP48,000 in the value of the
investment in Domestic Solar Limited was made at the year end.
Further increases in value were recognised for Tramps Night Club Limited
(GBP60,000); Quadrate Catering Limited (GBP40,000); Antelope Pub Limited
(GBP22,000); Alpha Schools (Holdings) Limited (GBP20,000) and Kidspace
Adventures Holdings Limited (GBP14,000) were recognised to reflect that
the businesses are performing well and in line with expectations.
On the negative side, a provision of GBP170,000 was made against Rostima
Limited. The company, which provides software systems to shipping ports,
has found the order conversion timescale with clients to be longer than
expected and has required further working capital since the year end. A
provision has been made equivalent to the equity element of our
investment.
A GBP121,000 reduction in value to both Chapel Street Services Limited
and Chapel Street Food and Beverage Limited was recognised at the year
end. Although the performance of each business is improving, they are
unlikely to meet the original business plan as expected.
A further reduction in value was recognised in Camandale Limited of
GBP112,000 following the reorganisation mentioned above which has left
the company owning one pub, The Riverbank. The valuation reflects the
latest standalone valuation of The Riverbank.
Most other investments have performed in line with expectations and have
been held at previous carrying value or cost.
Outlook
Performance in the portfolio is showing signs of improvement as we take
a cautious approach to recognising uplifts in investments that are
performing well and in several cases exceeding expectations. There is
still some way to go before the valuation fully recovers but we are
committed to closely monitoring all portfolio companies as a priority.
With continuing weak economic conditions, and consumer confidence still
subdued, we expect the task of developing the portfolio to continue to
be challenging. However, we believe that the Company holds a number of
investments with good prospects and we expect to see them deliver value
over the medium term.
Downing LLP
PORTFOLIO OF INVESTMENTS
The following investments were held at 31 March 2013:
Valuation
movement % of
Cost Valuation in year portfolio
GBP'000 GBP'000 GBP'000
Qualifying investments
Tramps Night Club Limited * 1,180 1,303 60 9.2%
Quadrate Spa Limited * 988 988 - 7.0%
Quadrate Catering Limited * 887 927 40 6.5%
Mosaic Spa and Health Clubs Limited
* 850 850 - 6.0%
Rostima Limited * 1,002 832 (170) 5.9%
Antelope Pub Limited * 750 829 22 5.9%
Data Centre Response Limited 527 726 199 5.1%
Redmed Limited * 529 664 135 4.7%
Tracsis plc* ** 128 516 318 3.7%
Residential PV Trading Limited * 500 500 - 3.5%
Future Biogas (Reepham Road)
Limited * 499 499 - 3.5%
Domestic Solar Limited * 400 448 48 3.2%
Accumuli plc * ** 228 411 26 2.9%
Slopingtactic Limited 379 379 - 2.7%
The 3D Pub Co Limited 516 362 - 2.6%
Alpha Schools (Holdings) Limited 333 353 20 2.5%
Liverpool Nurseries (Holdings)
Limited 340 340 - 2.4%
Kidspace Adventures Holdings
Limited 300 314 14 2.1%
Angel Solar Limited 250 250 - 1.8%
Camandale Limited * 1,112 218 (112) 1.5%
Chapel Street Food and Beverage
Limited 250 129 (121) 0.9%
Chapel Street Services Limited 250 129 (121) 0.9%
Ridgeway Pub Company Limited 136 126 (10) 0.9%
EPI Service Limited (in
administration) * 920 107 - 0.8%
13,254 12,200 348 86.2%
Non-qualifying investments
Retallack Surfpods Limited 500 500 - 3.5%
Baron House Developments LLP 400 400 - 2.8%
Fenkle Street LLP 288 288 - 2.0%
Kidspace Adventures Limited 173 173 - 1.2%
Commercial Street Hotel Limited 115 115 - 0.8%
Dominions House Limited 89 89 - 0.6%
Kilmarnock Monkey Bar Limited 83 83 - 0.6%
Chapel Street Hotel Limited 10 5 (5) 0.0%
1,658 1,653 (5) 11.5%
14,912 13,853 343 97.7%
Cash at bank and in hand 309 2.3%
Total investments 14,162 100.0%
* Part-qualifying investment
** AIM-quoted investment
All venture capital investments are incorporated in England and Wales.
ADDITIONS
GBP'000
Qualifying investments
Liverpool Nurseries (Holdings) Limited* + 339
Helcim Group Limited* 235
Rostima Limited * 171
Quadrate Spa Limited * 149
Mosaic Spa and Health Clubs Limited * 100
Tracsis plc* ** 1
995
Non-qualifying investments
Baron House Developments LLP 400
Dominions House Limited 89
Kilmarnock Monkey Bar Limited 83
572
Total 1,567
DISPOSALS
Total
realised
Market Gain/(loss) gain/(loss)
value at Disposal against during the
Cost 01/04/12 proceeds cost year
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Qualifying
investments
Helcim Group
Limited * 2,016 446 211++ (1,805) (235)
Antelope Pub
Company Limited* 300 300 300 - -
Tramps Night Club
Limited* 122 122 122 - -
Camandale Limited* 87 87 62 (25) (25)
Data Centre
Response Limited 80 80 80 - -
Tracsis plc* ** 73 113 192 119 79
EPI Service
Limited* 60 14 14 (46) -
Redmed Limited 34 34 34 - -
Accumuli plc * ** 23 38 38 15 -
2,795 1,234 1,053 (1,742) (181)
Non-qualifying
investments
Liverpool Nurseries
(House) Limited + 147 147 147 - -
Liverpool Nurseries
(Greenbank)
Limited + 100 100 100 - -
Fenkle Street LLP 58 58 58 - -
Liverpool Nurseries
(Cottage) Limited
+ 49 49 49 - -
Residential PV
Trading Limited 33 33 33 - -
Kidspace Adventures
Limited 27 27 27 - -
414 414 414 - -
Total 3,209 1,648 1,467 (1,742) (181)
* Part-qualifying investment
** AIM-quoted investment
Adjusted for purchases during the year
+ Part of reorganisation of Liverpool Nurseries companies
++ Estimated fair value of deferred consideration at time of disposal. A
provision has been made against this at the year end.
DIRECTORS' RESPONSIBILITIES STATEMENT
The Directors are responsible for preparing the Directors' report, the
Directors' remuneration report and the financial statements in
accordance with applicable law and regulations. They are also
responsible for ensuring that the annual report includes information
required by the Listing Rules of the Financial Conduct Authority.
Company law requires the directors to prepare financial statements for
each financial year. Under that law the directors have elected to
prepare the financial statements in accordance with United Kingdom
Generally Accepted Accounting Practice (United Kingdom accounting
standards and applicable law). Under company law the directors must not
approve the financial statements unless they are satisfied that they
give a true and fair view of the state of affairs of the company and of
the profit or loss of the company for that period.
In preparing these financial statements the Directors are required to:
* select suitable accounting policies and then apply them consistently;
* make judgments and accounting estimates that are reasonable and
prudent;
* state whether applicable UK accounting standards have been followed,
subject to any material departures disclosed and explained in the
financial statements;
* prepare the financial statements on the going concern basis unless it
is inappropriate to presume that the company will continue in business.
The Directors are responsible for keeping adequate accounting records
that are sufficient to show and explain the company's transactions, to
disclose with reasonable accuracy at any time the financial position of
the company and to enable them to ensure that the financial statements
comply with the Companies Act 2006. They are also responsible for
safeguarding the assets of the company and hence for taking reasonable
steps for the prevention and detection of fraud and other
irregularities.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the company's website.
Legislation in the United Kingdom governing the preparation and
dissemination of the financial statements and other information included
in annual reports may differ from legislation in other jurisdictions.
INCOME STATEMENT
FOR THE YEAR ENDED 31 MARCH 2013
Year ended 31 March 2013 Year ended 31 March 2012
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 1,063 - 1,063 669 - 669
Net gain/(loss) on
investments - 162 162 - (3,173) (3,173)
1,063 162 1,225 669 (3,173) (2,504)
Investment
management fees (60) (60) (120) - - -
Other expenses (213) (211) (424) (191) - (191)
Return/(loss) on
ordinary
activities before
tax 790 (109) 681 478 (3,173) (2,695)
Tax on ordinary
activities (170) - (170) (113) - (113)
Return/(loss)
attributable to
equity
shareholders 620 (109) 511 365 (3,173) (2,808)
Basic and diluted
return per
share:
Ordinary Share 3.1 (0.5) 2.6 1.8 (15.9) (14.1)
'A' Share - - - - - -
All revenue and capital items in the above statement derive from
continuing operations. The total column within the Income Statement
represents the profit and loss account of the Company. No operations
were acquired or discontinued during the year.
A Statement of Total Recognised Gains and Losses has not been prepared
as all gains and losses are recognised in the Income Statement noted
above.
Other than revaluation movements arising on investments held at fair
value through the profit and loss, there were no differences between the
(loss)/return as stated above and historical cost.
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
Year Year
ended ended
31 March 31 March
2013 2012
GBP'000 GBP'000
Opening Shareholders' funds 14,407 18,266
Dividends paid (995) (997)
Purchase of own shares (41) (54)
Total gains/(losses) for the year 511 (2,808)
Closing Shareholders' funds 13,882 14,407
BALANCE SHEET
AT 31 MARCH 2013
2013 2012
GBP'000 GBP'000 GBP'000 GBP'000
Fixed assets
Investments 13,853 13,591
Current assets
Debtors 154 482
Cash at bank and in hand 309 556
463 1,038
Creditors: amounts falling due within one
year (434) (222)
Net current assets 29 816
Net assets 13,882 14,407
Capital and reserves
Called up Ordinary Share capital 20 20
Called up 'A' Share capital 30 30
Special reserve 14,616 17,204
Revaluation reserve (1,059) (2,964)
Capital reserve - realised 134 -
Revenue reserve 141 117
Total equity shareholders' funds 13,882 14,407
Basic and diluted net asset value per
share (pence)
Ordinary Share 69.7 72.2
'A' Share 0.1 0.1
CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 MARCH 2013
Year Year
ended ended
31 March 31 March
2013 2012
GBP'000 GBP'000
Net cash inflow from operating activities 1,002 1,070
Taxation
Corporation tax paid (113) (111)
Capital expenditure
Purchase of investments (1,567) (8,844)
Proceeds from disposal of investments 1,467 7,467
Net cash outflow from capital expenditure (100) (1,377)
Equity dividends paid (995) (997)
Net cash outflow before financing (206) (1,415)
Financing
Purchase of own shares (41) (54)
Net cash outflow from financing (41) (54)
Decrease in cash (247) (1,469)
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 31 MARCH 2013
1.Accounting policies
Basis of accounting
The Company has prepared its financial statements under UK Generally
Accepted Accounting Practice ("UK GAAP") and in accordance with the
Statement of Recommended Practice "Financial Statements of Investment
Trust Companies and Venture Capital Trusts" revised January 2009
("SORP").
The financial statements are prepared under the historical cost
convention except for certain financial instruments measured at fair
value.
The Company implements new Financial Reporting Standards ("FRS") issued
by the Financial Reporting Council when required.
Presentation of Income Statement
In order to better reflect the activities of a Venture Capital Trust and
in accordance with the SORP, supplementary information which analyses
the Income Statement between items of a revenue and capital nature has
been presented alongside the Income Statement. The net revenue is the
measure the Directors believe appropriate in assessing the Company's
compliance with certain requirements set out in Part 6 of the Income Tax
Act 2007.
Investments
All investments are designated as "fair value through profit or loss"
assets due to investments being managed and performance evaluated on a
fair value basis. A financial asset is designated within this category
if it is both acquired and managed on a fair value basis, with a view to
selling after a period of time, in accordance with the Company's
documented investment policy. The fair value of an investment upon
acquisition is deemed to be cost. Thereafter investments are measured at
fair value in accordance with the International Private Equity and
Venture Capital Valuation Guidelines ("IPEV") together with FRS26.
For unquoted investments, fair value is established by using the IPEV
guidelines. The valuation methodologies for unquoted entities used by
the IPEV to ascertain the fair value of an investment are as follows:
* Price of recent investment;
* Multiples;
* Net assets;
* Discounted cash flows or earnings (of underlying business);
* Closing bid price;
* Discounted cash flows (from the investment); and
* Industry valuation benchmarks.
The methodology applied takes account of the nature, facts and
circumstances of the individual investment and uses reasonable data,
market inputs, assumptions and estimates in order to ascertain fair
value.
Gains and losses arising from changes in fair value are included in the
Income Statement for the year as a capital item and transaction costs on
acquisition or disposal of the investment are expensed. Where an
investee company has gone into receivership, liquidation or
administration (where there is little likelihood of recovery), the loss
on the investment, although not physically disposed of, is treated as
being realised.
It is not the Company's policy to exercise significant influence over
investee companies. Therefore the results of these companies are not
incorporated into the Income Statement except to the extent of any
income accrued. This is in accordance with the SORP that does not
require portfolio investments to be accounted for using the equity
method of accounting.
Income
Dividend income from investments is recognised when the Shareholders'
rights to receive payment has been established, normally the ex-dividend
date.
Interest income is accrued on a time apportionment basis, by reference
to the principal sum outstanding and at the effective rate applicable
and only where there is reasonable certainty of collection in the
foreseeable future.
Expenses
All expenses are accounted for on an accruals basis. In respect of the
analysis between revenue and capital items presented within the Income
Statement, all expenses have been presented as revenue items except as
follows:
* Expenses which are incidental to the disposal of an investment are
deducted from the disposal proceeds of the investment.
* Expenses are split and presented partly as capital items where a
connection with the maintenance or enhancement of the value of the
investments held can be demonstrated. The Company has adopted a policy
of charging 50% of the investment management fees to the revenue account
and 50% to the capital account to reflect the Board's estimated split of
investment returns which will be achieved by the company over the long
term.
Taxation
The tax effects on different items in the Income Statement are allocated
between capital and revenue on the same basis as the particular item to
which they relate, using the Company's effective rate of tax for the
accounting period.
Due to the Company's status as a Venture Capital Trust and the continued
intention to meet the conditions required to comply with Part 6 of the
Income Tax Act 2007, no provision for taxation is required in respect of
any realised or unrealised appreciation of the Company's investments
which arise.
Deferred taxation, which is not discounted, is provided in full on
timing differences that result in an obligation at the balance sheet
date to pay more tax, or a right to pay less tax, at a future date, at
rates expected to apply when they crystallise based on current tax rates
and law. Timing differences arise from the inclusion of items of income
and expenditure in taxation computations in periods different from those
in which they are included in the accounts.
Other debtors and other creditors
Other debtors (including accrued income) and other creditors are
included within the accounts at amortised cost.
Issue costs
Issue costs in relation to the shares issued for each share class have
been deducted from the share premium account.
2.Basic and diluted return per share
Weighted average number Revenue Capital
of shares in issue return loss
Return per share is calculated on
the following: GBP'000 GBP'000
Year ended 31
March 2013 Ordinary Shares 19,849,405 620 (109)
'A' Shares 29,918,922 - -
Year ended 31
March 2012 Ordinary Shares 19,981,516 365 (3,173)
'A' Shares 29,982,480 - -
As the Company has not issued any convertible securities or share
options, there is no dilutive effect on return per Ordinary Share or 'A'
Share. The return per share disclosed therefore represents both the
basic and diluted return per Ordinary Share or 'A' Share.
3.Basic and diluted net asset value per share
2013 2012
Shares in issue Net asset value Net asset value
Pence Pence
per per
2013 2012 share GBP'000 share GBP'000
Ordinary
Shares 19,875,508 19,932,658 69.7 13,860 72.2 14,385
'A' Shares 29,897,870 29,939,445 0.1 22 0.1 22
Net assets per Balance
Sheet 13,882 14,407
The Directors allocate the assets and liabilities of the Company between
the Ordinary Shares and 'A' Shares such that each share class has
sufficient net assets to represent its dividend and return of capital
rights.
As the Company has not issued any convertible shares or share options,
there is no dilutive net asset value per Ordinary Share or per 'A'
Share. The Net Asset Value per share disclosed therefore represents both
the basic and diluted net asset value per Ordinary Share or per 'A'
Share.
4.Principal risks
The Company's investment activities expose the Company to a number of
risks associated with financial instruments and the sectors in which the
Company invests. The principal financial risk arising from the Company's
operations are:
* Investment risks
* Credit risk
* Liquidity risk
The Board regularly reviews these risks and the policies in place for
managing them. There have been no significant changes to the nature of
the risks that the Company is exposed to over the year and there have
also been no significant changes to the policies for managing those
risks during the year.
The risk management policies used by the Company in respect of the
principal financial risks and a review of the financial instruments held
at the year end are provided below:
Investment risks
As a VCT, the Company is exposed to market risks in the form of
potential losses and gains that may arise on the investments it holds in
accordance with its investment policy. The management of these market
risks is a fundamental part of investment activities undertaken by the
Investment Manager and overseen by the Board. The Manager monitors
investments through regular contact with management of investee
companies, regular review of management accounts and other financial
information and attendance at investee company board meetings. This
enables the Manager to manage the investment risk in respect of
individual investments. Market risk is also mitigated by holding
diversified portfolio spread across various business sectors and asset
classes.
The key market risks to which the Company is exposed are:
* Investment price risk
* Interest rate risk
Investment price risk
Investment price risk arises from uncertainty about the future prices
and valuations of financial instruments held in accordance with the
Company's investment objectives. It represents the potential loss that
the Company might suffer through market price movements in respect of
quoted investments and also changes in the fair value of unquoted
investments that it holds.
Interest rate risk
The Company accepts exposure to interest rate risk on floating-rate
financial assets through the effect of changes in prevailing interest
rates. The Company receives interest on its cash deposits at a rate
agreed with its bankers. Investments in loan stock attract interest
predominately at fixed rates. A summary of the interest rate profile of
the Company's investments is shown below.
There are three categories in respect of interest which are attributable
to the financial instruments held by the Company as follows:
* "Fixed rate" assets represent investments with predetermined yield
targets and comprise certain loan note investments and Preference
Shares.
* "Floating rate" assets predominantly bear interest at rates linked to
Bank of England base rate or LIBOR and comprise cash at bank and
liquidity fund investments and certain loan note investments.
* "No interest rate" assets do not attract interest and comprise equity
investments, certain loan note investments, loans and receivables
(excluding cash at bank) and other financial liabilities.
The Company monitors the level of income received from fixed and
floating rate assets and, if appropriate, may make adjustments to the
allocation between the categories, in particular, should this be
required to ensure compliance with the VCT regulations.
Credit risk
Credit risk is the risk that a counterparty to a financial instrument is
unable to discharge a commitment to the Company made under that
instrument. The Company is exposed to credit risk through its holdings
of loan stock in investee companies, investments in liquidity funds,
cash deposits and debtors.
The Company's financial assets that are exposed to credit risk are
summarised as follows:
The Manager manages credit risk in respect of loan stock with a similar
approach as described under "Investment risks" above. In addition the
credit risk is partially mitigated by registering floating charges over
the assets of certain investee companies. The strength of this security
in each case is dependent on the nature of the investee company's
business and its identifiable assets. Similarly the management of credit
risk associated with interest, dividends and other receivables is
covered within the investment management procedures.
Cash is mainly held by Bank of Scotland plc and Royal Bank of Scotland
plc, both of which are A-rated financial institutions and both also
ultimately part-owned by the UK Government. Consequently, the Directors
consider that the credit risk associated with cash deposits is low.
There have been no changes in fair value during the year that are
directly attributable to changes in credit risk.
Liquidity risk
Liquidity risk is the risk that the Company encounters difficulties in
meeting obligations associated with its financial liabilities. Liquidity
risk may also arise from either the inability to sell financial
instruments when required at their fair values or from the inability to
generate cash inflows as required. As the Company has a relatively low
level of creditors (GBP434,000) and has no borrowings the Board believes
that the Company's exposure to liquidity risk is low. The Company always
holds sufficient levels of funds as cash in order to meet expenses and
other cash outflows as they arise. For these reasons the Board believes
that the Company's exposure to liquidity risk is minimal.
The Company's liquidity risk is managed by the Investment Manager in
line with guidance agreed with the Board and is reviewed by the Board at
regular intervals.
5.Related party transactions
Nicholas Lewis is a partner Downing LLP. Downing LLP was the Company's
Investment Manager during the year. During the year ended 31 March 2013,
GBP256,000 was payable to Downing LLP, of which GBP136,000 was waived,
in respect of these services. At the year end, the Company owed Downing
LLP GBP119,000.
Downing LLP provided administration services for the year, for an annual
fee of GBP65,000 plus RPI. During the year to 31 March 2013, GBP70,919
was payable to Downing LLP, of which GBP35,459 was waived, in respect of
administration fees. At the year end, the Company owed Downing LLP
GBP35,460.
ANNOUNCEMENT BASED ON AUDITED ACCOUNTS
The financial information set out in this announcement does not
constitute the Company's statutory financial statements in accordance
with section 434 Companies Act 2006 for the year ended 31 March 2013,
but has been extracted from the statutory financial statements for the
year ended 31 March 2013, which were approved by the Board of Directors
on 12 July 2013 and will be delivered to the Registrar of Companies
following the Company's Annual General Meeting. The Independent
Auditor's Report on those financial statements was unqualified and did
not contain any emphasis of matter nor statements under s498(2) and (3)
of the Companies Act 2006.
The statutory accounts for the year ended 31 March 2012 have been
delivered to the Registrar of Companies and received an Independent
Auditor's Report which was unqualified and did not contain any emphasis
of matter nor statements under s498(2) and (3) of the Companies Act
2006.
A copy of the full annual report and financial statements for the year
ended 31 March 2013 will be printed and posted to shareholders shortly.
Copies will also be available to the public at the registered office of
the Company at 10 Lower Grosvenor Place, London SW1W 0EN 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 Absolute Income VCT 2 Plc via Thomson Reuters ONE
HUG#1716219
1 Year Downing Abs.2 Chart |
1 Month Downing Abs.2 Chart |
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
