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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Downing Plan 5 | LSE:DPV5 | London | Ordinary Share | GB00B0S5PZ69 | ORD 1P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 6.00 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
TIDMDPV5 Downing Planned Exit VCT 5 plc Half Yearly Report for the six months ended 31 May 2011 PERFORMANCE SUMMARY 31 May 30 Nov 31 May 2011 2010 2010 pence pence pence Net asset value per share 34.0 34.5 38.3 Cumulative dividends per share 56.0 56.0 56.0 --------------------------- Total return per share * 90.0 90.5 94.3 * Net asset value per share plus dividend paid to date FORTHCOMING DIVIDEND The Company has declared the following dividend: Date payable Ex-div date Amount per share 26 August 2011 10 August 2011 18.0p CHAIRMAN'S STATEMENT I present my report for the six months ended 31 May 2011. Portfolio review As Shareholders will be aware, the Company is now working towards realising the remainder of its investment portfolio in order to return funds to Shareholders. During the period to 31 May 2011 there was limited investment activity, but three major realisations have occurred since the period end. The investments in West Tower Holdings Limited, Hoole Hall Country Club Limited and Hoole Hall Spa and Leisure Club Limited have each been disposed of at prices approximately equal to original cost and previous carrying value. Although these exits took much longer to achieve than had been planned, the fact that the Company was able to recover full value on investments in leisure assets originally made prior to the major financial turmoil of the late 2000's, is seen as a successful outcome. The investment in Chapel Street Hotel (2008) LLP was also realised in June, producing a small gain. The Company now has two major investments remaining: Coast Constructors Limited and Heyford Contracting (South) Limited. Coast Constructors Limited is building an apartment and hotel resort, known as Gara Rock, in South Devon on land which is owned by Aminghurst Limited. The project has undergone a number of changes from its original plan and has been significantly delayed as a result. However, the apartments are now complete and a full marketing effort is underway. In order to fund the completion of the apartments, the Company had to invest a further GBP636,000 in the project in January 2011. There is also an additional funding requirement for the completion of the hotel and, as a result, a further investment of approximately GBP500,000 is expected to be made by the Company shortly. The hotel is expected to commence operations in early 2012. Sales of the apartments are progressing, albeit at a slow rate. With the main show apartment recently opened, it is hoped that sales momentum will build over the summer months. A full exit from the investment will depend on the sale of all the apartments and a transaction involving the hotel, so timing is not clear but we hope to see significant progress before the end of the year. Heyford Contracting (South) Limited has been undertaking two contracts to build commercial office units: the North Gate site in Banbury, Oxfordshire and the Uppingham Gate site in Uppingham in the East Midlands. Both of the sites comprise seven units, of which two are unlet at North Gate and four are unlet at Uppingham Gate. With most of the building work complete, the focus has now shifted to marketing the remaining units. An exit from the investment is dependent on most of these remaining units being let or sold. Of the other smaller investments that the Company still holds, it is expected that the investment in Sanguine Hospitality Limited will be realised shortly at close to original cost and negotiations are ongoing in seeking an exit from Future Films Production Services Limited. The Board has reviewed the valuation of the remaining investments at the period end and made some adjustments to the previous carrying values. The valuation of Heyford Contracting (South) Limited has been reduced by GBP200,000 in view of the uncertainty regarding the exit from the investment. A further provision of GBP22,000 has been made against Coast Constructors Limited, based on the latest estimates of the final outcome of the project. A provision of GBP64,000 has also been made against the remaining investment in Future Films Limited, as a result of doubts about the collectability of a debt due from a third party. In total, valuations have been reduced by GBP286,000. Net Asset Value and results At 31 May 2011, the Net Asset Value per share ("NAV") of the Company stood at 34.0p, a decrease of 0.5p (1.5%) since the year end of 30 November 2010. Total return (NAV plus cumulative dividends paid to date) is now 90.0p. No provision has been made for any performance incentive as the relevant hurdles have not yet been met. Further details are given in note 8. The loss on ordinary activities after taxation for the period was GBP108,000, comprising a revenue gain of GBP178,000 and a capital loss of GBP286,000. Dividend As a result of the realisations mentioned above, the Company is now in a position to declare a further dividend. A dividend of 18p per share will be paid on 26 August 2011 to Shareholders on the register at 12 August 2011. This will bring total dividends paid to Shareholder since launch to 74.0p per share. Winding up plans In accordance with the Company's Articles of Association, a resolution was put to Shareholders at the AGM in May proposing that the Company discontinue as a Venture Capital Trust. The resolution was passed such that the Directors now need to put formal proposals for the liquidation, reorganisation or reconstruction of the Company to Shareholders by February 2012. In view of the small size of the Company once the dividend described above has been paid, the Board is proposing to go into members' voluntary liquidation shortly after its payment. This will involve the appointment of a liquidator who will oversee the exit from the remaining investments and the return of the further funds to Shareholders. Entering members' voluntary liquidation allows the VCT to benefit from a relaxation of certain VCT regulations which reduces running costs and avoids other difficulties that might be faced in realising the remaining portfolio. It is planned that the existing investment management team will continue in their role throughout the liquidation process. A circular with formal proposals for the appointment of the liquidator will be prepared and circulated to Shareholders in the near future. Share buybacks In view of the fact that the Company is now in the later stages of unwinding its portfolio, the Board wishes to have tight control over the Company's liquid funds and does not wish to expose the Company to any unpredictable cash outflows. The Company is therefore unlikely to undertake any further share buybacks and the Board recommends that Shareholders continue to hold their shares while the remaining value is returned to them by way of dividends and distributions. No share buybacks were made in the six months to 31 May 2011. Risk and uncertainties Under the Disclosure and Transparency Directive, the Board is required in the Company's half-yearly 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 facing the Company over the remainder of the financial period are as follows: (i) investment risk associated with investing in small and immature businesses; and (ii) failure to maintain approval as a VCT. In order to make VCT-qualifying investments, the Company has invested in small businesses which were mostly immature. The investments have been structured, where possible, to take a charge over the assets of the business. In addition, investments are closely monitored by the Investment Manager. The Board is satisfied that this approach reduces the investment risk as far as reasonably possible. The Company's compliance with the VCT regulations is continually monitored by the Administration Manager, who reports regularly to the Board on the current position. The Company also retains PricewaterhouseCoopers to provide regular reviews and advice in this area. The Board considers that this approach reduces the risk of a breach of the VCT regulations to a minimal level. The plans for the Company to take advantage of the VCT winding-up regulations by entering members' voluntary liquidation will also further reduce the chance of a possible breach. Going concern statement The Company is now required to make a statement about going concern within its half-yearly report. The Board considers that the Company has sufficient financial resources at the period end and has limited and predictable expenses and liabilities. As a result, the Directors believe that the Company is well placed to manage its business risks successfully. The Directors confirm that they are satisfied that the Company has adequate resources to continue in business for the foreseeable future. For this reason they believe that the Company continues to be a going concern and that it is appropriate to apply the going concern basis in preparing the financial statement. Although the Board has plans for the Company to enter members' voluntary liquidation in due course, the Directors do not believe this has any impact on the ongoing valuations of the investments as they will continue to be stated at fair value until they are realised. Outlook It has taken longer than expected for the Company to achieve its most recent realisations, primarily due to the continued difficulties in the banking and property sectors and the time and effort that has been needed to secure bank funding to allow exits from certain investee companies. The remaining investments, namely Coast Constructors Limited and Heyford Contracting (South) Limited, face different challenges before exits can be achieved. The timetable for the next significant distribution to Shareholders will be determined by the progress of sales of the apartments at Gara Rock and the sales or lettings of the commercial units at Uppingham and Banbury. The plans to enter members' voluntary liquidation will produce cost savings for Shareholders while these final realisations are pursued and should not have any significant negative impact on Shareholders. Formal proposals will be sent out soon seeking Shareholder approval for these plans. Hugh Gillespie Chairman UNAUDITED INCOME STATEMENT for the six months ended 31 May 2011 Six months ended 31 May 2011 Revenue Capital Total GBP'000 GBP'000 GBP'000 Income 315 - 315 Gain/(losses) on investments - (286) (286) ----------------------- 315 (286) 29 Investment management fees (30) - (30) Other expenses (60) - (60) ----------------------- Return/(loss) on ordinary activities before taxation 225 (286) (61) Taxation (47) - (47) ----------------------- Return/(loss) attributable to equity shareholders 178 (286) (108) Return/(loss) per share 0.9p (1.4p) (0.5p) Six months ended Year ended 30 31 May 2010 November 2010 Revenue Capital Total Total GBP'000 GBP'000 GBP'000 GBP'000 Income 131 - 131 203 Gain/(losses) on investments - 186 186 (590) ----------------------- ----------- 131 186 317 (387) Investment management fees (61) - (61) (100) Other expenses (72) - (72) (134) ----------------------- ----------- Return/(loss) on ordinary activities before (2) 186 184 (621) taxation Taxation (2) - (2) - ----------------------- ----------- Return/(loss) attributable to equity (4) 186 182 (621) shareholders Return/(loss) per share (0.1p) 0.9p 0.8p (3.0p) 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. UNAUDITED SUMMARISED BALANCE SHEET as at 31 May 2011 31 May 31 May 30 Nov 2011 2010 2010 GBP'000 GBP'000 GBP'000 Fixed assets Investments 6,362 8,071 6,026 Current assets Debtors 367 88 133 Cash at bank and in hand 534 37 1,194 ------------------------ 901 125 1,327 Creditors: amounts falling due within one year (99) (121) (81) ------------------------ Net assets less current liabilities 802 8,075 7,272 Creditors: amounts falling due after more than one year (21) (21) (21) ------------------------ Net assets 7,143 8,054 7,251 Capital and reserves Called up share capital 210 210 210 Capital redemption reserve 7 7 7 Special reserve 9,785 9,785 9,785 Capital reserve - realised 2 2 2 Revaluation reserve (2,999) (1,937) (2,713) Revenue reserve 138 (13) (40) ------------------------ Equity shareholders' funds 7,143 8,054 7,251 Net asset value per share 34.0p 38.3p 34.5p RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS 31 May 31 May 30 Nov 2011 2010 2010 GBP'000 GBP'000 GBP'000 Opening shareholders' funds 7,251 18,384 18,384 Purchase of own shares - - - Dividends paid - (10,512) (10,512) Total recognised (loss)/gain for the period (108) 182 (621) ------------------------------- Closing shareholders' funds 7,143 8,054 7,251 UNAUDITED CASH FLOW STATEMENT for the six months ended 31 May 2011 31 May 2011 31 May 2010 30 Nov 2010 Note GBP'000 GBP'000 GBP'000 Cash inflow from operating activities and returns on 1 investments (38) 117 (9) ------------- ------------- ------------- Taxation Corporation tax paid - (68) (54) ------------- ------------- ------------- Capital expenditure Purchase of investments (636) (170) (169) Proceeds from disposal of 14 1,677 2,945 investments ------------- ------------- ------------- Net cash (outflow)/inflow from capital expenditure (622) 1,507 2,776 ------------- ------------- ------------- Equity dividends paid - (10,512) (10,512) ------------- ------------- ------------- Net cash outflow before financing (660) (8,956) (7,799) Financing Shares repurchased - - - ------------- ------------- ------------- Net cash outflow from financing - - - ------------- ------------- ------------- Decrease in cash 2 (660) (8,956) (7,799) Notes to the cash flow statement: 1 Cash inflow from operating activities and returns on investments Net (loss)/gain before taxation (61) 184 (621) Losses/(gains) on investments 286 (186) 590 (Increase)/decrease in other debtors (234) 117 72 (Decrease)/increase in other creditors (29) 2 (22) Decrease in amount due to subsidiary undertaking - - (28) ------- --------- -------- Net cash (outflow)/inflow from operating activities (38) 117 (9) 2 Analysis of net funds Beginning of period 1,194 8,993 8,993 Net cash outflow (660) (8,956) (7,799) ------- --------- -------- End of period 534 37 1,194 SUMMARY OF INVESTMENT PORTFOLIO as at 31 May 2011 Unrealised % of gain/(loss) portfolio Cost Valuation in the period by value Venture Capital Investments GBP'000 GBP'000 GBP'000 GBP'000 VCT qualifying West Tower Holdings Limited 1,750 1,750 - 25.4% Coast Constructors Limited 1,755 1,257 (22) 18.2% Hoole Hall Spa and Leisure Club Limited 1,000 1,000 - 14.5% Heyford Contracting (South) Limited 1,500 875 (175) 12.7% Hoole Hall Country Club Holdings Limited 875 875 - 12.7% Future Films Production Services Limited 128 64 (64) 0.9% ---------------------------------------- 7,008 5,821 (261) 84.4% ---------------------------------------- Non-VCT qualifying Sanguine Hospitality Limited 243 237 - 3.5% Chapel Street Hotel (2008) LLP 63 126 - 1.8% Heyford Contracting (South) Limited 150 125 (25) 1.8% Vermont Developments Limited 902 50 - 0.7% Chapel Street Hotel Limited 3 3 - 0.0% Aminghurst Limited 992 - - 0.0% ---------------------------------------- 2,353 541 (25) 7.8% ---------------------------------------- Total 9,361 6,362 (286) 92.2% Cash at bank 534 7.8% ----------- ---------- Total investments 6,896 100.0% SUMMARY OF INVESTMENT MOVEMENTS for the six months ended 31 May 2011 Addition GBP'000 VCT qualifying investment Coast Constructors Limited 636 Disposal Profit/ Cost Proceeds (loss) GBP'000 GBP'000 GBP'000 VCT qualifying investment Future Films Production Services Limited 14 14 - NOTES TO THE UNAUDITED FINANCIAL STATEMENTS 1. The unaudited half yearly financial results cover the six months to 31 May 2011 and have been prepared in accordance with the accounting policies set out in the statutory accounts for the year ended 30 November 2010, which were prepared under UK Generally Accepted Accounting Practice ("UK GAAP") and in accordance with the Statement of Recommended Practice "Financial Statements of Investment Trust Companies and Venture Capital Trusts" revised January 2009 ("SORP"). 2. All revenue and capital items in the Income Statement derive from continuing operations. 3. The Company has only one class of business and derives its income from investments made in shares, securities and bank deposits. 4. The comparative figures were in respect of the six-month period ended 31 May 2010 and the year ended 30 November 2010 respectively. 5. Net Asset Value per share has been calculated on 21,024,816 shares, being the number of shares in issue at the period end. 6. Return per share for the period has been calculated on 21,024,816 shares, being the weighted average number of shares in issue during the period. 7. Dividends paid 31 May 2010 30 Nov 2010 31 May 2011 Revenue Capital Total Total Total GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Paid in period/year 2010 Interim - - - 8,410 8,410 (40.0p paid 1 March 2010) 2009 Final - - - 2,102 2,102 (10.0p paid 6 January 2010) --------- --------- ------- ------------- ------------ - - - 10,512 10,512 8. Reserves Capital Capital redemption Special reserve Revaluation Revenue reserve reserve - realised reserve reserve Total GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 At 1 December 7 9,785 2 (2,713) (40) 7,041 2010 Losses on - - - (286) - (286) investments Dividends paid - - - - - - Share buybacks - - - - - - Retained - - - - 178 178 revenue Transfer - - - - - - ------------------------------------------------------------------ At 31 May 2011 7 9,785 2 (2,999) 138 6,933 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 capital distributions. The Special Reserve and Revenue Reserve are both distributable reserves. 9. Contingent liability re. performance incentive fees The Company may be liable to pay performance incentive fees by way of additional interest on the loan notes issued to the Management Team and Directors. The amount of additional interest, if any, is dependent on the level of distributions made to Shareholders before 5 April 2012. The maximum amount payable under these arrangements is summarised as follows: (i) 10% of the net proceeds paid to Shareholders before 5 April 2010; (ii) 5% of the net proceeds paid to Shareholders between 6 April 2010 and 5 April 2011; and (iii) 2.5% of the net proceeds paid to Shareholders between 6 April 2011 and 5 April 2012. No performance fee is payable unless Shareholders (who invested at the launch of the Company) have received proceeds of at least 80p per share and achieved a compound return on their investment in excess of 8% per annum. If the Company's assets and liabilities were realised at the current carrying values and the compound return and other targets met, the maximum level of performance fees payable would be approximately GBP720,000 (equivalent to 3.4p per share). In view of the significant uncertainties as to what extent the targets will actually be met, the Directors are unable to make a reliable estimate of the performance fees (if any) that will ultimately be payable. Other than as described above, at 31 May 2011, the Company had no contingencies, guarantees or financial commitments. 10. 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. 11. The Directors confirm that, to the best of their knowledge, the half-yearly financial statements have 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 year 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 year; and b. DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year 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. 12. Copies of the half yearly report will be sent to Shareholders shortly. Further copies can be obtained from the Company's registered office or can be downloaded 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 Planned Exit VCT 5 PLC via Thomson Reuters ONE [HUG#1533425]
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