Final Results - Amendment
DOWNING PROTECTED VCT I PLC
Final Results for the year ended 30 June 2008 - Amendment
The announcement released by the Company at 15:23 on 30 October 2008
entitled "Final Results" contained an error within the Chairman's
Statement in respect of the value for the Company's Total Return.
The full corrected text of the announcement is as follows:
FINANCIAL HIGHLIGHTS
Year Year Year
(All "pence per share") Ended Ended Ended
30 Jun 08 30 Jun 07 30 Jun 06
Net asset value per share 106.40 111.70 108.30
Total distributions paid since 50.90 44.65 41.15
inception
Total return 157.30 156.35 149.45
CHAIRMAN'S STATEMENT
The year to 30 June 2008 has seen your Company start to feel some of
the effects of the sharp deterioration in the economic climate.
Despite this, it is satisfying to report that another profitable exit
from one of its original investments was achieved.
Net Asset Value
At 30 June 2008, the Company's Net Asset Value per share ("NAV")
stood at 106.4p per share. This represents an increase of 0.9p per
share against the NAV at 30 June 2007 (after adjusting for the
dividends paid during the year), equivalent to a rise of 0.8%. The
Company's Total Return (NAV plus cumulative dividends paid to date)
now stands at 157.3p per share compared to an original investment,
net of income tax relief, at the Company's outset, of 80p per share.
Investments and Investment Management
In March 2008, the Company disposed of its investment in Downing
(Meadows) Limited, which owned a residential care home for the
elderly. The investment, which had an original cost of �580,000, was
sold for �1,075,000 producing a realised gain of �495,000.
The Company also made two new investments, one small follow on
investment and exited one other investment when loan stock was
redeemed.
Details of the investment management activities over the year are set
out in the Investment Manager's Report.
At the year end, the Board and Investment Manager undertook a review
of the valuations of the investments. In the case of the investments
in the care home sector, the valuations have been based on an
estimated net asset basis using either Directors' valuations or
recent third party valuation of the care homes.
In the case of other investments which have been held for more than
one year, an estimated net asset basis has been used. Investments
held for less than one year have been valued at cost.
In most cases, trading performance of the underlying businesses has
remained stable or improved over the year. The Board has increased
the valuations of two investments, reduced the value of one and made
a full provision against one further investment.
The full provision was required against the investment in Honeycombe
Pubs VCT Limited. Following a period of poor trading under a
management team (which has subsequently been removed) and in view of
the current state of the sector, there is now significant uncertainty
about the valuation of the pub owned by the company. The Directors
therefore decided to make a full provision of �475,000.
Full details of the portfolio are included in the Review of
Investments.
Results and Dividend
The return on ordinary activities after taxation was �57,000 (2007:
�572,000) comprising revenue return of �334,000 (2007:�324,000) and a
capital loss of �277,000 (2007: gain �248,000).
Your Board is proposing to pay a final dividend of 2.5p per Share,
which, subject to shareholder approval, will be paid on 5 December
2008 to Shareholders on the register at 7 November 2008. This will
result in dividends for the year totalling 5.25p per Share
(comprising of 4.0p revenue and 1.25p capital) (2007: 5.0p per
share).
The payment of this dividend will bring total distributions to
Shareholders since the Company's launch to 53.4p per share.
Articles of Association
At the forthcoming AGM, the Board will seek Shareholder approval to
update the Company's Articles of Association. Resolution 6, which is
a special resolution, proposes the adoption of new Articles of
Association which incorporate a number of changes which are required
as a result of the implementation of the Companies Act 2006. An
explanation of the proposed changes is provided within the Report of
the Directors.
The Board recommends Shareholders vote for resolution 6 as, in the
Board's opinion, the proposed changes are in the best interests of
Shareholders.
Management Incentive Fee Arrangements
As Shareholders will be aware from my letter of 9th May 2008, the
Company has adopted a slightly revised allocation of the Management
Incentive Fees with effect from 1 July 2008. Full details of these
are provided in the Annual Report.
Share buybacks
Your Board continues to monitor the market in the Company's shares
and, in order to ensure liquidity for Shareholders, the Company has a
policy of purchasing its own shares when any become available when it
is not restricted from doing so. A special resolution to allow the
Company to continue with this policy is proposed for the forthcoming
AGM.
During the year the Board used this power to repurchase 253,910
shares for an average consideration of 98.8p per share. Shareholders
should be aware that those who deferred a capital gain by investing
in this VCT will crystallise the gain when or if they sell their
shares. Therefore any Shareholders considering selling their holding
are recommended to take advice from their financial adviser prior to
making any investment decision.
Annual General Meeting
The twelfth AGM of the Company will be held at Kings Scholars House,
230 Vauxhall Bridge Road, London SW1V 1AU at 11a.m. on 3 December
2008. Two items of special business will be proposed in respect of
share buybacks and adoption of revised articles of association.
Outlook
With most commentators having very pessimistic expectations for the
economy for the coming year, it is likely to be a relatively quiet
period in terms of investment activity for your Company, with the
Manager's focus being on close monitoring of the existing
investments.
In general, the portfolio remains in satisfactory condition. Many of
the investee companies are either developing their businesses or
progressing projects which should be able to deliver value, however
it is unlikely that the VCT will see the full benefits until economic
conditions start to improve.
Chris Kay
Chairman
INVESTMENT MANAGER'S REPORT
Introduction
The year to 30 June 2008 has seen a limited amount of investment
activity but, in general it has been a period where portfolio
companies have made progress, despite the effects of the economic
slowdown.
Disposals
The Company exited from another of its original nursing home
investments and also had a loan stock only investment redeemed which
provided additional yield while it was held. A summary of investment
disposals achieved during the year is as summarised as follows:
Gain
against
original Gain in
Date Cost Proceeds cost year
�'000 �'000 �'000 �'000
Downing (Meadows) Limited Mar 08 580 1,075 495 70
Cadbury House Hotel and
Country Club Limited Aug 07 1,000 1,000 - -
1,580 2,075 495 70
The investment in Downing (Meadows) Limited was originally made in
1999. The company owned a nursing home for the elderly near Milton
Keynes and was sold in March 2008, at what may be near the top of the
market for that sector. The investment produced a satisfactory yield
throughout the period of ownership and generated a realised gain of
�495,000 on its sale.
The investment in Cadbury House Hotel and Country Club Limited was a
loan stock only investment and was redeemed at par in August 2007.
New Investments
With the proceeds generated by the disposals mentioned above, the
Company was able to make two new investments and one small follow-on
investment as follows:
�'000
Kings Gap Group Limited Aug 07 1,000
Bond Contracting Limited Jan 08 200
Congress House Limited Aug 07 25
1,225
Kings Gaps Group Limited has acquired a hotel near Liverpool. The
hotel has been trading below its potential and will benefit from the
new management which has been installed. The hotel can be developed
to enhance its value and there is also an opportunity to consider
some residential development on the site.
Bond Contracting Limited owns a site in Winchester for which plans
are being progressed for a new hotel.
Both new investments have reasonable upside potential and also have
substantial assets which underpin your Company's investments.
A small additional investment of �25,000 was made in Congress House
Limited, an owner and operator of a care home for young adults with
special needs, to provide additional working capital.
Existing investments
In general, the portfolio investments have strengthened over the
year. The group of special needs care homes (Congress House Limited,
Downing (Pirbright Road) Limited and Bowman Care Homes Limited) have
all improved occupancy, made progress with staffing costs and, in one
case, been able to bring fee levels closer to budget. However,
Kimbolton Lodge Limited, which owns a care home for the elderly, has
struggled to maintain occupancy levels, which has justified a small
reduction in valuation.
The contracting company and developer investments (Downing Office
Villages Limited, Heyford Homes (Thornton Hall) Limited, and Heyford
Homes (VCT) Limited) have made satisfactory progress on the various
projects that they are undertaking.
The most significant development has been the investment in
Honeycombe Pubs VCT Limited. The company owns a pub in Burnley which
was managed by an AIM-quoted pub operator, Cains Beer Company
Limited. It became clear from increasing bad trading results that
the pub was being poorly managed and in May 2008, the manager was
removed. Some irregularities have come to light relating to the
period of Cains' management, and the company took legal action
against Cains to recover missing funds and further amounts owed. In
August, Cains was placed into administration. This is likely to
severely hinder the process of trying to recover the missing assets.
Since new management has been appointed, trading at the pub has and
continues to improve. However, in view of the above developments, we
have recommended a full provision against the cost of the investment
of �475,000.
Investment Income
The portfolio continues to generate a satisfactory yield. Investment
income for the year ended 30 June 2008 was �662,000 compared to
�596,000 in the previous year. Once again, this allows the Company
to pay a reasonable revenue dividend to Shareholders.
Conclusion
The Company remains effectively fully invested and so investment
activities will be heavily influenced by whether further profitable
exits from existing investments can be achieved. The current
economic conditions make it less likely that further realisations
will occur in the next year. The portfolio is, however, reasonably
well diversified and includes many business that should be able
continue to develop even in a challenging climate.
Downing Protected Managers I Limited
REVIEW OF INVESTMENTS
Portfolio of investments
The following investments, all of which are incorporated in England
and Wales, were held at 30 June 2008:
Valuation
movement % of
Cost Valuation in year portfolio
�'000 �'000 �'000 by value
Venture Capital
Investments
Bowman Care Homes Limited 1,000 1,250 250 14.3%
Gatewales Limited 1,000 1,000 - 11.5%
Heyford Homes VCT Limited 1,000 1,000 - 11.5%
Kings Gap Group Limited 1,000 1,000 - 11.5%
Downing (Pirbright Road) 700 950 50 10.9%
Limited
Downing Office Villages 850 850 - 9.7%
Contractor Limited
Kimbolton Lodge Limited 605 800 (100) 9.1%
Congress House Limited 375 375 - 4.3%
Heyford Homes (Thornton 372 372 - 4.3%
Hall) Limited
Bond Contracting Limited 200 200 - 2.3%
Sanguine Hospitality 6 6 - 0.1%
Limited
Dovestone (The Gables) 50 - - -
Limited
Honeycombe Pubs VCT 475 - (475) -
Limited
7,633 7,803 (275) 89.5%
Cash at bank and in hand 916 10.5%
Total investments 8,719 100.0%
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the annual 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 Services 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). The financial statements are required
to 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 estimates that are reasonable and prudent;
* state whether applicable accounting standards have been followed,
subject to any material departures disclosed and explained in the
financial statements; and
* prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the company will
continue in business.
The Directors confirm that they have complied with the above
requirements in preparing the financial statements. They also confirm
that the annual report includes a fair review of the development and
performance of the business together with a description of the
principal risks and uncertainties faced by the Company.
The Directors are responsible for ensuring that the Company keeps
proper accounting records that disclose with reasonable accuracy at
any time the financial position of the company and enable them to
ensure that the financial statements comply with the Companies Act
1985. 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 30 June 2008
Year ended 30 June 2008 Year ended 30 June 2007
Note Revenue Capital Total Revenue Capital Total
�'000 �'000 �'000 �'000 �'000 �'000
Income 2 662 - 662 596 - 596
(Losses)/gains 10 - (205) (205) - 327 327
on investments
662 (205) 457 596 327 923
Investment 3 (23) (69) (92) (23) (70) (93)
management
fees
Management 4 (27) (34) (61) (14) (43) (57)
incentive fees
Other expenses 5 (160) - (160) (135) - (135)
Return on
ordinary 452 (308) 144 424 214 638
activities
before tax
Tax on 7 (118) 31 (87) (100) 34 (66)
ordinary
activities
Return
attributable 334 (277) 57 324 248 572
to equity
Shareholders
Return per 9 4.0p (3.3p) 0.7p 3.8p 2.9p 6.7p
Share
All Revenue and Capital items in the above statement derive from
continuing operations.
A Statement of Total Recognised Gains and Losses has not been
prepared as all gains/losses are recognised in the Income Statement
as noted above.
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
Year ended Year ended
30 June 2008 30 June 2007
�'000 �'000
Opening Shareholders' funds 9,415 9,314
Purchase of own shares (253) (171)
Total recognised gains for the year 57 572
Distributions paid (523) (300)
Closing Shareholders' funds 8,696 9,415
BALANCE SHEET
as at 30 June 2008
2008 2007
�'000 �'000 �'000 �'000
Fixed asset
Investments 7,803 8,858
Current assets
Debtors 170 122
Cash at bank and in hand 916 691
1,086 813
Creditors: amounts falling due within one (193) (256)
year
Net current assets 893 557
Net assets 8,696 9,415
Capital and reserves
Called up share capital 4,086 4,213
Capital redemption reserve 820 693
Special reserve 2,584 2,875
Capital reserve - realised 764 406
Capital reserve - unrealised 170 870
Revenue reserve 272 358
Total shareholders' funds 8,696 9,415
Net asset value per share 106.4p 111.7p
CASH FLOW STATEMENT
for the year ended 30 June 2008
Year ended Year ended
30 June 30 June
2008 2007
�'000 �'000
Net cash inflow from operating activities 297 313
Taxation
Corporation tax (paid)/received (99) 29
Capital expenditure
Purchase of investments (1,225) (3,247)
Sale of investments 2,075 2,800
Net cash inflow/(outflow) from capital 850 (447)
expenditure
Dividends paid (523) (300)
Net cash inflow/(outflow) before financing 525 (405)
Financing
Repurchase of shares (300) (123)
Net cash outflow from financing (300) (123)
Increase/(decrease) in cash 225 (528)
NOTES
1. Basis of Accounting/Accounting policies
The Company has prepared the financial information under UK Generally
Accepted Accounting Practice ("UK GAAP") and in accordance with the
Statement of Recommended Practice "Financial Statements of Investment
Trust Companies" revised December 2005 ("SORP") and has used the
historical cost convention except for the revaluation of certain
financial instruments.
In order to better reflect the activities of a Venture Capital Trust
and in accordance with guidance issued by the Association of
Investment Companies ("AIC"), 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 Section
274 Income Tax Act 2007.
2. Return per share
Revenue return per share is based on the net revenue after taxation
of �334,000 (2007: �324,000) in respect of 8,336,239 (2007:
8,552,866) shares, being the weighted average number of shares in
issue during the year.
Capital return per share is based on the net capital loss (which
includes unrealised losses) for the financial year of �277,000 (2007:
profit �248,000) in respect of 8,336,239 (2007: 8,552,866) shares,
being the weighted average number of shares in issue during the year.
As the Company has not issued any convertible securities or share
options, there is no dilutive effect on return per share. The return
per share disclosed therefore represents both basic and diluted
return per share.
3. Net asset value per Ordinary Share
2008 2007
Net asset Net asset
value per Net asset value per Net asset
share value share value
pence �'000 pence �'000
Ordinary shares 106.4 8,696 111.7 9,415
Net asset value per Ordinary Share is based on net assets at the year
end, and on 8,171,773 (2007: 8,425,683) Ordinary Shares, being the
number of Ordinary Shares in issue at the year end.
4. Principal financial risks
As a VCT, the majority of the Company's assets are represented by
financial instruments which are held as part of the investment
portfolio. In order to ensure continued compliance with relevant VCT
regulation and to be in a position to deliver the long term capital
growth which is part of the Company's investment objective, the Board
is very much aware of the need to manage and mitigate the risks
associated with the financial instruments held within the investment
portfolio.
The management of these risks start
---END OF MESSAGE---
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solely responsible for the content of this announcement.
Downing Protected Vct I (LSE:DPV1)
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