Half-yearly report
(Thomson Reuters ONE) - Downing Protected VCT V plcHalf Yearly Report for the six months ended 31 May 2009Performance summary 31 May 30 Nov 31 May 2009 2008 2008 pence pence penceNet asset value per Ordinary share 89.4 95.5 93.8Cumulative distributions per Ordinary share 6.0 3.5 3.5Total return per Ordinary share 95.4 99.0 97.3CHAIRMAN'S STATEMENTI present my report for the six months ended 31 May 2009. TheCompany has now completed its investing phase and, in line with itsobjectives, is now seeking to realise its investments in order toreturn funds to Shareholders.The value of the Company's investments has generally been resilientdespite the difficult economic climate. Most investments havemaintained their value, although two provisions have been made asdetailed below.Portfolio activityWith the Company's investment portfolio already built, portfolioactivity was very limited during the period.The Company's investment in Hoole Hall Country Club Limited underwenta reorganisation in December 2008, with the result that the Companynow holds an investment in Hoole Hall Country Club Holdings Limitedwith a cost of £1.625 million.There was one other significant investment in the period, being ashort-term loan stock investment in an existing investment, FutureFilms Production Services Limited, to provide funds for the companyto take advantage of a new project.ValuationsThe Board has once again undertaken a valuation review of the Companyinvestment portfolio. In most cases, progress has been satisfactoryor to plan and the valuations have been agreed at levels equal tooriginal cost. These valuations are generally supported by securitythat has been taken over assets owned by the investee companies.As I have mentioned on previous occasions, Vermont DevelopmentsLimited went into administration last year, leaving the Companyseeking to recover value from the charge it had taken over a plot ofdevelopment land in Salford. A recent indicative valuation of thedevelopment land suggests that the current market value may be verylow. Accordingly, the Directors have reduced the carrying value to£50,000. The reduction is equivalent to 2.1p per share. TheInvestment Manager considers this valuation to be excessively low andbelieves that ultimately the Company will realise its investment at ahigher value.Additionally, the Directors have made a provision against theinvestment in Richstone Contracting Limited. The Company has beenbuilding an apartment and hotel complex in south Devon, but recentlybuilding work was put on hold while the developer reviews theviability of the planned development in the current marketconditions. In view of the current uncertainty about the project,the Board has made a provision of £570,000 against the total cost of£2.5 million. This provision is equivalent to 2.6p per share.Although it is disappointing to make these two provisions, the Boardconsiders the overall performance of the portfolio to be satisfactorywhen viewed against the sharp change in the economy that has takenplace since the investments were first made.Net Asset Value and resultsAt 31 May 2009, the Net Asset Value per share ("NAV") of the Companystood at 89.4p, a decrease of 3.6p (3.8%) since the previous year endof 30 November 2008 (after adjusting for the 2.5p dividend paidduring the period).The loss on ordinary activities after taxation for the period was£820,000, comprising a revenue profit of £200,000 and a capital lossof £1,020,000. Revenue profits are significantly lower than inprevious periods as a result of the falls in interest rates.Share buybacksAs I have stated previously, the Company is now in the process ofseeking to exit from its investments to generate proceeds that can bedistributed to Shareholders. This process is expected to take sometime but will ultimately result in funds being returned toShareholders without their suffering the discounts that typicallyarise with share buybacks.For this reason, the Board is reluctant to use the Company's liquidfunds to undertake share buybacks. The Board does however note thatthere are occasionally forced sellers of shares and wishes to allowthem the opportunity to sell their holdings, albeit at a higherdiscount to NAV than might have been expected.The Board intends to continue with its policy of buying in any sharesthat become available at a price equivalent to a 25% discount to theCompany's most recently published NAV. The Board will regularlyreview this policy and make adjustments if it sees fit.Risk and uncertaintiesUnder the Disclosure and Transparency Directive, the Board isrequired in the Company's half year results, to report on principalrisks and uncertainties facing the Company over the remainder of thefinancial year.The Board has concluded that the key risks facing the Company overthe remainder of the financial period are as follows:* investment risk associated with investing in small and immature businesses; and* failure to maintain approval as a VCT.In order to make VCT-qualifying investments, the Company has toinvest in small businesses which are often immature. The InvestmentManager follows a rigorous process in vetting and careful structuringof new investments, including taking a charge over the assets of thebusiness wherever possible, and, after an investment is made, closelymonitoring the business. The Board is satisfied that this approachreduces the investment risk as far as reasonably possible.The Company's compliance with the VCT regulations is continuallymonitored by the Administration Manager, who reports regularly to theBoard on the current position. The Company also retainsPricewaterhouseCoopers to provide regular reviews and advice in thisarea. The Board considers that this approach reduces the risk of abreach of the VCT regulations to a minimal level.OutlookIt is clear that the economic climate creates a significantly greaterchallenge in achieving investment exits in a timely manner and atacceptable prices. During the investing stage it was expected thatbank finance would be available to help fund investment realisationswhich is generally not currently the case. As a result, it is likelythat some realisations will be achieved by different means thanoriginally anticipated and others will take longer.The timing and amount of future dividends is difficult to estimatebecause it is highly dependent on when investment exits areachieved. However, the Investment Manager anticipates that asignificant number of realisations will take place over the next sixmonths. Accordingly, the Board is targeting the payment of a dividendin excess of 50p per share before the end of the first quarter of2010. Shareholders should appreciate that this is not a forecast andthe Board is not giving any guarantee that this can be achieved, butthe Board believes it to be a realistic target.The Board remains confident that the objective of returning funds toShareholders within approximately five years of the close ofCompany's offer for subscription as set out in the prospectus isachievable.Hugh GillespieChairmanUNAUDITED SUMMARISED BALANCE SHEETas at 31 May 2009 31 May 2009 31 May 2008 30 Nov 2008 £'000 £'000 £'000Fixed assetsInvestments 19,094 19,690 19,887Current assetsDebtors 117 225 166Cash at bank and in hand 79 783 769 196 1,008 935Creditors: amounts falling (256) (522) (267)duewithin one yearNet assets less current 19,034 20,176 20,555liabilitiesCreditors: amounts fallingdue (21) (21) (21)after more than one yearNet assets 19,013 20,155 20,534Capital and reservesCalled up share capital 213 215 215Capital redemption reserve 4 2 2Special reserve 19,936 20,099 20,100Capital reserve - realised (60) (50) (60)Capital reserve - unrealised (1,424) (500) (404)Revenue reserve 344 389 681Equity shareholders' funds 19,013 20,155 20,534Net asset value per share 89.4p 93.8p 95.5pRECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS 31 May 31 May 30 Nov 2009 2008 2008 £'000 £'000 £'000Opening shareholders' funds 20,534 20,856 20,856Purchase of own shares (164) (5) (5)Dividends paid (538) (538) (538)Total recognised (loss)/gain (819) (158) 221for the periodClosing shareholders' funds 19,013 20,155 20,534UNAUDITED INCOME STATEMENTfor the six months ended 31 May 2009 Six months ended 31 May 2009 Revenue Capital Total £'000 £'000 £'000Income 468 - 468Losses on investments (1,020) (1,020) 468 (1,020) (552)Investment management fees (101) - (101)Other expenses (82) - (82)Return on ordinary activities before 285 (1,020) (735)taxationTaxation (85) - (85)Return attributable to equity 200 (1,020) (820)shareholdersReturn per share 0.9p (4.8p) (3.9p) Six months ended Year ended 31 May 2008 30 November 2008 Revenue Capital Total Total £'000 £'000 £'000 £'000Income 638 - 638 1,235Losses on investments - (469) (469) (383) 638 (469) 169 852Investment management fees (103) - (103) (207)Other expenses (80) - (80) (161)Return on ordinary activities 455 (469) (14) 484before taxationTaxation (144) - (144) (263)Return attributable to equity 311 (469) (158) 221shareholdersReturn per share 1.4p (2.1p) (0.7p) (1.0p)A Statement of Total Recognised Gains and Losses has not beenprepared as all gains and losses are recognised in the IncomeStatement as noted above.UNAUDITED CASH FLOW STATEMENTfor the six months ended 31 May 2009 31 May 31 May 30 Nov 2009 2008 2008 Note £'000 £'000 £'000Cash inflow from operatingactivities 1and returns on investments 372 645 1,126TaxationCorporation tax paid (132) (143) (527)Capital expenditurePurchase of investments (1,853) (4,900) (7,771)Proceeds from disposal of 1,625 5,246 8,006investmentsNet cash (outflow)/inflow fromcapital expenditure (228) 346 235Equity dividends paid (538) (538) (538)Net cash inflow/(outflow) before (526) 310 296financingFinancingPurchase of own shares (164) (5) (5)Net cash outflow from financing (164) (5) (5)Increase/(decrease) in cash 2 (690) 305 291Notes to the cash flow statement:1. Cash inflow from operatingactivities and returns oninvestmentsNet loss before taxation (185) (14) 484Losses on investments 450 469 686Decrease in other debtors 70 99 159Increase/(decrease) in other 37 91 (203)creditorsNet cash inflow from operating 372 645 1,126activities2. Analysis of net fundsBeginning of period 769 478 478Net cash inflow/(outflow) (690) 305 291End of period 79 783 769SUMMARY OF INVESTMENT PORTFOLIOas at 31 May 2009 Unrealised % of gain/(loss) portfolio Cost Valuation in the period by valueVenture Capital Investments £'000 £'000 £'000 £'000VCT QualifyingCadbury House Limited 3,000 3,000 - 15.6%Richstone ContractingLimited 2,542 1,972 (570) 10.3%West Tower Holdings Limited 1,750 1,750 - 9.1%Heyford Contracting (South)Ltd 1,650 1,650 - 8.6%Hoole Hall Country Club Ltd 1,625 1,625 - 8.5%The Really Fine Leisure 1,100 1,100 - 5.7%Heyford Contracting (North)Ltd 1,037 1,037 - 5.4%Hoole Hall Spa and LeisureClub Limited 1,000 1,000 - 5.2%Nu Nu plc 1,000 1,000 - 5.2%Future Films ProductionServices Limited 825 825 - 4.3%Liongold Contracting Limited 434 434 - 2.3%The Thames Club Limited 150 150 - 0.8% 16,113 15,543 (570) 81.0%Non VCT QualifyingHoole Hall Hotel Ltd 1,250 1,250 - 6.5%Aminghurst Ltd 992 992 - 5.2%The Thames Club Limited 350 350 - 1.8%Heyford Homes Ltd 300 300 - 1.6%Sanguine Hospitality Ltd 243 243 - 1.3%Future Films ProductionServices Limited 225 225 - 1.2%Coastal Partnerships Ltd 75 75 - 0.4%Chapel Street Hotel (2008)Limited 63 63 - 0.3%Vermont Developments Ltd 904 50 (450) 0.3%Chapel Street Hotel Limited 3 3 - 0% 4,405 3,551 (450) 18.6%Total 20,518 19,094 (1,020) 99.6%Cash at Bank 79 0.4%Total investments 19,173 100.0%SUMMARY OF INVESTMENT MOVEMENTSfor the six months ended 31 May 2009Additions £'000VCT Qualifying investmentsHoole Hall Country Club Spa and leisure club and owner 1,625Holdings Limited operatorNon-Qualifying investmentsFuture Films Production Film production and post-production 225Services Limited servicesChapel Street Hotel LLP Hotel development 3 1,853Disposals Cost Proceeds Profit/(loss) £'000 £'000 £'000VCT Qualifying investmentsHoole Hall Country Club Limited 1,625 1,625 - 1,625 1,625 -NOTES TO THE UNAUDITED FINANCIAL STATEMENTS1. The unaudited half yearly financial results cover the six monthsto 31 May 2009 and have been prepared in accordance with theaccounting policies set out in the statutory accounts for the yearended 30 November 2008 which were prepared under UK GenerallyAccepted Accounting Practice ("UK GAAP") and in accordance with theStatement of Recommended Practice "Financial Statements of InvestmentTrust Companies" revised December 2005 ("SORP").2. All revenue and capital items in the Income Statement derive fromcontinuing operations.3. The Company has only one class of business and derives its incomefrom investments made in shares, securities and bank deposits.4. The comparative figures were in respect of the six-month periodended 31 May 2008 and the year ended 30 November 2008 respectively.5. Return per share for the period has been calculated on 21,352,000shares, being the weighted average number of shares in issue duringthe period.6. Dividends paid 31 May 2009 31 May 30 Nov 2008 2008 Revenue Capital Total Total Total £'000 £'000 £'000 £'000 £'000Paid in period/year2008 Final 538 - 538 - -(2.5p paid 30 April 2009)2007 Final - - - 538 538(2.5p paid 25 April 2008) 538 - 538 538 5387. Reserves Capital Capital Special reserve Capital redemption reserve - reserve - Revenue reserve realised unrealised reserve Total £'000 £'000 £'000 £'000 £'000 £'000At 30 November 2 20,100 (60) (404) 681 20,3192008Gains/(losses) - - - (1,020) - (1,020)oninvestmentsDividends paid - - - - (538) (538)Share buybacks 2 (164) - - - (162)Retained - - - - 201 201revenueTransfer - - - - - -At 31 May 2009 4 19,936 (60) (1,424) 344 18,800The Special Reserve is available to the Company to enable thepurchase of its own shares in the market without affecting itsability to pay capital distributions. The Special Reserve andRevenue Reserve are both distributable reserves.8. The unaudited financial statements set out herein do notconstitute statutory accounts within the meaning of Section 240 ofthe Companies Act 1985 and have not been delivered to the Registrarof Companies.9. The Directors confirm that, to the best of their knowledge, thehalf-yearly financial statements have been prepared in accordancewith the "Statement: Half-Yearly Financial Reports" issued by the UKAccounting Standards Board and the half-yearly financial reportincludes a fair review of the information required by:DTR 4.2.7R of the Disclosure and Transparency Rules, being anindication of important events that have occurred during the firstsix months of the financial year and their impact on the condensedset of financial statements, and a description of the principal risksand uncertainties for the remaining six months of the year; andDTR 4.2.8R of the Disclosure and Transparency Rules, being relatedparty transactions that have taken place in the first six months ofthe current financial year and that have materially affected thefinancial position or performance of the entity during that period,and any changes in the related party transactions described in thelast annual report that could do so.10. Copies of the half yearly report will be sent to shareholdersshortly. Further copies can be obtained from the Company's RegisteredOffice or can be downloaded from www.downing.co.uk.---END OF MESSAGE---This announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.
Datum: 28.07.2009 - 12:46 Uhr
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