Half-yearly report
(Thomson Reuters ONE) - Downing Protected VCT VII plcHalf Yearly Report for the six months ended 31 July 2009Performance summary 31 Jul 31 Jan 31 Jul 2009 2009 2008 pence pence penceNet asset value per Ordinary Share 87.10 92.00 94.40Net asset value per 'A' Share 0.10 0.10 0.10Cumulative distributions per Share 3.75 1.75 1.75Total return per Ordinary and 'A' Share 90.95 93.85 96.25CHAIRMAN'S STATEMENTI am pleased to update Shareholders on the progress of your Companyover the six months ended 31 July 2009.Venture capital investmentsAs the Company has now essentially achieved the VCT qualificationtarget of having 70% of its funds in qualifying investments,portfolio activity has been reasonably limited over the period.One follow-on qualifying investment of £150,000 was made into WestTower Holdings Limited to provide additional funding for the Companyto complete the planned refurbishment of its pub/restaurant andwedding venues.There were two part disposals during the period in the form of loanstock redemptions at par of £285,000 by Richstone Contracting Limitedand £17,000 from JEB Leisure Limited.The Company also made a small non-qualifying investment of £188,000in Downing Acquisitions 1 Limited. This company holds an investmentin a children's nurseries group and provides a reasonable yield witha very low level of risk.The Board has undertaken a review of the investment valuations at theperiod end and made some adjustments.The Thames Club Limited owns a health club which is in the process ofbeing refurbished to a higher standard. This is progressing to planand prospects appear good. However, an independent valuation,undertaken for the bank, has suggested that the value of the club hasfallen since it was acquired in July 2008. Your Directors aresatisfied that the investment is developing to plan, but, in view ofthe valuation, have made a provision of £150,000 against theinvestment's original cost of £1,000,000.Richstone Contracting Limited has been building an apartment andhotel complex in south Devon, but recently building work was put onhold while the developer reviews the viability of the planneddevelopment in the current market conditions. In view of the currentuncertainty about the project, the Board has made a provision of£90,000 against the original cost of £407,000. Richstone has nowrepaid the loan stock element of the investment.Shareholders will be aware from my previous reports that one of theCompany's investments, Vermont Developments Limited, went intoadministration last year. The Company is now seeking to recovervalue from the charge it had taken over a plot of development land inSalford. A recent indicative valuation of the development landsuggests that the current market value may be very low. Accordingly,the Directors have reduced the carrying value by a further £75,000 to£25,000. The Investment Manager considers this valuation to beexcessively low and believes that ultimately the Company should beable to realise its investment at a higher value.Of the other investments, all are progressing more or less to planand the Board is satisfied that the previous carrying values remainfair.The three valuation adjustments described above total £315,000 whichis equivalent to 3.5p per Ordinary Share. At 31 July 2009, theCompany's portfolio comprised 21 investments with a total value of£7.5 million.Net Asset Value and resultsAt 31 July 2009, the Net Asset Value ("NAV") per Ordinary Share stoodat 87.2p and the NAV per 'A' Share at 0.1p, giving a combined totalof 87.3p. This is a decrease of 2.9p per share (3.1%) since the yearend of 31 January 2009 (after adjusting for the 2.0p dividend paidduring the period).The loss on ordinary activities after taxation for the period as setout in the Income Statement was £258,000, comprising a revenue profitof £57,000 and a capital loss of £315,000.Share buybacksThe Company operates a policy, subject to certain restrictions, ofbuying any shares that become available in the market. At the currenttime, the Board has agreed to undertake any share buybacks atapproximately a 10% discount to the most recently announced NAV. TheBoard reviews this discount level regularly and will make adjustmentsif they feel it is appropriate.No shares buybacks were undertaken in the period.Risks and uncertaintiesThe Board has reviewed the principal risks and uncertainties facingthe Company over the remainder of the financial period and concludedthat the key risks are:(i) investment risk associated with investing in small and immaturebusinesses; and(ii) failure to maintain approval as a VCT.In both cases the Board is satisfied with the Company's approach tothese risks. The strategy of, where possible, taking charges overassets to secure its investments helps to limit any potential losseswhich could arise from the failure of an investee business.The Company continually monitors its compliance with the VCTregulations and retains PricewaterhouseCoopers to provide regularreviews and advice in this area. The Board considers that thisapproach reduces the risk of a breach of the VCT regulations to aminimal level.OutlookThe process of building the Company's investment portfolio has takenplace over a period where economic conditions have rapidlydeteriorated. Naturally, this has had some impact on the portfolio.The provisions made against a small number of investments havegenerally arisen as a direct result of the economic decline. TheCompany's objective is to seek to start returning funds toShareholders after June 2012 so there is some time before investmentrealisations will be sought. The Board and Manager believe that theportfolio can ultimately deliver reasonable returns.Hugh GillespieChairman30 September 2009UNAUDITED SUMMARISED BALANCE SHEETas at 31 July 2009 31 Jul 2009 31 Jul 2008 31 Jan 2009 £'000 £'000 £'000Fixed assetsInvestments 7,455 8,411 7,734Net current assets 485 193 646Net assets 7,940 8,604 8,380Capital and reservesCalled up share capital 23 23 23Deferred shares 3 3 3Share premium - 8,580 -Special reserve 8,576 - 8,576Revenue reserve 155 159 280Investment holding losses (817) (161) (502)Equity shareholders' funds 7,940 8,604 8,380Net asset value per Ordinary 87.1p 94.4p 92.0pShareNet asset value per 'A' Share 0.1p 0.1p 0.1pRECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDSfor the six months ended 31 July 2009 31 Jul 2009 31 Jul 2008 31 Jan 2009 £'000 £'000 £'000Opening Shareholders' funds 8,380 8,783 8,783Issue of shares - - -Share issue costs - - -Total recognised (losses)/gains for (258) (20) (244)the periodDistributions paid in the (182) (159) (159)periodClosing Shareholders' funds 7,940 8,604 8,380UNAUDITED INCOME STATEMENTfor the six months ended 31 July 2009 Six months ended 31 Jul 2009 Revenue Capital Total £'000 £'000 £'000Income 207 - 207Losses on investments - (315) (315) 207 (315) (108)Investment management fees (56) - (56)Other expenses (73) - (73)Return/(loss) on ordinary activities 78 (315) (237)before taxationTaxation (21) - (21)Return/(loss) attributable to equity 57 (315) (258)ShareholdersReturn/(loss) per Ordinary Share 0.6p (3.4p) (2.8p)Return per 'A' Share - - - Six months ended Year ended 31 Jul 2008 31 Jan 2009 Revenue Capital Total Total £'000 £'000 £'000 £'000Income 317 - 317 611Losses on investments - (161) (161) (506) 317 (161) 156 105Investment management fees (59) - (59) (118)Other expenses (61) - (61) (128)Return/(loss) on ordinary 197 (161) 36 (141)activities before taxationTaxation (56) - (56) (103)Return/(loss) attributable to 141 (161) (20) (244)equity ShareholdersReturn/(loss) per Ordinary 1.5p (1.7p) (0.2p) 2.7pShareReturn per 'A' Share - - - -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 July 2009 31 Jul 31 Jul 31 Jan 2009 2008 2009 Note £'000 £'000 £'000Cash inflow from operating activitiesand returns on investments 1 164 24 302TaxationCorporation tax paid - - (73)Capital expenditurePurchase of investments (681) (2,850) (5,160)Proceeds from sale of investments 642 592 3,234Net cash outflow from capital (39) (2,258) (1,926)expenditureEquity dividends paid (182) (159) (159)Net cash outflow before financing (57) (2,393) (1,856)FinancingNet cash inflow from financing - - -(Decrease)/increase in cash 2 (57) (2,393) (1,856)Notes to the cash flow statement:1 Cash inflow from operatingactivities and returns on investmentsNet revenue before taxation 78 197 365Increase in other debtors 101 (156) (59)(Decrease)/increase in other (15) (17) (4)creditorsNet cash inflow from operating 164 24 302activities2 Analysis of net fundsBeginning of period 623 2,479 2,479Net cash (outflow)/inflow (57) (2,393) (1,856)End of period 566 86 623SUMMARY OF INVESTMENT PORTFOLIOas at 31 July 2009 % of Unrealised portfolio Cost Valuation gain/(loss) by value £'000 £'000 £'000 £'000VCT qualifyingCadbury House Limited 1,000 1,000 - 12.5%West Tower Holdings Limited 1,150 1,000 (150) 12.5%The Thames Club Limited 1,000 850 (150) 10.6%Future Films ProductionServices Limited 825 825 - 10.3%Hoole Hall Country ClubHoldings Limited 750 750 - 9.4%Crossco (1135) Limited (t/aKingsclere Nurseries) 665 665 - 8.3%Liongold Contracting Limited 434 434 - 5.4%Richstone Contracting Limited 122 32 (90) 0.4% 5,946 5,556 (390) 69.4%Non-VCT qualifyingKings Gap Group Limited 400 400 - 5.0%JEB Leisure Limited 296 296 - 3.7%Sanguine Hospitality Limited 250 250 - 3.1%Future Films ProductionServices Limited 225 225 - 2.8%Aminghurst Limited 208 208 - 2.6%Downing Acquisitions 1 Limited 188 188 - 2.3%Cannock Developments (FieldEnd) LLP 125 125 - 1.6%Coastal Partnerships Limited 75 75 - 0.9%Cadbury House Limited 75 75 - 0.9%Chapel Street Hotel (2008) LLP 31 31 - 0.4%Vermont Developments Limited 452 25 (427) 0.3%Chapel Street Hotel Limited 1 1 - 0.0% 2,326 1,899 (427) 23.6%Total 8,272 7,455 (817) 93.0%Cash at bank and in hand 566 7.0%Total investments 8,021 100.0%SUMMARY OF INVESTMENT MOVEMENTSfor the six months ended 31 July 2009Additions £'000VCT qualifying investmentsWest Tower Holdings Limited 150 150Non-VCT qualifying investmentsDowning Acquisitions 1 Ltd 188Hoole Hall Country Club Holdings Limited 343 531 681Disposals Profit/ Gain/ (loss) Cost Proceeds (loss) in period £'000 £'000 £'000 £'000VCT qualifying investmentsRichstone Contracting Limited 285 285 - -Non-VCT qualifying investmentsJEB Leisure Limited 17 17 - -Hoole Hall Country ClubHoldings Limited 344 344 - - 646 646 - - NOTES TO THE UNAUDITED FINANCIAL STATEMENTS1. The unaudited half-yearly results cover the six months to 31 July2009 and have been prepared in accordance with the accountingpolicies set out in the statutory accounts for the period ended 31January 2009 which were prepared under UK Generally AcceptedAccounting Practice ("UK GAAP") and in accordance with the Statementof Recommended Practice "Financial Statements of Investment TrustCompanies" 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. Net Asset Value per share has been calculated on 9,098,500Ordinary Shares and 13,647,743 'A' Shares, being the shares in issueat the period end.5. Return per share for the period has been calculated on 9,098,500Ordinary Shares and 13,647,743 'A' Shares, being the weighted averagenumber of shares in issue during the period.6. Dividends 31 July 2009 31 Jan 2009 Revenue Capital Total Total £'000 £'000 £'000 £'000Paid in year2009 Final 182 - 182 1597. Reserves Investment Special Revenue holding reserve reserve losses £'000 £'000 £'000At 1 February 2009 8,576 280 (502)Net losses on investments - - (315)Distributions paid - (182) -Retained net revenue for the year - 57 -At 31 July 2009 8,576 155 (817)The Revenue reserve, Special reserve and Investment holding lossesare distributable reserves.Total distributable reserves at 31 July 2009 were £7,914,000.8. The unaudited condensed 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. The figures for the period ended 31 January 2009 havebeen extracted from the financial statements for that year, whichhave been delivered to the Registrar of Companies; the auditors'report on those financial statements was unqualified.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:(a) 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; and(b) DTR 4.2.8R of the Disclosure and Transparency Rules, beingrelated party transactions that have taken place in the first sixmonths of the current financial year and that have materiallyaffected the financial position or performance of the entity duringthat period, and any changes in the related party transactionsdescribed in the last annual report that could do so.10. Copies of the unaudited half-yearly results will be sent toShareholders shortly. Further copies can be obtained from theCompany's Registered Office and will be available for download fromwww.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: 30.09.2009 - 12:30 Uhr
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