TIDMDA1O
Downing Absolute Income VCT 1 plc
Half-Yearly Report for the six months ended 31 December 2012
PERFORMANCE SUMMARY
31 Dec 30 Jun 2012 31 Dec 2011
2012
Unaudited Audited Unaudited
Ordinary Share pool pence pence pence
Net asset value per share 89.1 89.6 83.3
Cumulative distributions per share (paid) 65.4 63.4 62.4
--------- ----------- ----------
Total return per share 154.5 153.0 145.7
--------- ----------- ----------
'C' Share pool
Net asset value per share 78.3 79.7 86.1
Cumulative distributions per share (paid) 7.5 5.0 2.5
--------- ----------- ----------
Total return per share 85.8 84.7 88.6
--------- ----------- ----------
CHAIRMAN'S STATEMENT
Introduction
I am pleased to present the Company's Half-Yearly Report for the six months
ended 31 December 2012. The period has been a reasonably stable one for the
Company's investments, with both share classes making small improvements in net
asset value.
Net asset values
Ordinary Share pool
At 31 December 2012, the Company's Ordinary Share net asset value ("NAV") stood
at 89.1p, an increase of 1.5p per share or 1.7% compared to 30 June 2012 (after
adjusting for the 2.0p dividend paid in December 2012). The Total Return to
original Shareholders now stands at 154.5p per share.
A detailed review of the Ordinary Share pool is included in the Investment
Manager's Report below.
'C' Share pool
At 31 December 2012, the Company's 'C' Share NAV stood at 78.3p, an increase of
1.1p per share or 1.3% compared to 30 June 2012 (after adjusting for the 2.5p
dividend paid in December 2012). The Total Return to Shareholders who invested
in the 'C' Share offer now stands at 85.8p per share.
A detailed review of the 'C' Share pool is included in the Investment Manager's
Report below.
Dividends
Interim dividends will be paid as follows:
Ordinary Shares 1.0p per share
'C' Shares 2.5p per share
Both dividends will be paid on 19 April 2013 to Shareholders on the register at
22 March 2013.
Share Realisation and Reinvestment Programme
The Company undertook a Share Realisation and Reinvestment Programme ("SRRP")
during the period in respect of the Ordinary Shares. Under the programme, the
Company
acquired 1,653,340 Ordinary Shares at 89.6p for cancellation and the sellers of
those shares reinvested the proceeds in 1,603,739 new Ordinary Shares, issued at
a price of 92.4p. Participants received VCT income tax relief based on the issue
price of the new shares.
The Company also issued 150,874 new Ordinary Shares in respect of new cash
subscriptions under the top-up offer that was launched in conjunction with the
SRRP.
Share buybacks
The Company normally operates a policy of making market purchases of its own
shares when they become available in order to provide liquidity for Shareholders
wishing to dispose of their holding. The Company's current policy is to acquire
Ordinary Shares at approximately a 10% discount to the latest published NAV and
'C' Shares at a nil discount.
During the period, the Company purchased 40,500 Ordinary Shares at an average
price of 80.5p per share and 27,500 'C' Shares at an average price of 80.0p per
share. All these shares were subsequently cancelled.
Outlook
The 'C' Share pool is expected to make further new investments over the
remainder of the year as it seeks to complete building its initial VCT
qualifying portfolio. The Manager reports a reasonable level of dealflow which
is likely to provide suitable opportunities.
General trading conditions remain challenging for most businesses. Although the
'C' Share pool has experienced some early difficulties with two investments, we
believe that these are now behind us and both the Ordinary and 'C' Share
portfolios have reasonable potential for growth when the economy starts to
improve.
Martin Bradford
Chairman
INVESTMENT MANAGERS REPORT - ORDINARY SHARE POOL
Investment activity and performance
The Ordinary Share pool is fully invested; accordingly, no new investments were
made during the period. The majority of the Ordinary Share portfolio has
performed well during the first half of the year, with a net valuation uplift of
GBP77,000 recognised at the interim stage.
The five investments in companies that own and operate care homes continue to
represent a major proportion of value of the Ordinary Share investment
portfolio. Trading performance of most of the care homes has continued to be
good, with high occupancy levels and costs being well controlled. The most
recent addition, Downing (Alton) Limited, faced some initial problems although
these have now been addressed and the focus is on building the occupancy level.
Each of the care home investments has been held at its former carrying value.
The valuation of the investment in Gatewales Limited was uplifted by GBP105,000.
Gatewales holds an investment in a hotel development and is entitled to a share
of the profits from the hotel over the next three years. We now have greater
visibility on the profits that Gatewales will receive from this investment and
have valued it accordingly.
City Falkirk Limited owns a large nightclub in Falkirk, Scotland, which was
purchased out of administration in April 2012. Performance of the nightclub is
behind forecast as it has become apparent that the damage to the trade caused by
the administration (e.g. poor customer service, lack of maintenance, etc.) was
worse than expected and it has taken longer than anticipated to rebuild the
reputation and regain lost custom. Accordingly, a cautionary reduction in value
of GBP28,000 was recognised during the period.
Details of the Ordinary Share pool portfolio and investment activity during the
period are shown on the following below.
Net asset value
At 31 December 2012, the Company's Ordinary Share net asset value per share
("NAV") stood at 89.1p, an increase of 1.5p per share or 1.7% compared to 30
June 2012 (after adjusting for the 2.0p dividend paid in December 2012).
The Total Return (net asset value plus dividends paid to date) to original
Ordinary Share investors now stands at 154.5p per share.
Results and dividend
The profit on ordinary activities after taxation for the period for the Ordinary
Share pool was GBP73,000 (2011: GBP42,000), comprising a revenue return of GBP23,000
(2011: GBP72,000) and a capital gain of GBP50,000 (2011 loss: GBP30,000).
The Company will pay an interim dividend of 1.0p per share on 19 April 2013 to
Shareholders on the register at 22 March 2013. Following the payment of this
dividend, original investors will have received tax-free dividends totalling
66.4p per share since the Company's launch.
Outlook
We are satisfied with the progress made by the Ordinary Share portfolio to date
and believe that there is potential for further growth before we consider
seeking realisations of some investments. Trading conditions do, however, remain
challenging for most businesses and therefore close monitoring of all portfolio
companies will remain a priority.
Downing LLP
SUMMARY OF INVESTMENT PORTFOLIO - ORDINARY SHARE POOL
as at 31 December 2012
Unrealised
gain/(loss) % of
Cost Valuation in period portfolio
GBP'000 GBP'000 GBP'000 by value
Venture capital investments
Bowman Care Homes Limited 800 1,700 - 23.4 %
Downing (Pirbright Road) Limited 780 1,305 - 18.0%
Blue Cedars Holdings Limited 970 1,268 - 17.4%
Kimbolton Lodge Limited * 645 610 - 8.4%
Downing (Alton) Limited 575 575 - 7.9%
Future Biogas (SF) Limited 406 454 - 6.2%
Gatewales Limited 367 267 105 3.7%
Leytonstone Pub Limited 200 200 - 2.8%
Chapel Street Food and Beverage Limited 125 125 - 1.7%
Chapel Street Services Limited 125 125 - 1.7%
City Falkirk Limited* 141 113 (28) 1.6%
Heyford Homes (VCT) Limited 300 100 - 1.4%
Progressive Energies Limited 100 100 - 1.4%
Fubar Stirling Limited 89 89 - 1.2%
Angel Solar Limited 75 75 - 1.0%
Fenkle Street LLP ** 69 69 - 0.9%
Cheers Dumbarton Limited 16 16 - 0.2%
Chapel Street Hotel Limited ** 5 5 - 0.1%
Lochrise Limited 4 4 - 0.1%
Kings Gap Group Limited 1,000 - - 0.0%
------- --------- ----------- ---------
6,792 7,200 77 99.1%
------- -----------
Cash at bank and in hand 69 0.9%
--------- ---------
Total investments 7,269 100.0%
--------- ---------
SUMMARY OF INVESTMENT MOVEMENTS - ORDINARY SHARE POOL
For the six months ending 31 December 2012
Market Total
value at Loss realised
Disposals Cost 1 July 2012 Proceeds vs cost gain
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Helcim Group Limited * 329 34 34 (295) -
Kimbolton Lodge Limited ** 40 40 40 - -
--------------------------------------------
369 74 74 (295) -
--------------------------------------------
* Partly non-qualifying
** Non-qualifying
INVESTMENT MANAGERS REPORT - 'C' SHARE POOL
Investment activity
The 'C' Share pool continued to build its VCT qualifying portfolio during the
period as it seeks to have at least 70% of its funds in qualifying investments
by 30 June 2013.
During the period, the pool made three new qualifying investments, one follow-on
qualifying investment and two non-qualifying investments at a total cost of
GBP2,261,000, details of which are set out below.
A qualifying investment of GBP682,000 was completed in Mosaic Spa and Health Clubs
Limited, a spa and health club management company which trades under the name of
Fitness Express. The company currently has approximately 30 management contracts
to provide gym and spa management to hotels, universities and corporate clients.
In December 2011, the Company invested GBP280,000 in Mosaic Spa and Health Club
(Shrewsbury) Limited to back the Mosaic management team to purchase a freehold
operating health club known as Welti near Shrewsbury. In October 2012, a share-
for-share exchange took place and Mosaic Spa and Health Club (Shrewsbury)
Limited became a subsidiary of Mosaic Spa and Health Clubs Limited. At the same
time, a second freehold club in Hereford, Holmer Park, was purchased by the
company. The investment is making satisfactory progress.
The share pool made an investment of GBP472,000 in Oak Grove Renewables Limited,
which is developing a 2MW biogas plant in Norfolk. The plant will produce biogas
through an anaerobic digestion process which is then used to generate
electricity. The company will benefit from the receipt of Feed-in Tariffs for
electricity generation and for electricity exported to the National Grid.
A GBP700,000 non-qualifying investment was made in Baron House LLP. The
partnership is developing a "Hampton by Hilton" hotel in central Newcastle. The
investment will pay an on-going yield and will also entitle the Company to a
share of the final development profit.
GBP300,000 was also invested in another non-qualifying opportunity, Southampton
Hotel Developments Limited. The company is developing a hotel at the Aegas Bowl,
the home of Hampshire Cricket Club. Again, the investment pays an on-going yield
and provides the company with a share in part of the completed development.
The share pool realised two non-qualifying investments in the period, generating
proceeds of GBP1.68 million. These were used to fund the new investments above.
Despite working very closely with the business for an extensive period to try to
find a viable business model, we were forced to conclude that Helcim Group had
very limited prospects. We finally decided to accept an offer, in deferred
consideration, which valued the 'C' Share pool's investment at GBP124,000, equal
to the level at which it was valued at the previous year end.
Investment performance
Over the period, the majority of the 'C' Share pool investments have performed
in line with expectations and continue to be valued at original cost. There
have, however, been three valuation movements; two positive and one negative.
The share price of Tracsis plc, one of the company's AIM-quoted holdings,
performed very strongly over the period, producing an increase of GBP87,000 in the
investment value. Part of the holding was also sold, generating a gain against
cost of GBP27,000. Universe Group plc, the other AIM-quoted holding, also saw an
increase in value of GBP34,000.
Investment performance (continued)
The negative movement arose in respect of City Falkirk Limited. The company owns
a large nightclub in Falkirk, Scotland, which was purchased out of
administration in April 2012. Performance at the nightclub is behind forecast as
it has become apparent that the damage to the trade caused by the period in
administration (e.g. poor customer service, lack of maintenance, etc.) was worse
than expected and it has taken longer than anticipated to rebuild the reputation
and regain lost custom. Accordingly, a cautionary reduction in value of GBP82,000
was recognised during the period. We are working closely with the company to
ensure that all appropriate steps are taken to get the business back on track.
In total, the portfolio produced a net unrealised capital gain of GBP39,000 for
the six months.
Details of the 'C' Share pool portfolio and investment activity during the
period are shown below.
Net asset value
At 31 December 2012, the Company's 'C' Share net asset value per share ("NAV")
stood at 78.3p, an increase of 1.1p per share or 1.3% compared to 30 June 2012
(after adjusting for the 2.5p dividend paid in December 2012). The Total Return
to Shareholders who invested in the 'C' Share offer now stands at 85.8p per
share.
Although performance has been stable over the period, the Total Return is behind
where we would have expected it to be at this stage as a result of a small
number of problem investments on which we have reported previously. These
difficulties have now been mostly resolved although value has been lost. In view
of the disappointing performance to date, Downing has again offered to waive its
management fees in respect of the 'C' Share pool for this period.
Results and dividend
The profit on ordinary activities after taxation for the period was GBP94,000
(2011 loss: GBP894,000) comprising a revenue return of GBP57,000 (2011: GBP103,000)
and a capital gain of GBP37,000 (2011 loss: GBP997,000).
In line with the 'C' Share prospectus, the Company will pay an interim dividend
of 2.5p per share on 19 April 2013 to Shareholders on the register at 22 March
2013. Following the payment of this dividend, Shareholders will have received
tax-free dividends totalling 10.0p per share since the Company's launch.
Outlook
The 'C' Share pool is on target to meet the 70% VCT qualifying test by the end
of the financial year. A number of investment opportunities have been identified
for the pool which we expect to complete over the coming months.
Although the 'C' Share pool suffered significant losses from a couple of
investments in its early life, we believe that these issues have now been fully
resolved and, although the general economic climate remains difficult, we are
optimistic that the portfolio has reasonable potential for growth going forward.
Downing LLP
SUMMARY OF INVESTMENT PORTFOLIO - 'C' SHARE POOL
as at 31 December 2012
Unrealised
(loss)/gain % of
Cost Valuation in period portfolio
GBP'000 GBP'000 GBP'000 by value
Qualifying venture capital investments
Mosaic Spa and Health Clubs Limited * 682 682 - 9.8%
Residential PV Trading Limited * 500 500 - 7.2%
Future Biogas (Reepham Road) Limited 499 499 - 7.2%
Oak Grove Renewables Limited 472 472 - 6.8%
City Falkirk Limited * 422 340 (82) 4.9%
Kidspace Adventures Holdings Limited * 300 300 - 4.3%
Tracsis plc 81 284 87 4.1%
Fubar Stirling Limited 268 268 - 3.9%
Progressive Energies Limited 220 220 - 3.2%
Alpha Schools (Holdings) Limited 200 207 - 3.0%
Angel Solar Limited 175 175 - 2.5%
Universe Group plc * 106 140 34 2.0%
Cheers Dumbarton Limited 48 48 - 0.7%
Lochrise Limited 13 13 - 0.2%
Non-qualifying investments
Baron House Developments LLP 700 700 - 10.1%
Southampton Hotel Developments Limited 300 300 - 4.3%
Liverpool Nurseries (Holdings) Limited 218 218 - 3.1%
Kidspace Adventures Limited 200 200 - 2.9%
------- --------- ------------ ----------
5,404 5,506 39 80.3%%
------- ------------
Cash at bank and in hand 1,368 19.7%
--------- ----------
Total investments 6,934 100.0%
--------- ----------
* Partly non-qualifying
SUMMARY OF INVESTMENT MOVEMENTS - 'C' SHARE POOL
for the six months ended 31 December 2012
Additions
GBP'000
Qualifying venture capital investments
Mosaic Spa and Health Clubs Limited * 682
Oak Grove Renewables Limited 472
Universe Group plc * 106
Tracsis plc 1
Non-qualifying investments
Baron House Developments LLP 700
Southampton Hotel Developments Limited 300
--------
2,261
--------
Market (Loss)/ Total
value at profit realised
Disposals Cost 1 July 2012 Proceeds vs cost loss
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Qualifying venture capital
investments
Helcim Limited* 1,186 124 124 (1,062) -
Mosaic Spa and Health Club
(Shrewsbury) Limited 280 280 280 - -
Residential PV Trading Limited * 32 32 32 - -
Tracsis plc 20 49 47 27 (2)
Non-qualifying investments
West Tower Holdings Limited 880 880 880 - -
Hoole Hall Hotel Limited 800 800 800 - -
--------------------------------------------
3,198 2,165 2,163 (1,035) (2)
--------------------------------------------
* Partly non-qualifying
UNAUDITED INCOME STATEMENT
for the six months ended 31 December 2012
Company Total Six months ended Six months ended Year ended 30
31 Dec 2012 31 Dec 2011 Jun 2012
Revenue Capital Total Revenue Capital Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 285 - 285 285 - 285 631
Gains/(losses) on
investments
- realised - (2) (2) - 24 24 (61)
- unrealised - 116 116 - (519) (519) (395)
----------------------- ------------------------ --------------
285 114 399 285 (495) (210) 175
Investment
management fees (9) (27) (36) (28) (83) (111) (70)
Other expenses (165) - (165) (160) - (160) (289)
----------------------- ------------------------ --------------
Return on
ordinary
activities before
taxation 111 87 198 97 (578) (481) (184)
Taxation (31) - (31) (20) - (20) (94)
----------------------- ------------------------ --------------
Return
attributable to
equity
shareholders 80 87 167 77 (578) (501) (278)
----------------------- ------------------------ --------------
Return per 0.3p 0.6p 0.9p 0.9p (0.4p) 0.5p 7.5p
Ordinary Share
Return per 'C' 0.6p 0.4p 1.0p 0.0p (6.2p) (6.2p) (10.0p)
Share
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.
UNAUDITED INCOME STATEMENT for the six months ended 31 December 2012
Year
ended
Six months ended Six months ended 30 Jun
31 Dec 2012 31 Dec 2011 2012
Revenue Capital Total Revenue Capital Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Ordinary Share pool
Income 140 - 140 143 - 143 282
Gains/(losses) on
investments
- realised - - - - 24 24 24
- unrealised - 77 77 - (27) (27) 517
----------------------- ----------------------- ------
140 77 217 143 (3) 140 823
Investment management fees (9) (27) (36) (9) (27) (36) (70)
Other expenses (106) - (106) (45) - (45) (105)
----------------------- ----------------------- ------
Return on ordinary
activities before taxation 25 50 75 89 (30) 59 648
Taxation (2) - (2) (17) - (17) (32)
----------------------- ----------------------- ------
Return attributable to
equity shareholders 23 50 73 72 (30) 42 616
----------------------- ----------------------- ------
'C' Share pool
Income 145 - 145 142 - 142 349
Gains/(losses) on
investments
- realised - (2) (2) - - - (85)
- unrealised - 39 39 - (492) (492) (912)
----------------------- ----------------------- ------
145 37 182 142 (492) (350) (648)
Investment management fees - - - (19) (56) (75) -
Other expenses (59) - (59) (115) - (115) (184)
----------------------- ----------------------- ------
Return on ordinary
activities before taxation 86 37 123 8 (548) (540) (832)
Taxation (29) - (29) (3) - (3) (62)
----------------------- ----------------------- ------
Return attributable to
equity shareholders 57 37 94 5 (548) (543) (894)
----------------------- ----------------------- ------
UNAUDITED SUMMARISED BALANCE SHEET as at 31 December 2012
31 Dec 31 Dec 30 Jun
2012 2011 2012
Ord Shares 'C' Shares Total Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Fixed assets
Investments 7,200 5,566 12,924 12,064 12,628
Current assets
Debtors 54 212 107 646 117
Cash at bank and in hand 69 1,368 1,437 2,051 1,877
------------------------- --------- -------
123 1,580 1,544 2,697 1,994
Creditors: amounts falling due within
one year (134) (128) (262) (200) (241)
------------------------- --------- -------
Net current assets (11) 1,452 1,282 2,497 1,753
------------------------- --------- -------
Net assets 7,189 7,018 14,206 14,561 14,381
------------------------- --------- -------
Capital and reserves
Called up share capital 4,036 9 4,045 4,100 4,034
Capital redemption reserve 2,131 - 2,131 1,198 1,264
Share premium 744 - 744 279 -
Special reserve (637) 6,745 6,108 9,470 9,292
Revaluation reserve 409 162 571 (1,018) (873)
Capital reserve - realised 460 27 487 411 582
Revenue reserve 46 75 121 121 82
------------------------- --------- -------
Equity shareholders' funds 7,189 7,018 14,207 14,561 14,381
------------------------- --------- -------
Net asset value per Ordinary Share 89.1p 83.3p 89.6p
Net asset value per 'C' Share 78.3p 86.1p 79.7p
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the six months ended 31 December 2012
31 Dec 31 Dec 30 Jun
2012 2011 2012
Ord Shares 'C' Shares Total Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Opening Shareholders' funds 7,212 7,169 14,381 14,963 14,963
Proceeds from share issue 1,621 - 1,621 648 649
Share issue costs - - - (35) (36)
Purchase of own shares (1,555) (21) (1,576) (123) (221)
Total recognised gains/(losses) for
the period 73 94 167 (501) (278)
Distributions paid (162) (224) (386) (391) (696)
---------------------------- -------- -------
Closing Shareholders' funds 7,189 7,018 14,207 14,561 14,381
---------------------------- -------- -------
UNAUDITED CASH FLOW STATEMENT
for the six months ended 31 December 2012
31 Dec 31 Dec 30 Jun
2012 2011 2012
Ord Shares 'C' Shares Total Total Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cash inflow/(outflow) from operating
activities
and returns on 1 (400) 355
investments 16 (91) (75)
---------------------------- --------- --------
Taxation
Corporation tax paid - - - (17) (19)
Capital expenditure
Purchase of investments - (2,261) (2,261) (3,547) (6,767)
Sale of investments 74 2,163 2,237 3,648 6,344
---------------------------- --------- --------
Net cash inflow/(outflow) from
capital expenditure 40 (98) (24) 101 (423)
---------------------------- --------- --------
Equity dividends paid (162) (224) (386) (391) (696)
---------------------------- --------- --------
Net cash outflow before financing (72) (413) (485) (707) (783)
Financing
Repurchase of shares (1,554) (22) (1,576) (123) (221)
Share issue costs - - - (36) (36)
Proceeds from share 1,621 - 1,621 649 649
issue
---------------------------- --------- --------
Net cash (outflow)/inflow from 67 (22) 45 490 392
financing
---------------------------- --------- --------
Decrease in cash 2 (5) (435) (440) (217) (391)
---------------------------- --------- --------
Notes to the cash flow
statement:
1 Cash inflow/(outflow) from operating activities and returns on
investments
Return on ordinary activities
before taxation 75 123 198 (481) (184)
Losses/(gains) on investments (77) (37) (114) 495 456
Decrease/(increase) in other 5 (153) (148) (423) 107
debtors
Increase/(decrease) in other 13 (24) (11) 9 (24)
creditors
---------------------------- --------- --------
Net cash inflow/(outflow) from
operating activities 16 (91) (75) (400) 355
---------------------------- --------- --------
2 Analysis of net funds
Beginning of period 74 1,803 1,877 2,268 2,268
Net cash (5) (435) (440) (217) (391)
inflow/(outflow)
---------------------------- --------- --------
End of period 69 1,368 1,437 2,051 1,877
---------------------------- --------- --------
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
1. The unaudited half-yearly financial results cover the six months to 31
December 2012 and have been prepared in accordance with the accounting policies
set out in the statutory accounts for the year ended 30 June 2012, 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" 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 months ended 31 December
2011 and the year ended 30 June 2012 respectively.
5. Dividends
Six months to Year ended
31 December 2012 30 June 2012
Revenue Capital Total Revenue Capital Total
Ordinary Shares GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Paid in period
2012 Final - 2p 41 121 162 - - -
2012 Interim - 1p - - - 82 - 82
2011 Final - 2p - - - 41 124 165
----------------------- ----------------------
41 121 162 123 124 247
----------------------- ----------------------
'C' Shares
Paid in period
Final 2012 - 2.5p - 224 224 - - -
2012 1st Interim - 2.5p - - - 112 112 224
2012 2nd Interim - 2.5p - - - - 225 225
----------------------- ----------------------
- 224 224 112 337 449
----------------------- ----------------------
6. Reserves
Capital Capital Share
redemption Special reserve Revaluation Revenue premium
reserve reserve realised reserve reserve reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 30 June 2012 1,264 9,292 582 (873) 82 -
Repurchase of shares 867 (1,576) - - - -
Issue of new shares - - - - - 744
Share issue costs - - - - - -
Expenses capitalised - - (27) - - -
Gain/(loss) on investments - - (2) 116 - -
Transfer between reserves - (1,608) 280 (1,328) - -
Retained net revenue for the
period - - - - 80 -
Dividend paid - - (346) - (41) -
----------------------------------------------------
At 31 December 2012 2,131 6,108 487 (571) 121 744
----------------------------------------------------
The Special reserve, Capital reserve - realised and Revenue reserve are all
distributable reserves. Revaluation reserve includes losses of GBP1,444,000 which
are included in the calculation of distributable reserves. Total distributable
reserves are GBP5,272,000.
7. Net asset value per share has been calculated on 8,071,443 Ordinary Shares
and 8,966,557 'C' Shares, being the shares in issue at the period end.
8. Return per share for the period has been calculated on 8,087,430 Ordinary
Shares and 8,984,940 'C' Shares, being the weighted average number of shares in
issue during the period.
9. 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. The figures for the year ended
30 June 2012 have been extracted from the financial statements for that year,
which have been delivered to the Registrar of Companies; the Auditor's report on
those financial statements was unqualified.
10. Risks and uncertainties
Under the Disclosure and Transparency Directive, the Board is required in the
Company's half-year 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;
(ii) market risk in respect of the various assets held by the investee
companies; and
(iii) failure to maintain approval as a VCT.
In order to make VCT qualifying investments, the Company has to invest in small
businesses which are often immature. The Investment Manager follows a rigorous
process in vetting and careful structuring of new investments and, after an
investment is made, close monitoring of the business. The Manager also seeks to
diversify the portfolio to some extent by holding investments which operate in
various sectors. The Board is satisfied with this approach.
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, along
with the fact that the Company currently operates at comfortably above the "70%
test", reduces the risk of a breach of the VCT regulations to a minimal level.
11. Going concern
The Directors have reviewed the Company's financial resources at the period end
and conclude that the Company is well placed to manage its business risks.
The Board confirms that it is satisfied that the Company has adequate resources
to continue in business for the foreseeable future. For this reason, the Board
believes that the Company continues to be a going concern and that it is
appropriate to apply the going concern basis in preparing the financial
statements.
12. 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.
13. Copies of the unaudited half-yearly financial reports will be sent to
Shareholders shortly. Further copies can be obtained from the Company's
Registered Office 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 1 PLC via Thomson Reuters ONE
[HUG#1681833]
Downing Absol 1 (LSE:DA1O)
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