Half-yearly report
01 September 2011 - 12:21AM
UK Regulatory
TIDMDPV8
Downing Planned Exit VCT 8 plc
Half-Yearly Report for the six months ended 30 June 2011
PERFORMANCE SUMMARY
30 Jun 31 Dec 30 Jun
2011 2010 2010
Pence Pence Pence
Net asset value per Ordinary Share 84.7 83.8 80.5
Net asset value per 'A' Share 0.1 0.1 0.1
Cumulative distributions per Ordinary Share 7.5 5.0 5.0
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Total return per Ordinary Share and 'A' Share 92.3 88.9 85.6
CHAIRMAN'S STATEMENT
I present the Company's Half-Yearly Report for the period ended 30 June 2011.
Investment activity
During the period, the Company made one small qualifying follow-on investment in
The Thames Club Limited. GBP25,000 was invested, alongside funds from other
investors, to provide additional working capital for the business.
The Company also made a non-qualifying investment of GBP250,000 in Future Biogas
(SF) Limited. The investment comprises wholly of loan stock and is secured by a
charge over the anaerobic digestion plant and machinery owned by the business.
The investment has an attractive yield and is expected to be redeemed in line
with the Company's timetable for returning funds to Shareholders.
Two redemptions of non-qualifying loan stock investments also took place in the
period, producing proceeds of GBP328,000.
Investment valuations
The Board has undertaken a review of the investment valuations at the period end
and made no adjustments from the carrying values from the previous year-end.
Three of the Company's investments remain valued below original cost. The Thames
Club is making progress, but at a slow rate, in rebuilding its health club
membership base after a major refurbishment. It continues to be valued at
GBP350,000 below original cost.
Horsham Bowl, which operates a nightclub and bowling alley, continues to
struggle in a very challenging economic climate. The investment, similarly,
continues to be valued at GBP180,000 below original cost.
West Tower Holdings owns and operates a wedding venue and restaurant. Both
businesses are making progress and, in time, there appear to be prospects for a
recovery in value. However, for the time being, the investment is valued at
GBP400,000 below original cost.
No other investments have experienced significant departures from plan which
impact on their valuations and, accordingly, continue to be valued at original
cost or near to it.
Net asset value and results
The Company generated a significant level of loan stock interest in the period
which has helped to lift the Company's net asset value ("NAV"). At 30 June
2011, the NAV per Ordinary Share stood at 84.7p and the NAV per 'A' Share stood
at 0.1p, producing a combined total of 84.8p. This is an increase of 3.4p per
share (4.1%) since 31 December 2010 (after adjusting for the 2.5p dividend paid
during the period). Total Return (NAV plus cumulative dividends paid to date)
has now reached an aggregate 92.3p per Ordinary Share and 'A' Share combined.
The profit on ordinary activities after taxation for the period was GBP300,000.
Share buybacks
The Company operates a policy, subject to certain restrictions, of buying its
own shares when any become available in the market. Buybacks will generally be
undertaken at a 10% discount to the latest NAV, but the Directors regularly
review this discount level and make adjustments if they believe it is
appropriate.
During the period the Company purchased 10,300 Ordinary Shares at a price of
75.5p per share and 7,625 'A' Shares at a price of 0.1p per share. These shares
were subsequently cancelled.
Risk 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;
and
(ii) failure to maintain provisional 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 has followed a
rigorous process in vetting and carefully structuring new investments, including
taking a charge over the assets of the business wherever possible and, after an
investment is made, closely monitors the business. The Board is satisfied that
this approach reduces the investment risks described in (i) 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 an acceptable level.
Going concern
The Company has sufficient financial resources at the period end, and holds a
diversified portfolio of investments. As a consequence, the Directors believe
that the Company is well placed to manage its business risks successfully
despite the uncertain economic outlook.
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
statements.
Outlook
The Company is now in the phase of its life where it is fully invested but there
is some time to go before it will seek to start unwinding its investment
portfolio. The process of returning funds to Shareholders is due to commence in
2013.
The Manager remains focussed on monitoring and supporting portfolio companies
during these challenging times, and is now also starting to look ahead to
possible exit plans for some of the investments so that these can be developed
over the next two years.
Hugh Gillespie
Chairman
UNAUDITED BALANCE SHEET
as at 30 June 2011
30 Jun 30 Jun 31 Dec
2011 2010 2010
GBP'000 GBP'000 GBP'000
Fixed assets
Investments 6,853 6,637 6,906
Current assets
Debtors 441 51 113
Cash at bank and in hand 242 429 303
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683 480 416
Creditors: amounts falling due within one year (208) (149) (70)
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Net current assets 475 331 346
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Net assets 7,328 6,968 7,252
Capital and reserves
Called up Ordinary Share capital 9 9 9
Called up 'A' Share capital 13 13 13
Deferred share capital 3 3 3
Special reserve 7,811 8,039 8,035
Revaluation reserve (781) (980) (781)
Capital reserve - realised 9 9 9
Revenue reserve 264 (125) (36)
-------- -------- -------
Equity shareholders' funds 7,328 6,968 7,252
Net asset value per Ordinary Share 84.7p 80.5p 83.8p
Net asset value per 'A' Share 0.1p 0.1p 0.1p
-------- -------- -------
84.8p 80.6p 83.9p
UNAUDITED INCOME STATEMENT
for the six months ended 30 June 2011
Six months ended
30 June 2011
Revenue Capital Total
GBP'000 GBP'000 GBP'000
Income 519 - 519
Losses on investments - - -
--------- --------- ------
519 - 519
Investment management fees (41) - (41)
Other expenses (63) - (63)
--------- --------- ------
Return on ordinary activities before taxation 415 - 415
Taxation (115) - (115)
--------- --------- ------
Return attributable to equity shareholders 300 - 300
Return per Ordinary Share 3.4p - 3.4p
Return per 'A' Share - - -
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