Downing Healthcare - Final Results
November 26 1999 - 6:30AM
UK Regulatory
RNS Number:5129B
Downing Healthcare Protectd.VCT PLC
26 November 1999
DOWNING HEALTHCARE PROTECTED VCT PLC
Preliminary results for the year ended 30 June 1999
The Directors are pleased to announce the preliminary results, subject
to audit, of the Company for the year ended 30 June 1999.
The Company's investment objective is to provide shareholders with an
attractive dividend return on their investment, whilst providing a
protected "asset backed" environment for their capital.
Investments in care home businesses are funded through realisations of
fixed income securities. The Company had invested over #7.4 million
in eight such businesses by 30 June 1999, thereby satisfying the
Inland Revenue requirement that at least 70% of the company's
investments should be in qualifying holdings. It is anticipated that
in due course at least 85% of the Company's funds raised will be
invested in care home businesses.
The Company makes investments in the form of ordinary shares,
preference shares and loan stock in special purpose companies, which
own and operate care homes. Each company owns freehold or long
leasehold property and has little or no borrowings i.e. an "asset
backed" investment. Typically, the Company owns 50% of the ordinary
shares in each investee company with the balance owned by a third
party, who is a selected partner with proven experience in the sector
or the previous owner of the care home. A professional care home
manager is appointed under contract to manage each care home.
Financial highlights
Total 1999 1998
return pence pence
pence
Net asset value per ordinary 94.1 94.1 94.4
share
Total dividends per ordinary
share including Tax credits where 10.9 4.6 6.3
reclaimable) ------- ------ -------
Total shareholder value 105.0 98.7 100.7
------- ------ -------
Revenue return per ordinary share 3.7 5.4
Net assets #9.2 m #9.3m
Chairman's statement
Introduction
I am pleased to present the Company's second Report and Accounts for
the year to 30 June 1999. Details of the forthcoming AGM on 22
December 1999 are set out below.
During the year ended 30 June 1999, the Company has continued to make
good progress in building up and developing its portfolio of
investments in quality care home businesses. During the current year
the directors and managers of each of the care home businesses, in
which the Company has invested, intend to improve their respective
homes. They will focus on the level of care provided and improving
facilities and financial performance. Consequently this year will be
one of consolidation after two years of significant investments.
Venture capital investments
In the year to 30 June 1999, approximately #3.5 million was invested
in four care home businesses and top-up investments of #1.4 million
were made in three of the existing businesses. This brings the total
invested by the Company to over #7.4 million in eight care home
businesses, thereby satisfying the Inland Revenue qualification rule
for VCT companies. Subsequent to the year end a further #900,000 has
been invested in a ninth care home business, bringing total funds
invested in care homes to approximately 85% of funds raised.
It is the policy of each care home business, in which the Company
invests, to establish appropriate care and maintenance standards.
This process can affect profitability in the short term, particularly
during the first year following each acquisition. However, your
Directors consider this policy will enhance the value of each business
over the medium term and recognise that the performance of the
contracted care manager is a key ingredient to the achievement of a
successful outcome. The care home companies' directors are
responsible for the performance and standards at each home and, where
necessary, take appropriate action, which in some instances has led
to the appointment of new managers.
The homes, in which the Company has an interest, generally operate
with a high level of occupancy and the current strength of the
property market, particularly in the south east, should give support
to the underlying property asset backing of the Company's investments,
which for accounting purposes are stated at cost. However, care home
companies for the elderly operate in an increasingly difficult trading
environment. On the one hand, room rates are held down by Councils
and Social Security offices that are reluctant to increase their
costs, while on the other hand regulatory controls in the healthcare
sector are on the increase, inevitably leading to higher wages and
other costs.
Listed investments
Fixed income securities continue to be managed by Cazenove Fund
Management Limited. The returns to date from these investments have
been in line with our expectations.
Results and dividend
Gross revenue for the year was #586,000. Net revenue after taxation
was #367,000 and net assets per share were 94.1p.
An interim dividend of 2.4p per share net (3.0p gross) was paid during
the year and your Board is recommending a final dividend payment of
1.6p per share. This dividend can not be "grossed up" due to the
abolition of ACT with effect from 6 April 1999. Dividend payments
total 4p net which, combined with the associated tax credits on the
interim dividend, means shareholders will have received tax free
dividends of 4.6p per share in respect of the year. This falls short
of the target of 6.25p per share set out in our prospectus and
reflects both the slow start made at some of the homes, as well as the
loss of the repayment of tax credits on dividends. Nevertheless, 4.6p
per share represents a higher dividend yield than that paid by most
other VCTs and is equivalent to 9.6% gross for a 40% taxpayer net of
the initial income tax relief.
The proposed final dividend will be paid, subject to shareholder
approval, on 22 December 1999, to shareholders on the register on 10
December 1999.
Annual General Meeting
The third Annual General Meeting of the Company will be held at 69
Eccleston Square, London SW1V 1PJ at 11.00 am on 22 December 1999.
Notice of the meeting is at the end of this document. One item of
Special Business is proposed as a Special Resolution in the Notice of
Meeting, seeking to renew the Company's authority to purchase up to
489,998 ordinary shares in the market, representing approximately 5%
of the current ordinary shares.
Share repurchase
Your Board is conscious that the Company's share price is affected by
the illiquidity of its shares in the market, resulting from the
requirement that shareholders must retain their shares for at least
five years in order to retain their tax benefits. The Company
therefore has a policy of purchasing its own shares and during the
period repurchased 12,000 ordinary shares at 80p per share, which have
subsequently been cancelled. A special resolution to continue with
this policy, which was approved at last year's AGM, is proposed for
the forthcoming AGM.
Cancellation of share premium
In order to facilitate share buy-backs, your Board will shortly be
submitting proposals to shareholders, which will be subject to an
Extraordinary General Meeting. These proposals would, if accepted by
shareholders and subject to Court approval, enable the Company to re-
designate the share premium account as a reserve which would be
available to fund share purchases, without affecting the Company's
ability to pay dividends.
Outlook
Having fulfilled its revised target of investing approximately 85% its
net assets in care home businesses, the boards of the investee
companies continue to focus their attention on the structural
development of the properties and on improving their operational
efficiency and contribution.
The Company is represented on the board of each care home business,
and in conjunction with executive management and an independent
chairman seeks to develop the full potential of each home. We are
pleased with the quality and location of the homes that we have
acquired, recognising that additional building development work is
required at some homes to maximise their asset value and full profit
potential.
Future Plans
Your Board has identified three factors, which it considers may affect
your Company. These comprise, the abolition of ACT, the lower
overall returns available on bonds and gilts compared to when the
Company was launched and the increasing standards demanded in the care
industry, coupled with increasing costs and limited fee increases. As
a consequence, your Board would like, over a two or three year period,
to increase the number of its investments in new or newer purpose
built homes, whilst maintaining a reasonable dividend yield to
shareholders. Within these plans, your Board may consider one or two
investments of up to #500,000 each in companies, which are allowed to
borrow funds. This limited risk taking is intended to improve your
Company's mix of established and new-build care homes and provide some
opportunity for future capital uplift, given the reduced attraction of
dividends.
Chris Kay
Chairman
25 November 1999
Review of investments
Portfolio of investments
The following investments were held at 30 June 1999.
Portfolio
Cost Valuation by value
#000 #000 %
Venture capital investments
Kimbolton Lodge Limited 600 600 6.5
Evedale Care Home Limited 1,375 1,375 14.8
Downing Harnham Croft Nursing
Home Limited 950 950 10.3
Downing (Acacia House) Limited 1,000 1,000 10.8
Downing (Chertsey Road) Limited 1,000 1,000 10.8
Dovestone (The Gables) Limited 950 950 10.3
Downing (Meadows) Limited 575 575 6.2
Downing (Bon Accord) Limited 970 970 10.5
------ ------ ------
7,420 7,420 80.2
Listed fixed income securities
General Electric Capital Corp 7
1/4% bonds 1999 250 250 2.7
Harvard University 67/8% bonds 248 253 2.7
2000
Province of Ontario 67/8% bonds 493 507 5.5
2000
Sainsbury 8 1/4% bonds 2000 511 517 5.6
------ ------ ------
1,502 1,527 16,5
------ ------ ------
Cash deposits 305 305 3.3
------ ------ ------
Total 9,227 9,252 100%
------ ------ ------
Statement of total return (incorporating the revenue account)
for the year ended 30 June 1999
Year ended 30 June Period ended 30 June 1998
1999
Revenue Capita Total Revenue Capital Total
#'000 l #'000 #'000 #'000 #.000
#'000
Gains/(losses)o
n investments - 7 7 - (60) (60)
Income 586 - 586 808 - 808
Management
incentive fees (21) (20) (41) (51) (51) (102)
Other expenses (49) - (36)
------ ----- (49) (36) - ------
----- ----- -----
Return on
ordinary
activities 516 (13) 503 721 (111) 610
before tax
Tax on ordinary
activities (143) 14 (176)
(149) 6 ------ (190) ------ ------
------ ----- ------
Return
attributable to
shareholders 367 (7) 360 531 (97) 434
Dividends (392) (491)
------ - (392) (491) - ------
----- ------ ------- -----
Transfer
(from)/ to (25) (7) (32) 40 (97) (57)
reserves ------- ------ ------ ------ ------ ------
Return per
ordinary share 3.7p (0.1)p 3.6p 5.4p (1.0)p 4.4p
The revenue column of this statement is the profit and loss account of
the Company.
All revenue and capital items in the above statement derive from
continuing operations.
No operations were acquired or discontinued in the period.
The comparative figures for 1998 represent the period from
incorporation on 27 January 1997 (the Company commenced trading on 4
April 1997) to 30 June 1998.
Balance sheet at 30 June 1999
1999 1998
#000 #000
Fixed assets
Venture capital investments 7,420 2,535
Listed fixed income investments 1,527 6,642
------- ------
Total fixed asset investments 8,947 9,177
------- ------
Current assets
Debtors 502 477
Cash at bank 305 207
Creditors: amounts failing due within one (532) (597)
year ------- -------
Net current assets 275 87
------- -------
Net assets 9,222 9,264
------- -------
Capital and reserves
Called up share capital 4,900 4,906
Share premium accounts 4,415 4,415
Capital redemption reserve 6 -
Capital reserve (104) (97)
Revenue reserve 5 40
------- -------
Total shareholders' funds 9,222 9,264
------- -------
Net asset value per ordinary share 94.1p 94.4p
Venture capital investments are included at cost, which in the opinion
of the Directors also represents their market value at 30 June 1999.
Net asset value per ordinary share is based on net assets at the year
end, and on 9,799,961 ordinary shares, being the number of ordinary
shares in issue at the year end.
Revenue return per ordinary share is based on the net revenue on
ordinary activities after taxation, but before deduction of dividends,
of #367,000 (1998 - #531,000) in respect of 9,811,895 ordinary shares,
being the weighted average number of ordinary shares in issue during
the year.
Capital return per ordinary shares is based on net capital loss for
the financial year of #7,000 (1998 - loss of #97,000) in respect of
9,811,895 ordinary shares, being the weighted average number of
ordinary shares in issue during the year.
The proposed final dividend of 1.6p net will be paid, subject to
shareholder approval, on 22 December 1999, to shareholders on the
register on 10 December 1999.
The preliminary results for the year have not been audited by the
Company's auditors and do not constitute statutory accounts. The
comparative figures for 1998 have been abridged from the statutory
accounts for the period ended 30 June 1998. The Auditors' opinion on
these accounts was unqualified and did not contain any statements
under section 237(2) or (3) of the Act. The statutory accounts have
been filed with the Registrar of Companies.
Copies of the full report and accounts for the year ended 30 June 1999
will be printed and posted to shareholders on 29 November 1999 and
will be filed with the Registrar of Companies shortly. The Company's
Annual General Meeting will be held at 69 Eccleston Square, London
SW1V 1PJ at 11.00 am on 22 December 1999.
Copies of this announcement will be available to the public at the
registered office, 69 Eccleston Square, London SW1V 1PJ.
By Order of the Board
Tony McGing
Secretary
25 November 1999
END
FR ANAAKKBKAUAA
Darwen (LSE:DHP)
Historical Stock Chart
From Jun 2024 to Jul 2024
Darwen (LSE:DHP)
Historical Stock Chart
From Jul 2023 to Jul 2024
