Final Results
December 06 2000 - 1:12PM
UK Regulatory
RNS Number:3784V
Downing Healthcare Protectd.VCT PLC
6 December 2000
Preliminary Announcement of Results
for the year ended 30 June 2000
FINANCIAL HIGHLIGHTS
NAV Total Return to date
pence 2000 1999
pence pence
Net asset value per share 90.3 90.3 94.1
Total dividends per ordinary
share
(including tax credits where 13.8 3.0 4.6
reclaimable)
104.1
Revenue return per ordinary 3.3 3.7
share
Net assets #8.8 #9.2
million million
The statement to shareholders by the Chairman, Christopher Kay, includes the
following comments:
Introduction
I am pleased to present the Company's third Report and Accounts for the year
ended 30 June 2000.
Venture capital investments
During the year to 30 June 2000, the Company invested in two further nursing
home businesses. An investment of #930,000 was made in Downing (Green Gables)
Limited, a company operating a nursing home in Grayshott, Surrey. An
investment of #250,000 was also made in Downing (Barwell) Limited. This
company has recently received planning permission to develop a care home near
Hinckley, Leicestershire. The Company now has over 90% of its net assets
invested in 10 care home businesses.
In general, care homes have continued to operate in a difficult environment.
As discussed in my report last year, room rates have continued to be squeezed
by Local Authorities while at the same time regulatory controls have been
tightened leading to higher wages and other costs. The Government has also
announced new care standards, "fit for the future". Although these new
standards have not been finalised and are not yet in force, they have impacted
on development plans at several of the homes. The boards of the investee
companies are reviewing compliance with the proposed standards and will be
taking steps to ensure that there is no detrimental effect on the valuations
of the homes in future.
The Board has reviewed the carrying values of the investments at the year end
and have considered it prudent to make a number of adjustments. In the cases
of Downing Harnham Croft Nursing Home Limited, Downing (Acacia House) Limited
and Evedale Care Home Limited trading results have been disappointing and have
fallen below budget. The Directors believe that it may be some time before
these care homes achieve the performance that was anticipated when the
investments were originally made and consequently the investments have been
written down by #538,000. Details of the actions being taken to improve
performance at these care homes are contained in the Review of Investments.
On a brighter note, Downing (Chertsey Road) Limited has exceeded expectations
and the investment has been revalued upwards by #150,000. The net effect of
these adjustments is a reduction in total valuation of #388,000 being 4.0p per
share.
Refurbishment and development work has been carried out at a number of homes
during the year. In some cases the capacity of the homes was temporarily
reduced during the work which has had an impact on their respective
profitability.
Listed investments
At the year end only 2.3% of the portfolio remained invested in fixed income
securities, which continue to be managed by Cazenove Fund Management Limited.
The returns to date from these investments have been broadly in line with our
expectations.
Results and dividend
Gross revenue for the year was #543,000 and net revenue after taxation was #
319,000. Net assets per share were 90.3p compared to 94.1p at 30 June 1999.
An interim dividend of 1.5p per share was paid on 5 June 2000. Your Board is
proposing a final dividend of 1.5p per share that, subject to shareholder
approval, will be paid on 16 January 2001, to shareholders on the register on
22 December 2000. For the reasons discussed above, the total dividend for the
year is a disappointing 3p per share, compared to the target return of 5p per
share (net of tax credits) as set out in the prospectus.
Annual General Meeting
The fourth Annual General Meeting of the Company will be held at 69 Eccleston
Square, London SW1V 1PJ at 11.00 a.m. on 8 January 2001. Notice of the
meeting is at the end of this document.
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 year repurchased 25,000 ordinary shares for #
15,900, 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.
As you are aware from the recent circular, the Company is currently in the
process of cancelling its share premium account in order to create a
distributable reserve, which can be used to fund share buy-backs. The court
has now approved the resolution and it is expected that this process will be
completed within two months.
Publication of share price
The Company's share price continues to be quoted in the Financial Times on a
daily basis in the "Investment Companies" sector.
Outlook
The Board is concerned with the performance of several of the investee
companies and is in the process of taking steps to resolve key issues. Since
the year end, two investee companies have appointed new managers with clearly
defined objectives. The development of the care home by Downing (Barwell)
Limited had been delayed by problems with planning permission which have now
been resolved.
The Board is continuing to evaluate opportunities for both new investments and
possible disposals of existing investments and is focused on ensuring that
current portfolio is brought back on track to deliver improved returns to
shareholders in the future.
STATEMENT OF TOTAL RETURNS
(incorporating the revenue account)
for the year ended 30 June 2000
Year ended Year ended
30 June 2000 30 June 1999
Revenue Capital Total Revenue Capital Total
#'000
#'000 #'000 #'000 #'000 #'000
(Losses)/ gains on
investments
- realised (17) (17) - - - -
- unrealised (391) (391) - 7 7 -
Income 543 - 543 586 - 586
Management (10) (10) (20) (21) (20) (41)
incentive fees
Other (61) - (61) (49) - (49)
expenses
Return on 472 (418) 54 516 (13) 503
ordinary activities
before tax
Tax on (153) 9 (144) (149) 6 (143)
ordinary activities
Return 319 (409) (90) 367 (7) 360
attributable to equity
shareholders
Dividends in (294) - (294) (392) - (392)
respect of equity
shareholders
Transfer to/ 25 (409) (384) (25) (7) (32)
(from) reserves
Return per 3.3p (4.2p) (0.9p) 3.7p (0.1p) 3.6p
ordinary share
Revenue per ordinary share is based on the net revenue after taxation of #
319,000 (1999 - #367,000) but before deduction of dividends of #294,000 (1999
- #392,000), in respect of 9,794,510 ordinary shares (1999 - 9,811,895), being
the weighted average number of ordinary shares in issue during the year.
Capital return per ordinary share is based on the net capital loss for the
financial year of #409,000 (1999 - #7,000) in respect of 9,794,510 ordinary
shares (1999 - 9,811,895), being the weighted average number of ordinary
shares in issue during the year.
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.
BALANCE SHEET
as at 30 June 2000
2000 1999
#'000 #'000 #'000 #'000
Fixed Assets
Venture capital 8,212 7,420
investments
Listed fixed income investments 200 1,527
8,412 8,947
Current assets
Debtors 448 502
Cash at bank and in hand 398 305
846 807
Creditors: amounts falling due within (436) (532)
one year
Net current assets 410 275
Net assets 8,822 9,222
Capital and reserves
Called up share capital 4,887 4,900
Share premium account 4,415 4,415
Capital redemption 19 6
reserve
Capital reserve (513) (104)
Revenue reserve 14 5
Total equity shareholders' 8,822 9,222
funds
Net asset value per ordinary share 90.3p 94.1p
share
Net asset value per ordinary share is based on net assets at the year end, and
on 9,774,961 ordinary shares (1999 - 9,799,961), being the number of ordinary
shares in issue at the year end.
CASHFLOW STATEMENT
for the year ended 30 June 2000
Year ended Year ended
30 June 2000 30 June 1999
#'000 #'000
Net cash inflow from operating activities 532 575
Taxation
Corporation tax and income tax (246) (225)
paid in the year
Investing activities
Purchase of listed fixed income (204) -
securities
Purchase of venture capital (1,180) (4,885)
investments
Net cash outflow from investing (1,384) (4,885)
activities
Equity dividends paid (304) (490)
Management of liquid resources
Sale of fixed income securities 1,511 5,123
Financing
Repurchase of ordinary shares (16) -
Increase in cash and cash 93 98
equivalents
Reconciliation of net cash flow to movement in
net funds
Increase in cash during the year 93 98
Net funds at 1 July 305 207
1999
Net funds at 30 June 2000 398 305
The financial information set out in the announcement does not constitute the
Company's statutory accounts for the years ended 30 June 2000 or 30 June 1999.
The financial information ended for the year ended 30 June 1999 is derived
from the statutory accounts for that year, which have been delivered to the
Registrar of Companies. The auditors reported on those accounts; their report
was unqualified and did not contain a statement under s237 (2) or (3)
Companies Act 1985. The statutory accounts for the year ended 30 June 2000
will be finalised on the basis of the financial information presented by the
directors in this preliminary announcement and will be delivered to the
Registrar of Companies following the company's annual general meeting.
A copy of the full annual report and financial statements for the year ended
30 June 2000 will be printed and posted to shareholders. Copies will also be
available to the public at the registered office of the company at 69
Eccleston Square, London SW1V 1PJ.
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