TIDMDO1O
Downing Protected Opportunities VCT 1 plc
Initial Accounts for the period from 12 January 2009 to 31 July 2009
Downing Protected Opportunities 1 VCT plc announces audited initial
accounts for the period for from 12 January 2009 to 31 July 2009.
BALANCE SHEET
as at 31 July 2009
Note 2009
GBP'000 GBP'000
Fixed assets
Investments 8 6,457
Current assets
Debtors 9 787
Cash at bank and in hand 15 2,577
3,364
Creditors: amounts falling due within one year 10 (146)
Net current assets 3,218
Net assets 9,675
Capital and reserves
Called up Ordinary Share capital 11 9
Called up 'A' Share capital 11 9
Called up Management 'A' Share capital 11 10
Share premium account 12 1,518
Special reserve 12 7,115
Share capital to be issued 12 520
Investment holding gains 12 583
Revenue reserve 12 (89)
Total equity Shareholders' funds 9,675
Basic and diluted net asset value per share
Ordinary Share 13 100.2p
'A' Share 13 0.1p
These financial statements were approved by the Board of Directors on
24 September 2009 and were signed on its behalf by
Howard Flight
Chairman
The accompanying notes form an integral part of these financial
statements.
INCOME STATEMENT
for the period from 12 January 2009 to 31 July 2009
Period ended 31 July 2009
Note Revenue Capital Total
GBP'000 GBP'000 GBP'000
Income 2 6 - 6
Gain on investments - realised 8 - 126 126
- unrealised 8 - 482 482
6 608 614
Investment management fees 3 (20) (20) (40)
Other expenses 4 (75) (5) (80)
Return on ordinary activities before (89) 583 494
tax
Tax on ordinary activities 6 - - -
Return attributable to equity
shareholders (89) 583 494
Basic and diluted return per share:
Ordinary Share 7 (1.3p) 8.3p 7.0p
'A' Share 7 - - -
All Revenue and Capital items in the above statement derive from
continuing operations. The total column within the Income Statement
represents the profit and loss account of the Company.
A Statement of Total Recognised Gains and Losses has not been
prepared as all gains and losses are recognised in the Income
Statement noted above.
Other than revaluation movements arising on investments held at fair
value through the Income Statement, there were no differences between
the return/deficit as stated above and historical cost.
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
Period ended
Note 31 July 2009
GBP'000
Opening Shareholders' funds -
Proceeds from share issue 11/12 9,162
Share issue costs 12 (501)
Unallotted shares 12 520
Total recognised gains for the period 494
Closing Shareholders' funds 9,675
The accompanying notes form an integral part of these financial
statements.
CASH FLOW STATEMENT
for the period from 12 January 2009 to 31 July 2009
Period
ended
Note 31 July 2009
GBP'000
Net cash inflow from operating activities 14 29
Capital expenditure
Purchase of investments (7,902)
Proceeds from disposal of investments 1,269
Net cash outflow from capital expenditure (6,633)
Net cash outflow before financing (6,604)
Financing
Proceeds from Ordinary Share issue 9,143
Proceeds from 'A' Share issue 19
Proceeds from Preference Share issue 50
Redemption of Preference Shares (50)
Unallotted shares 520
Share issue costs (501)
Net cash inflow from financing 9,181
Increase in cash 15 2,577
The accompanying notes form an integral part of these financial
statements.
NOTES TO THE ACCOUNTS
for the period ended 31 July 2009
1. Accounting policies
Basis of accounting
The Company has prepared its financial statements under UK Generally
Accepted Accounting Practice ("UK GAAP") and in accordance with the
Statement of Recommended Practice "Financial Statements of Investment
Trust Companies and Venture Capital Trusts" revised January 2009
("SORP").
The financial statements are prepared under the historical cost
convention as modified by the revaluation of certain financial
instruments.
Presentation of Income Statement
In accordance with the SORP, supplementary information which analyses
the Income Statement between items of a revenue and capital nature
has been presented alongside the Income Statement. The net revenue is
the measure the Directors believe appropriate in assessing the
Company's compliance with certain requirements set out in Part 6 of
the Income Tax Act 2007.
Investments
All investments are designated as "fair value through profit or loss"
assets and are measured at fair value. A financial asset is
designated within this category if it is both acquired and managed,
with a view to selling after a period of time, in accordance with the
Company's documented investment policy. The fair value of an
investment upon acquisition is deemed to be cost. Thereafter
investments are measured at fair value in accordance with the
International Private Equity and Venture Capital Valuation Guidelines
("IPEV") together with FRS26.
Structured product investments are measured using bid prices in
accordance with the IPEV.
In respect of unquoted instruments, fair value is established by
using the IPEV. The valuation methodologies for unquoted entities
used by the IPEV to ascertain the fair value of an investment are as
follows:
* Price of recent investment;
* Earnings multiple;
* Net assets;
* Discounted cash flows or earnings (of underlying business);
* Discounted cash flows (from the investment); and
* Industry valuation benchmarks.
The methodology applied takes account of the nature, facts and
circumstances of the individual investment and uses reasonable data,
market inputs, assumptions and estimates in order to ascertain fair
value.
Where an investee company has gone into receivership or liquidation
the loss on the investment, although not physically disposed of, is
treated as being realised.
Gains and losses arising from changes in fair value are included in
the Income Statement for the year as a capital item and transaction
costs on acquisition or disposal of the investment expensed.
It is not the Company's policy to exercise either significant or
controlling influence over investee companies. Therefore the results
of these companies are not incorporated into the Revenue Account
except to the extent of any income accrued.
Income
Dividend income from investments is recognised when the shareholders'
rights to receive payment has been established, normally the ex
dividend date.
Interest income is accrued on a time apportioned basis, by reference
to the principal outstanding and at the effective interest rate
applicable and only where there is reasonable certainty of
collection.
Expenses
All expenses are accounted for on an accruals basis. In respect of
the analysis between revenue and capital items presented within the
Income Statement, all expenses have been presented as revenue items
except as follows:
* Expenses which are incidental to the disposal
of an investment are deducted from the disposal proceeds of the
investment.
* Expenses are split and presented partly as
capital items where a connection with the maintenance or
enhancement of the value of the investments held can be
demonstrated.
The Company has adopted a policy of charging 50% of the investment
management fees to the revenue account and 50% to the capital account
to reflect the Board's estimated split of investment returns which
will be achieved by the company over the long term.
Taxation
The tax effects on different items in the Income Statement are
allocated between capital and revenue on the same basis as the
particular item to which they relate, using the Company's effective
rate of tax for the accounting period.
Due to the Company's status as a Venture Capital Trust and the
continued intention to meet the conditions required to comply with
Part 6 of the Income Tax Act 2007, no provision for taxation is
required in respect of any realised or unrealised appreciation of the
Company's investments which arises.
Deferred taxation is provided in full on timing differences that
result in an obligation at the balance sheet date to pay more tax, or
a right to pay less tax at a future date, at rates expected to apply
when they crystallise based on current tax rates and law. Timing
differences arise from the inclusion of items of income and
expenditure in taxation computations in periods different from those
in which they are included in the accounts.
Issue costs
Issue costs in relation to the shares issued have been deducted from
the share premium account.
2. Income
2009
GBP'000
Other income
Bank interest 6
3. Investment management fees
2009
GBP'000
Investment management fees 40
4. Other expenses
2009
GBP'000
Administration services 16
Trail commission 16
Directors' remuneration 20
Auditors' remuneration for audit 6
Auditors' remuneration for non-audit services (taxation) 1
Other 21
80
The annual running costs of the Company for the period are subject to
a cap of 3.5% of net assets of the Company plus cumulative
distributions.
5. Directors' remuneration
The Company had no employees (other than Directors) during the
period. Directors' remuneration is disclosed in note 4 above. No
other emoluments or pension contributions were paid by the Company
to, or on behalf of any Directors.
6. Tax on ordinary activities
2009
GBP'000
(a) Tax charge for period
UK corporation tax at 28% -
Charge for the period -
(b) Factors affecting tax charge for the period
Revenue return on ordinary activities before taxation (89)
Tax charge calculated on return on ordinary activities before (25)
taxation at the applicable rate of 28%
Effects of:
Expenses disallowed for tax purposes 4
Losses available to carry forward 21
-
7. Return per share
Ordinary Shares 'A' Shares
Return per share based on:
Net revenue after taxation for the (89) -
financial year (GBP'000)
Weighted average number of shares in 7,008,935 15,590,017
issue
Capital return per share based on:
Net capital gain for the financial year 583 -
(GBP'000)
Weighted average number of shares in 7,008,935 15,590,017
issue
As the Company has not issued any convertible securities or share
options, there is no dilutive effect on the return per Ordinary or
'A' Share. The return per share disclosed therefore represents both
basic and diluted return per Ordinary and 'A' Share.
8. Fixed Assets - Investments
2009
Structured Product Investments
GBP'000
Movement in the period:
Purchased at cost 7,902
Disposals - proceeds (2,053)
- realised gains on 126
disposals
Unrealised gains in the Income 482
Statement
Closing value at 31 July 2009 6,457
Closing cost at 31 July 2009 5,975
Gains at 31 July 2009 482
6,457
No costs incidental to the acquisitions of investments were incurred
during the period.
9. Debtors
2009
GBP'000
Other debtors 784
Prepayments and accrued income 3
787
10. Creditors: amounts falling due within one year
2009
GBP'000
Accruals and deferred income 146
146
11. Called up share capital
2009
GBP'000
Authorised:
30,000,000 Ordinary Shares of 0.1p each 30
60,000,000 'A' Shares of 0.1p each 60
50,000 Preference Shares of GBP1 each 50
140
Allotted, called up and fully-paid:
9,117,210 Ordinary Shares of 0.1p each 9
9,117,210 'A' Shares of 0.1p each 9
10,000,000 Management 'A' Shares of 0.1p each 10
28
The authorised share capital upon incorporation was GBP140,000 divided
into 50,000 Redeemable Preference Shares of GBP1 each, 60,000,000 'A'
Shares of 0.1p each and 30,000,000 Ordinary Shares of 0.1p each, of
which 2 Ordinary Shares were issued to the subscribers to the
Memorandum of Association.
On 12 January 2009 the two Ordinary Shares issued to the subscribers
were paid up in full. On the same day 50,000 Redeemable Preference
Shares were issued to Downing Management Services Limited,
one-quarter paid up, to enable the Company to obtain a certificate
under Section 117 of the Companies Act 1985.
On 6 March 2009, the 50,000 Redeemable Preference Shares were paid up
in full and then subsequently redeemed out of the proceeds of the
offers.
Between 6 March 2009 and 30 April 2009, 7,544,764 Ordinary Shares
were issued at 99.9p per share, 17,544,764 'A' Shares were issued at
0.1p per share and 10,000,000 Management 'A' Shares (known as the
"Management 'A' Shares") were issued at 0.1p per share pursuant to
the offers for subscription by way of a prospectus. The aggregate
consideration for the shares was GBP7,555,000 which excludes issue
costs of GBP415,000. The holders of 'A' Shares are not entitled to vote
at any meeting, save where the resolution put to the meeting of
Shareholders is to amend any provision of the Articles relating to
the rights of the 'A' Shares or where a takeover offer has been made
and remains open to acceptance.
On 2 June 2009, 598,396 Ordinary Shares were issued at 102.6p per
share and 598,396 'A' Shares were issued at 0.1p per share pursuant
to the offers for subscription by way of a prospectus. The aggregate
consideration for the shares was GBP614,000 which excludes issue costs
of GBP33,000.
On 3 July 2009, 974,050 Ordinary Shares were issued at 101.8p per
share and 974,050 'A' Shares were issued at 0.1p per share pursuant
to the offers for subscription by way of a prospectus. The aggregate
consideration for the shares was GBP993,000 which excludes issue costs
of GBP54,000.
Following the close of the offers for subscription on 2 September
2009, a number of Management 'A' Shares were converted into 0.1p
Deferred Shares such that the remaining Management 'A' Shares
represented one third of the total number of 'A' Shares in issue at
that date.
Provided that the performance hurdle is met (i.e. Shareholders
receive proceeds of at least GBP1 per Share and a 7% compound return)
distributions or returns of capital shall be made on the following
basis between the holders of Ordinary Shares and 'A' Shares:
* 97% to Ordinary Shares and 3% to 'A' Shares until an amount
equivalent to the 100p per one Ordinary Share and one 'A' Share
has been distributed; thereafter
* 80% to Ordinary Shares and 20% to 'A' Shares
If the distribution set out above would result in Shareholders
receiving less than 100p per Share or lower than a 7% Compound
Return, then the return to Management will be reduced until
Shareholders receive at least 100p per Share and a 7% Compound
Return. Management's share of the Total Proceeds will be subject to a
Cap of 1.25% of Net Assets per annum and will only be payable if the
Hurdle is achieved. If, in any accounting period of the Company, the
Performance Incentive payable is less than the Cap then the shortfall
will be aggregated to the Cap in respect of the following accounting
period and so on until fully utilised.
12. Reserves
Share Share capital Investment
Premium Special to be issued holding Revenue
account reserve gains reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 12 January - - - - - -
2009
Issue of new 9,134 - - - - 9,134
shares
Share issue (501) - - - - (501)
costs
Unallotted - - 520 - - 520
shares
Transfer (7,115) 7,115 - - - -
between
reserves
Gains on - - - 608 - 608
investments
Expenses - - - (25) - (25)
capitalised
Retained net - - - - (89) (89)
revenue
At 31 July 1,518 7,115 520 583 (89) 9,647
2009
The Special Reserve was created on 30 April 2009 by the cancellation
of the Share Premium account following court approval. The Special
Reserve is available to the Company to enable the purchase of its own
shares in the market without affecting its ability to pay capital
distributions. The Special Reserve and Revenue Reserve are both
distributable reserves.
13. Net asset value per share
2009
Net asset
value
Shares in issue Pence per GBP'000
share
Ordinary Shares 9,117,210 100.2 9,136
'A' Shares 19,117,210 0.1 19
Net assets in respect of shares 100.3 9,155
in issue at 31 July 2009
Share capital to be issued 520
Net assets per Balance Sheet 9,675
The Directors allocate the assets and liabilities of the Company
between the Ordinary Shares and 'A' Shares such that each share class
has sufficient net assets to represent its dividend and return of
capital rights as described in note 11.
As the Company has not issued any convertible securities or share
options, there is no dilutive effect on net asset per share. The net
asset value per share disclosed therefore represents both basic and
diluted return per share.
14. Reconciliation of return on ordinary activities before taxation
to net cash flow from operating activities
2009
GBP'000
Return on ordinary activities before taxation 494
Gains on investments (608)
Increase in debtors (3)
Increase in creditors 146
Net cash inflow from operating activities and returns on 29
investments
15. Analysis of changes in cash during the period
2009
GBP'000
Beginning of period -
Net cash inflow 2,577
End of period 2,577
16. Financial instruments and derivatives
The Company's financial instruments comprise investments in
structured products, other debtors, cash and liquid resources and
accruals. Investments are designated as "fair value through profit or
loss on initial recognition". The main purpose of these financial
instruments is to generate revenue and capital appreciation for the
Company's operations. The fair value of investments is determined
using the detailed accounting policy as shown in note 1.
Loans and receivables (including cash at bank and in hand and
debtors) and other financial liabilities are stated at amortised cost
which the Directors consider is equivalent to fair value.
The Company has not entered into any derivative transactions.
Interest rate profile of financial assets and financial liabilities
The Company's financial assets (excluding cash at bank and in hand)
and liabilities, other than the Company's investments, have no
attributable interest rate and cash at bank and in hand attracts
interest at a floating rate.
Average Average period 2009
interest rate until maturity GBP'000
Floating rate 0.6% n/a 2,577
No interest rate 7,098
9,675
* "Floating rate assets" represent investments with interest rates
linked to Bank of England base rate.
* "No interest rate assets" include structured product investments,
debtors and creditors having no attributable rate of interest.
Financial liabilities
The Company had no financial liabilities or guarantees other than the
creditors disclosed within the Balance Sheet.
Currency exposure
As at 31 July 2009, the Company had no foreign currency exposures.
Borrowing facilities
The Company has no committed borrowing facilities as at 31 July 2009.
17. Principal financial risks
As a VCT, the majority of the Company's assets are represented by
financial instruments which are held as part of the investment
portfolio. In order to ensure continued compliance with relevant VCT
regulation and to be in a position to deliver the long term capital
growth, which is part of the Company's investment objective, the
Board is very much aware of the need to manage and mitigate the risks
associated with the financial instruments held within the investment
portfolio.
The management of these risks starts with the application of a clear
investment strategy which has been developed by the Board who are
experienced investment professionals. Furthermore, the Board has
appointed an experienced Investment Manager and Structured Product
Manager to whom they have communicated the Company's investment
objectives. The Investment Manager and Structured Product Manager
report regularly to the Board on performance, investment activity and
discuss planned future investment activity.
In assessing the risk profile of its investment portfolio, the Board
has identified one principal class of financial instrument as shown
in note 8. All financial instruments are "fair value through the
profit and loss account" and are recognised as such on initial
recognition.
A review of the specific financial risks faced by the Company is
presented below.
Market risks
Market risk arises from uncertainty about fair values or future cash
flows of financial instruments because of changes in market prices.
The Company's investment portfolio is comprised of structured
products, the fair values of which are influenced primarily by
changes in the FTSE 100 Index.
Sensitivity has been tested to movements in the FTSE 100 Index (and,
in the case of one investment, the TOPIX index) as follows:
Risk exposure at 31
July 2009
GBP'000
Structured products 6,457
FTSE 100 at 31 July 2009 4,608
Estimated
Impact on
Estimated NAV per
Impact on NAV Ordinary Share
GBP'000 pence
Movement in Index:
20% decrease to 3,683 (464) (5.1p)
At 31 July 2009, the Company's only investments were structured
products. The investments have significant protection against falls
in value below a base value. This limits the Company's downside
exposure to movements in the FTSE 100 index.
Credit risk
Credit risk is the risk that a counterparty to a financial instrument
is unable to discharge a commitment to the Company made under that
instrument. The Company's financial assets that are exposed to
credit risk are summarised as follows:
2009
GBP'000
Fair value through profit or loss assets
Investments in structured products 6,457
Loans and receivables
Cash and cash equivalents 2,577
Interest and other receivables 784
9,818
Investments in structured products are managed so as to limit
exposure to any one counterparty and taking into account the credit
rating of the counterparty.
Cash is mainly held by Bank of Scotland plc, which is an A+ rated
financial institution and, consequently the Directors consider that
the risk profile associated with cash deposits is low and thus the
carrying value in the financial statements is a close approximation
of its fair value.
Interest, dividends and other receivables are predominantly covered
within the investment management procedures.
Liquidity risk
Liquidity risk is the risk that the Company encounters difficulties
in meeting obligations associated with its financial liabilities. As
the Company only ever has a very low level of creditors and has no
borrowings, the Board believes that the Company's exposure to
liquidity risk is minimal.
18. Management of capital
The Company's objective when managing capital is to safeguard the
Company's ability to continue as a going concern in order to continue
to provide returns for Shareholders.
The requirements of the Venture Capital Trust Regulations and the
fact that the Company has a policy of not having any borrowings mean
that there is limited scope to manage the Company's capital
structure. However, to the extent it is possible, the Company can
maintain or adjust its capital structure by adjusting the amount of
dividends paid to Shareholders, purchasing its own shares or issuing
new shares.
As the Company has a low level of liabilities, the Board considers
the Company's net assets to be its capital.
The Company does not have any externally imposed capital
requirements.
19. Contingencies, guarantees and financial commitments
At 31 July 2009, the Company had no contingencies, guarantees or
financial commitments.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The directors are responsible for preparing the initial accounts in
accordance with applicable law and regulations.
The directors have elected to prepare the initial accounts in
accordance with United Kingdom Generally Accepted Accounting Practice
(United Kingdom Accounting Standards and applicable law).
Under company law the directors must not approve the initial accounts
unless they are satisfied that they give a true and fair view of the
state of affairs of the company and of the profit or loss of the
company for that period. In preparing these initial accounts the
directors are required to:
* select suitable accounting policies and then apply them
consistently;
* make judgments and estimates that are reasonable and
prudent;
* state whether applicable accounting standards have been
followed, subject to any material departures disclosed and
explained in the initial accounts;
* prepare the initial accounts on the going concern basis
unless it is inappropriate to presume that the company will
continue in business.
The directors are responsible for keeping adequate accounting records
that are sufficient to show and explain the company's transactions
and disclose with reasonable accuracy at any time the financial
position of the company and enable them to ensure that the initial
accounts comply with the Companies Act 2006. They are also
responsible for safeguarding the assets of the company and hence for
taking reasonable steps for the prevention and detection of fraud and
other irregularities.
The directors are responsible for the maintenance and integrity of
the corporate and financial information included on the company's
website. Legislation in the United Kingdom governing the preparation
and dissemination of the financial statements and other information
included in annual reports may differ from legislation in other
jurisdictions.
The directors confirm, to the best of their knowledge that the
initial accounts, which have been prepared in accordance with UK
Generally Accepted Accounting Practice, give a true and fair view of
the assets, liabilities, financial position and profit or loss of the
company.
By Order of the Board
Grant Whitehouse
Secretary
Kings Scholars House
230 Vauxhall Bridge Road
London SW1V 1AU
24 September 2009
INDEPENDENT AUDITORS' REPORT TO THE DIRECTORS OF DOWNING PROTECTED
OPPORTUNITIES VCT I PLC UNDER SECTION 839(5) OF THE COMPANIES ACT
2006
We have audited the initial accounts of Downing Protected
Opportunities VCT I plc for the period ended 31 July 2009 which
comprise the income statement, the reconciliation of movements in
shareholders' funds, the balance sheet, the cash flow statement and
the related notes. The financial reporting framework that has been
applied in their preparation is applicable law and United Kingdom
Accounting Standards (United Kingdom Generally Accepted Accounting
Practice).
This report is made solely to the company's directors, as a body, in
accordance with section 839(5) of the Companies Act 2006. Our audit
work has been undertaken so that we might state to the company's
directors those matters we are required to state to them in an
auditors' report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone
other than the company and the company's directors as a body, for our
audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the directors' responsibilities statement,
the directors are responsible for the preparation of the initial
accounts and for being satisfied that they give a true and fair view.
Our responsibility is to audit the initial accounts in accordance
with applicable law and International Standards on Auditing (UK and
Ireland) and to report to you our opinion as to whether the initial
accounts have been properly prepared within the meaning of section
839(4) of the Companies Act 2006. Those standards require us to
comply with the Auditing Practices Board's Ethical Standards for
Auditors.
Scope of the audit
An audit involves obtaining evidence about the amounts and
disclosures in the initial accounts sufficient to give reasonable
assurance that the initial accounts are free from material
misstatement, whether caused by fraud or error. This includes an
assessment of: whether the accounting policies are appropriate to the
company's circumstances and have been consistently applied and
adequately disclosed; the reasonableness of significant accounting
estimates made by the directors; and the overall presentation of the
initial accounts.
Opinion on initial accounts
In our opinion the initial accounts:
* give a true and fair view of the state of the company's
affairs as at 31 July 2009 and of its return for the year then
ended;
* have been properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice; and
* have been properly prepared within the meaning of section
839(4) of the Companies Act 2006.
Matters on which we are required to report by exception
We have nothing to report in respect of the following:
Under the Companies Act 2006 we are required to report to you if, in
our opinion:
* adequate accounting records have not been kept, or returns
adequate for our audit have not been received from branches not
visited by us; or
* the financial statements are not in agreement with the
accounting records and returns; or
* we have not received all the information and explanations we
require for our audit.
Stuart Collins
Senior statutory auditor
for and on behalf of PKF (UK) LLP,
Statutory auditors
24 September 2009
=--END OF MESSAGE---
This announcement was originally distributed by Hugin. The issuer is
solely responsible for the content of this announcement.
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