Downing Plnd Ext 4 plc Downing Planned Exit VCT 4 plc : Shareholder and Portfolio Update
January 24 2012 - 6:16AM
UK Regulatory
TIDMDPV4
Downing Planned Exit VCT 4 plc
Shareholder and Portfolio Update
24 January 2012
The Company has today issued a Shareholder Update updating Shareholders on
developments within the Company and its plans for winding up as follows:
"Portfolio Update
Shareholders will be aware that the majority of the Company's investments have
been realised and that 74.0p per share of funds have already been paid out as
dividends. The remaining portfolio investments are, unsurprisingly, the more
difficult investments and it is disappointing to report that there have been
some negative developments over recent months. A review of these investments is
presented below.
Coast Constructors Limited/Aminghurst Limited
Coast is undertaking a contract to build a residential and hotel complex at Gara
Rock, near Salcombe in Devon, a site owned by Aminghurst. Much of the work on
the residential units is complete but further work is required to complete the
hotel. Market conditions for these types of properties have deteriorated greatly
since the investment was first made and, despite a significant marketing effort,
sales of residential units during 2011 have been very poor. It is believed that
completion of the on-site hotel will make the residential units significantly
more attractive to purchasers; however, as a result of the lack of sales and
cost overruns, additional funding will be needed to complete the build.
At this time, the Board believes that it is necessary to make a further
provision against these two investments. The Board will review the merits and
practicalities of providing further funds with the Investment Manager once the
options become clear. In any event, the Board will ensure the Manager continues
to stay closely involved with Coast and Aminghurst in order to seek to extract
as much value as possible.
Heyford Contracting (South) Limited
Heyford has built two commercial office developments; North Gate in Banbury,
Oxfordshire and Uppingham Gate in Uppingham, Rutland. Exits from these
investments will be achieved when the various units are sold or let. Market
conditions have again resulted in slow progress although the company has
recently been able to return GBP285,000 of the remaining value as a result of the
sale of one of the buildings. Both sites will continue to be marketed until
purchasers or tenants can be found. The Board has reviewed the valuation and
believe it is appropriate to release some of the provision previously made
against the investment.
Future Films Production Services Limited
Futures Films Production Services provided services for a number of films and
has already repaid most of its investment. A small part of the investment has
remained and was expected to be repaid once an outstanding debt and a final tax
credit were collected. Collectability of these amounts now appears uncertain
and, accordingly, the Board believes it is prudent to make a full provision
against the investment.
Vermont Developments Limited
Shareholders will recall that Vermont Developments went into administration in
2008 and subsequently into liquidation; however, the Company's investment is
secured on some development land in Salford. A third party has been progressing
some development proposals for the site, but it is the Manager's view that these
are now unlikely to proceed. If so, further options will be explored, with one
possible route being a student accommodation development. Until any firm plans
are in place, it is difficult to estimate the value and timing of any exit from
this investment. For the time being, the investment is being held at the most
recent third party valuation of the land, which is substantially below original
cost.
Summary
The Company's unaudited summarised balance sheet and portfolio as at 31 December
2011 are summarised as follows:
Unaudited Balance Sheet
31 Dec 2011 31 May 2011
GBP'000 GBP'000
Fixed Assets - Venture Capital Investments 1,950 6,362
Current assets
Debtors 365 374
Bank 255 645
Current Liabilities - Creditors (66) (99)
Long Term Liabilities (21) (21)
----------------------------
Net Assets 2,483 7,261
----------------------------
Pence Pence
per share per share
Net Asset Value per Share 11.6 33.8
Dividends paid to date 74.0 56.0
Total Return 85.6 89.8
Unaudited portfolio as at 31 December 2011
Valuation Valuation
31 Dec 11 31 May 11 Movement*
GBP'000 GBP'000 GBP'000
Aminghurst Limited - - -
Coast Constructors Limited 475 1,257 (1,279)
Future Films Production Services - 64 (64)
Heyford Contracting (South) Limited 1,425 1,000 425
Vermont Developments Limited 50 50 -
Investments sold/redeemed since 31 May 2011 - 3,991 -
----------- ----------- ----------
1,950 6,362 (1,640)
----------- ----------- ----------
* adjusted for additions since 31 May 2011
As I have said in previous statements, it is difficult to estimate the size and
timing of future distributions from the Company as these are driven by
realisations of the remaining investments. Following the recent return of the
funds from Heyford, the Company now has some cash but no decision has yet been
made on whether to pay this out as a dividend while the possibility of a further
investment in Coast Constructors Limited is being considered. Regardless, it
will be some time before all remaining investments are realised. By appointing a
liquidator and formally entering a winding up period, the Company will be able
to reduce the burden of running costs while these investment exits are pursued.
Based on the current valuations, the total return to Shareholders that the
Company ultimately achieves may be 85.6p which, while it is below the levels
that had been targeted, your Board considers to be a reasonable overall result.
It would provide Shareholders who invested at the launch of the Company with an
overall internal rate of return on their investment of approximately 7.5% per
annum when measured against the original cost of the shares of 60.0p net of
income tax relief, which compares favourably with other forms of investment over
the same period.
Hugh Gillespie
Chairman
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 Planned Exit VCT 4 plc via Thomson Reuters ONE
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