Net Asset Value and portfolio update
Updated : 12:30
Downing TWO VCT plc
Unaudited Net Asset Values and Portfolio Update
LEI: 213800HLGTPWF8YEY55
15 April 2019
The Company announces that its unaudited Net Asset Values as at 31 December 2018 are as follows:
| Unaudited NAV at 31 Dec 2018 | Dividends paid to date | Total Return | |
| Share Class | Pence | Pence | Pence |
| F Share | 28.7 | 67.0 | 95.7 |
| G Share | 60.9 | 37.5 | 98.4 |
The performance of the Share classes has been impacted by significant issues encountered at three portfolio companies. These are summarised as follows:
Apex Energy Limited
Apex Energy is the developer of a reserve power generation plant in the East Midlands run by a third party operator. There have been several material shortcomings in the plant and equipment supplied to the company that have severely impacted operations. Work is ongoing to establish what steps could result in some recovery of value, including legal action against the third party operator. The investment has been reduced in value by £900,000 per F Share and £1.17 million per G Share, being 90% of the original cost (equivalent to 8.3p per F Share and 4.6p per G Share)
Hermes Wood Pellets Limited
Hermes was planning to build, commission and operate a wood pelleting plant in Goole, Yorkshire. The anticipated cost of constructing the wood pellet manufacturing plant in Goole significantly exceeded the estimates which were reviewed in the due diligence and investment process. Whilst the management team believed that these cost over-runs could be mitigated, this was not the case and it is unclear whether the project remains financially viable. Management is working to find a solution to recover some equity value to shareholders. As a result, a significant shortfall has been created resulting in a valuation write down of £848,000 per G Share, being 85% provision against original cost (equivalent to 3.4p per G Share).
Zora Energy Renewables Limited
Zora Energy is a wood pellet sales and distribution business. To date the business has been unable develop at the rate originally planned due to supply issues and is unclear now whether this is a viable business. A provision of £672,000 per G Share has been required, being 90% of original cost (equivalent to 2.7p per G Share). Management is exploring solutions for the business, including a sale to a third party.