Downing Planned Exit VCT 7 plc
Second interim report for the twelve months ended 31 January 2015

PERFORMANCE SUMMARY

	31 Jan 2015		31 Jul 2014		31 Jan 2014
	pence		pence		pence
Net asset value per Ordinary Share	63.50		59.20		63.10
Cumulative distributions per Ordinary Share	17.75		17.75		13.75
Total return per Ordinary Share	81.25		76.95		76.85

CHAIRMAN'S STATEMENT
I am pleased to present a second interim report for the Company covering the twelve month period ended 31 January 2015.

Proposed Merger
As Shareholders will be aware, the Company has recently announced proposals to merge the Company with three other VCTs. Should Shareholder approval be given by all the companies involved, the merger will complete on 20 July and you will be issued with new shares in what will be known as "Downing FOUR VCT plc".

Shareholders should note that the merger will not have any impact on the VCT status of your investment and the planned exit strategy will be unaltered. It is proposed that Downing Planned Exit VCT 7 plc shares are merged into a new share class with those of Downing Planned Exit VCT 6 plc, which is the sister company and holds an identical portfolio and therefore has a very similar net asset value.

Downing Planned Exit VCT 7 plc by itself is now very small for a VCT and running costs are at their maximum level.  The merger will make the company part of a VCT with in excess of £60 million of net assets.  This will deliver pro-rata savings on running costs and provide some additional flexibility in continuing to comply with the VCT regulations and also when it comes to exiting from investments. It is expected that approximately 6%, being £25,000, of the total costs of merger will be borne by the Company, with 50% being contributed by the Manager, Downing LLP, and the remainder by the other merging companies. The costs are expected to be recouped in reduced running costs in a short period.

The Board believes that the merger is a positive development, which will put Shareholders in an improved position over the next two and a half years or so as the Company works towards the scheduled commencement of the exit process in 2018.

In view of these merger proposals, the Board decided to extend the Company's year end from 31 January to 31 July. This report has therefore been produced to update Shareholders on portfolio development up to 31 January 2015, the original year end date.

Net asset value and results
At 31 January 2015, the net asset value ("NAV") per share stood at 63.5p. This represents an increase of 4.4p per share (7.0%) over the 12 month period (after adding back the dividend of 4p per share paid in July 2014).

Total dividends paid to date by the Company are 17.75p per share. Total Return (NAV plus dividends paid to date) at 31 January 2015 is 81.25p per share compared to the original cost, net of income tax relief, of approximately 70.0p per share.

The profit on ordinary activities after taxation for the 12 month period, as set out in the Income Statement, was £264,000, comprising of a revenue profit of £276,000 and a capital loss of £12,000.

In line with the normal policy, the Company will pay a dividend of 4.0p per share on 20 July 2015 to Shareholders on the register at 3 July 2015. It is intended that this dividend policy will be unchanged by the proposed merger.

Venture capital investments
There has been a reasonable level of investment activity during the period and also in the months since the period end.

The most notable transaction was the disposal of two Hoole Hall companies which took place in February 2015.  These generated proceeds of £1.3 million at a small deficit to original cost. However, the disposal also allowed the Company to collect £377,000 of accrued loan stock interest, much of which had not previously been recognised in the Income Statement.

Also since the period end, the holding in Vermont Developments was sold at £130,000 above the previous carrying value.

Three new investments were made since the period end, each in renewable energy opportunities. A VCT qualifying investment of £410,000 was made in Oak Grove Renewables Limited, which is developing an anaerobic digestion plant. Two short-term non-qualifying loans were also made, totalling £610,000, in two ground-mounted solar operators, UK Solar (Lower Newton) LLP and UK Solar (Hartwell) LLP.

Following the disposal of Hoole Hall and Vermont, the Company now has a portfolio comprising 10 investments with a value of £2.3 million. The remaining investments are all performing in line with current expectations.

Share buybacks
The Company purchased 51,447 shares in the period at a price of 62.5p per share and 10,000 shares in the period at a price of 59.0p per share. These shares were subsequently cancelled.

It is intended that the Company's Share buyback policy will continue unchanged following the proposed merger, in that the Company will, subject to liquidity, regulatory and other constraints, purchase shares that become available in the market at a price close to net asset value.

Outlook
The Board is pleased with the improved performance shown by the portfolio in recent months and the fact that disposals of some of the larger investments have now been achieved. With some funds being reinvested, the portfolio now contains a mix of newer and older investments, which the Manager believes has prospects for further growth.

The small size of the Company has been a concern for the Board for some time. The Board believes that the merger proposals address these concerns and will provide you with the prospect of enhanced returns over the remaining planned exit life of your investment.

Hugh Gillespie
Chairman
23 June 2015

UNAUDITED SUMMARISED BALANCE SHEET

as at 31 January 2015

			31 Jan 2015		31 Jan 2014
			£'000		£'000
Fixed assets
Investments			2,907		3,164
Current assets
Debtors			557		163
Cash at bank and in hand			467		592
			1,024		755
Creditors: amounts falling due within one year			(113)		(84)
Net current assets			911		671
Net assets			3,818		3,835
Capital and reserves
Called up Ordinary Share Capital			6		6
Deferred shares			17		17
Capital redemption reserve			7		7
Share premium			1,126		1,126
Special reserve			4,632		4,670
Revenue reserve			457		181
Revaluation reserve			(1,277)		(1,243)
Capital reserve - realised			(1,150)		(929)
Equity shareholders' funds			3,818		3,835
Net asset value per Ordinary Share			63.5p		63.1p

UNAUDITED INCOME STATEMENT
for the twelve months ended 31 January 2015

	Year ended 31 Jan 2015				Year ended 31 Jan 2014
	Revenue	Capital	Total		Revenue	Capital	Total
	£'000	£'000	£'000		£'000	£'000	£'000
Income	451	-	451		244	-	244
Net loss on investments	-	(12)	(12)		-	(71)	(71)
	451	(12)	439		244	(71)	173
Investment management fees	7	-	7		(31)	-	(31)
Other expenses	(99)	-	(99)		(208)	-	(208)
Return/(loss) on ordinary activities before taxation	359	(12)	347		5	(71)	(66)
Taxation	(83)	-	(83)		(3)	-	(3)
Return/(loss) attributable to equity shareholders	276	(12)	264		2	(71)	(69)
Return per Ordinary Share	4.6p	(0.2p)	4.4p		0.0p	(0.8p)	(0.8p)

A Statement of Total Recognised Gains and Losses has not been prepared as all gains and losses are recognised in the Income Statement as noted above.

RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the twelve months ended 31 January 2015

			31 Jan 2015		31 Jan 2014
			£'000		£'000
Opening Shareholders' funds			3,835		6,113
Purchase of own shares			(38)		(1,851)
Dividends paid			(243)		(358)
Total recognised gains/(losses) for the period			264		(69)
Closing Shareholders' funds			3,818		3,835

 

UNAUDITED CASH FLOW STATEMENT

for the twelve months ended 31 January 2015

				Year ended 31 Jan 2015		Year ended 31 Jan 2014
Note				£'000		£'000
Cash (outflow)/inflow from operating activities and returns on investments	1			(77)		24
Taxation
Corporation tax paid				(12)		(13)
Capital expenditure
Purchase of investments				-		(157)
Proceeds from sale of investments				245		2,182
Net cash inflow from capital expenditure				245		2,025
Equity dividends paid				(243)		(358)
Net cash (outflow)/inflow before financing				(87)		1,678
Financing
Repurchase of own shares				(38)		-
Purchase of own shares through tender offer				-		(1,851)
Net cash outflow from financing				(38)		(1,851)
(Decrease) in cash	2			(125)		(173)
Notes to the cash flow statement:
1  Cash (outflow)/inflow from operating activities and returns on investments
Net revenue before taxation				347		(66)
Losses on investments				12		71
(Increase)/decrease in other debtors				(378)		57
(Decrease) in other creditors				(18)		(22)
(Decrease) in amounts due to subsidiary undertaking				(40)		(16)
Net cash (outflow)/inflow from operating activities				(77)		24
2 Analysis of net funds
Beginning of period				592		765
Net cash (outflow)				(125)		(173)
End of period				467		592

SUMMARY OF INVESTMENT PORTFOLIO
as at 31 January 2015

	Cost	Valuation	Unrealised loss in period	% of portfolio by value
	£'000	£'000	£'000
Qualifying investments
Cadbury House Holdings Limited	654	771	-	22.9%
Hoole Hall Country Club Holdings Limited	750	743	(74)	22.0%
Hoole Hall Spa and Leisure Club Limited	563	558	(55)	16.5%
The Thames Club Limited*	1,125	245	(35)	7.3%
Gatewales Limited	146	146	-	4.3%
Coast Constructors Limited	933	-	-	0.0%
	4,171	2,463	(164)	73.0%
Non-qualifying investments
Snow Hill Developments LLP	250	250	-	7.4%
Vermont Developments Limited	451	156	130	4.6%
Fenkle Street LLP	38	38	-	1.1%
Aminghurst Limited	207	-	-	0.0%
	946	444	130	13.1%
Total	5,117	2,907	(34)	86.1%
Cash at bank and in hand		467		13.9%
Total investments		3,374		100.0%

*partially non-qualifying investment

SUMMARY OF INVESTMENT MOVEMENTS
for the twelve months ended 31 January 2015

Disposals in the year ended 31 January 2015

	Cost	Market value at 01/02/14	Proceeds	Gain vs. cost	Total realised gain in period
	£'000	£'000	£'000	£'000	£'000
Qualifying investments
Gatewales Limited	96	96	96	-	-
	96	96	96	-	-
Non-qualifying investments
Moebius Two Limited	127	127	149	22	22
	127	127	149	22	22
	223	223	245	22	22

Additions in the three month period to 30 April 2015

		£'000
VCT qualifying investments
Oak Grove Renewables Limited		410
		410
Non-qualifying investments
UK Solar (Lower Newton) LLP		410
UK Solar (Hartwell) LLP		200
		610
		1,020

Disposals in the three month period to 30 April 2015

	Cost	Market value at  01/02/15	Proceeds	Gain vs. cost	Total realised (loss)/gain in period
	£'000	£'000	£'000	£'000	£'000
Qualifying investments
Hoole Hall Country Club Holdings Limited	750	743	743	(7)	-
Hoole Hall Spa and Leisure Limited	563	558	558	(5)	-
Cadbury House Holdings Limited	51	66	81	30	15
	1,364	1,367	1,382	18	15
Non-qualifying investments
Vermont Developments Limited	451	156	156	(295)	-
	451	156	156	(295)	-
	1,815	1,523	1,538	(277)	15

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
1. The unaudited results cover the twelve months to 31 January 2015 and have been prepared in accordance with the accounting policies set out in the statutory accounts for the year ended 31 January 2014 which were prepared under UK Generally Accepted Accounting Practice ("UK GAAP") and in accordance with the Statement of Recommended Practice "Financial Statements of Investment Trust Companies" revised January 2009 ("SORP").

2. All revenue and capital items in the Income Statement derive from continuing operations.

3. The Company has only one class of business and derives its income from investments made in shares, securities and bank deposits.

4. Net asset value per share has been calculated on 6,013,592 Ordinary Shares, being the shares in issue at the period end.

5. Return per share for the period has been calculated on 6,048,693 Ordinary Shares, being the weighted average number of shares in issue during the period.

6. Dividends

	31 Jan 2015			31 Jan 2014
	Revenue	Capital	Total		Total
	£'000	£'000	£'000		£'000
Paid in year
2014 Final	-	243	243		-
2013 Final	-	-	-		358
	-	243	243		358

7. Reserves

	Capital redemption reserve			Share Premium Account	Special Reserve	Revenue reserve	Revaluation reserve	Capital reserve- realised
			£'000	£'000	£'000	£'000	£'000	£'000
At 1 February 2014			7	1,126	4,670	181	(1,243)	(929)
Purchase of own shares			-	-	(38)	-	-	-
Net (loss)/gains on investments			-	-	-	-	(34)	22
Transfer between reserves			-	-	-	-	-	-
Dividends paid			-	-	-	-	-	(243)
Retained net revenue			-	-	-	276	-	-
At 31 January 2015		7		1,126	4,632	457	(1,277)	(1,150)

The Special reserve, Capital reserve - realised and Revenue reserve are all distributable reserves. Revaluation reserve includes losses of £1,445,000 which are included in the calculation of distributable reserves. Total distributable reserves at 31 January 2015 were £2,494,000.

8. The Directors confirm that, to the best of their knowledge, the second interim report has been prepared in accordance with the "Statement: Half-Yearly Financial Reports" issued by the UK Accounting Standards Board and the second interim report includes a fair review of the information required by:

a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the second six months of the financial period and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining period; and

b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the second six months of the current financial period and that have materially affected the financial position or performance of the entity during that period, and any changes in the related party transactions described in the last annual report that could do so.

9. Risks and uncertainties
The Board has reviewed the principal risks and uncertainties facing the Company over the remainder of the financial period and concluded that the key risks are:

• investment risk associated with investing in small and immature businesses; and
• failure to maintain approval as a VCT.

In both cases the Board is satisfied with the Company's approach to these risks. The strategy of, where possible, taking charges over assets to secure its investments helps to limit any potential losses which could arise from the failure of an investee business.

The Company continually monitors its compliance with the VCT regulations and has appointed Robertson Hare LLP to provide regular reviews and advice in this area. The Board considers that this approach reduces the risk of a breach of the VCT regulations to a minimal level.

10. Going concern
The Directors have reviewed the Company's financial resources at the period end and concluded that the Company is well placed to manage its business risks.

11. The Board confirms that it is satisfied that the Company has adequate resources to continue in business for the foreseeable future. For this reason, the Board believes that the Company continues to be a going concern and that it is appropriate to apply the going concern basis in preparing the financial statements.

12. The unaudited condensed financial statements set out herein do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006 and have not been delivered to the Registrar of Companies. The figures for the year ended 31 January 2014 have been extracted from the financial statements for that year, which have been delivered to the Registrar of Companies; the auditors' report on those financial statements was unqualified.

13. Copies of the unaudited results for the twelve months ended 31 January 2015 will be sent to Shareholders shortly. Further copies can be obtained from the Company's registered office and will be available for download from www.downing.co.uk.