TIDMDDV1
Downing ONE VCT plc
Half-Yearly Report for the
six months ended 30 September 2019
FINANCIAL SUMMARY
30 Sep 31 Mar 30 Sep Nov
2019 2019 2018 2013
pence pence pence pence
Net Asset Value per share ("NAV") 75.5 78.3 87.7 100.4
Cumulative dividends paid since 12 Nov 2013 33.5 31.5 28.5 0.0
------ ------ ------ -----
Total return 109.0 109.8 116.2 100.4
====== ====== ====== =====
(NAV plus cumulative dividends paid per share)
CHAIRMAN'S STATEMENT
I present the Company's half-yearly report for the six-month period
ended 30 September 2019. The period saw a continued high level of
investment activity as the task of deploying the company's available
funds continues, as well as a number of realisations from the existing
investment portfolio.
The uncertain market conditions in the quoted portfolio, coupled with a
small number of disappointing setbacks in the unquoted portfolio has
resulted in a minor decrease in NAV (after adjusting for dividends paid)
since the 31 March 2019 year end.
Net asset value and results
As at 30 September 2019, the Company's NAV stood at 75.5p, a decrease of
0.8p (or 1.0%) compared to the 31 March 2019 year-end position, after
adding back the 2.0p dividend paid during the period.
The return attributable to equity shareholders for the period was a loss
of GBP1.1 million, comprising a revenue loss of GBP99,000 and a capital
loss of GBP983,000.
Investment activity and performance
The Company has been an active investor during the period with ten
qualifying investments and one non-qualifying investment made totalling
GBP4.2 million. Four of these were new investments and seven were follow
on investments into existing portfolio companies. There were a number
of disposals and part disposals in the period. Total realisations in the
period generated proceeds of GBP6.6 million, resulting in a minor net
realised loss of GBP4,000.
At the period end, the Company held a portfolio of 89 investments, with
29% (by value) held in quoted growth, 47% (by value) in unquoted income
and 24% (by value) in unquoted growth. 30 investments are held in the
quoted growth category which are either quoted on AIM or the NEX
Exchange Growth Market and have a value of GBP23.7 million. The 59
unquoted investments have a value of GBP57.7 million.
At the period end the Board has reviewed the unquoted valuations and
approved a number of adjustments. Net unrealised losses across the
unquoted and quoted portfolio over the period were GBP730,000.
Further details of the investment activities of the Company are in the
Investment Adviser's Report below.
Dividends
The Company has a stated policy of seeking to pay dividends equivalent
to at least 4% of net asset value each year. Consistent with this policy,
the Board has declared an interim dividend of 2.0p which will be paid on
28 February 2020 to Shareholders on the register as at 7 February 2020.
This will take the total dividends paid since the merger in November
2013 to 35.5p.
Fundraising
The Company launched a new offer for subscription on 19 September 2019,
seeking to raise up to GBP15 million, with the option of a further GBP25
million. The offer has been well received by the market in the three
months that it has been opened, with GBP3.4 million being raised to
date.
General Meeting
The Company held a General Meeting on 6 November 2019 seeking
Shareholder approval for resolutions in connection with the new
fundraising offer, to revise the investment strategy to align with
future investment into young growth businesses and amend arrangements
with the Investment Adviser. All resolutions proposed were approved.
In line with the resolutions, Downing LLP's annual management charge has
been increased from 1.8% to 2.0% per annum and the cap on annual running
costs provided by Downing LLP has reduced from 2.75% to 2.6% with effect
from 1 October 2019.
Share buybacks
The Company operates a policy of buying in its own shares that become
available in the market at a 5% discount to NAV (subject to liquidity
and any regulatory restrictions).
During the period, the Company purchased 1,159,749 shares at an average
price of 73.5p per Ordinary Share, being a 5% discount to the latest
announced NAV at the time of purchase.
VCT Qualification
From 1 April 2020, the proportion of funds required to be invested in
VCT qualifying investments for the Company will increase from 70% to
80%. Currently, the VCT holds 76.4% of its total investments in
qualifying assets. The Board continues to monitor the qualification
level closely and is confident of exceeding the 80% target by the end of
the current accounting period.
Outlook
In the period from the merger in 2013 to 30 September 2018, the Company
experienced moderate but consistent growth in its Total Return. In the
last 12 months, the Company has suffered from a number of factors that
have impacted performance.
The unquoted income-focussed investments suffered from a small number of
major setbacks in the last financial year. The quoted investments have
suffered from uncertain market conditions producing falls in share
prices from which they have yet to recover significantly. Unfortunately,
the VCT regulations now mostly prevent the Company from taking advantage
of these lower prices by adding to the existing quoted holdings.
With the continued delay to Brexit, the political and economic
uncertainty in the UK is expected to remain for some time. The
Investment Adviser believes that the quoted portfolio share prices do
not currently reflect the intrinsic value of the underlying businesses
and there are therefore prospects for growth. However, any significant
recovery is unlikely to take place until the outcome and full impact of
Brexit are clear.
It is too early to form a view as to the ultimate success of the
portfolio of young unquoted growth investments that the Company has made
over the last couple of years. Weaker businesses in this sector tend to
become apparent well before the stronger businesses prove themselves.
This is the effect that we have started to see recently. The Investment
Adviser works very closely with all of these businesses to ensure that
the potential successes are identified and nurtured, while tough
decisions about the businesses which ultimately may fail are taken at
the earliest opportunity.
Funds raised under the new share offer will ensure that the Company is
able to continue to add new businesses to the portfolio as well as
support existing investments that require further funds. The Company's
next report to Shareholders will be the Annual Report of the year ended
31 March 2020 which is expected to be published in July 2020.
Chris Kay
Chairman
INVESTMENT ADVISER'S REPORT - OVERVIEW
Introduction
We present a review of the investment portfolio and activity over the
six months to 30 September 2019. Our review is split into three parts
comprising this overview, an unquoted investments review and a report on
the quoted investments.
Portfolio Overview
At 30 September 2019, the Company held a portfolio of 89 investments,
valued in total at GBP81.4 million.
There have been some positives and negatives within the portfolio over
the period, resulting in a fall in value across both the quoted and
unquoted portfolios. Despite the decrease to investment valuations in
the period, over three quarters of the portfolio remains held at a
valuation either at or above cost.
Portfolio Performance
The net unrealised losses in the quoted portfolio totalled GBP434,000.
The largest unrealised gains in the quoted portfolio were Inland Homes
plc (GBP611,000), Cohort plc (GBP318,000) and Angle plc (GBP247,000).
These were offset by unrealised losses on Bonhill Group plc (GBP438,000),
Downing Strategic Micro-Cap Investment Trust plc (GBP328,000) and
Tracsis plc (GBP270,000).
There were several valuation movements in the unquoted portfolio in the
period totalling an unrealised loss over valuation of GBP296,000. Within
the unquoted portfolio, the largest unrealised gains related to Baron
House Developments LLP (GBP1.1 million) and Harrogate Street LLP
(GBP657,000). These gains were offset but a small number of material
unrealised losses in the unquoted portfolio, most notably to Empiribox
Limited (GBP747,000), Jito Trading Limited (GBP727,000) and Live Better
With Limited (GBP495,000).
Further details on these and other movements can be found within the
quoted and unquoted Investment Adviser Reports below.
Portfolio Composition
As noted in the 2019 annual report, the underlying investments in the
portfolio are expected to shift from income to growth investments, in
line with changes in the VCT regulations. In the six months to 30
September 2019, this has not been proven as a result of a number of
write downs in the period, mainly attributable to the growth portfolio,
with the quoted growth and unquoted growth sectors returning an
unrealised loss of 0.4p and 1.1p respectively, contrasting to a 0.9p
unrealised gain in the unquoted income sector.
However, it is our expectation that the proportion of growth investments
in the portfolio, particularly the unquoted growth investments, will
increase over the coming years.
The diversified portfolio illustrates that that the main sectors that
the Company are invested continue to be Alternative Energy, Leisure and
Software and Computer Services, albeit the maximum exposure to any
sector is 15%.
Net asset value and results
The net asset value per Share ("NAV") at 30 September 2019 stood at
75.5p, compared to the NAV at 31 March 2019 of 78.3p. Total Return (NAV
plus cumulative dividends paid since the merger in 2013) is 109.0p.
Outlook
In the period to 30 September 2019, the Company has demonstrated a high
level of deal flow with GBP4.2 million being invested to date, which we
expect to maintain over the remainder of the year.
It has been disappointing to report further write downs to a small
number of the earlier stage companies. However, shareholders should be
assured that the investment adviser has devoted notable resources to
address the issues that have occurred. Uncertain market conditions have
also resulted in falls in the quoted stocks, however we remain positive
in the longer-term prospects for the existing portfolio.
We remain satisfied with the composition of the portfolio for the period
to 30 September 2019, as focus remains on the close monitoring of the
current portfolio. In addition, we shall continue to utilise the
remaining cash in the Company as well as the additional funds raised
from the current offer and expect the Company to be an active investor
over the remainder of the year.
INVESTMENT ADVISER'S REPORT -- UNQUOTED PORTFOLIO
We present a review of the unquoted investment portfolio for the six
months ended 30 September 2019.
Investment activity
At 30 September 2019, the unquoted portfolio was valued at GBP57.7
million, comprising 59 investments spread across a number of sectors.
During the period, the Company invested a total of GBP4.0 million in
unquoted companies comprising four new investments and six follow-on
investments.
The four new qualifying investments that were made during the six month
period are as follows:
JRNI Limited (GBP525,000) is a leading, business to business (B2B)
software platform that enables companies to offer online appointment and
event booking to their customers and staff in real-time.
Hummingbird Technologies Limited (GBP500,000) is an advanced crop
analytics platform that is powered by machine learning and aerial
imagery to asses and predict crop health.
Cambridge Touch Technologies Limited (GBP459,000) is developing pressure
sensitive multi touch technology that is simpler to integrate in touch
panels such as mobile phone devices.
StreetHub Limited, trading as Trouva (GBP300,000) is an online
marketplace for curated homeware and lifestyle products.
Follow on investments totalling GBP2.2 million were made into Limitless
Limited (GBP584,000), Volo Commerce Limited (GBP510,000), Lignia Wood
Company Limited (GBP333,000), Channel Mum Limited (GBP300,000),
Empiribox Limited (GBP250,000) and E-Fundamentals Limited (GBP250,000).
Details of the small number of realisations in the year are set out
below. Total proceeds of GBP2.9 million were generated, producing
profits over holding value of GBP56,000.
Leytonstone Pub Limited, the owner of The Red Lion located in
Leytonstone, London, was the largest disposal during the period after
redeeming loans of GBP1.6 million in full.
One other notable exit was in Wickham Solar Limited, the owner of a
5.6MW ground mounted solar farm in Bourne, Lincolnshire which was exited
in full, realising a gain over holding value of GBP56,000.
Portfolio valuation
A number of adjustments to carrying values have been made at the period
end, resulting in an overall loss of GBP296,000. The most significant of
which are summarised below.
The largest fall in value was in Empiribox Limited, the provider of
equipment and training to primary schools across the UK. Due to
operational issues experienced in the company and cash restrictions
within primary schools in the UK, the equity value has been reduced to
nil, resulting in an unrealised loss of GBP747,000.
Jito Trading Limited, the developer of a wood pelleting plant in Weitra,
Austria has suffered a further write down of GBP727,000. This has arisen
as a result of it becoming clear that the company's projections were
overoptimistic in terms of both costs to develop the plant and future
trading prospects.
Live Better With Limited, a developer of a healthcare website aiming to
help people with long-term medical conditions, has been reduced in value
by GBP495,000 as a result of significant underperformance.
The losses encountered were partly offset by a number of gains across
the portfolio. The most significant gain in the period related to Baron
House Developments LLP, a company created to fund the purchase of a
property opposite Newcastle station, which qualifies under the BPRA
scheme. At the period end, an uplift of GBP1.1 million was recognised,
following improved trading and an uplift in the value of the hotel site.
Outlook
We remain satisfied with the composition of the portfolio for the period
to 30 September 2019, despite the significant challenges faced by a
limited number of investments which has impacted performance.
We believe that the portfolio includes businesses that can deliver good
rewards over time and expect to see further investment into a good
pipeline of investment over the remainder of the period.
INVESTMENT ADVISER'S REPORT -- QUOTED PORTFOLIO
Quoted investments
Investment activity
At 30 September 2019 the quoted portfolio was valued at GBP23.7 million
comprising 30 active investments.
It was a relatively quiet period, during which the quoted portfolio made
one full exit in Finsbury Food Group plc, a partial sale in Craneware
plc, and a follow-on investment in the Downing Strategic Micro-Cap
Investment Trust plc.
In August 2019, the boards of Sanderson Group plc and Aptean Bidco
announced they had agreed terms of a recommended cash acquisition by
Aptean Bidco to acquire the entire issued share capital of Sanderson
Group. Following shareholder approval, shareholders were entitled to
receive 140 pence per share.
Realisations of quoted investments generated proceeds of GBP128,000 and
a gain over holding value of GBP6,000. The largest of these gains
related to Finsbury Food Group plc, a leading UK speciality bakery
manufacturer of cake, break and morning goods for the retail and
foodservice channels, generating proceeds of GBP843,000 and producing a
gain over holding value of GBP155,000.
Portfolio valuation
Overall, the quoted portfolio produced unrealised losses of GBP434,000.
The most notable movements are summarised below.
Cohort plc provides a wide range of services and products for domestic
and export customers in defence and related markets. During the period
its share price appreciated as the group announced positive progress,
achieving a record adjusted operating profit and record order intake.
In addition, three significant new contract wins in the period enhanced
the visibility of future group revenue. This resulted in an increase in
market value of GBP318,000.
Inland Homes plc is a land developer focusing on residentially-led,
mixed-use brownfield sites in the South of England. During the period,
the group announced that it had received planning consent for its
flagship site at Wilton Park Buckinghamshire, a site that has an
estimated gross development value of GBP350 million. We believe that
strategic land is now making a positive contribution to the group's
profitability. This led to an increase in market value of GBP611,000.
The most significant decrease in the period was to Bonhill Group plc
(formerly Vitesse Media plc), a business to business (B2B) media company
providing business information, live events and data and insight
propositions to international business communities. The group reported
that a challenging US market impacted trading at InvestmentNews, its US
business. In addition, the lack of fund flows in the UK fund management
industry and the ongoing issues in Hong Kong have impacted performance.
Full year revenue and EBITDA will be below market expectations and this
resulted in a decrease in market value of GBP437,000. However, we are
confident that the group will enter 2020 in a stronger position.
Downing Strategic Micro-Cap Investment Trust plc also had a decrease in
value across the period. We believe a combination of uncertainty,
failing markets and poor sentiment towards UK smaller companies has
driven micro-cap share prices down excessively over the last six months.
The Trust's share price fell and the discount to net asset value widened
over the last reporting period. This has resulted in a decrease in
market value over the period of GBP328,000. Given the upside that the
manager sees in this portfolio, an additional investment of GBP197,000
was made to take advantage on the discount on the NAV.
Outlook
We believe the portfolio is well positioned to grow over the coming
years, but the political and economic background remains challenging.
This environment is particularly difficult for small and micro-cap
companies that have been impacted by poor market sentiment and whose
share prices have been driven down because they are generally perceived
to raise most of their revenues from the domestic market.
However, despite the headwinds, we believe that the outlook for young
and growing companies remains positive and should support future growth.
Downing LLP
UNAUDITED BALANCE SHEET
as at 30 September 2019
30 Sep 30 Sep
2019 2018 31 Mar 2019
GBP'000 GBP'000 GBP'000
Fixed assets
Investments 81,388 91,628 84,483
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Current assets
Debtors 3,519 2,168 3,228
Cash at bank and in hand 16,517 24,021 17,222
------- ------- -----------
20,036 26,189 20,450
Creditors: amounts falling due within one
year (868) (403) (383)
Net current assets 19,168 25,786 20,067
------- ------- -----------
Net assets 100,556 117,414 104,550
======= ======= ===========
Capital and reserves
Called up share capital 1,329 1,338 1,334
Capital redemption reserve 1,608 1,586 1,597
Share premium 45,989 44,923 45,515
Funds held in respect of shares not yet
allotted 237 60 114
Special reserve 51,965 60,390 52,526
Capital reserve -- unrealised (1,709) 8,899 1,343
Revenue reserve 1,137 218 2,121
Equity shareholders' funds 100,556 117,414 104,550
======= ======= ===========
Basic and diluted net asset value per 75.5p 87.7p 78.3p
share
UNAUDITED INCOME STATEMENT
for the six months ended 30 September 2019
Year ended
Six months ended Six months ended 31 March
30 September 2019 30 September 2018 2019
Revenue Capital Total Revenue Capital Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 1,232 100 1,332 1,750 90 1,840 4,727
Gains on
investments
- realised - (4) (4) - 39 39 (30)
- unrealised - (730) (730) - 3,890 3,890 (6,287)
1,232 (634) 598 1,750 4,019 5,769 (1,590)
Investment
management
fees (461) (461) (922) (510) (510) (1,020) (1,950)
Other expenses (758) - (758) (381) - (381) (732)
Return on
ordinary
activities
before tax 13 (1,095) (1,082) 859 3,509 4,368 (4,272)
Tax on total
comprehensive
income and
ordinary
activities (112) 112 - (128) 128 - -
Return
attributable
to equity
shareholders (99) (983) (1,082) 731 3,637 4,368 (4,272)
======= ======= ======= ======= ======= ======= ==========
Basic and
diluted return
per share (0.1p) (0.7p) (0.8p) 0.5p 2.7p 3.2p (3.2p)
The total column within the Income Statement represents the Statement of
Total Comprehensive Income of the Company prepared in accordance with
Financial Reporting Standards ("FRS102"). There are no other items of
comprehensive income. The supplementary revenue and capital return
columns are prepared in accordance with the Statement of Recommended
Practice issued in November 2014 by the Association of Investment
Companies ("AIC SORP").
STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 September 2019
Funds held in
Capital Share respect of Capital
Share redemption premium shares not yet Special reserve Revaluation Revenue
Capital reserve account allotted reserve -realised reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
For the six months ended 30 September 2019
At 1 Apr 2019 1,334 1,597 45,515 114 52,526 - 1,343 2,121 104,550
Total comprehensive
income - - - - - (253) (730) (99) (1,082)
Realisation of revaluations
from previous years* - - - - - 1,752 (1,752) - -
Realisation of impaired
valuations - - - - - 570 (570) - -
Transfer between
reserves** - - - - 298 (298) - - -
Transactions with owners
Unallotted shares - - - 123 - - - - 123
Dividends paid - - - - - (1,771) - (885) (2,656)
Issue of new shares 6 - 474 - - - - - 480
Share issue costs - - - - (3) - - - (3)
Purchase of own
shares (11) 11 - - (856) - - - (856)
At 30 Sept 2019 1,329 1,608 45,989 237 51,965 - (1,709) 1,137 100,556
======== =========== ======== =============== ======== ========== =========== ======== =======
* A transfer of GBP1.8 million representing previously recognised
unrealised gains on disposal of investments during the period ended 30
September 2019 (year ended 31 March 2019: losses GBP1.6 million) has
been made from the Capital reserve - realised to the Revaluation
reserve.
** A transfer of GBP298,000 representing realised gains on disposal of
investments, less net investment impairments and the excess of capital
expenses over capital income and capital dividends in the year (year
ended 31 March 2019: GBP7.3 million) has been made from Capital Reserves
- realised to Special reserve.
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2019
Funds
held in respect
Capital Share of shares Capital
Share redemption premium not yet Special reserve Revaluation Revenue
Capital reserve account allotted reserve -realised reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
For the year ended 31 March 2019
At 1 Apr 2018 1,200 1,574 31,661 12,876 64,859 - 4,909 828 117,907
Total comprehensive
income - - - - - (618) (6,287) 2,634 (4,271)
Realisation of
revaluations from
previous years - - - - - (1,598) 1,598 - -
Realisation of
impaired
valuations - - - - - (1,123) 1,123 - -
Transfer between
reserves - - - - (10,018) 10,018 - - -
Transactions with owners
Unallotted shares - - - (12,762) - - - - (12,762)
Dividends paid - - - - - (6,679) - (1,341) (8,020)
Issue of new shares 157 - 13,854 - - - - - 14,011
Share issue costs - - - - (470) - - - (470)
Purchase of own
shares (23) 23 - - (1,845) - - - (1,845)
------- ----------- -------- ---------------- -------- ---------- ----------- -------- --------
At 31 Mar 2019 1,334 1,597 45,515 114 52,526 - 1,343 2,121 104,550
======= =========== ======== ================ ======== ========== =========== ======== ========
UNAUDITED CASH FLOW STATEMENT
for the six months ended 30 September 2019
30 Sep 30 Sep 31 Mar
2019 2018 2019
GBP'000 GBP'000 GBP'000
Cash flow from operating activities
Profit/(loss) on ordinary activities
before taxation (1,082) 4,368 (4,272)
(Gains)/loss on investments 734 (3,929) 6,317
Increase in debtors (291) (594) (1,654)
(Decrease)/increase in creditors 279 (179) (76)
Cash from operations
Corporation tax paid - - -
Net cash (utilised)/generated from
operating activities (360) (334) 315
--------- -------- ---------
Cash flow from investing activities
Purchase of investments (4,208) (6,300) (12,501)
Proceeds from disposal of investments 6,570 189 3,289
Net cash (utilised)/generated from
investing activities 2,362 (6,111) (9,212)
--------- -------- ---------
Cash flows from financing activities
Proceeds from share issue 480 13,412 14,011
Funds held in respect of shares not yet
allotted 123 (12,816) (12,762)
Share issue costs (3) (468) (470)
Purchase of own shares (651) (1,098) (2,096)
Equity dividends paid (2,656) (4,020) (8,020)
Net cash (utilised)/generated from
financing activities (2,707) (4,990) (9,337)
--------- -------- ---------
(Decrease)/increase in cash (705) (11,435) (18,234)
========= ======== =========
Net increase in cash
Beginning of period 17,222 35,456 35,456
Net cash (outflow)/inflow (705) (11,435) (18,234)
--------- -------- ---------
End of period 16,517 24,021 17,222
========= ======== =========
SUMMARY OF INVESTMENT PORTFOLIO
as at 30 September 2019
Valuation % of
movement portfolio
Cost Valuation in period by value
GBP'000 GBP'000 GBP'000
Top twenty venture capital
investments (by value)
Doneloans Limited 5,000 5,627 1 5.7%
Tracsis plc* 1,443 4,585 (270) 4.7%
Downing Care Homes Holdings
Limited 3,880 4,495 - 4.6%
Baron House Developments LLP 2,695 3,773 1,078 3.9%
Downing Strategic Micro-Cap
Investment Trust plc** 5,197 3,418 (328) 3.5%
Cadbury House Holdings Limited 3,082 3,075 - 3.1%
Pilgrim Trading Limited 2,594 2,594 - 2.6%
Inland Homes plc* 1,526 2,412 611 2.5%
Xupes Limited 2,250 2,250 - 2.3%
Leytonstone Pub Limited 361 2,061 (75) 2.1%
Harrogate Street LLP 1,400 2,057 657 2.1%
Anpario plc* 1,448 1,979 - 2.0%
Craneware plc* 353 1,877 61 1.9%
Avid Technologies Group Limited 1,351 1,659 - 1.7%
Pearce & Sanders Limited 1,320 1,605 (48) 1.6%
Lignia Wood Company Limited 1,444 1,533 - 1.6%
Pantheon Trading Limited 1,500 1,500 - 1.5%
Data Centre Response Limited 557 1,414 148 1.4%
Universe Group plc* 1,506 1,350 (11) 1.4%
Nomansland Biogas Limited 1,300 1,300 - 1.3%
40,207 50,564 1,824 51.5%
Other venture capital investments 43,842 30,824 (2,554) 31.6%
------- --------- ---------- ----------
84,049 81,388 (730) 83.1%
======= ==========
Cash at bank and in hand 16,517 16.9%
--------- ----------
Total investments 97,905 100%
========= ==========
All venture capital investments are unquoted unless otherwise stated.
* Quoted on AIM
** Listed and traded on the Main Market of the London Stock Exchange
SUMMARY OF INVESTMENT MOVEMENTS
for the six months ended 30 September 2019
Additions
GBP'000
Quoted
Downing Strategic Micro-Cap Investment Trust plc 197
-------
197
-------
Unquoted
Limitless Limited 584
JRNI Limited 525
Volo Commerce Limited 510
Hummingbird Technologies Limited 500
Cambridge Touch Technologies Limited 459
Lignia Wood Company Limited 333
Channel Mum Limited 300
StreetHub Limited 300
Empiribox Limited 250
E-Fundamentals Limited 250
-------
4,011
-------
Total additions 4,208
=======
Disposals
Gain/(loss) Realised
Value at Disposal against gain
Cost 31/03/19* Proceeds cost in period
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Quoted
Sanderson Group plc 336 461 701 365 240
Finsbury Food Group
plc 655 688 843 188 155
Craneware plc 497 2,550 2,095 1,598 (455)
1,488 3,699 3,639 2,151 (60)
------- ---------- ---------- ----------- ----------
Unquoted
Including loan note
redemptions
Wickham Solar
Limited 473 660 716 243 56
Mosaic Spa and
Health Clubs
Limited 706 58 58 (648) -
Pabulum Limited 607 607 607 - -
Leytonstone Pub
Limited 1,550 1,550 1,550 - -
3,336 2,875 2,931 (405) 56
------- ---------- ---------- ----------- ----------
4,824 6,574 6,570 1,746 (4)
======= ========== ========== =========== ==========
* adjusted for purchases in the period
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
for the six months ended 30 September 2019
1. General Information
Downing ONE VCT plc ("the Company") is a Venture Capital Trust
established under the legislation introduced in the Finance Act 1995 and
is domiciled in the United Kingdom and incorporated in England and
Wales.
2. Basis of accounting
The unaudited half-yearly financial results cover the six months to 30
September 2019 and have been prepared in accordance with the accounting
policies set out in the statutory accounts for the year ended 31 March
2019, which were prepared in accordance with the Financial Reporting
Standard 102 ("FRS102") and in accordance with the Statement of
Recommended Practice "Financial Statements of Investment Trust
Companies" revised November 2014 ("SORP").
3. The Company has only one class of business and derives its income
from investments made in shares, securities and bank deposits.
4. The comparative figures were in respect of the six months ended 30
September 2018 and the year ended 31 March 2019 respectively.
5. Return per share
Capital
Weighted average Revenue Gain/
number of shares in issue Return (loss)
GBP'000 GBP'000
Period ended 30 September 2019 133,357,325 (99) (983)
======= =======
Period ended 30 September 2018 133,284,857 731 3,637
======= =======
Year ended 31 March 2019 133,474,895 2,634 (6,906)
======= =======
6. Dividends paid in the period
Six months ended Year ended
30 September 31 March
2019 2019
Revenue Capital Total Total
Date paid GBP'000 GBP'000 GBP'000 GBP'000
30 August 2019:
2019 Final 2.0p 885 1,771 2,656 -
22 February 2019:
2019 Interim 3.0p - - - 4,001
24 August 2018:
2018 Final 3.0p - - - 4,019
------- ------- ------- ----------
885 1,771 2,656 8,020
======= ======= ======= ==========
7. Basic and diluted net asset value per share
Net NAV per
Shares in issue assets share
GBP'000 pence
Period ended 30 September 2019 132,902,307 100,556 75.5
=======
Period ended 30 September 2018 133,822,737 117,414 87.7
=======
Year ended 31 March 2019 133,444,807 104,550 78.3
=======
8. Called up share capital
Shares in
issue GBP'000
Period ended 30 September 2019 132,902,307 1,329
=======
Period ended 30 September 2018 133,822,737 1,338
=======
Year ended 31 March 2019 133,444,807 1,334
=======
9. Reserves
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
dividends/capital distributions.
30 Sep 30 Sep 31 Mar
2019 2018 2019
GBP'000 GBP'000 GBP'000
Capital redemption reserve 1,608 1,586 1,597
Share premium account 45,989 44,923 45,515
Funds held in respect of shares not
yet allotted 237 60 114
Special reserve 51,965 60,390 52,526
Revaluation reserve (1,709) 8,899 1,343
Revenue reserve 1,137 218 2,121
----------- --------- -------
Total reserves 99,227 116,076 103,216
=========== ========= =======
Distributable reserves are calculated as follows:
30 Sep 30 Sep 31 Mar
2019 2018 2019
GBP'000 GBP'000 GBP'000
Special reserve 51,965 60,390 52,526
Revenue reserve 1,137 218 2,121
Unrealised gains/(losses)
(excluding unrealised unquoted gains) (10,144) 3,629 (5,989)
--------- ------- --------
42,958 64,237 48,658
========= ======= ========
10. Investments
The fair value of investments is determined using the detailed
accounting policy as shown in the audited financial statements for the
year ended 31 March 2019. The Company has categorised its financial
instruments using the fair value hierarchy as follows:
Level 1 Reflects financial instruments quoted in an active market
(quoted companies and fixed interest bonds);
Level 2 Reflects financial instruments that have prices that are
observable either directly or indirectly; and
Level 3 Reflects financial instruments that use valuation techniques
that are not based on observable market data (investments in unquoted
shares and loan note investments).
30 Sep 31 Mar
Level 1 Level 2 Level 3 2019 Level 1 Level 2 Level 3 2019
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Quoted on AIM 19,203 - - 19,203 23,027 - - 23,027
Quoted on NEX 8 - - 8 18 - - 18
Quoted on
Main market 4,499 - - 4,499 4,600 - - 4,600
Unquoted loan
notes - - 22,330 22,330 - - 21,645 21,645
Unquoted
equity - - 35,348 35,348 - - 35,193 35,193
23,710 - 57,678 81,388 27,645 - 56,838 84,483
========= ========= ========= ======= ========= ========= ========= =======
11. The unaudited 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 March 2019 have been extracted from the
financial statements for that year, which have been delivered to the
Registrar of Companies; the Auditor's report on those financial
statements was unqualified.
12. 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.
The Directors confirm that they are satisfied that the Company has
adequate resources to continue to operate for the foreseeable future.
For this reason, the Directors believe 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.
13. Risks and uncertainties
Under the Disclosure and Transparency Rules, the Board is required, in
the Company's half-year results, to report on principal risks and
uncertainties facing the Company over the remainder of the financial
year.
The Board has concluded that the key risks are:
(i) compliance risk of failure to maintain approval as a VCT; and
(ii) investment risk associated with investing in small and immature
businesses.
The Company's compliance with the VCT regulations is continually
monitored by the Adviser, who regularly reports to the Board on the
current position. The Company also retains Philip Hare & Associates LLP
to provide regular reviews and advice in this area.
In order to make VCT qualifying investments, the Company has to invest
in small businesses which are often immature. It also has a limited
period in which it must invest the majority of its funds into VCT
qualifying investments. The Adviser follows a rigorous process in
vetting and careful structuring of new investments, including taking a
charge over the assets of the business wherever possible and, after an
investment is made, closely monitoring the business.
The Board is satisfied that these approaches provide satisfactory
management of the key risks.
14. The Directors confirm that, to the best of their knowledge, the half
yearly financial report has been prepared in accordance with the
"Statement: Half-Yearly Financial Reports" issued by the UK Accounting
Standards Board as well as in accordance with FRS 104 Interim Financial
Reporting and the half-yearly financial 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 first six
months of the financial year and their impact on the condensed set of
financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related
party transactions that have taken place during the first six months of
the current financial year 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.
15. Copies of the unaudited half-yearly financial results 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
(END) Dow Jones Newswires
November 26, 2019 06:02 ET (11:02 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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