TIDMDDV1
Downing ONE VCT plc
Half-Yearly Report for the
six months ended 30 September 2018
FINANCIAL SUMMARY
30 Nov 30 Sep 31 Mar 30 Sep Nov
2018 2018 2018 2017 2013
Pence pence pence pence pence
Net Asset Value per share ("NAV") 84.4 87.7 87.5 88.8 100.4
Cumulative dividends paid since 12 Nov
2013 28.5 28.5 25.5 22.5 0.0
Total return 112.9 116.2 113.0 111.3 100.4
(NAV plus cumulative dividends paid per share)
CHAIRMAN'S STATEMENT
I am pleased to present the Company's half-yearly report for the
six-month period ended 30 September 2018. The portfolio made positive
progress during the period under review however the correction to global
stock markets in October and November has caused the NAV to fall back
since the period end.
The period saw a reasonable level of investment activity following the
close of the successful fundraising in April 2018, having reached full
capacity of GBP30 million.
Net asset value and results
As at 30 September 2018, the Company's NAV stood at 87.7p, an increase
of 3.2p (or 3.7%) compared to the 31 March 2018 year-end position, after
adding back the 3.0p dividend paid during the period.
The return attributable to equity shareholders for the period was GBP4.4
million, comprising a revenue return of GBP731,000 and a capital return
of GBP3.6 million.
Investment activity and performance
The Company has been an active investor during the period with nine
qualifying investments made totalling GBP6.3 million. Five of these were
new investments and four were follow on investments into existing
portfolio companies. There were also a small number of partial
realisations.
At the period end, the Company held a portfolio of 85 investments. Of
these, 31 are either quoted on AIM or the NEX Exchange Growth Market and
have a value of GBP34.5 million (38% of the portfolio). The 54 unquoted
investments have a value of GBP57.1 million and represent 62% of the
investment portfolio.
At the period end the Board has undertaken a review of the unquoted
valuations and made a number of adjustments. Net unrealised gains across
the unquoted and quoted portfolio over the period were GBP3.9 million.
The most significant uplift was the AIM quoted investment in Craneware
plc, the financial solutions provider for the healthcare market, which
contributed GBP2.9 million of unrealised gains.
Further details of the investment activities of the Company are in the
Investment Advisers 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 3.0p which will be paid on
22 February 2019 to Shareholders on the register as at 1 February 2019.
This will take the total dividends paid since the merger in November
2013 to 31.5p.
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 1,186,349 shares at an average
price of 81.3p per Ordinary Share, being a 5% discount to the latest
announced NAV at the time of purchase.
Performance incentive arrangements
As mentioned in my statement with the last Annual Report, the Board
continues its discussions with the Manager regarding the introduction of
a performance incentive scheme. Further details are expected with the
year end accounts to 31 March 2019.
Outlook
In October and November there were significant falls in global stock
markets indices. This has been reflected in the valuations of many of
the Company's quoted stocks, resulting in a fall in the NAV of 3.3p from
87.7p to 84.4p per share as at 30 November 2018, which brings Total
Return down from 116.2p to 112.9p, a decrease of 0.1p (0.1%) compared to
the 31 March 2018 year end position. Despite this small setback, the
Manager is satisfied that the prospects of the underlying businesses
remain positive, although continuing political and economic uncertainty
may produce more market volatility.
Over the remainder of the year, we expect to see a further significant
level of new investment activity as the Manager continues to deploy the
available funds in order to maintain VCT qualification status. In line
with the current VCT regulations, we expect all new investments to be
into relatively young growth businesses, where the Manager has developed
a steady pipeline of investment opportunities.
I look forward to updating the Shareholders on developments and the
progress of the portfolio in my statement with the Annual Report
covering the year to 31 March 2019.
Chris Kay
Chairman
INVESTMENT ADVISER'S REPORT - OVERVIEW
Introduction
We are pleased to present a review of the investment portfolio and
activity over the six months to 30 September 2018. 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 2018, the Company held a portfolio of 85 investments,
valued in total at GBP91.6 million.
There have been some positives and negatives within the portfolio over
the period, however overall there has been a rise in value across both
the quoted and unquoted portfolios. Overall 82% of the portfolio is held
at a valuation either at or above cost.
Portfolio Performance
The net unrealised gains in the quoted portfolio totalled GBP3.5
million. The largest unrealised gains in the quoted portfolio were
Craneware plc (GBP2.9 million), Tracsis plc (GBP1.5 million) and Anpario
plc (GBP371,000). These were partially offset by unrealised losses on
Universe Group plc (GBP425,000) and Redhall Group plc (GBP275,000).
There were several valuation movements in the unquoted portfolio in the
period totalling an unrealised gain over valuation of GBP355,000. Within
the unquoted portfolio, the largest unrealised gains were Ludorum plc
(GBP785,000), Doneloans Limited (GBP600,000), Pearce and Saunders
Limited (GBP238,000) and Kimbolton Lodge Limited (GBP121,000).
Further details on these and other movements can be found within the
quoted and unquoted Investment Adviser Reports below.
Portfolio Composition
The 2017/18 fundraising closed in April 2018, having reached full
capacity of GBP30 million. As a result, a significant proportion of the
net assets were held in cash at the prior year end. Since the year end,
GBP6.3 million has been deployed into new or follow on investments. As a
result, 21% of the net assets of the Company remains held in cash at the
period end.
The chart overleaf shows the diversification of the portfolio
illustrating that the main sectors in which the Company has invested are
Leisure, Alternative Energy and Software and Computer Services, albeit
the maximum exposure to any sector is 15%.
Net assets value and results
The net asset value per Share ("NAV") at 31 September 2018 stood at
87.7p, compared to the NAV at 31 March 2018 of 87.5p. Total Return (NAV
plus cumulative dividends paid since the merger in 2013) is 116.2p.
Outlook
The existing portfolio now comprises of a significant number of
investments which we are broadly satisfied with and can provide good
returns for Shareholders.
As demonstrated over the past six months, the Company has a high quality
deal flow to utilise the remaining cash in the portfolio. Focus remains
on younger growth investments and although the environment remains
challenging and competitive, we expect there to be a steady pipeline of
such businesses to utilise the remaining cash over the following six
months.
INVESTMENT ADVISER'S REPORT -- UNQUOTED PORTFOLIO
We present a review of the unquoted investment portfolio for the six
months ended 30 September 2018.
Investment activity
At 30 September 2018, the unquoted portfolio was valued at GBP57.1
million, comprising 54 investments spread across a number of sectors.
During the period, the Company invested a total of GBP5.3 million in
unquoted companies comprising five new investments and four follow-on
investments.
The five new qualifying investments that were made during the six month
period are as follows:
Lignia Wood Company Limited (GBP1.1 million) is a producer of modified
sustainable wood based in Barry Wales. The VCT invested as part of a
GBP7.6 million net equity funding round.
Live Better With Limited (GBP991,000) has developed a healthcare
platform aiming to help people with long-term medical conditions,
focussing on non-medical products that make day to day life better for
patients.
Glownet Limited (GBP741,000) has developed a technology solution for
organisers of mass-attendance live events and festivals, which allows
attendees to make cashless payments.
Virtual Class Limited (GBP525,000), trading as Third Space Learning, has
developed an online educational platform that provides mathematics
tuition to pupils studying for their Key Stage 2 exams.
Masters of Pie Limited (GBP166,000) is an early stage technology firm
specialising in virtual and augmented reality software for manufacturing
and wider enterprise solutions.
Follow on investments totalling GBP1.8 million were made into
E-fundamentals Limited (GBP639,000), Xupes Limited (GBP450,000), BridgeU
Corporation (GBP417,000) and Avid Technology Group Limited (GBP260,000).
Details of the small number of realisations in the year are set out
below. Total proceeds of GBP61,000 were generated, producing profits
over holding value of GBP33,000.
Tramps Nightclub Limited, the owner of three nightclub sites in central
Worcester, was the largest disposal during the period after redeeming
GBP43,000 as the company continues to repay loan notes.
Portfolio valuation
A number of adjustments to carrying values have been made at the period
end, resulting in an overall gain of GBP355,000. The most significant of
which are summarised below:
Ludorum plc, the owner of the intellectual property rights to various
children's entertainment brands, was uplifted in the period by
GBP785,000 to reflect post period end expected receipts.
Doneloans Limited, a non-qualifying investment company was uplifted by
GBP600,000 as a result of positive outcomes on its loan book.
Pearce and Saunders Limited, the owner of three freehold pubs in south
east London, was uplifted by GBP238,000 supported by independent
valuations from industry specialists.
Kimbolton Lodge Limited, which operates a care home for the elderly in
Bedford was valued up by GBP121,000 in the year on the back of stronger
trading.
The most significant decrease in value was Quadrate Spa Limited, which
owns and operates a health club business in The Cube complex in
Birmingham. The company has been written down by GBP808,000 following
poor performance.
The other notable decrease in value was to Tramps Nightclub Limited, the
owner of three nightclub sites in central Worcester. Following a
challenging period of trading, the valuation was reduced by GBP251,000.
Outlook
We remain satisfied with the composition of the portfolio for the period
to 30 September 2018 as focus remains on the close monitoring of the
current portfolio companies as they reach maturity. In addition, we
shall continue to utilise the remaining cash in the Company and expect
the Company to be an active investor over the remainder of the year.
INVESTMENT ADVISER'S REPORT -- QUOTED PORTFOLIO
Quoted investments
Investment activity
At 30 September 2018 the quoted portfolio was valued at GBP34.5 million
comprising 31 active investments.
During the period, there was a full exit in Mi-Pay Group plc, a full
redemption on the Universe Group plc loan notes, a partial sale in Amino
Technologies plc and a new qualifying investment in to Bonhill Group
plc.
GBP1 million was invested in Bonhill Group plc, a leading B2B media
business specialising in business information, live events and data and
insight.
Realisations of quoted investments generated proceeds of GBP128,000 and
a gain over holding value of GBP6,000. The most significant divestment
was Universe Group plc, a designer and supporter of point of sale,
payment and online loyalty solutions for the UK petrol forecourt and
convenience store markets. The company fully redeemed its loan notes at
par.
The investment in Mi-Pay Group plc, who manage and mitigate fraud risk
in the payment solutions market was sold, generating proceeds of
GBP26,000 and a gain over holding value of GBP4,000.
Portfolio valuation
Overall the quoted portfolio produced unrealised gains of GBP3.5
million. The most notable movements are discussed below.
Craneware plc is a provider of billing and auditing software to the US
healthcare industry. It experienced appreciation in its share price
following its reporting of very positive results for the year ended 30
June 2018, highlighting five significant contracts wins or contract
extensions. This resulted in an increase in market value of GBP2.9
million.
Tracsis plc, a provider of transport software solutions for rail and bus
services, issued a trading update for the year ended 31 July 2018. It
was reported that group trading for the year has been strong. An
increase to the broker forecast given confidence in future growth
prospects resulted in an increase in market value of GBP1.5 million.
The most significant decrease was to Universe Group plc. The interim
profit decreased as a result of new product development costs which
resulted in a decrease in market value of GBP425,000.
Redhall Group plc, a high integrity engineering company, also had a
decrease in value across the period. Delays on key projects and slower
than expected operational efficiency gains mean the company's board now
anticipates that the group's full year performance will be materially
below its previous expectations. This resulted in a decrease in market
value of GBP275,000.
Outlook
While we believe that it is a competitive market for AIM VCT qualifying
investments, in general, we remain confident in the longer-term
prospects for the existing portfolio.
Macro trends and political uncertainty have been consistent features
this year, however we believe that the outlook for the UK equity market
is not as bleak as some have predicted. Although the overall UK economy
has slowed resulting in significant falls in the AIM index since the
period end, it is still growing. 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 2018
30 Sep 30 Sep 31 Mar
2018 2017 2018
GBP'000 GBP'000 GBP'000
Fixed assets
Investments 91,628 81,037 81,588
Current assets
Debtors 2,168 767 1,574
Cash at bank and
in hand 24,021 8,337 35,456
26,189 9,104 37,030
Creditors: amounts
falling due within
one year (403) (248) (711)
Net current assets 25,786 8,856 36,319
Net assets 117,414 89,893 117,907
Capital and reserves
Called up share
capital 1,338 1,008 1,200
Capital redemption
reserve 1,586 1,564 1,574
Share premium 44,923 13,710 31,661
Funds held in respect
of shares not yet
allotted 60 361 12,876
Special reserve 60,390 73,559 64,859
Capital reserve
-- unrealised 8,899 (259) 4,909
Revenue reserve 218 (50) 828
Equity shareholders'
funds 117,414 89,893 117,907
Basic and diluted 87.7p 88.8p 87.5p
net asset value
per share
UNAUDITED INCOME STATEMENT
for the six months ended 30 September 2018
Year
ended
31
Six Months ended 30 Six Months ended 30 March
September 2018 September 2017 2018
Revenue Capital Total Revenue Capital Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 1,750 90 1,840 2,102 - 2,102 3,858
Gains on
investments
- realised - 39 39 - 590 590 1,037
- unrealised - 3,890 3,890 - 1,314 1,314 2,299
------- ------- ------- ------- ------- -------
1,750 4,019 5,769 2,102 1,904 4,006 7,194
Investment
management
fees (510) (510) (1,020) (413) (413) (826) (1,670)
Other expenses (381) - (381) (345) - (345) (687)
Return on
ordinary
activities
before tax 859 3,509 4,368 1,344 1,491 2,835 4,837
Tax on total
comprehensive
income and
ordinary
activities (128) 128 - (124) 124 - -
Return/(loss)
attributable
to equity
shareholders 731 3,637 4,368 1,220 1,615 2,835 4,837
======= ======= ======= ======= ======= =======
Basic and 0.5p 2.7p 3.2p 1.2p 1.6p 2.8p 4.6p
diluted return
per share
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 2018
Funds held in
Capital respect of Capital
Share redemption Share shares not yet Special reserve Revaluation Revenue
Capital reserve premium 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 2018
At 1 April
2018 1,200 1,574 31,661 12,876 64,859 - 4,909 828 117,907
Total
comprehensive
income - - - - - (254) 3,890 731 4,367
Realisation of
revaluations
from previous
years* - - - - - (100 ) 100 - -
Transfer
between
reserves** - - - - (3,032) 3,032 - - -
Transactions with owners
Dividends paid - - - - - (2,678) - (1,341) (4,019)
Utilised in
share issue - - - (12,816) - - - - (12,816)
Issue of new
shares 150 - 13,262 - - - - - 13,412
Share issue
costs - - - - (468) - - - (468)
Purchase of
own shares (12) 12 - - (969) - - - (969)
At 30
September
2018 1,338 1,586 44,923 60 60,390 - 8,899 218 117,414
*A transfer of GBP100,000 representing previously recognised unrealised
losses on disposal of investments during the period ended 30 September
2018 (year ended 31 March 2018: losses GBP3.2 million) has been made
from the Capital reserve realised to the Revaluation reserve.
** A transfer of GBP3.0 million representing realised gains on disposal
of investments, less capital expenses and capital dividends in the year
(year ended 31 March 2018: GBP6.3 million) has been made from Capital
Reserves -- realised to Special reserve.
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2018
Funds
Capital held in respect of shares Capital
Share redemption Share not yet Special reserve Revaluation Revenue
Capital reserve premium 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 2018
At 1 April 2017 1,016 1,553 13,387 - 77,049 - (1,002) (133) 91,870
Total comprehensive
income - - - - - 440 2,299 2,098 4,837
Realisation of
revaluations from
previous years - - - - - (3,213 ) 3,213 - -
Realisation of
impaired valuations - - - - - (399 ) 399 - -
Transfer between
reserves - - - - (9,958) 9,958 - - -
Transactions with owners
Unallotted shares - - - 12,876 - - - - 12,876
Dividends paid - - - - - (6,786) - (1,137) (7,923)
Issue of new shares 205 - 18,274 - - - - - 18,479
Share issue costs - - - - (464) - - - (464)
Purchase of own
shares (21) 21 - - (1,768) - - - (1,768)
At 31 March 2018 1,200 1,574 31,661 12,876 64,859 - 4,909 828 117,907
UNAUDITED CASH FLOW STATEMENT
for the six months ended 30 September 2018
30 Sep 30 Sep 31 Mar
2018 2017 2018
GBP'000 GBP'000 GBP'000
Cash flow from operating
activities
Profit on ordinary
activities before
taxation 4,368 2,835 4,837
Gains on investments (3,929) (1,904) (3,336)
(Increase)/decrease
in debtors (594) (317) (1,126)
Decrease in creditors (180) (77) 38
Cash from operations
Corporation tax paid - - -
Net cash generated/(utilised)
from operating activities (335) 537 413
Cash flow from investing
activities
Purchase of investments (6,300) (7,910) (10,627)
Proceeds from disposal
of investments 189 15,171 18,772
Net cash generated/(utilised)
from investing activities (6,111) 7,261 8,145
Cash flows from financing
activities
Proceeds from share
issue 13,412 323 18,479
Funds held in respect
of shares not yet
allotted (12,816) 361 12,876
Share issue costs (468) - (464)
Purchase of own shares (1,098) (1,119) (1,593)
Equity dividends
paid (4,019) (4,549) (7,923)
Net cash (utilised)/generated
from financing activities (4,989) (4,984) 21,375
Increase/(Decrease)
in cash (11,435) 2,814 29,933
Net increase in cash
Beginning of year 35,456 5,523 5,523
Net cash inflow/(outflow) (11,435) 2,814 29,933
End of year 24,021 8,337 35,456
SUMMARY OF INVESTMENT PORTFOLIO
as at 30 September 2018
% of
Valuation portfolio
movement by
Cost Valuation in period value
GBP'000 GBP'000 GBP'000
Top twenty venture
capital investments
(by value)
Craneware plc* 850 6,029 2,877 5.2%
Doneloans Limited 5,000 5,600 600 4.8%
Tracsis plc* 1,443 5,471 1,541 4.7%
Downing Care Homes
Holdings Limited 3,880 4,495 - 3.9%
Downing Strategic
Micro-Cap Investment
Trust plc** 5,000 4,400 (200) 3.8%
Leytonstone Pub Limited 1,911 3,686 - 3.2%
Cadbury House Holdings
Limited 3,082 3,075 - 2.7%
Anpario plc* 1,448 2,969 371 2.6%
Baron House Developments
LLP 2,695 2,695 - 2.4%
Pilgrim Trading Limited 2,594 2,594 - 2.2%
Jito Trading Limited 2,500 2,500 - 2.2%
Yamuna Renewables
Limited 2,500 2,500 - 2.2%
Xupes Limited 2,250 2,250 - 1.9%
Inland Homes plc* 1,526 1,801 (61) 1.6%
Pearce and Saunders
Limited 1,320 1,558 238 1.3%
Ludorum plc 3,269 1,535 785 1.3%
Pantheon Trading
Limited 1,500 1,500 - 1.3%
Quadrate Catering
Limited 1,500 1,500 - 1.3%
Science in Sport
plc* 1,239 1,418 (39) 1.2%
Harrogate Street
LLP 1,400 1,400 - 1.2%
46,907 58,976 6,112 51.0%
Other venture capital
investments 36,222 32,652 (2,222) 28.2%
83,129 91,628 3,890 79.2%
Cash at bank and
in hand 24,021 20.8%
Total investments 115,649 100.0%
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 2018
Additions
GBP'000
Quoted
Bonhill Group plc 1,000
1,000
-------
Unquoted
Lignia Wood Company Limited 1,111
Live Better With Limited 991
Glownet Limited 741
E-Fundamentals Limited 639
Virtual Class Limited 525
Xupes Limited 450
BridgeU Corporation 417
Avid Technology Group Limited 260
Masters of Pie Limited 166
5,300
-------
Total additions 6,300
Disposals
Realised
Value Gain/(loss) gain
at Disposal against in
Cost 31/03/18* Proceeds cost period
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Quoted
Universe Group
plc 80 80 80 - -
Mi-Pay Group plc 113 22 26 (87) 4
Amino Technologies
plc 13 20 22 9 2
206 122 128 (78) 6
------- ----------- ---------- ------------- --------
Unquoted
Including loan
note redemptions
Tramps Nightclub
Limited 33 24 43 10 19
VSA Capital Limited - - 7 7 7
Fubar Stirling
Limited 11 4 11 - 7
44 28 61 17 33
------- ----------- ---------- ------------- --------
250 150 189 (61) 39
* adjusted for purchases in the period
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
for the six months ended 30 September 2018
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 2018 and have been prepared in accordance with the accounting
policies set out in the statutory accounts for the year ended 31 March
2018, 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 2017 and the year ended 31 March 2018 respectively.
5. Return per share
Revenue Capital
Return Gain
Weighted average
number of shares in issue GBP'000 GBP'000
Period ended 30
September 2018 133,284,857 731 3,637
Period ended 30
September 2017 101,366,948 1,220 1,615
Year ended 31 March
2018 105,306,924 2,098 2,739
6. Dividends paid in the period
Six months Year
ended ended
30 September 31 March
2018 2018
Revenue Capital Total Total
Date paid GBP'000 GBP'000 GBP'000 GBP'000
24 August
2018 Final 2018: 3.0p 1,341 2,678 4,019 -
23 February
2018 Interim 2018: 3.0p - - - 3,374
18 August
2017 Final 2017: 4.5p - - - 4,549
1,341 2,678 4,019 7,923
7. Basic and diluted net asset value per share
NAV
Shares per
in issue Net assets share
GBP'000 pence
Period ended 30
September 2018 133,822,737 117,414 87.7
Period ended 30
September 2017 100,829,225 89,893 88.8
Year ended 31 March
2018 119,997,574 117,907 87.5
8. Called up share capital
Shares
in issue GBP'000
Period ended 30
September 2018 133,822,737 1,338
Period ended 30
September 2017 100,829,225 1,008
Year ended 31 March
2018 119,997,574 1,200
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.
31
30 Sep 30 Sep Mar
2018 2017 2018
GBP'000 GBP'000 GBP'000
Capital redemption
reserve 1,586 1,564 1,574
Share premium account 44,923 13,710 31,661
Funds held in respect
of shares not yet
allotted 60 361 12,876
Special reserve 60,390 73,559 64,859
Revaluation reserve 8,899 (259) 4,909
Revenue reserve 218 (50) 828
Total reserves 116,076 88,885 116,707
Distributable reserves are calculated as follows:
30 Sep 30 Sep 31 Mar
2018 2017 2018
GBP'000 GBP'000 GBP'000
Special reserve 60,390 73,559 64,859
Revenue reserve 218 (50) 828
Unrealised gains/(losses) (excluding unrealised unquoted
gains) 3,629 (4,115) 523
64,237 69,394 66,210
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 2018. 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).
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 2018 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.
Level Level Level 30 Sep Level Level Level 31 Mar
1 2 3 2018 1 2 3 2018
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Quoted on AIM 29,067 - - 29,067 24,390 - - 24,390
Quoted on NEX 15 - - 15 29 - - 29
Quoted on
Main Market 5,430 - - 5,430 5,600 - - 5,600
Unquoted loan
notes - - 23,490 23,490 - - 22,477 22,477
Unquoted
equity - - 33,626 33,626 - - 29,092 29,092
34,512 - 57,116 91,628 30,019 - 51,569 81,588
======= ======= ======= ======= ======= ======= ======= =======
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
December 17, 2018 12:33 ET (17:33 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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