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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Thames Ventures Vct 2 Plc | LSE:D467 | London | Ordinary Share | GB00BWX53D91 | DP67 ORD 0.1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 14.00 | 9.00 | 19.00 | 14.00 | 14.00 | 14.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Investment Advice | -6.02M | -7.66M | -0.0777 | -12.81 | 98.05M |
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TIDMD467
Downing FOUR VCT plc
LEI: 21380035MV1VRYEXPR95
Half-Yearly Report for the six months ended 30 September 2018
19 December 2018
FINANCIAL HIGHLIGHTS
18 Dec 30 Sept 31 Mar 30 Sept
2018 2018 2018 2017
Pence Pence Pence Pence
DSO D Share pool
Net Asset Value per DSO D Share 30.3 54.4 78.5
Cumulative dividends per DSO D Share 76.5 52.5 27.5
Estimated Performance Incentive * (4.4) (4.4) (4.2)
Total Return per DSO D Share 102.4 102.5 101.8
DP67 Share pool
Net Asset Value per DP67 Share 50.5 50.0 68.7
Cumulative dividends per DP67 Share 49.8 49.8 29.8
Total Return per DP67 Share 100.3 99.8 98.5
======
DP2011 General Share pool
Net Asset Value per DP2011 Gen Ord Share - - 15.0
Net Asset Value per DP2011 Gen A Share 13.0 20.3 34.4
Cumulative dividends per DP2011 Gen Ord Share and
Gen A Share 92.0 85.0 55.0
Total Return per DP2011 Gen Ord Share and Gen A Share 105.0* 105.3* 104.4*
======
Estimated remaining Performance Incentive (already
included above) * 2.3 3.6 5.2
DP2011 Structured Share pool
Net Asset Value per DP2011 Struc Ord Share - - 5.0
Net Asset Value per DP2011 Struc A Share 9.8 15.0 34.5
Cumulative dividends per DP2011 Struc Share and Struc
A Share 95.0 90.0 65.0
Total Return per DP2011 Struc Ord Share and Struc
A Share 104.8* 105.0* 104.5*
======
Estimated remaining Performance Incentive (already
included above) * 1.7 2.7 5.2
Generalist Share pool
Net Asset Value and Total Return per
Generalist Share 87.0 92.7 95.5 98.7
Healthcare Share pool
Net Asset Value and Total Return per
Healthcare Share 84.0 88.7 94.6 98.6
*A full explanation of the Performance Incentive arrangements for each
Share pool will be shown in the Half-Yearly Report.
CHAIRMAN'S STATEMENT
Introduction
I am pleased to present the Company's Half-Yearly Report for the six
months ended 30 September 2018.
Share pools
The Company now has six active share pools, four of which are winding
down. This report includes sections covering the individual share pools
and I will give a brief overview of each.
Planned exit Share pools
DSO D Share Pool
The DSO D Share NAV stood at 30.3p at 30 September 2018, a decrease of
0.1p per share or 0.2% over the period, after adjusting for the
dividends paid in the period. Total Return now stands at 102.4p per
share, compared to the cost for Shareholders who invested in the D Share
offer, net of income tax relief, of 70.0p. Based on the current
performance it is estimated that a performance fee equivalent to 4.4p
per D Share may become payable to the Manager. This has been reflected
in the Total Return figure shown above.
Following a number of disposals from the D Share Pool, the second major
distribution of 24.0p per DSO D Share was paid on 13 August 2018.
Realisation plans are progressing in respect of the remaining
investments and we expect to be in a position to make a final
distribution to Shareholders during 2019.
DP67 Share Pool
As at 30 September 2018, the NAV of the DP67 Shares stood at 50.5p per
share. This represents an increase of 0.5p (1.0%) over the period. Total
Return for DP67 shareholders now stands at 100.3p per share, compared to
the cost for Shareholders who invested in the original offers, net of
income tax relief, of 70.0p.
There are plans in place to exit from all of the remaining investments
in the DP67 portfolio and, following the dividend of 20.0p per DP67
Share paid on 16 March 2018, we anticipate that the remaining value will
be distributed to Shareholders through the payment of one final dividend,
which we anticipate should be paid in the coming months.
DP2011 General Share Pool
The DP2011 General Share Pool is in the process of returning funds to
Shareholders. After providing for an estimated Performance Incentive of
2.3p per DP2011 General Ordinary Share, as at 30 September 2018, the NAV
of a combined holding of one DP2011 General Ordinary Share and one
DP2011 General A Share stood at 13.0p per share. This represents a
decrease of 0.3p or 1.5% after adjusting for dividends paid during the
period, as well as the Performance Incentive estimate. Further details
of the Performance Incentive arrangements are set out in the notes to
the accounts.
Total Return for DP2011 General Shareholders now stands at 105.0p,
compared to the cost for Shareholders who invested in the original offer,
net of income tax relief, of 70.0p.
On 13 August 2018 a dividend of 7.0p per DP2011 General A Share was paid,
bringing total dividends paid to Shareholders to 92.0p for a combined
holding. As the portfolio now consists of a small number of investments,
all with plans to exit, it is expected that the remaining proceeds will
be distributed to Shareholders by way of one closing dividend in the
first half of 2019.
DP2011 Structured Share Pool
The DP2011 Structured Share Pool is at a similar stage to the DP2011
General Share Pool. After providing for an estimated Performance
Incentive of 1.7p per DP2011 Structured Ordinary Share, as at 30
September 2018, the NAV of a combined holding of one DP2011 Structured
Ordinary Share and one DP2011 Structured A Share stood at 9.8p per
share. This represents a decrease of 0.2p or 1.3% after adjusting for
dividends paid during the period, as well as the Performance Incentive
estimate. Further details of the Performance Incentive arrangements are
set out in the notes to the accounts.
Total Return for DP2011 Structured Shareholders now stands at 104.8p,
compared to the cost for Shareholders who invested in the original offer,
net of income tax relief, of 70.0p.
On 13 August 2018 a dividend of 5.0p per DP2011 Structured A Share was
paid, bringing total dividends paid to Shareholders to 95.0p for a
combined holding. As the portfolio now consists of a small number of
investments, all with plans to exit, it is expected that the remaining
proceeds will be distributed to Shareholders by way of one closing
dividend in the first half of 2019.
Evergreen Share pools
Generalist Share pool
As at 30 September 2018, the Generalist Share NAV and Total Return stood
at 92.7p, a decrease of 2.8p per share or 2.9% over the period. This
fall is attributable to a combination of the unrealised holding losses
on the Venture Capital portfolio and the 'cash-drag' of holding
uninvested funds. Since the period end, there has been a significant
decline in global stock markets. This has impacted the valuation of
Public Equity investments. At 18 December 2018, the Generalist NAV stood
at 87.0p per share.
As detailed in the Investment Manager's Report, the process of building
the Generalist portfolio is progressing well, with GBP5.2m having been
invested in VCT Qualifying Investments during the six months to 30
September 2018. More than 40% of the funds are now invested in VCT
Qualifying investments. The Manager has a good pipeline of investment
opportunities from which the portfolio will continue to be built over
the coming years.
Healthcare Share pool
As at 30 September 2018, the Healthcare Share NAV and Total Return stood
at 88.7p, a decrease of 5.9p per share or 6.2% over the period. This
fall is the result of unrealised holding losses in respect of the
Venture Capital portfolio, coupled with the 'cash-drag' of holding
uninvested funds. As with the Generalist Share pool, the falls in global
stock markets have impacted the Public Equity investments and other
quoted investments. At 18 December 2018, the Healthcare NAV stood at
84.0p per share.
As outlined in the Investment Manager's Report, the process of building
the Healthcare portfolio is ongoing, with GBP2.7m invested in VCT
Qualifying Investments during the six months to 30 September 2018. As
this is a specialist sector, the process of investing Healthcare funds
presents more challenges than that of the Generalist Share pool. However,
the Manager has a good pipeline of investment opportunities from which
the portfolio will continue to be built over the coming years.
Dividends
Dividends in respect of the planned exit Share pools will be announced
as and when sufficient realisations have taken place.
No dividends have been declared with respect to Generalist and
Healthcare Share pools, due to the effective restriction on paying
dividends in the first three years following a share issue.
Share buybacks
The Company has a policy of buying in any Generalist and Healthcare
Shares that become available in the market and will usually expect to do
so at a price approximately equal to the latest NAV of the shares,
subject to regulatory restrictions and other factors such as
availability of liquid funds.
In respect of the planned exit pools, the Board does not intend to buy
in any of those shares as exits for these Shareholders will be
facilitated by way of distributions.
During the period the Company repurchased 14,400 Generalist Shares at an
average price of 95.7p per Share. The Shares were subsequently
cancelled.
Fundraising
The Company has launched further fundraisings in respect of the
Generalist and Healthcare Share pools. The Company plans to raise
approximately GBP20m of Generalist funds and GBP10m of Healthcare funds,
with an over-allotment facility which could increase these totals to
approximately GBP40m and GBP30m respectively.
Downing LLP, the Manager and Promoter, considers there to be a strong
pipeline of investment opportunities available to the Company, and the
decision to raise additional funds was recommended to Shareholders and
the Board as a result.
I look forward to reporting on developments in my statement with the
Annual Report to 31 March 2019, to be published in July 2019, by which
time we expect that the planned exit processes will be substantially
complete.
Board composition
The Directors review the composition and effectiveness of the Board at
regular intervals to ensure that it continues to comply with the
applicable regulations, is consistent with best practice and remains
effective for Shareholders.
The new Corporate Governance Code will become effective for the Company
at the start of the next financial year and introduces some changes. In
order to ensure continued compliance, I will step down as chairman of
the Company on 31 December 2018 but will continue on the Board as a
non-executive director. I am pleased to announce that Sir Aubrey
Brocklebank has agreed to chair the Company from 1 January 2019 onwards.
Sir Aubrey joined the Board at the time of the merger with two other
VCTs in 2015 and has extensive experience in the VCT sector. I am
confident that that he will be an excellent chairman for the Company.
We believe that the three-person Board has operated effectively and
efficiently since it was established in 2015 and continues to do so.
With the changing landscape of the VCT regulation and the new focus of
the investment activity, the Board will continue to regularly review the
structure and, of course, consider adjustments if it concludes that they
would be beneficial.
Outlook
For the remainder of this financial year, there will be a dual focus for
the Board and Manager, of working to return funds to investors in the
four remaining planned exit share pools, whilst also continuing to
develop the Generalist and Healthcare portfolios.
Generally, the Board remains satisfied with the performance of the
portfolio companies, which the Manager will continue to closely monitor.
Lord Flight
Chairman
INVESTMENT MANAGER'S REPORT
DSO D SHARE POOL
Portfolio valuation
As at 30 September 2018, the DSO D Share Pool had a portfolio of seven
investments with a value of GBP1.5m.
The most significant valuation adjustment during the period was in
respect of Apex Energy Limited, which has been written down by
GBP200,000. Technical issues have impacted on operations of the business
and the valuation has been adjusted to reflect the additional work
required.
Other valuation movements amount to a net uplift of GBP24,000.
Portfolio activity
Three full realisations took place during the period, generating
proceeds of GBP2.2m.
Goonhilly Earth Station Limited, the owner and operator of the
afore-named Satellite Earth Station in Cornwall, was sold during the
period, generating proceeds of GBP878,000 and a gain over cost of
GBP163,000. Loan note interest of GBP49,000 was also recovered on exit.
Merlin Renewables Limited, the owner and operator of an Anaerobic
Digestion plant in Norfolk, was also sold during the period, generating
proceeds of GBP770,000 and realising a gain over cost of GBP270,000.
The final of the three realisations was in respect of Nightjar
Sustainable Power Limited, the owner and operator of a run-of-river
hydroelectric scheme in Scotland. The DSO D interest in the company was
refinanced by existing investors for GBP600,000, resulting in a gain
over cost of GBP115,000.
Results and Net Asset Value
The Net Asset Value ('NAV') per DSO D Share at 30 September 2018 stood
at 30.3p, a decrease of 0.1p or 0.2% over the period after adjusting for
dividends paid. Total Return stands at 102.4p per share compared to
initial cost to Shareholders, net of income tax relief, of 70.0p per
share.
The loss on ordinary activities after taxation for the period was
GBP7,000, comprising a revenue loss of GBP29,000 and a capital gain of
GBP22,000.
Dividends
In light of the realisations from the DSO D Share Pool during the period,
the second significant distribution, being 24.0p per DSO D Share, was
paid on 13 August 2018.
We expect that the remaining NAV will be distributed to Shareholders by
way of one closing dividend, and we anticipate that this will be paid
during the summer of 2019.
Outlook
Although the portfolio is now reasonably small in value, as it is made
up of investments in seven different companies we expect that it will
take some months to execute the realisation plans in place.
A further update on the progress of the realisation plans will be
provided in the Annual Report to 31 March 2019.
Downing LLP
SUMMARY OF INVESTMENT PORTFOLIO
DSO D SHARE POOL
as at 30 September 2018
Unrealised % of
gain portfolio
Cost Valuation in period by value
GBP000 GBP000 GBP000
Venture Capital investments
Lambridge Solar Limited 500 605 (21) 25.1%
Pearce and Saunders Limited* 300 354 54 14.7%
Fresh Green Power Limited 189 231 - 9.6%
Apex Energy Limited 400 200 (200) 8.3%
Green Energy Production UK Limited 100 74 (6) 3.1%
Pearce and Saunders DevCo Limited** 126 20 - 0.8%
Fubar Stirling Limited 20 5 (3) 0.2%
1,635 1,489 (176) 61.8%
Cash at bank and in hand 921 38.2%
Total investments 2,410 100.0%
*partially qualifying
**non-qualifying investment
SUMMARY OF INVESTMENT MOVEMENTS
DSO D SHARE POOL
for the period ended 30 September 2018
Total gain/
Valuation at Disposal (loss) against Realised
Disposals Cost 31/03/2018 proceeds cost gain in period
GBP000 GBP000 GBP000 GBP000 GBP000
Venture
Capital
investments
Goonhilly
Earth
Station
Limited 715 715 878 163 163
Merlin
Renewables
Limited 500 719 770 270 51
Nightjar
Sustainable
Power
Limited 485 600 600 115 -
1,700 2,034 2,248 548 214
====== ============ ========= =============== ===============
DIVID HISTORY
DSO D SHARE POOL
Pence
Period end Date paid per share
2012 Final 28 September 2012 2.5
2013 Interim 25 January 2013 2.5
2013 Final 13 September 2013 2.5
2014 Interim 24 January 2014 2.5
2014 Final 30 September 2014 2.5
2015 Interim 30 January 2015 2.5
2015 Second interim 30 September 2015 2.5
2016 Interim 23 December 2015 2.5
2016 Final 30 September 2016 2.5
2017 Interim 6 January 2017 2.5
2017 Final 29 September 2017 2.5
2018 Special 2 November 2017 25.0
2018 Interim 13 August 2018 24.0
76.5
INVESTMENT MANAGER'S REPORT
DP67 SHARE POOL
Portfolio valuation
As at 30 September 2018, the DP67 Share Pool had a portfolio of seven
investments with a value of GBP4.6m.
The only valuation adjustment during the period was in respect of Fenkle
Street LLP. The DP67 Share pool received profit distributions of
GBP75,000, which have been recorded as income for the Share pool. In
light of the receipt of this income, the valuation of the investment has
been reduced by the same amount.
Results and Net Asset Value
The Net Asset Value ('NAV') per DP67 Share at 30 September 2018 stood at
100.3p, an increase of 0.5p (1.0%) over the period. Total Return stands
at 100.3p per share compared to initial cost to Shareholders, net of
income tax relief, of 70.0p per share.
The profit on ordinary activities after taxation for the period was
GBP58,000, comprising a revenue gain of GBP77,000 and a capital loss of
GBP19,000.
Dividends
The first significant distribution of 20.0p per DP67 Share was paid on
16 March 2018.
We expect that the remaining value will be distributed to Shareholders
by way of one final dividend which we are optimistic can be paid in the
coming months.
Outlook
Our focus for this Share pool is on delivering the exit plans currently
in place for each of its investments and making a final distribution to
Shareholders.
Downing LLP
SUMMARY OF INVESTMENT PORTFOLIO
DP67 SHARE POOL
as at 30 September 2018
Unrealised % of
gain portfolio
Cost Valuation in period by value
GBP000 GBP000 GBP000
Venture Capital investments
Cadbury House Holdings Limited 1,409 1,613 - 31.8%
Snow Hill Developments LLP* 584 830 - 16.4%
Fenkle Street LLP* 405 603 (75) 11.9%
Gatewales Limited* 343 527 - 10.4%
Oak Grove Renewables Limited 820 492 - 9.7%
Yamuna Energy Limited 400 400 - 7.9%
London City Shopping Centre
Limited* 99 99 - 2.0%
4,060 4,564 (75) 90.1%
Cash at bank and in hand 501 9.9%
Total investments 5,065 100.0%
* non-qualifying investment
DIVID HISTORY
DP67 SHARE POOL
Pence
per
Period end Date paid share
Pre-merger dividends 21.8
2016 Interim 23 December 2015 2.0
2016 final 30 September 2016 2.0
2017 Interim 6 January 2017 2.0
2017 Final 29 September 2017 2.0
2018 Special 16 March 2018 20.0
49.8
INVESTMENT MANAGER'S REPORT
DP2011 GENERAL SHARE POOL
Portfolio valuation
As at 30 September 2018, the DP2011 General Share Pool had a portfolio
of seven investments with a value of GBP2.2m.
The value of the portfolio is materially unchanged from 31 March 2018,
with a small overall reduction in value of GBP19,000 during the period.
Net Asset Value and results
The combined Net Asset Value ('NAV') of one DP2011 General Ordinary
Share and one DP2011 General A Share at 30 September 2018 stood at 13.0p,
a decrease of 0.3p or 1.5% over the period after adjusting for dividends
paid. Total Return stands at 105.0p per share compared to an initial
cost to Shareholders, net of income tax relief, of 70.0p per share.
The loss on ordinary activities after taxation for the period was
GBP58,000, comprising a revenue loss of GBP22,000 and a capital loss of
GBP36,000.
Dividends
The DP2011 General Share pool commenced the process of returning funds
to Shareholders in late 2016. Following the dividend of 7.0p per DP2011
General A Share, paid on 13 August 2018, the Share pool is awaiting its
final exits before announcing a closing dividend. We believe this can be
achieved in the first half of 2019.
Outlook
Our focus for this Share pool is on completing the final investment
realisations to allow the payment of a final distribution.
Downing LLP
SUMMARY OF INVESTMENT PORTFOLIO
DP2011 GENERAL SHARE POOL
as at 30 September 2018
Unrealised % of
gain/(loss) portfolio
Cost Valuation in period by value
GBP000 GBP000 GBP000
Venture Capital investments
Snow Hill Developments LLP* 750 1,178 - 48.4%
Wickham Solar Limited 550 635 (15) 26.1%
Oak Grove Renewables Limited 400 254 - 10.1%
London City Shopping Centre
Limited** 88 88 - 3.6%
Mosaic Spa and Health Clubs
Limited* 96 64 - 2.6%
Fubar Stirling Limited 133 5 (4) 0.2%
Odysian (Holdings) Limited 233 - - 0.0%
2,250 2,224 (19) 91.0%
Cash at bank and in hand 208 9.0%
Total investments 2,432 100.0%
* non-qualifying investment
DIVID HISTORY
DP2011 GENERAL SHARE POOL
Pence
Period end Date paid per share
Pre-merger dividends 20.0
2016 Interim 23 December 2015 2.5
2016 Special 2 September 2016 22.5
2017 Special 14 February 2017 10.0
2018 Special 2 November 2017 30.0
2018 Interim 13 August 2018 7.0
92.0
INVESTMENT MANAGER'S REPORT
DP2011 STRUCTURED SHARE POOL
Portfolio valuation
As at 30 September 2018, the DP2011 Structured Share Pool had a
portfolio of seven investments with a value of GBP1.0m.
The value of the portfolio is materially unchanged from 31 March 2018,
with a small overall reduction in value of GBP17,000 during the period.
Net Asset Value and results
The combined Net Asset Value ('NAV') of one DP2011 Structured Ordinary
Share and one DP2011 Structured A Share at 30 September 2018 stood at
9.8p, a decrease of 0.2p or 1.3% over the period after adjusting for
dividends paid. Total Return stands at 104.8p per share compared to an
initial cost to Shareholders, net of income tax relief, of 70.0p per
share.
The loss on ordinary activities after taxation for the period was
GBP33,000 comprising a revenue loss of GBP7,000 and a capital loss of
GBP26,000.
Dividends
The DP2011 Structured Share pool commenced the process of returning
funds to Shareholders in late 2016. Following the dividend of 5.0p per
DP2011 Structured A Share, paid on 13 August 2018, the Share pool is
awaiting its final exits before announcing a closing dividend. We
believe this can be achieved in the first half of 2019.
Outlook
Our focus now is on completing the final investment realisations to
allow the payment of a final distribution to Shareholders.
Downing LLP
SUMMARY OF INVESTMENT PORTFOLIO
DP2011 STRUCTURED SHARE POOL
as at 30 September 2018
Unrealised % of
loss portfolio
Cost Valuation in period by value
GBP000 GBP000 GBP000
Venture Capital investments
Wickham Solar Limited 550 635 (15) 51.1%
Oak Grove Renewables Limited 545 347 - 27.9%
Mosaic Spa and Health Clubs
Limited 64 42 - 3.4%
Fubar Stirling Limited 90 4 (2) 0.3%
Odysian (Holdings) Limited 155 - - 0.0%
1,404 1,028 (17) 82.7%
Cash at bank and in hand 215 17.3%
Total investments 1,243 100.0%
DIVID HISTORY
DP2011 STRUCTURED SHARE POOL
Pence
Period end Date paid per share
Pre-merger dividends 20.0
2016 Interim 23 December 2015 2.5
2016 Special 2 September 2016 32.5
2017 Special 14 February 2017 10.0
2018 Special 2 November 2017 25.0
2018 Interim 13 August 2018 5.0
95.0
INVESTMENT MANAGER'S REPORT
GENERALIST SHARE POOL
Portfolio activity
The ongoing process of building the Generalist portfolio has progressed
well during the period, with six new and four follow-on investments
totalling GBP5.2m made during since 31 March 2018.
VCT Qualifying Investments
GBP1.1m was invested in Lignia Wood Company Limited (formerly Fibre 7 UK
Limited), a producer of modified sustainable wood based in Barry, Wales.
A further GBP991,000 was invested in Live Better With Limited, the
developer of a healthcare platform aiming to help people with long-term
medical conditions, focusing on non-medical products that make
day-to-day life better for patients.
GBP741,000 was invested in Glownet Limited, the developer of a
technology solution for organisers of mass-attendance live events, which
allows attendees to make cashless payments at the event.
A further GBP639,000 was invested in E Fundamentals (Group) Limited, via
two fundraising tranches. The company provides a data analytics service
that helps brand owners improve their online revenues.
GBP525,000 was invested in Virtual Class Limited, trading as Third Space
Learning. The Company has developed an online educational platform that
provides mathematics tuition to pupils studying for their Key Stage 2
exams.
A further GBP417,000 was invested in BridgeU Corporation, the developer
of a platform providing intelligent university and course matching which
is tailored to the individual student.
GBP250,000 was invested in ADC Biotechnology Limited, a company creating
innovative new technology which aims to speed up, simplify and lower the
costs of the processes involved in the production of new Antibody Drug
Conjugates (ADCs). This investment was made alongside GBP892,000 from
the Healthcare Share pool.
GBP240,000 was invested in Arecor Limited, the developer of
biopharmaceuticals and proprietary diabetes-related products, including
ultra-fast acting insulin to treat type 1 and 2 diabetes. This
investment was made alongside GBP880,000 from the Healthcare Share pool.
GBP167,000 was invested in Masters of Pie Limited, an early-stage
technology firm specialising in virtual and augmented reality software
for manufacturing and wider enterprise solutions.
A further GBP150,000 was invested in Xupes Limited, an online retailer
of pre-owned luxury goods including designer watches, handbags,
jewellery and antiques.
Portfolio valuation
The carrying values of the Public Equity investments have been adjusted
to reflect their quoted prices as at 30 September 2018, resulting in a
net reduction of GBP5,000.
Ormsborough Limited has been reduced in value by GBP279,000 as a result
of the delays and cost overruns on the company's pub developments. We
have now put in place a plan for the completion of these developments.
Both ADC Biotechnology Limited and Virtual Class Limited are currently
behind on their respective plans and the carrying values of these
investments have been reduced by GBP243,000 and GBP146,000 respectively.
However, both investments are still in an early stage and we continue to
work closely with the management teams.
Destiny Pharma plc has been revalued to reflect the quoted share price
as at 30 September 2018, resulting in a downward revaluation of
GBP89,000 during the period. The business is progressing well, with the
reduction in the share price being attributable to limited trading
volumes during the period.
Live Better With Limited has been increased in value by GBP73,000 to
reflect the share price at which the Generalist Share pool most recently
invested, alongside third parties.
Net Asset Value and results
At 30 September 2018, the NAV of a Generalist share stood at 92.7p, a
decrease of 2.8p (2.9%) for the period. This fall is attributable to a
combination of the unrealised holding losses on the Venture Capital
portfolio and the 'cash-drag' of holding uninvested funds.
The loss on ordinary activities after taxation for the period was
GBP896,000 comprising a revenue loss of
GBP130,000 and a capital loss of GBP766,000.
Outlook
The process of building the Generalist portfolio is progressing well and
the Share pool is on target to meet the 80% VCT Qualifying threshold by
the required date of 1 April 2020.
There is a strong pipeline of investment opportunities available to the
Share pool, so Shareholders should expect further investment activity
over the remainder of the financial year.
In addition, as the new Generalist Offer is now open, Shareholders
should expect the average deal size to increase proportionately with the
size of the Generalist Share pool.
Shareholders will be provided with a further update on the progress made
in investing the Generalist funds in the Annual Report to 31 March 2019,
to be published in July 2019.
Downing LLP
SUMMARY OF INVESTMENT ADDITIONS
GENERALIST SHARE POOL
for the period ended 30 September 2018
Cost
Venture Capital investments GBP000
Fibre 7 UK Limited 1,111
Live Better With Limited 991
Glownet Limited 741
E Fundamentals (Group)
Limited 639
Virtual Class Limited 525
BridgeU Corporation 417
ADC Biotechnology Limited 250
Arecor Limited 240
Masters of Pie Limited 167
Xupes Limited 150
Total 5,231
=======
All VCT Qualifying Investments are incorporated in England and Wales.
SUMMARY OF INVESTMENT PORTFOLIO
GENERALIST SHARE POOL
as at 30 September 2018
Unrealised
gain/(loss) % of
Cost Valuation in period portfolio
GBP000 GBP000 GBP000
Venture Capital investments
Live Better With Limited 1,211 1,284 73 4.4%
Lignia Wood Company Limited 1,111 1,111 - 3.8%
Maverick Pubs (Holdings)
Limited 1,000 1,000 - 3.5%
E-Fundamentals (Group)
Limited 917 917 - 3.2%
BridgeU Corporation 811 811 - 2.8%
Empiribox Limited 750 750 - 2.6%
Xupes Limited 750 750 - 2.6%
Glownet Limited 741 741 - 2.6%
Ormsborough Limited 900 621 (279) 2.1%
Volo Commerce Limited 567 567 - 2.0%
Fenkle Street LLP* 321 321 - 1.1%
Virtual Class Limited 525 282 (243) 1.0%
Destiny Pharma plc^^ 500 274 (89) 0.9%
Arecor Limited 240 240 - 0.8%
Limitless Technology Limited 173 173 - 0.6%
Masters of Pie Limited 167 167 - 0.6%
ADC Biotechnology Limited 250 104 (146) 0.4%
Snow Hill Developments
LLP* 86 92 - 0.3%
Mosaic Spa and Health Clubs
Limited* 37 37 - 0.1%
London City Shopping Centre
Limited* 30 30 - 0.1%
11,087 10,272 (684) 35.5%
Public Equity investments
MI Downing Monthly Income
Fund* 3,950 3,995 172 13.8%
MI Downing UK Micro-Cap
Growth Fund* 4,025 3,832 (28) 13.2%
Downing Strategic Micro-Cap
Investment Trust plc*^ 4,100 3,608 (164) 12.5%
MI Downing Diversified
Global Managers Fund* 1,800 1,848 15 6.4%
13,875 13,283 (5) 45.9%
Total 24,392 23,555 (689) 81.4%
======= ============
Cash at bank and in hand 5,396 18.6%
Total investments 28,951 100.0%
* non-qualifying investment
^ listed and traded on the Main Market of the London Stock Exchange
^^ listed and trade on AIM
INVESTMENT MANAGER'S REPORT
HEALTHCARE SHARE POOL
Portfolio activity
The building of the Healthcare portfolio has progressed further during
the six months to 30 September 2018, with one follow-on investment and
two new investments totalling GBP2.7m made during the period.
We has also added further resource to our Healthcare team during the
period, with the recruitment of Dr Will Brooks. Will has 12 years of
experience in medical research and development, academia and business in
the UK and Germany. He led Healthcare investments for 15 years at Quest
Management, a large European fund, where he was responsible for direct
investments in Europe and the US, as well as investments in quoted
companies. Will strengthens our Healthcare team significantly and, we
believe, will be an invaluable asset as we continue to invest the Share
pool's funds.
VCT Qualifying Investments
GBP892,000 was invested in ADC Biotechnology Limited, a company creating
innovative new technology which aims to speed up, simplify and lower the
costs of the processes involved in the production of new Antibody Drug
Conjugates (ADCs). The company has also been provided with an investment
of GBP250,000 from the Generalist Share pool.
A further GBP886,000 was invested in Live Better With Limited, the
developer of a healthcare platform aiming to help people with long-term
medical conditions, focusing on non-medical products that make
day-to-day life better for patients. To date, the Generalist Share pool
has also invested GBP1.2m in the company, alongside the Healthcare Share
pool.
GBP880,000 was invested in Arecor Limited, the developer of
biopharmaceuticals and proprietary diabetes-related products, including
ultra-fast acting insulin to treat type 1 and 2 diabetes. This
investment was made alongside GBP240,000 from the Generalist Share pool.
Portfolio valuation
The carrying values of the Public Equity investments have been adjusted
to reflect their quoted prices as at 30 September 2018, resulting in a
net uplift of GBP20,000.
ADC Biotechnology Limited is currently behind on its plans and the
carrying value of this investment has been reduced by GBP520,000 as a
result. However, this investment is still in an early stage and we
continue to work closely with the management team.
Destiny Pharma plc has been revalued to reflect the quoted share price
as at 30 September 2018, resulting in a downward revaluation of
GBP89,000 during the period. The business is progressing well, with the
reduction in the share price being attributable to limited trading
volumes during the period. We remain confident that the business can
deliver its potential.
Live Better With Limited has been increased in value by GBP73,000 to
reflect the share price at which the Healthcare Share pool most recently
invested.
Net Asset Value and results
At 30 September 2018, the NAV of a Healthcare share stood at 88.7p, a
decrease of 5.9p (6.2%) for the period. This fall is attributable to a
combination of the unrealised holding losses on the Venture Capital
portfolio and the 'cash-drag' of holding uninvested funds.
The loss on ordinary activities after taxation for the period was
GBP719,000 comprising a revenue loss of GBP93,000 and a capital loss of
GBP626,000.
Outlook
The task of building the Healthcare Share portfolio is underway, with a
total of GBP3.6m invested into VCT Qualifying investments to date.
Shareholders should expect to see further investment activity over the
remainder of the financial year, as the growing pipeline of investment
opportunities continues to result in completed deals.
In addition, as the new Healthcare Offer is now open, Shareholders
should expect the average deal size to increase proportionately with the
size of the Healthcare Share pool.
Shareholders will be provided with a further update on the progress made
in investing the Healthcare funds in the Annual Report to 31 March 2019,
to be published in July 2019.
Downing LLP
SUMMARY OF INVESTMENT ADDITIONS
HEALTHCARE SHARE POOL
for the period ended 30 September 2018
Cost
Venture Capital investments GBP000
ADC Biotechnology Limited 892
Live Better With Limited 886
Arecor Limited 880
Total 2,658
All VCT Qualifying Investments are incorporated in England and Wales.
SUMMARY OF INVESTMENT PORTFOLIO
HEALTHCARE SHARE POOL
as at 30 September 2018
Unrealised
(loss)/
gain in % of
Cost Valuation period portfolio
GBP000 GBP000 GBP000
Venture Capital investments
Live Better With Limited 1,106 1,179 73 10.8%
Arecor Limited 880 880 - 8.1%
Destiny Pharma plc^^ 750 411 (134) 3.7%
ADC Biotechnology Limited 892 372 (520) 3.4%
3,628 2,842 (581) 26.0%
Public Equity investments
MI Downing UK Micro-Cap
Growth Fund* 1,125 1,067 (8) 10.2%
Downing Strategic Micro-Cap
Investment Trust plc*^ 700 616 (28) 9.8%
MI Downing Diversified
Global Managers Fund* 950 970 8 8.9%
MI Downing Monthly Income
Fund* 1,100 1,115 48 5.6%
3,875 3,768 20 34.5%
Total 7,503 6,610 (561) 60.5%
======= ==========
Cash at bank and in hand 4,313 39.5%
Total investments 10,923 100.0%
* non-qualifying investment
^ listed and traded on the Main Market of the London Stock Exchange
^^ listed and trade on AIM
All VCT Qualifying Investments are incorporated in England and Wales.
UNAUDITED INCOME STATEMENT
for the six months ended 30 September 2018
Year
ended
Six months ended 30 Sep Six months ended 30 Sep 31 Mar
2018 2017 2018
Revenue Capital Total Revenue Capital Total Total
Company Total GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Income 215 115 330 545 - 545 765
Net gains on investments - (1,363) (1,363) - 1,440 1,440 1,425
215 (1,248) (1,033) 545 1,440 1,985 2,190
Investment management fees (203) (203) (406) (317) (317) (634) (1,192)
Other expenses (197) - (197) (248) - (248) (1,214)
Return/(loss) on ordinary activities before tax (185) (1,451) (1,636) (20) 1,123 1,103 (216)
Tax on total comprehensive income and ordinary
activities (19) - (19) (14) - (14) (160)
Return/(loss) attributable to equity shareholders,
being total comprehensive income for the year (204) (1,451) (1,655) (34) 1,123 1,089 (376)
Return per DSO B Share - - - (0.4p) 0.5p 0.1p -
Return per DSO C Share - - - - - - -
Return per DSO D Share (0.4p) 0.3p (0.1p) 0.6p 4.3p 4.9p 5.8p
Return per DP67 Share 0.7p (0.2p) 0.5p 0.5p 4.1p 4.6p 5.9p
Return per DP2011 Gen Ordinary Share - - - 0.4p 3.4p 3.8p -
Return per DP2011 Gen A Share (0.1p) (0.2p) (0.3p) - - - 4.1p
Return per DP2011 Struc Ordinary Share - - - 0.4p 2.7p 3.1p -
Return per DP2011 Struc A Share - (0.2p) (0.2p) - - - 3.4p
Return per DP2011 Low Carbon Share - - - 1.1p (5.0p) (3.9p) (9.7p)
Return per Generalist Share (0.5p) (2.9p) (3.4p) (0.9p) (0.7p) (1.6p) (6.2p)
Return per Healthcare Share (1.2p) (8.5p) (9.7p) (1.3p) (1.4p) (2.7p) (9.4p)
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.
UNAUDITED INCOME STATEMENT (ANALYSED BY SHARE POOL)
for the six months ended 30 September 2018
Year
ended
Six months ended Six months ended 31 Mar
30 Sep 2018 30 Sep 2017 2018
Revenue Capital Total Revenue Capital Total Total
B Share pool GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Income - - - 15 - 15 30
Gains on
investments - - - - 121 121 120
- - - 15 121 136 150
Investment
management
fees - - - (26) (26) (52) (52)
Other expenses - - - (61) - (61) (55)
(Loss)/return
on ordinary
activities
before
taxation - - - (72) 95 23 43
Taxation - - - (14) - (14) (34)
(Loss)/return
attributable
to equity
shareholders - - - (86) 95 9 9
Revenue Capital Total Revenue Capital Total Total
D Share pool GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Income 2 - 2 96 - 96 166
Gains on
investments - 38 38 - 361 361 442
2 38 40 96 361 457 608
Investment
management
fees (16) (16) (32) (22) (22) (44) (92)
Other expenses (15) - (15) (29) - (29) (53)
Return on
ordinary
activities
before
taxation (29) 22 (7) 45 339 384 463
Taxation - - - - - - (10)
Return
attributable
to equity
shareholders (29) 22 (7) 45 339 384 453
Year
ended
Six months ended Six months ended 31 Mar
30 Sep 2018 30 Sep 2017 2018
Revenue Capital Total Revenue Capital Total Total
DP67 Share
pool GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Income 117 75 192 119 - 119 247
Gains on
investments - (75) (75) - 482 482 683
117 - 117 119 482 601 930
Investment
management
fees (19) (19) (38) (25) (25) (50) (102)
Other
expenses (2) - (2) (37) - (37) (62)
Return on
ordinary
activities
before
taxation 96 (19) 77 57 457 514 766
Taxation (19) - (19) - - - (114)
Return
attributable
to equity
shareholders 77 (19) 58 57 457 514 652
Revenue Capital Total Revenue Capital Total Total
DP2011
General Share
pool GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Income 9 - 9 132 - 132 160
Gains on
investments - (19) (19) - 573 573 947
9 (19) (10) 132 573 705 1,107
Investment
management
fees (17) (17) (34) (36) (36) (72) (150)
Other
expenses (14) - (14) (40) - (40) (196)
Return on
ordinary
activities
before
taxation (22) (36) (58) 56 537 593 761
Taxation - - - - - - (1)
Return on
ordinary
activities
before
taxation (22) (36) (58) 56 537 593 760
Year
ended
Six months ended Six months ended 31 Mar
30 Sep 2018 30 Sep 2017 2018
Revenue Capital Total Revenue Capital Total Total
DP2011 Structured
Share pool GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Income 9 - 9 86 - 86 75
Gains on
investments - (17) (17) - 309 309 535
9 - (8) 86 309 395 610
Investment
management fees (9) (9) (18) (20) (20) (40) (78)
Other expenses (7) - (7) (23) - (23) (126)
Return/(losses)
on ordinary
activities
before taxation (7) (26) (33) 43 289 332 406
Taxation - - - - - - (1)
Return/(losses)
attributable to
equity
shareholders (7) (26) (33) 43 289 332 405
Revenue Capital Total Revenue Capital Total Total
DP2011 Low
Carbon Share
pool GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Income - - - 112 - 112 16
Losses on
investments - - - - (370) (370) (252)
- - - 112 (370) (258) (236)
Investment
management fees - - - (15) (15) (30) (54)
Other expenses - - - (15) - (15) (442)
Return/(losses)
on ordinary
activities
before taxation - - - 82 (385) (303) (732)
Taxation - - - - - - -
Return/(losses)
attributable to
equity
shareholders - - - 82 (385) (303) (732)
Year
ended
Six months ended Six months ended 31 Mar
30 Sep 2018 30 Sep 2017 2018
Revenue Capital Total Revenue Capital Total Total
Generalist
Share pool GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Income 61 40 101 10 - 10 62
Losses on
investments - (729) (729) - (24) (24) (718)
61 (689) (628) 10 (24) (14) (656)
Investment
management
fees (77) (77) (154) (135) (135) (270) (470)
Other
expenses (114) - (114) (56) - (56) (208)
Losses on
ordinary
activities
before
taxation (130) (766) (896) (181) (159) (340) (1,334)
Taxation - - - - - - -
Losses
attributable
to equity
shareholders (130) (766) (896) (181) (159) (340) (1,334)
Revenue Capital Total Revenue Capital Total Total
Healthcare
Share pool GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Income 17 - 17 1 - 1 9
Losses on
investments - (561) (561) - (13) (13) (332)
17 (561) (544) 1 (13) (12) (323)
Investment
management
fees (65) (65) (130) (38) (38) (76) (194)
Other
expenses (45) - (45) (12) - (12) (72)
Losses on
ordinary
activities
before
taxation (93) (626) (719) (49) (51) (100) (589)
Taxation - - - - - - -
Losses
attributable
to equity
shareholders (93) (626) (719) (49) (51) (100) (589)
UNAUDITED BALANCE SHEET
as at 30 September 2018
As at 31
As at 30 September As at 30 September March
2018 2017 2018
GBP000 GBP000 GBP000
Fixed assets
Investments 39,470 31,939 35,192
Current assets
Debtors 572 1,180 695
Cash at bank and in
hand 11,554 40,931 21,063
12,126 42,111 21,758
Creditors: amounts
falling due within
one year (211) (340) (615)
Net current assets 11,915 41,771 21,143
Net assets 51,385 73,710 56,335
Capital and
reserves
Called up Share
capital 130 180 188
Capital redemption
reserve 31 31 31
Special reserve 4,463 29,203 8,021
Share premium
account 44,621 39,846 43,904
Funds held in
respect of shares
not yet allotted 234 1,127 420
Revaluation reserve (1,637) (1,198) 234
Capital reserve -
realised 4,855 4,668 4,641
Revenue reserve (1,312) (147) (1,104)
Total equity
shareholders'
funds 51,385 73,710 56,335
Basic and diluted
Net Asset Value
per Share:
DSO B Share - 4.444p -
DSO C Share - 10.939p -
DSO D Share 30.3p 78.5p 54.4p
DP67 Share 50.5p 68.7p 50.0p
DP2011 General - 15.0p -
Ordinary Share
DP2011 General A 13.0p 34.4p 20.3p
Share
DP2011 Structured - 5.0p -
Ordinary Share
DP2011 Structured A 9.8p 34.5p 15.0p
Share
DP2011 Low Carbon - 39.1p -
Share
Generalist Share 92.7p 98.7p 95.5p
Healthcare Share 88.7p 98.6p 94.6p
The comparative balance sheet as at 30 September 2017 includes only the
Share Pools in existence at that date.
UNAUDITED BALANCE SHEET (ANALYSED BY SHARE POOL)
as at 30 September 2018
DSO D Shares
As at
As at 30 As at 30 September 31 March
September 2018 2017 2018
GBP000 GBP000 GBP000
Fixed assets
Investments 1,489 3,636 3,699
Current assets
Debtors 4 113 66
Cash at bank and in
hand 921 2,479 582
925 2,592 648
Creditors: amounts
falling due within
one year (31) (51) (67)
Net current assets 894 2,541 581
Net assets 2,383 6,177 4,280
Capital and
reserves
Called up share
capital 8 8 8
Special reserve 2,629 6,205 4,201
Revaluation reserve (39) 281 471
Capital reserve -
realised (148) (266) (362)
Revenue reserve (67) (51) (38)
Total equity
shareholders'
funds 2,383 6,177 4,280
DP67 Shares
As at 30 As at 30 As at 31 March
September 2018 September 2017 2018
GBP000 GBP000 GBP000
Fixed assets
Investments 4,564 4,890 4,639
Current assets
Debtors 627 621 552
Cash at bank and
in hand 501 2,264 519
1,128 2,885 1,071
Creditors: amounts
falling due
within one year (40) (55) (116)
Net current assets 1,088 2,830 955
Net assets 5,652 7,720 5,594
Capital and
reserves
Called up share
capital 11 11 11
Capital redemption
reserve 31 - 31
Special reserve 861 5,623 805
Revaluation
reserve 504 603 579
Capital reserve -
realised 3,581 1,308 3,581
Revenue reserve 664 175 587
Total equity
shareholders'
funds 5,652 7,720 5,594
DP2011 General Shares
As at
As at 30 September As at 30 September 31 March
2018 2017 2018
GBP000 GBP000 GBP000
Fixed assets
Investments 2,224 2,884 2,243
Current assets
Debtors 1 205 -
Cash at bank and in
hand 208 5,675 1,569
209 5,880 1,569
Creditors: amounts
falling due within
one year (36) (76) (68)
Net current assets 173 5,804 1,501
Net assets 2,397 8,688 3,744
Capital and
reserves
Called up share
capital 16 16 16
Called up share
capital - A Shares 18 18 18
Special reserve 903 7,489 2,209
Revaluation reserve 334 (278) 353
Capital reserve -
realised 831 956 831
Revenue reserve 295 487 317
Total equity
shareholders'
funds 2,397 8,688 3,744
DP2011 Structured Shares
As at
As at 30 September As at 30 September 31 March
2018 2017 2018
GBP000 GBP000 GBP000
Fixed assets
Investments 1,028 1,398 1,045
Current assets
Debtors 3 120 3
Cash at bank and in
hand 215 3,390 877
218 3,510 880
Creditors: amounts
falling due within
one year (20) (44) (37)
Net current assets 198 3,466 843
Net assets 1,226 4,864 1,888
Capital and
reserves
Called up share
capital - Ordinary
Shares 11 11 11
Called up share
capital - A Shares 13 13 13
Special reserve 566 4,348 1,204
Revaluation reserve (136) (514) (119)
Capital reserve -
realised 591 685 591
Revenue reserve 181 321 188
Total equity
shareholders'
funds 1,226 4,864 1,888
Generalist Shares
As at
As at 30 September As at 30 September 31 March
2018 2017 2018
GBP000 GBP000 GBP000
Fixed assets
Investments 23,555 12,562 19,053
Current assets
Debtors 94 77 73
Cash at bank and in
hand 5,396 17,732 10,563
5,490 17,809 10,636
Creditors: amounts
falling due within
one year (129) (164) (215)
Net current assets 5,361 17,645 10,421
Net assets 28,916 30,207 29,474
Capital and
reserves
Called up share
capital 38 38 38
Special reserve (331) (140) (240)
Share premium
reserve 32,058 31,063 31,058
Revaluation reserve (1,407) (24) (718)
Funds held in
respect of shares
not yet allotted 199 566 398
Revenue reserve (1,641) (1,296) (1,512)
Total equity
shareholders'
funds 28,916 30,207 29,474
Healthcare Shares
As at
As at 30 September As at 30 September 31 March
2018 2017 2018
GBP000 GBP000 GBP000
Fixed assets
Investments 6,610 3,361 4,513
Current assets
Debtors 3 - 1
Cash at bank and in
hand 4,313 5,629 6,953
4,316 5,629 6,954
Creditors: amounts
falling due within
one year (115) (46) (112)
Net current assets 4,201 5,583 6,842
Net assets 10,811 8,944 11,355
Capital and
reserves
Called up share
capital 15 9 15
Special reserve (165) (41) (100)
Share premium
reserve 12,563 8,782 12,396
Revaluation reserve (893) (13) (332)
Funds held in
respect of shares
not yet allotted 35 561 22
Revenue reserve (744) (354) (646)
Total equity
shareholders'
funds 10,811 8,944 11,355
STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 September 2018
Capital Funds held
Called Redempt Share in respect Revaluati Capital
up Share -ion Special premium of shares not -on reserve Revenue
capital reserve reserve account yet allotted Reserve -realised reserve Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 31 March
2017 144 31 30,620 10,074 16,137 (1,980) 3,331 1,055 59,412
Total
comprehensive
income - - - - - (225) 645 (796) (376)
Transfer
between
reserves* - - (22,576) - - 2,439 19,548 589 -
Unallotted
shares - - - - 420 - - - 420
Transactions
with owners
Dividend paid - - - - - - (18,883) (589) (19,472)
Cancellation
of shares - - - - - - - - -
Purchase of
own shares - - (23) - - - - - (23)
Issue of
shares 44 - - 33,830 (16,137) - - - 17,737
Share issue
costs - - - - - - - (1,363) (1,363)
At 31 March
2018 188 31 8,021 43,904 420 234 4,641 (1,104) 56,335
Total
comprehensive
income - - - - - (1,537) 86 (204) (1,655)
Transfer
between
reserves* - - (3,602) - - (334) 3,934 - (2)
Unallotted
shares - - - - (186) - - - (186)
Transactions
with owners
Dividend paid - - - - - - (3,806) - (3,806)
Cancellation
of shares (58) - 58 - - - - - -
Purchase of
own shares - - (14) - - - - - (14)
Issue of
shares - - - 717 - - - - 717
Share issue
costs - - - - - - - (4) (4)
At 30
September
2018 130 31 4,463 44,621 234 (1,637) 4,855 (1,312) 51,385
*A transfer of GBP334,000 (31 March 2018: GBP2.4 million) representing
previously recognised realised gains and losses on disposal of
investments during the period has been made from the Revaluation Reserve
to the Capital reserve-realised. A transfer of GBP3.9 million (31 March
2018: GBP19.5 million) representing realised gains on disposal of
investments, less capital expenses and capital dividends in the period
was made from Capital Reserve - realised to Special reserve.
UNAUDITED STATEMENT OF CASH FLOWS
Six months ended 30 September 2018
DSO DP2011 DP2011
D DP67 General Structured
Share Share Share Share Generalist Healthcare
pool pool pool pool Share Pool Share Pool Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Cash flows from operating activities
Return on ordinary
activities before
taxation (7) 77 (58) (33) (896) (719) (1,636)
(Gains)/losses
on investments (38) 75 19 17 689 561 1,323
Decrease/(increase)
in debtors 62 (94) (1) - (21) (2) (56)
Increase/(decrease)
in creditors (38) (76) (32) (17) (87) 4 (246)
Net cash (outflow)/inflow
from operating
activities (21) (18) (72) (33) (315) (156) (615)
Corporation
tax paid - - - - - - -
New cash generated
from operating
activities (21) (18) (72) (33) (315) (156) (615)
Cash flow from investing activities
Purchase of
investments - - - - (5,191) (2,658) (7,849)
Proceeds from
disposal of
investments 2,248 - - - - - 2,248
Net cash inflow/(outflow)
from investing
activities 2,248 - - - (5,191) (2,658) (5,601)
------- ------ -------- ----------- ----------- ------------ -------
Net cash inflow/(outflow)
before financing 2,227 (18) (72) (33) (5,506) (2,814) (6,216)
Cash flows from financing activities
Repurchase of
shares - - - - (14) - (14)
Issue of share
capital - - - - 551 162 713
Unallotted shares - - - - (198) 12 (186)
Equity dividends
paid (1,888) - (1,289) (629) - - (3,806)
Net cash (outflow)/inflow
from financing
activities (1,888) - (1,289) (629) 339 174 (3,293)
Net movement
in cash 339 (18) (1,361) (662) (5,167) (2,640) 9,509
Cash and cash
equivalents
at start of
period 582 519 1,569 877 10,563 6,953 21,063
Cash and cash
equivalents
at end of period 921 501 208 215 5,396 4,313 11,554
Cash and cash equivalents comprise
Cash at bank
and in hand 921 501 208 215 5,396 4,313 11,554
Total cash and
cash equivalents 921 501 208 215 5,396 4,313 11,554
UNAUDITED STATEMENT OF CASH FLOWS
Six months ended 30 September 2017
DSO DP2011 DP2011 Year
B DSO D DP67 Gen Struc DP2011 Generalist ended
Share Share Share Share Share LC Share Share Healthcare 31 March
pool pool pool pool pool pool Pool Share Pool Total 2018
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Cash flows from
operating activities
Return on
ordinary activities
before taxation 23 384 514 593 332 (303) (340) (100) 1,103 (216)
(Gains)/losses
on investments (121) (361) (482) (573) (309) 370 24 13 (1,440) (1,425)
Decrease/(increase)
in debtors 35 141 (24) 380 244 (108) (77) - 591 1,244
Increase/(decrease)
in creditors 5 (24) (50) (48) (41) (24) 155 41 14 28
Net cash (outflow)/
inflow from
operating
activities (58) 140 (42) 352 226 (65) (238) (46) 268 (369)
Corporation
tax paid (58) 10 (505) (16) (7) (6) - - (582) (637)
New cash generated
from operating
activities (116) 150 (547) 336 219 (71) (238) (46) (314) (1,006)
Cash flow from
investing activities
Purchase of
investments - - - - - - (12,361) (3,350) (15,711) (24,366)
Proceeds from
disposal of
investments 1,358 2,091 640 5,073 3,143 - - - 12,305 17,696
Net cash inflow/(outflow)
from investing
activities 1,358 2,091 640 5,073 3,143 - (12,361) (3,350) (3,406) (6,670)
-------- ------ ------ ------ ------ --------- ---------- ------------ -------- ---------
Net cash inflow/(outflow)
before financing 1,242 2,241 93 5,409 3,362 (71) (12,599) (3,396) (3,720) (7,676)
Cash flows from
financing activities
Repurchase
of shares - - - - - - - - - (23)
Issue of share
capital - - - - - - 22,552 6,089 28,641 16,793
Unallotted
shares - - - - - - (13,446) (1,564) (15,010) -
Equity dividends
paid - (197) (225) - - - - - (422) (19,472)
Net cash (outflow)/inflow
from financing
activities - (197) (225) - - - 9,106 4,525 13,209 (2,702)
Net movement
in cash 1,242 2,044 (132) 5,409 3,362 (71) (3,493) 1,129 9,490 (10,378)
Cash and cash
equivalents
at start of
year 2,475 435 2,396 266 28 116 21,225 4,500 31,441 31,441
Cash and cash
equivalents
at end of
year 3,717 2,479 2,264 5,675 3,390 45 17,732 5,629 40,931 21,063
Cash and cash equivalents
comprise
Cash at bank
and in hand 3,717 2,479 2,264 5,675 3,390 45 17,732 5,629 40,931 21,063
Total cash
and cash equivalents 3,717 2,479 2,264 5,675 3,390 45 17,732 5,629 40,931 21,063
Comparative cash flows include the Share Pools in existence at those
dates.
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
General Information
Downing FOUR 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.
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 ('FRS 102') and the Statement of Recommended Practice
'Financial Statements of Investment Trust Companies' issued in November
2014 (revised in February 2018) ('SORP').
The Company has only one class of business and derives its income from
investments made in shares, securities and bank deposits.
The comparative figures are in respect of the six months ended 30
September 2017 and the year ended 31 March 2018 respectively.
Net Asset Value per share at the period end has been calculated on the
number of shares in issue at the period end as follows:
DP2011 Structured
DSO D Shares 7,867,247 Shares 10,678,725
DP2011 Structured
DP67 Shares 11,192,136 A Shares 12,572,817
DP2011 General
Shares 15,644,066 Generalist Shares 38,477,754
DP2011 General
A Shares 18,418,614 Healthcare Shares 15,138,059
Return per share for the period has been calculated on the average
number of shares in issue in the period as follows:
DP2011 Structured
DSO D Shares 7,867,247 Shares 10,678,725
DP2011 Structured
DP67 Shares 11,229,211 A Shares 12,572,817
DP2011 General
Shares 15,644,066 Generalist Shares 26,206,561
DP2011 General
A Shares 18,418,614 Healthcare Shares 7,372,573
Dividends
Six months ended 30 September 2018
Revenue Capital Total
GBP000 GBP000 GBP000
Paid in period
DSO D Shares - 1,888 1,888
DP2011 General A Shares - 1,289 1,289
DP2011 Structured A Shares - 629 629
Reserves
30 Sep 30 Sep 31 Mar
2018 2017 2018
GBP000 GBP000 GBP000
Capital redemption reserve 31 31 31
Special reserve 4,463 29,203 8,021
Share premium account 44,621 39,846 43,904
Funds held in respect of
shares not yet allotted 234 1,127 420
Capital reserve - realised 4,855 (1,198) 4,641
Revaluation reserve (1,637) 4,668 234
Revenue reserve (1,312) (147) (1,104)
Total reserves 51,255 73,530 56,147
The Revenue reserve, Special reserve and Capital reserve - realised are
distributable reserves and are reduced by revaluation losses of GBP3.5
million. Distributable reserves at 30 September 2018 were GBP4.5
million.
In October 2018, the balances on the Share Premium account and the
capital redemption reserve were cancelled and added to the special
reserve, contributing an additional GBP44.7 million to distributable
reserves. Whilst the distributable reserves of the Company have
increased significantly, the VCT regulations prevent the Company from
paying dividends in respect of the Generalist and Healthcare Share
classes during the first three years of their lives.
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, investment funds 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).
Level Level Level 30 Sep Level Level Level 31 Mar
1 2 3 2018 1 2 3 2018
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Quoted equity 685 - - 685 908 - - 908
Public Equity
investments 17,051 - - 17,051 17,036 - - 17,036
Unquoted loan
notes - - 3,135 3,135 - - 3,323 3,323
Unquoted
equity - - 18,599 18,599 - - 13,925 13,925
17,736 - 21,734 39,470 17,944 - 17,248 35,192
====== ====== ====== ======
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.
Risk and uncertainties
Under the Disclosure and Transparency Directive, the Board is required
in the Company's half-year results to report on the principal risks and
uncertainties facing the Company over the remainder of the financial
year.
The Board has concluded that the key risks facing the Company over the
remainder of the financial period are as follows:
-compliance risk of failure to maintain approval as a VCT;
-market, liquidity and counterparty risk associated with Public Equity
investments; and
-investment risk associated with investing in small and immature
businesses.
The Company's compliance with the VCT regulations is continually
monitored by the Manager, who reports regularly to the Board on the
current position. The Company also retains Phillip Hare & Associates LLP
('Phillip Hare') to provide regular reviews and advice in this area.
Philip Hare have confirmed that all relevant tests have been complied
with for the period under review. The Board considers that this approach
reduces the risk of a breach of the VCT regulations.
With this approach, the Board believes that these risks are reduced.
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.
Going concern
The Directors have reviewed the Company's financial resources at the
period end and conclude that the Company is well placed to manage its
business risks.
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.
Statutory accounts
The Directors confirm that, to the best of their knowledge, the
Half-Yearly 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:
- 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
- DTR 4.2.8R of the Disclosure and Transparency Rules, being related
party transactions that have taken place in 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.
PERFORMANCE INCENTIVE ARRANGEMENTS
Performance Incentive arrangements are in place for each share pool
except the DP67 pool. The various schemes are summarised as follows:
DSO D Shares
The Performance Incentive in respect of the DSO D Shares is structured
as a simple fee when the hurdle is met. A fee is payable when:
Shareholders receive total proceeds of at least 100.0p per DSO D Share
(excluding income tax relief); and
Shareholders achieve a tax-free compound return of at least 7% per annum
(after allowing for income tax relief on investment).
If the hurdle is met, the fee will be 3p per DSO D Share plus 20% of
shareholder proceeds above 100.0p per D Share. The Performance Incentive
is restricted to a maximum of 7.0p per DSO D Share.
As at 30 September 2018, the estimated performance fee is 4.4p per DSO D
Share.
DP2011 General Shares/ DP2011 Structured Shares
The Performance Incentive arrangements in respect of the DP2011 General
and DP2011 Structured pools enable payments, by way of distributions of
income, to members of the management team who subscribed for 15% of the
DP2011 General A Shares and DP2011 Structured A Shares at 6.5p per
share.
As the proceeds paid to Shareholders have now exceeded 70.0p per DP2011
General Ordinary/A Share and DP2011 Structured Ordinary/A Share, a
Performance Incentive equal to 15% of the dividends paid in respect of
the A Shares becomes due to members of the management team. No further
incentive is paid to management once Shareholder proceeds exceed 120.0p
per DP2011 General Ordinary/A Share and DP2011 Structured Ordinary/A
Share.
By virtue of the dividends paid in respect of the DP2011 General A
Shares and DP2011 Structured A Shares to date, of 22.0p and 25.0p
respectively, members of the management team have received Performance
Incentive payments, to date, of 3.1p per DP2011 General Ordinary Share
and 3.6p per DP2011 Structured Ordinary Share.
As at 30 September 2018, the estimated remaining Performance Incentive
due to management in respect of the DP2011 General and DP2011 Structured
Share pools is equivalent to approximately 2.3p per DP2011 General
Ordinary Share and 1.7p per DP2011 Structured Ordinary Share. This
brings the total Performance Incentive to approximately 5.4p per DP2011
General Ordinary Share and 5.3p per DP2011 Structured Ordinary Share.
Generalist and Healthcare Share pools
A Performance Incentive scheme is in place in respect of the Generalist
and Healthcare Management Shares, which will represent 20% of the total
number of Generalist and Healthcare Shares in issue. As part of the
arrangement, in order to prevent dilution to the shareholders of the
Generalist and Healthcare Shares, the management team will waive
their voting rights granted by these Management Shares at any
general meeting of the Company and income or capital distributions otherwise payable on these Management Shares will be waived unless the share class has achieved a Total Return (based on audited year end results) in excess of GBP1 per share for the years ended 31 March 2018, 31 March 2019 and 31 March 2020. For subsequent years, the Total Return hurdle increases by 3p per annum such that for the year ended 31 March 2021 the hurdle is GBP1.03, and for the year ended 31 March 2022 the hurdle is GBP1.06. The existing Performance Incentive scheme in respect of the Generalist and Healthcare Share pools, will also apply to the Shares issued under the new Offers.
(END) Dow Jones Newswires
December 19, 2018 12:07 ET (17:07 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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