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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 2019
FINANCIAL HIGHLIGHTS
30 Sept 31 March 30 Sept
2019 2019 2018
Pence Pence Pence
Live Share Pools
Generalist Share Pool
Net Asset Value and Total Return per Generalist Share 77.6 83.5 92.7
======= ======== =======
Healthcare Share Pool
Net Asset Value and Total Return per Healthcare Share 77.7 83.3 88.7
======= ======== =======
DSO D Share Pool
Net Asset Value per DSO D Share 28.9 27.8 30.3
Cumulative dividends per DSO D Share 76.5 76.5 76.5
Estimated Performance Incentive * (4.1) (3.9) (4.4)
------- -------- -------
Total Return per DSO D Share 101.3 100.4 102.4
======= ======== =======
DP67 Share Pool
Net Asset Value per DP67 Share 47.4 48.5 50.5
Cumulative dividends per DP67 Share 49.8 49.8 49.8
------- -------- -------
Total Return per DP67 Share 97.2 98.3 100.3
======= ======== =======
Share Pools now cancelled
DP2011 General Share Pool
Net Asset Value per DP2011 Gen Ord Share - - -
Net Asset Value per DP2011 Gen A Share - 13.3 13.0
Cumulative dividends per DP2011 Gen Ord Share and
Gen A Share 105.595 92.0 92.0
------- -------
Total Return per DP2011 Gen Ord Share and Gen A Share 105.595 105.3 105.0
======= ======== =======
DP2011 Structured Share Pool
Net Asset Value per DP2011 Struc Ord Share - - -
Net Asset Value per DP2011 Struc A Share - 9.9 9.8
Cumulative dividends per DP2011 Struc Ord Share and
Struc A Share 105.059 95.0 95.0
------- -------
Total Return per DP2011 Struc Ord Share and Struc
A Share 105.059 104.9 104.8
======= ======== =======
* Based on the Total Return to Shareholders at 30 September 2019, a
Performance Incentive is expected to become due to management. The
Performance Incentive has been estimated at 4.1p per DSO D Share.
A full explanation of the Performance Incentive arrangements for each
Share Pool is 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 2019.
Share Pools
The Company now has four active Share Pools, two of which evergreen
share pools and two are planned exit pools that are winding down. Two
further planned exit share pools completed the task of returning funds
to Shareholders during the period. This report includes sections
covering each of the Share Pools which were active during the period.
Planned exit Share Pools
Of the planned exit share pools, two completed returning funds to
investors during the period and two further pools remain.
DP2011 General Share Pool
The DP2011 General Share Pool paid a final dividend of 13.595p per
DP2011 General A Share on 27 September 2019 to bring the pool to a
close.
Shareholders who invested under the original offer received total
dividends of 105.595p for a combined holding of one Ordinary Share and
one A Share, compared to an initial cost, net of tax relief, of 70.0p.
In line with the structure of the performance incentive arrangements
members of the management team received dividends equivalent to 5.1p per
DP2011 General Ordinary Shares. Both the DP2011 General Ordinary Shares
and A Shares were cancelled on 15 November 2019.
DP2011 Structured Share Pool
The DP2011 General Share Pool paid a final dividend of 10.059p per
DP2011 Structured A Share on 27 September 2019 to bring the pool to a
close.
Shareholders who invested under the original offer received total
dividends of 105.059p for a combined holding of one Ordinary Share and
one A Share, compared to an initial cost, net of tax relief, of 70.0p.
In line with the structure of the performance incentive arrangements
members of the management team received dividends equivalent to 5.1p per
DP2011 Structured Ordinary Shares. Both the DP2011 Structured Ordinary
Shares and A Shares were cancelled on 15 November 2019.
DSO D Share Pool
The DSO D Share Net Asset Value ("NAV") stood at 28.9p at 30 September
2019, an increase of 1.1p per share or 4.0% over the period. Total
Return now stands at 101.3p per share, compared to the cost for
Shareholders who invested in the DSO D Share offer, net of income tax
relief, of 70.0p. A performance fee equivalent to 4.1p per DSO D Share
is estimated to become payable to the Manager on the final exit, which
has been provided for in the above figures.
Realisation plans are progressing in respect of the remaining
investments and we expect that this process will be completed during the
first quarter of 2020, after which the Company will declare distribution
of the remaining value.
DP67 Share Pool
As at 30 September 2019, the NAV of the DP67 Shares stood at 47.4p per
share, a decrease of 1.1p or 2.3% over the period. Total Return for DP67
shareholders now stands at 97.2p 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 each of the remaining investments
in the DP67 portfolio and we anticipate that this process will be
completed during the middle of 2020, after which the Company will
announce a final dividend.
DP2011 Structured Share Pool
As no value is now attributable to the DP2011 General Ordinary Shares
and DP2011 General A Shares in issue, these Shares were cancelled on 15
November 2019.
Evergreen Share Pools
The changes to the VCT regulations that took place in 2017 heavily
refocussed VCTs on young growth companies. The new share pools that the
Company launched that year are consequently investing in a very
different sector from that in which the older planned exit share pools
invested. As a result, the Generalist and Healthcare Share pools have a
much higher risk and reward profile and are expected to exhibit
different features from the relatively stable planned exit share pools.
The Generalist and Healthcare Share pools are focused on investments in
young growth companies, which typically reinvest any surplus cash back
into their business. Therefore, as is to be expected, the costs of
running the share pools exceeds the revenue income generated from the
portfolio. Returns from the Generalist and Healthcare share pools are
instead expected to be predominantly generated by capital gains on the
eventual disposal of successful investments.
Generalist Share Pool
As at 30 September 2019, the Generalist Share NAV and Total Return stood
at 77.6p, a decrease of 5.9p per share or 7.1% over the period. The
reduction in the NAV during the period is attributable to unrealised
reductions in the carrying values of the quoted and unquoted investments
held by the Generalist Share pool, as well as the impact of VCT running
costs and the "cash-drag" of holding uninvested funds. Whilst a
reduction in NAV is disappointing in is not untypical of a portfolio
like this where failures often come to light earlier than successes.
Further detail on the movements in the valuations of the investments
held by the Generalist Share pool can be found in the Investment
Manager's Report below.
Healthcare Share Pool
As at 30 September 2019, the Healthcare Share NAV and Total Return stood
at 77.7p, a decrease of 5.6p per share or 6.7% over the period. The
reduction in the NAV during the period is attributable to unrealised
reductions in the carrying values of the quoted and unquoted investments
held by the Healthcare Share pool, as well as the impact of VCT running
costs and the "cash-drag" of holding uninvested funds.
In the course of seeking to expand, it is expected that some of the
businesses in the Healthcare portfolio will underperform against their
plans in the short term, or ultimately fail. Whilst this is a typical
feature of investing in young growth companies, for the businesses in
the Healthcare portfolio there is the added challenge of operating in
the complex and highly-regulated healthcare industry. The weaker
businesses will tend to present themselves first, before the stronger
businesses have had time to establish themselves as such. The Manager
continues to support the management teams of all the Healthcare Share
pool's unquoted investments and is confident that several of businesses
have the potential to deliver good rewards for Shareholders.
Further detail on the movements in the valuations of the investments
held by the Healthcare Share pool can be found in the Investment
Manager's Report below.
Dividends
Planned exit Share pools dividends
On 22 November 2019, the Company paid the following dividends to its
planned exit Shareholders:
DSO D Share pool -- 18.0p per DSO D Share
DP67 Share pool -- 18.0p per DP67 Share
Further dividends in respect of the planned exit Share Pools will be
announced as and when sufficient realisations have taken place.
Evergreen Share pools dividends
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. The first
Generalist and Healthcare dividends are expected to be paid during the
summer of 2020.
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.
The Board does not intend to buy in any DSO D or DP67 Shares, as the
Company will continue to distribute funds to investors by way of
dividends.
During the period the Company purchased 73,944 Generalist Shares and
19,704 Healthcare Shares, at an average price of 81.8p per Generalist
Share and 80.8p per Healthcare Share. The Shares were subsequently
cancelled.
Fundraising
The 2018 Generalist and Healthcare Offers closed on 31 October 2019,
having raised gross proceeds of GBP12.0 million for the Generalist Share
pool and GBP5.4 million for the Healthcare Share pool.
The Company has now launched a further Offer for subscription, to allow
the Company to continue to issue Shares in the tax year to 5 April 2020.
Outlook
Over the remainder of this financial year, the Board and Manager will
continue to work towards exiting from all the remaining investments held
by the DSO D and DP67 Share pools, ahead of distributing the remaining
proceeds to investors.
The Board and Manager will also continue the process of building the
Generalist and Healthcare portfolios, and Shareholders should expect to
see a similar level of investment activity in the period to 31 March
2020.
The difficulties with Brexit combined with the imminent general election
have created significant political and economic uncertainty which have
made it difficult period for public companies, particularly smaller
ones. Once the outcome of the election is known we may see a period of
greater stability for the economy which would be helpful.
Sir Aubrey Brocklebank Bt
Chairman
INVESTMENT MANAGER'S REPORT
DSO D SHARE POOL
Portfolio valuation
As at 30 September 2019, the DSO D Share Pool had a portfolio of five
investments with a value of GBP0.7 million.
The DSO D Share pool portfolio was reduced in value by GBP7,000 during
the period, this being the result of a GBP11,000 reduction in the
carrying value of Pearce and Saunders Limited and a GBP4,000 increase in
the carrying value of Green Energy Production UK Limited
Portfolio activity
One realisation took place during the period. Lambridge Solar Limited,
the owner of a 9MW ground-mounted photovoltaic system in Lincolnshire,
was sold for GBP716,000, representing a gain over cost of GBP216,000.
Results and Net Asset Value
The Net Asset Value ("NAV") per DSO D Share at 30 September 2019 stood
at 28.9p, a decrease of 1.1p or 4.0% over the period. Total Return
stands at 103.0p 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
GBP93,000 comprising a revenue loss of GBP3,000 and a capital gain of
GBP96,000.
Dividends
On 22 November 2019 the Company paid a dividend of 18.0p per DSO D Share,
bringing the cumulative dividends total to 94.5p per DSO D Share as at
the date of this report.
We expect that the realisations of the remaining investments will be
completed during the first quarter of 2020, after which it is expected
that the Company will declare a further dividend.
Downing LLP
SUMMARY OF INVESTMENT PORTFOLIO
DSO D SHARE POOL
as at 30 September 2019
Unrealised % of
(loss)/gain portfolio
Cost Valuation in period by value
GBP000 GBP000 GBP000
Venture Capital investments
Pearce and Saunders Limited 300 365 (11) 16.0%
Fresh Green Power Limited 189 210 - 9.2%
Green Energy Production UK
Limited 100 55 4 2.4%
Apex Energy Limited 400 40 - 1.8%
Pearce and Saunders DevCo
Limited* 20 20 - 0.9%
1,635 690 (7) 30.3%
Cash at bank and in hand 1,591 69.7%
Total investments 2,281 100.0%
========= ==========
* non-qualifying investment
SUMMARY OF INVESTMENT MOVEMENTS
DSO D SHARE POOL
for the period ended 30 September 2019
Valuation at Disposal Total gain against Realised
Disposals Cost 31/03/2019 proceeds cost gain in period
GBP000 GBP000 GBP000 GBP000 GBP000
Venture
Capital
investments
Lambridge
Solar
Limited 500 605 716 216 111
500 605 716 216 111
========= =============== ============ ===================== ==================
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
----------
Cumulative dividends paid to 30 September 2019 76.5
----------
2019 Interim 22 November 2019 18.0
----------
Cumulative dividends paid to 12 December 2019 94.5
==========
INVESTMENT MANAGER'S REPORT
DP67 SHARE POOL
Portfolio valuation
As at 30 September 2019, the DP67 Share Pool had a portfolio of three
investments with a value of GBP2.9 million.
The only valuation adjustment during the period was in respect of Fenkle
Street LLP, which was uplifted by GBP96,000. The investment is valued on
a discounted cash flow basis, based on the expected profit distributions
from the underlying hotel. The valuation continues to increase as the
effect of the discount is unwound.
Portfolio activity
One realisation took place during the period. Snow Hill Developments LLP
was exited, generating proceeds of GBP788,000 and a gain of GBP314,000
over the opening cost. The business developed a hotel in Birmingham and
the DP67 Share pool has been receiving profit share over time based on
the performance of the underlying hotel. Over the holding period of the
investment in Snow Hill Developments LLP, total proceeds of GBP2.0
million were received, from an initial investment of GBP1.1 million.
Results and Net Asset Value
The Net Asset Value ("NAV") per DP67 Share at 30 September 2019 stood at
47.4p, a decrease of 1.1p (2.3%) over the period. Total Return stands at
97.2p 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
GBP125,000 comprising a revenue loss of GBP250,000 and a capital profit
of GBP125,000. Included in the revenue loss of GBP250,000 is a non-cash
tax adjustment of GBP316,000, which is an accounting adjustment to
eliminate the impact of the timing differences in respect of profit
distributions from Snow Hill Developments LLP, in view of the disposal
of the investment as discussed above.
Dividends
On 22 November 2019 the Company paid a dividend of 18.0p per DSO D Share,
bringing the cumulative dividends total to 67.8p per DSO D Share as at
the date of this report.
We expect that the realisations of the remaining investments will be
completed during the middle of 2020, after which it is expected that the
Company will declare a further dividend.
Downing LLP
SUMMARY OF INVESTMENT PORTFOLIO
DP67 SHARE POOL
as at 30 September 2019
Unrealised % of
gain portfolio
Cost Valuation in period by value
GBP000 GBP000 GBP000
Venture Capital investments
Cadbury House Holdings Limited 1,409 1,613 - 31.9%
Fenkle Street LLP* 405 793 96 15.7%
Gatewales Limited* 343 527 - 10.4%
Yamuna Energy Limited 400 - - 0.0%
London City Shopping Centre
Limited* 99 - - 0.0%
--------- ----------
2,656 2,933 96 58.0%
========= ==========
Cash at bank and in hand 2,120 42.0%
Total investments 5,053 100.0%
========= ==========
* non-qualifying investment
SUMMARY OF INVESTMENT MOVEMENTS
DP67 SHARE POOL
for the period ended 30 September 2019
Valuation at Disposal Total gain against Realised
Disposals Cost 31/03/2019 proceeds cost gain in period
GBP000 GBP000 GBP000 GBP000 GBP000
Venture
Capital
investments
Snow Hill
Developments
LLP 474 741 788 314 47
474 741 788 314 47
========= =============== ============ ===================== ==================
DIVID HISTORY
DP67 SHARE POOL
Period end Date paid Pence per 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
Cumulative dividends paid to 30 September 2019 49.8
---------------
2019 Interim 22 November 2019 18.0
---------------
Cumulative dividends paid to date 67.8
===============
INVESTMENT MANAGER'S REPORT
DP2011 GENERAL SHARE POOL
Introduction
The process of realising the remaining investments held by the DP2011
General Share pool was completed during September 2019, with the final
distributions of 13.595p per DP2011 General A Share having been paid on
27 September 2019.
Realisations
During the period, the three remaining investments were realised,
achieving proceeds of GBP2.0 million and a gain over cost of GBP654,000.
Final results
Over the life of the DP2011 General Share pool, Shareholders who
invested under the original offer received dividends totalling 70.0p per
DP2011 General Ordinary Share and 35.595p per DP2011 General A Share,
equating to a Total Return of 105.595p for an original investment of
70.0p, net of income tax relief.
Following the final distributions and in accordance with the Articles of
the Company, the DP2011 General Ordinary Shares and DP2011 General A
Shares were converted into worthless deferred Shares on 14 November 2019
and were duly cancelled on 15 November 2019.
Downing LLP
SUMMARY OF INVESTMENT MOVEMENTS
DP2011 GENERAL SHARE POOL
for the period ended 30 September 2019
Valuation at Disposal Total gain against Realised
Disposals Cost 31/03/2019 proceeds cost gain in period
GBP000 GBP000 GBP000 GBP000 GBP000
Venture
Capital
investments
Snow Hill
Developments
LLP 680 1,206 1,225 545 19
Wickham Solar
Limited 550 660 716 166 56
Mosaic Spa
and Health
Clubs
Limited 86 29 29 (57) -
1,316 1,895 1,970 654 75
====== ============ ========= ================== ===============
DIVID HISTORY
DP2011 GENERAL SHARE POOL
Pence
Period end Date paid per share
Pre-merger dividends 20.000
2016 Interim 23 December 2015 2.500
2016 Special 2 September 2016 22.500
2017 Special 14 February 2017 10.000
2018 Special 2 November 2017 30.000
2018 Interim 13 August 2018 7.000
2020 Interim 27 September 2019 13.595
105.595
==========
INVESTMENT MANAGER'S REPORT
DP2011 STRUCTURED SHARE POOL
Portfolio valuation
The process of realising the remaining investments held by the DP2011
Structured Share pool was completed during September 2019, with the
final distributions of 10.059p per DP2011 General A Share having been
paid on 27 September 2019.
Realisations
During the period, the two remaining investments were realised,
achieving proceeds of GBP735,000 and a gain over cost of GBP127,000.
Final results
Over the life of the DP2011 Structured Share pool, Shareholders who
invested under the original offer received dividends totalling 70.0p per
DP2011 Structured Ordinary Share and 35.059p per DP2011 Structured A
Share, equating to a Total Return of 105.059p for an original investment
of 70.0p, net of income tax relief.
Following the final distributions and in accordance with the Articles of
the Company, the DP2011 Structured Shares and DP2011 Structured A Shares
were converted into worthless deferred Shares on 14 November 2019 and
were duly cancelled on 15 November 2019.
Downing LLP
SUMMARY OF INVESTMENT MOVEMENTS
DP2011 STRUCTURED SHARE POOL
for the period ended 30 September 2019
Valuation at Disposal Total gain against Realised
Disposals Cost 31/03/2019 proceeds cost gain in period
GBP000 GBP000 GBP000 GBP000 GBP000
Venture
Capital
investments
Wickham
Solar
Limited 550 660 716 166 56
Mosaic Spa
and Health
Clubs
Limited 58 19 19 (39) -
608 679 735 127 56
====== ============ ========= ================== ===============
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
2020 Interim 27 September 2019 10.059
105.059
==========
INVESTMENT MANAGER'S REPORT
GENERALIST SHARE POOL
Introduction
As at 30 September 2019, the Generalist Share Pool held a portfolio of
28 VCT Qualifying investments and three non-qualifying investments, with
a combined value of GBP26.5 million.
Portfolio activity
During the period to 30 September 2019, the Generalist Share pool made
12 VCT Qualifying investments totalling GBP4.3 million. Of this total,
GBP1.8 million was invested in four new VCT Qualifying businesses, with
the remaining GBP2.5 million having been invested in eight of the
existing portfolio businesses.
Also during the period, the Generalist Share pool invested a further
GBP1.4 million in two non-qualifying investments.
New VCT Qualifying investments
The new VCT qualifying investments made in the period are summarised as
follows:
- GBP525,000 was invested in JRNI Limited (formerly BookingBug Limited),
the developer of a customer engagement platform that can help businesses
increase revenue and build customer loyalty.
- GBP500,000 was invested in Hummingbird Technologies Limited, an
advanced crop analytics business.
- GBP459,000 was invested in Cambridge Touch Technologies Limited, a
company which develops pressure-sensitive multi-touch technology.
- GBP300,000 was invested in Trouva Limited, the owner of an online
marketplace for independent boutiques.
Follow-on VCT Qualifying investments
Follow-on investment completed during the period are summarised as
follows:
- GBP583,000 was invested in Limitless Technology Limited, the developer
of a crowdsourced customer service platform.
- GBP510,000 was invested in Volo Commerce Limited, a provider of
multichannel e-commerce technology.
- GBP333,000 was invested in Lignia Wood Company Limited (formerly Fibre
7 UK Limited), a producer of sustainable high-performance modified
timber for that has applications in building and yacht construction
- GBP300,000 was invested in Channel Mum Limited, the developer of a
community-based website for parents.
- GBP250,000 was invested in Empiribox Limited, the provider of
equipment, lesson plans and CPD--accredited support for teachers
delivering practical science lessons to UK primary school children.
- GBP250,000 was invested in E Fundamentals (Group) Limited, the
provider of a data analytics service that helps brand owners improve
their online revenues.
- GBP138,000 was invested in ADC Biotechnology Limited, a company
creating a 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).
- GBP115,000 was invested in Xupes Limited, an online retailer of
pre-owned luxury goods including designer watches, handbags, jewellery
and antiques.
Non-qualifying investments
The Generalist Share pool holds a non-qualifying portfolio of funds
managed by Downing which mainly invest in UK equities, focussing on the
small cap sector. The share pool added to its holding in Downing
Strategic Micro-Cap Investment Trust plc, investing a further
GBP169,000.
The Generalist Share pool also added to its non-qualifying investment in
Snow Hill Developments LLP, the developer of a hotel in Birmingham. The
Generalist Share pool acquired the DP2011 General Share pool's interest
in the business for GBP1.2 million. This transaction allowed the
Generalist Share pool to add a yielding asset to its growing portfolio,
whilst also enabling DP2011 General Share pool to make its final
distribution to its investors. Snow Hill Developments LLP was
subsequently refinanced during the period, and the Generalist Share pool
received proceeds of GBP1.4 million from its total investment of GBP1.3
million.
Portfolio valuation
A number of adjustments were made to the valuation of the investments in
the VCT qualifying portfolio, resulting in a reduction in value by
GBP1.9 million during the period. The individual valuation movements are
discussed below.
Empiribox Limited was reduced in value by GBP747,000, in view of the
business being behind on its revenue targets, largely due to the
restrictive budgets available to UK primary schools. Downing is closely
monitoring the business and is providing support to its management team.
Live Better With Limited has been reduced in value by GBP642,000,
equating to a 50% provision against cost, as the business is now behind
on the performance metrics set at the time of the last investment.
However, the business has now been through a cost reduction phase, which
was carried out alongside the merging of its operations with
Unforgettable. Downing is working closely with the management team.
Ormsborough Limited was reduced in value by GBP194,000 during the period
and is now held at GBPnil. The individual pub sites have been subject to
an independent valuation exercise, which has seen their expected sales
values decrease. This means that it is unlikely there will be any
recovery of value for equity holders.
Destiny Pharma plc has been reduced in value by GBP140,000 during the
period, to reflect the prevailing quoted share price as at 30 September
2019. The company posted some encouraging interim results to 30 June
2019 and is making good progress on its trials, with results expected
during mid-2020. However, the share price has fallen on limited trading
volumes.
Glownet Limited was reduced in value by GBP112,000 during the period, in
view of the company's underperformance against its budget.
The remaining valuation movements in the Venture Capital portfolio
amounted to a net valuation reduction of GBP66,000.
In addition, the carrying values of the non-qualifying fund investments
have been adjusted to reflect their quoted prices as at 30 September
2019, resulting in a net reduction of GBP483,000 over the period.
Net Asset Value and results
At 30 September 2019, the Net Asset Value ("NAV") of a Generalist share
stood at 77.6 p, a decrease of 5.9p (7.1%) over the period. This
fall is attributable to a combination of the unrealised losses on the
VCT and non-qualifying portfolios as well the "cash-drag" of holding
uninvested funds.
The loss on ordinary activities after taxation for the period was GBP2.7
million, comprising a revenue loss of GBP306,000 and a capital loss of
GBP2.4 million.
Outlook
The process of building the Generalist portfolio is progressing well and
the VCT is on target to meet the 80% Qualifying threshold by the
required date of 1 April 2020.
Although we have seen a fall in the value of the VCT qualifying
portfolio since the commencement of the Generalist Share Pool, this is
not untypical behaviour for this type of portfolio where weaker
investments will often become visible well before the more successful
investments prove their worth. An important part of our role over the
remainder of the year and going forward will be to continue to support
and nurture the investments, particularly those which can we believe may
be able to ultimately deliver good outcomes. A more stable UK political
and economic outlook will be helpful to this end.
We will update Shareholders on the further progress made in building the
Generalist portfolio in the Annual Report to 31 March 2020, to be
published in July 2020.
Downing LLP
SUMMARY OF INVESTMENT ADDITIONS
GENERALIST SHARE POOL
for the period ended 30 September 2019
Cost
GBP'000
Venture Capital investments
Snow Hill Developments LLP* 1,225
Limitless Technology Limited 583
JRNI Limited 525
Volo Commerce Limited 510
Hummingbird Technologies Limited 500
Cambridge Touch Technologies Limited 459
Lignia Wood Company Limited 333
Channel Mum Limited 300
Trouva Limited 300
Empiribox Limited 250
E-Fundamentals (Group) Limited 250
ADC Biotechnology Limited 138
Xupes Limited 115
--------
5,488
--------
Liquidity investments
Downing Strategic Micro-Cap Investment Trust plc*^ 169
--------
169
--------
Total 5,657
========
* non-qualifying investment
^ listed and traded on the Main Market of the London Stock Exchange
All VCT Qualifying Investments are incorporated in England and Wales.
SUMMARY OF INVESTMENT DISPOSALS
GENERALIST SHARE POOL
for the period ended 30 September 2019
Valuation at Disposal Total gain against Realised
Disposals Cost* 31/03/2019* proceeds cost gain in period
GBP000 GBP000 GBP000 GBP000 GBP000
Venture
Capital
investments
Snow Hill
Developments
LLP** 1,289 1,317 1,417 128 100
Mosaic Spa
and Health
Clubs
Limited 32 17 18 (14) 1
1,321 1,334 1,435 114 101
========= =============== ============ ===================== ==================
*adjusted for addition
SUMMARY OF INVESTMENT PORTFOLIO
GENERALIST SHARE POOL
as at 30 September 2019
Unrealised
gain/(loss)
in % of
Cost Valuation period portfolio
GBP'000 GBP'000 GBP'000
Venture Capital
investments
Lignia Wood Company
Limited 1,444 1,533 - 4.5%
Rated People Limited 1,282 1,282 - 3.8%
E-Fundamentals (Group)
Limited 1,167 1,167 - 3.4%
Volo Commerce Limited 1,077 1,077 - 3.2%
Firefly Learning Limited 1,047 1,047 - 3.1%
Imagen Limited 1,000 1,000 - 2.9%
Xupes Limited 933 933 - 2.7%
Maverick Pubs Limited 1,000 850 (50) 2.5%
Limitless Technology
Limited 756 802 - 2.4%
Hackajob Limited 784 784 - 2.3%
BridgeU Limited 811 727 (84) 2.1%
Live Better With Limited 1,211 642 (642) 1.9%
Virtual Class Limited 803 544 - 1.6%
JRNI Limited 525 525 - 1.5%
Exonar Limited 500 500 - 1.5%
Channel Mum Limited 500 500 - 1.5%
Hummingbird Technologies
Limited 500 500 - 1.5%
Cambridge Touch
Technologies Limited 459 459 - 1.3%
Fenkle Street LLP* 301 423 51 1.2%
ADC Biotechnology Limited 550 421 17 1.2%
Empiribox Limited 1,278 400 (747) 1.2%
Arecor Limited 300 300 - 0.9%
Trouva Limited 300 300 - 0.9%
Masters of Pie Limited 167 167 - 0.5%
Destiny Pharma plc^ 500 121 (140) 0.4%
Glownet Limited 741 73 (112) 0.2%
Ormsborough Limited 900 - (194) 0.0%
London City Shopping
Centre Limited* 30 - - 0.0%
-------- ----------- ------------ -----------
20,866 17,077 (1,901) 50.2%
Liquidity investments
MI Downing Monthly Income
Fund* 3,950 3,597 94 10.5%
MI Downing UK Micro-Cap
Growth Fund* 4,025 3,021 (306) 8.8%
Downing Strategic
Micro-Cap Investment
Trust plc*^ 4,269 2,809 (271) 8.2%
12,244 9,427 (483) 27.5%
Total 33,110 26,504 (2,384) 77.7%
======== ============
Cash at bank and in hand 7,594 22.3%
----------- -----------
Total investments 34,098 100.0%
=========== ===========
* non-qualifying investment
^ listed and traded on the Main Market of the London Stock Exchange
^^ listed and traded on AIM
INVESTMENT MANAGER'S REPORT
HEALTHCARE SHARE POOL
Introduction
As at 30 September 2019, the Generalist Share Pool held a portfolio of
eight Venture Capital investments and three Liquidity investments, with
a combined value of GBP7.0 million.
Portfolio activity
During the period to 30 September 2019, the Healthcare Share pool made
two investments in VCT Qualifying businesses totalling GBP416,000.
Also, during the period the Healthcare Share pool added to its liquidity
portfolio, with a further investment of GBP29,000.
VCT Qualifying investments
GBP278,000 was invested in The Electrospinning Company Limited, a
business which designs, develops and manufactures nanofibrous
biomaterials for use in tissue-regenerative devices.
A further GBP138,000 was invested in ADC Biotechnology Limited, a
company creating a 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).
Portfolio valuation
The carrying values of the Public Equity investments have been adjusted
to reflect their quoted prices as at 30 September 2019, resulting in a
net reduction of GBP105,000.
Live Better With Limited has been reduced in value by GBP590,000,
equating to a 50% provision against cost, as the business is now behind
on the performance metrics set at the time of the last investment.
However, the business has now been through a cost reduction phase, which
was carried out alongside the merging of its operations with
Unforgettable. Downing are working closely with the management team.
The remaining valuation movements in the Venture Capital portfolio
amounted to a net valuation uplift of GBP94,000.
Net Asset Value and results
At 30 September 2019, the Net Asset Value ("NAV") of a Healthcare share
stood at 77.7 p, a decrease of 5.6p (6.7%) over the period. As with
the Generalist Share pool, the fall is attributable to a combination of
the unrealised losses on the VCT and non-qualifying portfolios as well
the "cash-drag" of holding uninvested funds.
The loss on ordinary activities after taxation for the period was GBP1.0
million, comprising a revenue loss of GBP119,000 and a capital loss of
GBP889,000.
Outlook
The process of building the Healthcare portfolio is progressing well and
the VCT is on target to meet the 80% Qualifying threshold by the
required date of 1 April 2020.
As noted for the Generalist Share pool, the overall fall in the value of
the VCT qualifying investments since the commencement of the Healthcare
share pool is not an uncommon feature of this type of portfolio. In the
Healthcare growth sector, the effect of weaker investments becoming
evident at a much earlier stage than stronger investments proving
themselves is perhaps even more pronounced than in the Generalist
sector. Additionally, this and the non-qualifying portfolio have
exposure to the AIM market and so the uncertainty about Brexit and the
UK political situation in general has had a negative impact on
valuations. We welcome the prospect of a clearer path ahead in the
coming weeks and months which we believe could support growth in the
valuations of the underlying AIM stocks.
Over the remainder of the year and onwards we will continue to secure
new investments to further develop the VCT qualifying portfolio and also
work with the existing investments to provide ongoing support to help
them towards achieving their goals.
We will next update Shareholders on the progress made in investing the
Healthcare funds in the Annual Report to 31 March 2020, to be published
in July 2020.
Downing LLP
SUMMARY OF INVESTMENT ADDITIONS
HEALTHCARE SHARE POOL
for the period ended 30 September 2019
Cost
GBP'000
Venture Capital investments
The Electrospinning Company Limited 278
ADC Biotechnology Limited 138
--------
416
--------
Liquidity investments
Downing Strategic Micro-Cap Investment Trust plc*^ 29
--------
29
--------
Total 445
========
* non-qualifying investment
^ listed and traded on the Main Market of the London Stock Exchange
All VCT Qualifying Investments are incorporated in England and Wales.
SUMMARY OF INVESTMENT PORTFOLIO
HEALTHCARE SHARE POOL
as at 30 September 2019
Unrealised
gain/
(loss) %
in of
Cost Valuation period portfolio
GBP'000 GBP'000 GBP'000
Venture Capital investments
Arecor Limited 1,100 1,100 - 7.8%
Open Bionics Limited 1,000 1,000 - 7.1%
ADC Biotechnology 1,192 701 29 5.0%
Live Better With Limited 1,106 589 (590) 4.2%
Adaptix Limited 556 556 65 3.9%
Future Health Works Limited 278 278 - 2.0%
The Electrospinning Company
Limited 278 278 - 2.0%
Destiny Pharma plc^ 750 181 (211) 1.3%
6,260 4,683 (707) 33.3%
Liquidity investments
MI Downing UK Micro-Cap
Growth Fund* 1,125 841 (85) 6.0%
Downing Strategic Micro-Cap
Investment Trust plc*^ 729 480 (46) 3.3%
MI Downing Monthly Income
Fund* 1,100 1,004 26 7.1%
-------- ----------- ---------- -----------
2,954 2,325 (105) 16.4%
Total 9,214 7,008 (812) 49.7%
======== ==========
Cash at bank and in hand 7,099 50.3%
----------- -----------
Total investments 14,107 100.0%
=========== ===========
* non-qualifying investment
^ listed and traded on the Main Market of the London Stock Exchange
^^ listed and traded on AIM
All VCT Qualifying Investments are incorporated in England and Wales.
UNAUDITED INCOME STATEMENT
for the six months ended 30 September 2019
Year
ended
Six months ended Six months ended 31 Mar
30 Sep 2019 30 Sep 2018 2019
Revenue Capital Total Revenue Capital Total Total
Company Total GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Income 156 59 215 215 115 330 608
Net losses on investments - (2,717) (2,717) - (1,363) (1,363) (5,091)
156 (2,658) (2,502) 215 (1,248) (1,033) (4,483)
Investment management fees (286) (286) (572) (203) (203) (406) (772)
Other expenses (279) - (279) (197) - (197) (468)
(Loss)/return on ordinary activities before tax (409) (2,944) (3,353) (185) (1,451) (1,636) (5,723)
Tax on total comprehensive income and ordinary
activities (306) - (306) (19) - (19) 7
(Loss)/return attributable to equity Shareholders,
being total comprehensive income for the period (715) (2,944) (3,659) (204) (1,451) (1,655) (5,716)
======= ======= ======= ======= ======= ======= =========
Return per DSO D Share - 1.2p 1.2p (0.4p) 0.3p (0.1p) 2.6p
Return per DP67 Share (2.2p) 1.1p (1.1p) 0.7p (0.2p) 0.5p (1.5p)
Return per DP2011 Gen Ordinary Share - - - - - - -
Return per DP2011 Gen A Share (0.1p) 0.3p 0.2p (0.1p) (0.2p) (0.3p) -
Return per DP2011 Struc Ordinary Share - - - - - - -
Return per DP2011 Struc A Share (0.1p) 0.4p 0.3p - (0.2p) (0.2p) (0.3p)
Return per Generalist Share (0.7p) (5.8p) (6.5p) (0.5p) (2.9p) (3.4p) (12.0p)
Return per Healthcare Share (0.7p) (5.1p) (5.8p) (1.2p) (8.5p) (9.7p) (11.3p)
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 2019
Year
ended
Six months ended Six months ended 31 Mar
30 Sep 2019 30 Sep 2018 2019
Revenue Capital Total Revenue Capital Total Total
D Share Pool GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Income 6 - 6 2 - 2 14
Gains on
investments - 104 104 - 38 38 (141)
6 104 110 2 38 40 (127)
Investment
management
fees (8) (8) (16) (16) (16) (32) (34)
Other expenses (11) - (11) (15) - (15) (46)
(Loss)/return
on ordinary
activities
before
taxation (13) 96 (83) (29) 22 (7) (207)
Taxation 10 - - - - - -
(Loss)/return
attributable
to equity
Shareholders (3) 96 (93) (29) 22 (7) (207)
======= ======= ====== ======= ======= ====== =======
Year
ended
Six months ended Six months ended 31 Mar
30 Sep 2019 30 Sep 2018 2019
Revenue Capital Total Revenue Capital Total Total
DP67 Share Pool GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Income 107 - 107 117 75 192 326
(Losses)/gains
on
investments - 143 143 - (75) (75) (372)
107 143 250 117 - 117 (46)
Investment
management
fees (18) (18) (36) (19) (19) (38) (66)
Other expenses (23) - (23) (2) - (2) (26)
Return/(loss)
on ordinary
activities
before
taxation 66 125 191 96 (19) 77 (138)
Taxation (316) - (316) (19) - (19) (28)
Return/(loss)
attributable
to equity
Shareholders (250) 125 (125) 77 (19) 58 (166)
======= ======= ====== ======= ======= ====== =======
Year
ended
Six months ended Six months ended 31 Mar
30 Sep 2019 30 Sep 2018 2019
Revenue Capital Total Revenue Capital Total Total
DP2011 General
Share Pool GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Income - - - 9 - 9 4
(Losses)/gains
on
investments - 75 75 - (19) (19) 71
- 75 75 9 (19) (10) 75
Investment
management
fees (11) (11) (22) (17) (17) (34) (40)
Other expenses (8) - (8) (14) - (14) (31)
(Loss)/return
on ordinary
activities
before
taxation (19) 64 45 (22) (36) (58) 4
Taxation - - - - - - -
(Loss)/return
attributable
to equity
Shareholders (19) 64 45 (22) (36) (58) 4
======= ======= ====== ======= ======= ======== =======
Year
ended
Six months ended Six months ended 31 Mar
30 Sep 2019 30 Sep 2018 2019
Revenue Capital Total Revenue Capital Total Total
DP2011
Structured
Share Pool GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Income - - - 9 - 9 3
(Losses)/gains
on
investments - 56 56 - (17) (17) -
- 56 56 9 (17) (8) 3
Investment
management
fees (6) (6) (12) (9) (9) (18) (14)
Other expenses (12) - (12) (7) - (7) (15)
(Loss)/return
on ordinary
activities
before
taxation (18) 50 32 (7) (26) (33) (26)
Taxation - - - - - - -
(Loss)/return
attributable
to equity
Shareholders (18) 50 32 (7) (26) (33) (26)
======= ======= ====== ======= ======= ====== =======
Year
ended
Six months ended Six months ended 31 Mar
30 Sep 2019 30 Sep 2018 2019
Revenue Capital Total Revenue Capital Total Total
Generalist
Share Pool GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Income 21 59 80 61 40 101 232
Losses on
investments - (2,283) (2,283) - (729) (729) (3,572)
21 (2,224) (2,203) 61 (689) (628) (3,340)
Investment
management
fees (166) (166) (332) (77) (77) (154) (360)
Other expenses (161) - (161) (114) - (114) (252)
Losses on
ordinary
activities
before
taxation (306) (2,390) (2,696) (130) (766) (896) (3,952)
Taxation - - - - - - 35
Losses
attributable
to equity
Shareholders (306) (2,390) (2,696) (130) (766) (896) (3,917)
======= ======= ======= ======= ======= ====== =======
Year
ended
Six months ended Six months ended 31 Mar
30 Sep 2019 30 Sep 2018 2019
Revenue Capital Total Revenue Capital Total Total
Healthcare
Share Pool GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Income 22 - 22 17 - 17 29
Losses on
investments - (812) (812) - (561) (561) (1,077)
22 (812) (790) 17 (561) (544) (1,048)
Investment
management
fees (77) (77) (154) (65) (65) (130) (258)
Other expenses (64) - (64) (45) - (45) (98)
Losses on
ordinary
activities
before
taxation (119) (889) (1,008) (93) (626) (719) (1,404)
Taxation - - - - - - -
Losses
attributable
to equity
Shareholders (119) (889) (1,008) (93) (626) (719) (1,404)
======= ======= ======= ======= ======= ====== =======
UNAUDITED BALANCE SHEET
as at 30 September 2019
As at As at As at 31
30 September 30 September March
2019 2018 2019
GBP'000 GBP'000 GBP'000
Fixed assets
Investments 37,135 39,470 39,394
Current assets
Debtors 558 572 800
Cash at bank and in hand 18,437 11,554 18,443
------------- ------------- --------
18,995 12,126 19,243
Creditors: amounts falling due
within one year (481) (211) (485)
------------- ------------- --------
Net current assets 18,514 11,915 18,758
-------------
Net assets 55,649 51,385 58,152
============= ============= ========
8BCapital and reserves
Called up Share capital 149 130 138
Capital redemption reserve - 31 -
Special reserve 45,762 4,463 47,040
Share premium account 17,102 44,621 7,172
Funds held in respect of
shares not yet allotted 167 234 4,772
Revaluation reserve (8,395) (1,637) (4,158)
Capital reserve -- realised 3,733 4,855 4,940
Revenue reserve (2,869) (1,312) (1,752)
-------------
Total equity Shareholders'
funds 55,649 51,385 58,152
============= ============= ========
Basic and diluted Net Asset
Value per Share:
DSO D Share 28.9p 30.3p 27.8p
DP67 Share 47.4p 50.5p 48.5p
DP2011 General Ordinary Share - - -
DP2011 General A Share - 13.0p 13.3p
DP2011 Structured Ordinary - - N/A
Share
DP2011 Structured A Share - 9.8p 9.9p
Generalist Share 77.6p 92.7p 83.5p
Healthcare Share 77.7p 88.7p 83.3p
The comparative balance sheet as at 30 September 2018 includes the Share
Pools in existence at that date.
UNAUDITED BALANCE SHEET (ANALYSED BY SHARE POOL)
as at 30 September 2019
DSO D Share Pool
As at As at As at
30 September 30 September 31 March
2019 2018 2019
GBP'000 GBP'000 GBP'000
Fixed assets
Investments 690 1,489 1,302
Current assets
Debtors 18 4 1
Cash at bank and in hand 1,591 921 910
------------- ------------- ---------
1,609 925 911
Creditors: amounts falling
due within one year (21) (31) (28)
------------- ------------- ---------
Net current assets 1,588 894 883
------------- ------------- ---------
Net assets 2,278 2,383 2,185
============= ============= =========
Capital and reserves
Called up share capital 8 8 8
Special reserve 2,356 2,629 2,259
Revaluation reserve 41 (39) 153
Capital reserve -- realised (37) (148) (148)
Revenue reserve (90) (67) (87)
------------- ------------- ---------
Total equity Shareholders'
funds 2,278 2,383 2,185
============= ============= =========
DP67 Share Pool
As at As at As at
30 September 30 September 31 March
2019 2018 2019
GBP'000 GBP'000 GBP'000
Fixed assets
Investments 2,933 4,564 3,578
Current assets
Debtors 333 627 669
Cash at bank and in hand 2,120 501 1,251
------------- ------------- ---------
2,453 1,128 1,920
Creditors: amounts falling due
within one year (83) (40) (70)
------------- ------------- ---------
Net current assets 2,370 1,088 1,850
------------- ------------- ---------
Net assets 5,303 5,652 5,428
============= ============= =========
Capital and reserves
Called up share capital 11 11 11
Capital redemption reserve - 31 -
Special reserve 783 861 534
Revaluation reserve 376 504 547
Capital reserve -- realised 3,669 3,581 3,622
Revenue reserve 464 664 714
------------- ------------- ---------
Total equity Shareholders'
funds 5,303 5,652 5,428
============= ============= =========
DP2011 General Share Pool
As at As at As at
30 September 30 September 31 March
2019 2018 2019
GBP'000 GBP'000 GBP'000
Fixed assets
Investments - 2,224 1,895
Current assets
Debtors - 1 1
Cash at bank and in hand 19 208 594
------------- ------------- ---------
19 209 595
Creditors: amounts falling due
within one year (19) (36) (31)
------------- ------------- ---------
Net current assets - 173 564
------------- ------------- ---------
Net assets - 2,397 2,459
============= ============= =========
Capital and reserves
Called up share capital --
Ordinary Shares 16 16 16
Called up share capital -- A
Shares 18 18 18
Special reserve (34) 903 652
Revaluation reserve - 334 636
Capital reserve -- realised - 831 867
Revenue reserve - 295 270
------------- ------------- ---------
Total equity Shareholders'
funds - 2,397 2,459
============= ============= =========
DP2011 Structured Share Pool
As at As at As at
30 September 30 September 31 March
2019 2018 2019
GBP'000 GBP'000 GBP'000
Fixed assets
Investments - 1,028 679
Current assets
Debtors - 3 3
Cash at bank and in hand 14 215 566
------------- ------------- ---------
14 218 569
Creditors: amounts falling due
within one year (14) (20) (15)
------------- ------------- ---------
Net current assets - 198 554
------------- ------------- ---------
Net assets - 1,226 1,233
============= ============= =========
Capital and reserves
Called up share capital --
Ordinary Shares 11 11 11
Called up share capital -- A
Shares 13 13 13
Special reserve (24) 566 332
Revaluation reserve - (136) 109
Capital reserve -- realised - 591 599
Revenue reserve - 181 169
------------- ------------- ---------
Total equity Shareholders'
funds - 1,226 1,233
============= ============= =========
Generalist Share Pool
As at As at As at
30 September 30 September 31 March
2019 2018 2019
GBP'000 GBP'000 GBP'000
Fixed assets
Investments 26,504 23,555 24,565
Current assets
Debtors 201 94 124
Cash at bank and in hand 7,594 5,396 8,661
------------- ------------- ---------
7,795 5,490 8,785
Creditors: amounts falling due
within one year (218) (129) (220)
------------- ------------- ---------
Net current assets 7,577 5,361 8,565
------------- ------------- ---------
Net assets 34,081 28,916 33,130
============= ============= =========
Capital and reserves
Called up share capital 51 38 43
Special reserve 30,711 (331) 31,111
Share premium account 11,889 32,058 4,692
Revaluation reserve (6,606) (1,407) (4,209)
Capital reserve -- realised 101 - -
Funds held in respect of shares
not yet allotted 144 199 3,396
Revenue reserve (2,209) (1,641) (1,903)
------------- ------------- ---------
Total equity Shareholders'
funds 34,081 28,916 33,130
============= ============= =========
Healthcare Share Pool
As at As at As at
30 September 30 September 31 March
2019 2018 2019
GBP'000 GBP'000 GBP'000
Fixed assets
Investments 7,008 6,610 7,375
Current assets
Debtors 6 3 2
Cash at bank and in hand 7,099 4,313 6,461
------------- ------------- ---------
7,105 4,316 6,463
Creditors: amounts falling due
within one year (126) (115) (121)
------------- ------------- ---------
Net current assets 6,979 4,201 6,342
------------- ------------- ---------
Net assets 13,987 10,811 13,717
============= ============= =========
Capital and reserves
Called up share capital 21 15 18
Special reserve 11,970 (165) 12,152
Share premium account 5,213 12,563 2,480
Revaluation reserve (2,206) (893) (1,394)
Funds held in respect of shares
not yet allotted 23 35 1,376
Revenue reserve (1,034) (744) (915)
------------- ------------- ---------
Total equity Shareholders'
funds 13,987 10,811 13,717
============= ============= =========
STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 September 2019
Funds held
Called Capital Share in respect Capital
up Share Redemption Special premium of Shares Revaluation reserve Revenue
capital reserve reserve account not yet allotted Reserve - realised reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 31 March 2018 188 31 8,021 43,904 420 234 4,641 (1,104) 56,335
Total comprehensive income - - - - - (5,250) 3 (469) (5,716)
Transfer between reserves* - - (4,960) - - 858 4,102 - -
Unallotted Shares - - - - 4,352 - - - 4,352
Transactions with owners
Dividends paid - - - - - - (3,806) - (3,806)
Cancellation of Share Premium/ Capital Redemption
Reserve - (89) 43,993 (43,904) - - - - -
Cancellation of Shares (58) 58 - - - - - - -
Purchase of own Shares - - (14) - - - - - (14)
Issue of Shares 8 - - 7,172 - - - - 7,180
Share issue costs - - - - - - - (179) 179
-------- ----------- -------- -------- ----------------- ----------- ----------- -------- ----------
At 31 March 2019 138 - 47,040 7,172 4,772 (4,158) 4,940 (1,752) 58,152
Total comprehensive income - - - - - (3,107) 163 (715) (3,659)
Transfer between reserves* - - (867) - - (1,130) 2,399 (402) -
Unallotted Shares - - - - (4,605) - - - (4,605)
Transactions with owners
Dividends paid - - - - - - (3,769) - (3,769)
Purchase of own Shares (76) (76)
Issue of Shares 11 - - 9,930 - - - - 9,941
Share issue costs - - (335) - - - - - (335)
-------- ----------- -------- -------- ----------------- ----------- ----------- -------- ----------
At 30 September 2019 149 - 45,762 17,102 167 (8,395) 3,733 (2,869) 55,649
======== =========== ======== ======== ================= =========== =========== ======== ==========
*A transfer of GBP1,130,000 (31 March 2019: GBP858,000) representing
previously recognised realised gains and losses on disposal of
investments during the period has been made between the Revaluation
Reserve to the Capital reserve-realised. A transfer of GBP867,000 (31
March 2019: GBP4,960,000) representing realised gains on disposal of
investments, less capital expenses and capital dividends in the period
has been made between the Capital Reserve -- realised and the Special
reserve. A transfer of GBP402,000 (31 March 2019: GBPnil), representing
the balance on the Revenue reserve relating to the two cancelled share
classes, has been made from the revenue reserve to the Special reserve.
UNAUDITED STATEMENT OF CASH FLOWS
Six months ended 30 September 2019
DSO D DP67
Share Share DP2011 General DP2011 Structured Generalist Healthcare
pool pool Share Pool Share Pool Share Pool Share Pool Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cash flows from operating
activities
Return on ordinary activities
before taxation 83 191 45 32 (2,697) (1,008) (3,354)
(Gains)/losses on investments (104) (143) (75) (56) 2,284 812 2,718
(Decrease)/increase in
creditors 3 (347) (12) (1) (1) 5 (353)
Decrease/(increase) in
debtors (17) 220 1 3 (79) (3) 125
------- ------- -------------- ----------------- ----------- ------------ -------
Net cash outflow from
operating activities (35) (79) (41) (22) (493) (194) (704)
Corporation tax paid - 160 - - - - -
------- ------- -------------- ----------------- ----------- ------------ -------
New cash generated from
operating activities (35) 81 (41) (22) (493) (194) (704)
------- ------- -------------- ----------------- ----------- ------------ -------
Cash flow from investing
activities
Purchase of investments - - - - (5,657) (445) (6,102)
Proceeds from disposal of
investments 716 788 1,970 735 1,435 - 5,644
Net cash inflow/(outflow)
from investing activities 716 788 1,970 735 (4,222) (445) (458)
------- ------- -------------- ----------------- ----------- ------------ -------
Net cash inflow/(outflow)
before financing 681 869 1,929 713 (4,715) (639) (1,162)
Cash flows from financing
activities
Repurchase of shares - - - - (60) (16) (76)
Issue of share capital - - - - 7,205 2,736 9,941
Share issue costs - - - - (246) (89) (335)
Unallotted shares - - - - (3,251) (1,354) (4,605)
Equity dividends paid - - (2,504) (1,265) - - (3,769)
------- ------- -------------- ----------------- ----------- ------------ -------
Net cash (outflow)/inflow
from financing activities - - (2,504) (1,265) 3,648 1,277 1,156
------- ------- -------------- ----------------- ----------- ------------ -------
Net movement in cash 681 869 (575) (552) (1,067) 638 (6)
Cash and cash equivalents at
start of period 910 1,251 594 566 8,661 6,461 18,443
------- ------- -------------- ----------------- ----------- ------------ -------
Cash and cash equivalents at
end of period 1,591 2,120 19 14 7,594 7,099 18,437
======= ======= ============== ================= =========== ============ =======
Cash and cash equivalents
comprise
Cash at bank and in hand 1,591 2,120 19 14 7,594 7,099 18,437
------- ------- -------------- ----------------- ----------- ------------ -------
Total cash and cash
equivalents 1,591 2,120 19 14 7,594 7,099 18,437
======= ======= ============== ================= =========== ============ =======
UNAUDITED STATEMENT OF CASH FLOWS
Six months ended 30 September 2018
DSO D DP67
Share Share DP2011 General DP2011 Structured Generalist Healthcare
pool pool Share Pool Share Pool Share Pool Share Pool Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
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
creditors (38) (76) (32) (17) (87) 4 (246)
Decrease/(increase) in
debtors 62 (94) (1) - (21) (2) (56)
------- ------- -------------- ----------------- ----------- ------------ -------
Net cash outflow 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
======= ======= ============== ================= =========== ============ =======
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
1. 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.
2. Basis of accounting
The unaudited half-yearly financial results cover the six months to 30
September 2019 and have been prepared in accordance with the accounting
policies set out in the statutory accounts for the year ended 31 March
2019, which were prepared in accordance with the Financial Reporting
Standard 102 ("FRS 102") and the Statement of Recommended Practice
"Financial Statements of Investment Trust Companies" issued in November
2014 (revised in February 2018) ("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 are in respect of the six months ended 30
September 2018 and the year ended 31 March 2019 respectively.
5. 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:
DSO D Shares 7,867,247 DP2011 Structured Shares 10,678,725
DP67 Shares 11,192,136 DP2011 Structured A Shares 12,572,817
DP2011 General Shares 15,644,066 Generalist Shares* 43,752,827
DP2011 General A Shares 18,418,614 Healthcare Shares* 17,982,727
*Excludes Management Shares
6. Return per share for the period has been calculated on the average
number of shares in issue in the period as follows:
DSO D Shares 7,867,247 DP2011 Structured Shares 10,678,725
DP67 Shares 11,192,136 DP2011 Structured A Shares 12,572,817
DP2011 General Shares 15,644,066 Generalist Shares* 41,328,481
DP2011 General A Shares 18,418,614 Healthcare Shares* 17,296,874
*Excludes Management Shares
7. Dividends
Six months ended 30 September 2019
Revenue Capital Total
GBP000 GBP000 GBP000
Paid in period
DP2011 General A Shares - 2,504 2,504
============ ============ ==========
DP2011 Structured A Shares - 1,265 1,265
============ ============ ==========
8. Reserves
30 Sep 30 Sep 31 Mar
2019 2018 2019
GBP'000 GBP'000 GBP'000
Capital redemption reserve - 31 -
Special reserve 45,762 4,463 47,040
Share premium account 17,102 44,621 7,172
Funds held in respect of shares not yet
allotted 167 234 4,772
Capital reserve -- realised 3,733 4,855 4,940
Revaluation reserve (8,395) (1,637) (4,158)
Revenue reserve (2,869) (1,312) (1,752)
Total reserves 55,500 51,255 58,014
======= ======= =======
The Revenue reserve, Special reserve and Capital reserve - realised are
distributable reserves and are reduced by revaluation losses of GBP9.5
million. Distributable reserves at 30 September 2019 were GBP37.1
million.
9. Investments
The fair value of investments is determined using the detailed
accounting policy as shown in the audited financial statements for the
year ended 31 March 2019. The Company has categorised its financial
instruments using the fair value hierarchy as follows:
Level 1 Reflects financial instruments quoted in an active market
(quoted companies, 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 2019 1 2 3 2019
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Liquidity
investments 11,752 - - 11,752 12,142 - - 12,142
Quoted
equity 302 - - 302 653 - - 653
Unquoted
loan notes - - 4,124 4,124 - - 2,971 2,971
Unquoted
equity - - 20,957 20,957 - - 23,628 23,759
------ ------ ------ ------
12,054 - 25,081 37,135 12,795 - 26,599 39,394
====== ====== ====== ====== ====== ====== ====== ======
10. 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.
11. 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:
(i) compliance risk of failure to maintain approval as a VCT;
(ii) market, liquidity and counterparty risk associated with Public
Equity investments; and
(iii) 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 Philip Hare & Associates LLP
("Philip Hare") to provide regular reviews and advice in this area.
Philip Hare has 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 Manager follows a rigorous process in
vetting and carefully structuring new investments, including taking a
charge over the assets of the business wherever possible and, after an
investment is made, closely monitoring the business.
12. 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.
13. 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:
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 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:
(i) Shareholders receive total proceeds of at least 100.0p per DSO D
Share (excluding income tax relief); and
(ii) 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 3.0p per DSO D Share plus 20% of
shareholder proceeds above 100.0p per DSO D Share. The Performance
Incentive is restricted to a maximum of 7.0p per DSO D Share.
As at 30 September 2019, the estimated performance fee is 4.1p per DSO D
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 3.0p 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 12, 2019 13:00 ET (18:00 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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