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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Downing One Vct Plc | LSE:DDV1 | London | Ordinary Share | GB00BFRSVQ41 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 57.00 | 56.00 | 58.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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TIDMDDV1
DOWNING ONE VCT PLC
Report and Accounts for the year ended 31 March 2017
FINANCIAL SUMMARY
31 Mar 31 Mar
2017 2016
pence pence
Net asset value per share ("NAV") 90.4 94.1
Cumulative dividends paid since 12 November 2013 18.0 12.0
Total return (net asset value plus cumulative dividends
paid per share) 108.4 106.1
Dividends in respect of financial year
Interim dividend per share 3.0 3.0
Proposed final dividend per share 4.5 3.0
7.5 6.0
CHAIRMAN'S STATEMENT
I am pleased to present the Company's Annual Report for the year ended
31 March 2017.
The year saw a significant level of new funds raised by the Company and
a fair amount of investment activity as the task of employing the new
funds got underway, along with several realisations from some of the
existing investments.
Net asset value and results
As at 31 March 2017, the net asset value per share ("NAV") stood at
90.4p, an increase of 2.3p (2.4%) after adding back dividends of 6.0p
per share which were paid during the year.
The Income Statement shows a return attributable to equity shareholders
for the year of GBP2.3 million comprising a revenue loss of GBP12,000
and a capital return of GBP2.3 million.
Fundraising
The Company launched an Offer for Subscription in December 2015, which
closed on 30 September 2016. The offer raised total gross proceeds of
GBP19.3 million, which provides the Company with a significant level of
new funds and allows it to participate in attractive new investment
opportunities as they arise.
Investment activity and performance
At the year end, the Company held a portfolio of 90 investments. Of
these, 31 are either quoted on AIM or the NEX Exchange Growth Market and
have a value of GBP24.5 million (28% of the portfolio). The 59 unquoted
investments have a value of GBP61.9 million and represent 72% of the
portfolio.
Two new quoted investments were made at a total cost of GBP427,000.
There were three quoted investment disposals generating proceeds of
GBP656,000.
In the unquoted portfolio, there were 19 realisations, producing
proceeds of GBP9.0 million and realised gains of GBP524,000. One
follow-on investment was made at a cost of GBP1.6 million and 14 new
investments at GBP25.8 million.
The quoted portfolio showed net unrealised gains of GBP840,000 over the
year. At the year end, the Board reviewed the valuations of the unquoted
investments and made a number of adjustments. Overall the unquoted
portfolio showed total unrealised gains of GBP1.2 million for the year.
Net unrealised gains for the full portfolio were therefore GBP2.1
million.
Further details on the investment activity are included in the
Investment Adviser's Report.
Dividends
The Company has a policy of seeking to pay annual dividends of at least
4% of net assets per annum.
In view of the level of realisations achieved in the period, the Board
is proposing a final dividend of 4.5p per share to be paid on 18 August
2017, subject to Shareholder approval at the forthcoming AGM, to
Shareholders on the register at 21 July 2017. This will bring total
dividends in respect of the year ended 31 March 2017 to 7.5p per share,
which represents a yield based on opening NAV of 8.0% pa.
Shareholders are reminded that the Company operates a Dividend
Reinvestment Scheme for those investors that wish to reinvest their
dividends and obtain further income tax relief on the reinvested
dividend. A Dividend Reinvestment Form is available on Downing's website
or further information can be obtained by contacting Downing.
Share buybacks
The Company continues to operate a policy of buying in its own shares
that become available in the market at a 5% discount to NAV (subject to
liquidity and any regulatory restrictions).
During the year, the Company purchased 2.8 million shares at an average
price of 87.2p per share. Overall, the total cash returned to
shareholders via share buybacks and this year's total dividend of 7.5p
per share is approximately equal to the level of cash proceeds received
during the year.
The Company retains Panmure Gordon as its corporate broker to assist in
operating the share buyback process and ensuring that the quoted spread
on the Company's shares remains at a reasonable level.
Directorate
As reported in the Half Yearly Report, two Directors, Helen Sinclair and
Andrew Griffiths, resigned during the year. I would like to once again
thank Helen and Andrew for their contributions as non-executive
directors since the major merger in 2013 which created Downing ONE. My
colleagues and I wish them every success in their other ventures.
Now that the original six VCTs that were merged together have been
successfully integrated into one Company, the Directors believe that a
Board comprising three non-executive directors is appropriate for the
Company at the current time and therefore do not propose to make any new
appointments for the time being.
Fundraising plans
The Company did not launch a new fundraising for the 2016/17 tax year,
partly because it had raised significant funds in the prior tax year
which were still in the process of being invested. Progress is now being
made in investing those funds and the Board has therefore decided to
consider undertaking a new Offer for Subscription for the 2017/18 tax
year. If the Board decides to proceed full details will be sent to
Shareholders as they become available.
In order to give the Company flexibility to launch this new offer
without having to incur the expense of issuing a separate Shareholder
circular, resolutions will be proposed at the forthcoming AGM to give
the Directors authority to allot and waive pre-exemption rights on up to
approximately GBP35 million worth of new shares.
Annual General Meeting
The Company's next Annual General Meeting ("AGM") will be held at
Downing LLP, Fifth Floor, Ergon House, Horseferry Road, London, SW1P 2AL
at 10.30 a.m. on 15 August 2017.
Three items of special business are proposed at the AGM:
- two in respect of the allotment of shares as described above; and
- one in respect of the authority to buy back shares as noted above.
Outlook
The new VCT regulations continue to provide challenges for the
Investment Adviser in both securing and structuring new investments and
in supporting existing portfolio companies. In particular, the new rules
heavily restrict opportunities to invest in AIM-quoted companies. The
Company does however continue to hold a substantial portfolio of
AIM-quoted investments so can continue to benefit from that for the time
being.
Since the year end, the Company has made a GBP5 million non-qualifying
investment into the Downing Micro-Cap Strategic Trust plc, a new
Investment Trust managed by the same team that advises the Company on
its AIM-quoted portfolio. As an Investment Trust, this is one of the few
types of non-qualifying investments now permitted under the VCT
regulations and will provide the Company with liquidity and the
possibilities of some growth on funds that would otherwise be held as
cash while awaiting investment in new VCT qualifying opportunities. For
the avoidance of doubt, the Board has obtained agreement from the
Advisor that there will be no "double charging" of fees.
Over the next year, we expect to see the more recent investments develop
businesses that have the potential to drive steady performance of the
Company in the future. At the same time, the Adviser will be exploring
realisation opportunities for the more mature investments, although, as
ever, will only pursue exits if they consider the price and timing to be
appropriate.
I look forward to meeting Shareholders at the AGM and to reporting
developments in my statement with the Half Year Report to 30 September
2017.
Chris Kay
Chairman
INVESTMENT ADVISER'S REPORT
Introduction
The following is a review of the performance of both the quoted and
unquoted investment portfolios.
At 31 March 2017, the Company held a portfolio of investments in 90
quoted and unquoted companies, valued in total at GBP86.4 million.
Net asset value and results
The net asset value per Share ("NAV") at 31 March 2017 stood at 90.4p,
compared to the NAV at 31 March 2016 of 94.1p. Total Return (NAV plus
cumulative dividends paid since the merger in 2013) is 108.4p.
The return on ordinary activities after taxation for the year was GBP2.3
million, comprising a revenue loss of GBP12,000 and a capital profit of
GBP2.3 million.
Unquoted Venture Capital investments
Investment activity
At 31 March 2017, the unquoted portfolio was valued at GBP61.9 million,
comprising 59 investments, spread across a number of sectors.
During the period, there were 14 new investments totalling GBP25.8
million and one follow-on investment totalling GBP1.6 million. The new
investments were as follows:
GBP2.5 million was invested in Vectis Alpha Limited which is seeking to
build and develop infrastructure opportunities.
GBP700,000 was invested in Avid Technology Group Limited, a manufacturer
of electrified ancillaries for internal combustion engines.
Brownfields Trading Limited is seeking to develop small scale waste
disposal projects and GBP2.5 million has been invested in this company.
GBP2.5 million was invested in Yamuna Renewables Limited, which is
seeking investment opportunities in the wood refinery sector.
Jito Trading Limited, Morava Limited and Rhodes Solutions Limited are
all exploring opportunities in the wood refinery sector. GBP2.5 million
was invested into each company. After the year end Morava was wound up
in order to free up cash for other investments.
GBP1.5 million was invested into Pantheon Trading Limited which is
seeking to develop and operate roof mounted PV systems in Cyprus.
GBP920,000 was invested into both Ironhide Generation Limited and Indigo
Generation Limited. GBP738,000 was invested in Rockhopper Renewables
Limited and GBP422,000 in SF Renewables (Solar) Limited which are in the
process of acquiring land in India to build and operate 15MW ground
mounted solar arrays.
One non-qualifying investment of GBP5 million was made into DoneLoans
Limited, an investment company which makes secured loans.
GBP600,000 was invested into Xupes Limited, a pre-owned luxury
e-commerce business based in Bishops Stortford, specialising in watches,
handbags, jewellery and antiques.
A further GBP1.6 million was invested into Pilgrim Trading Limited which
will be converting two vacant properties in London into children's day
nurseries.
Realisations of investments in the year generated proceeds of GBP9.0
million and total profits over holding value of GBP524,000 from 15 full
exits, and 4 partial exits. A summary of the most significant
realisations is shown below:
A further distribution of GBP195,000 was received from the refinancing
of Quadrate Catering Limited in the prior year, generating an additional
profit of GBP161,000.
Tramps Night Club Limited, the owner of a night club in the West
Midlands, has started repaying the loan notes under a refinancing
arrangement. A total of GBP427,000 was received during the year at a
profit over carrying value of GBP221,000.
Gatewales Limited holds rights to profit shares from a development
project. The project is performing in line with plans and the profit
shares are now being paid out, with GBP151,000 received in the year.
Kidspace Adventures Holdings Limited, which owns three well established
children's play areas in Croydon, Romford and Epsom, was sold and
generated proceeds of GBP2.8 million, being GBP210,000 in excess of
original cost.
Two non-qualifying loans were repaid in full in the year, being Hobblers
Heath Limited and Kidspace Adventures Limited, which repaid a total of
GBP1.2 million.
Deferred consideration totalling GBP30,000 was received from Kilmarnock
Monkey Bar Limited and Liverpool Nurseries (Holdings) Limited, both of
which were sold in prior years.
Loan notes totalling GBP474,000 were redeemed at par from Gara Rock
Resort Limited, Norman Broadbent plc and Future Biogas (SF) Limited.
Unquoted Venture Capital investments
Cedarville Limited was established with the intention of developing and
operating garden centres in the UK. Morava Limited was incorporated to
build and develop biomass boilers in the wood refinery sector.
Following a lack of suitable investment opportunities for either company,
both investments were repaid in full generating total cash of GBP3.5
million for deployment in other qualifying prospective investments.
Redmed Limited paid final distributions of GBP36,000, generating a loss
of GBP28,000 compared to holding value.
Portfolio valuation
There have been a number of valuation movements in the unquoted
portfolio during the year with an overall value uplift of GBP1.2
million. The most significant value movements are shown below.
Leytonstone Pub Limited owns and operates The Red Lion pub in
Leytonstone and continues to trade well. An independent valuation also
demonstrated strong growth in the underlying property value, and these
two factors combined to generate a further uplift in value of
GBP750,000.
Pearce & Saunders Limited, is a small pub group with a portfolio of
three pubs in the London area. These have similarly benefitted from the
continued increase in property prices across the capital, resulting in
an uplift in value of GBP475,000 (now held at cost).
Cadbury House Holdings Limited was uplifted by GBP200,000 during the
year. The company owns and operates a health club, restaurant and
conference centre near Bristol which continues to perform well.
Fenkle Street LLP, is a property development company that purchased a
building in Newcastle and converted it into a hotel. The hotel is
trading well and the valuation has been uplifted by GBP141,000 to
reflect this.
Kimbolton Lodge Limited, the elderly care home in Bedford, was valued up
GBP141,000 and is reflective of sustained levels of good occupancy.
Tramps Night Club Limited the owner of a night club in the West Midlands,
has increased in value by GBP171,000 following a refinancing agreement
made during the year and the ongoing repayment of the loan.
Unfortunately significant write downs were also required against three
investments in the period.
Oak Grove Renewables Limited, an anaerobic digestion plant in Norfolk
has been reduced in value by GBP284,000, due to continued performance
issues at the facility.
Curo Compensation Limited offers a 'software as a service' solution to
blue chip companies to manage their annual staff compensation process.
The company is seeking further funding in 2017 to support its growth and
ongoing development. The share price of this new round has been taken in
to consideration when valuing the Downing ONE holding and, as such, the
year-end value has been reduced by GBP235,000.
Mosaic Spa and Health Club Limited continues to progress an exit
strategy. The valuation has been adjusted down by GBP260,000 at the year
end to reflect the anticipated final proceeds.
Other smaller valuation adjustments totalled to a net gain of GBP147,000
over the year.
Quoted investments
Investment activity
As at 31 March 2017, the quoted portfolio was valued at GBP24.5 million
comprising of 31 holdings. Over 13% of the quoted portfolio is accounted
for in the top 10 holdings, reflective of the focused investment
management approach that the Manager deploys.
Over the year to 31 March 2017, the valuation of the quoted portfolio
(taking into account realised and unrealised movements) has risen by
over 3%, behind the main AIM indices over the same period which
experienced gains of up to 30%. The predominant reason for this
underperformance is stock-specific within the underlying portfolio, and
also due to the fact that the Company does not invest in mining and
extraction companies or mainstream IPOs, both of which experienced a
buoyant period for share price rises.
The quoted portfolio saw relatively little change in the year. Two
partial and one full disposal were made, realising gains (versus cost)
of GBP79,000. There were two new quoted holdings in the year, the
largest being an investment of GBP377,000 into SysGroup plc.
Portfolio Movements
The main positive contributors to performance were Craneware Plc, the
market leader in Value Cycle solutions for the US healthcare market,
which contributed GBP867,000 of unrealised gains. The Company
experienced strong trading and exceeded market expectations.
Science in Sport plc, the leading sports nutrition company that develops,
manufactures and markets sports nutrition products for professional
athletes and sports enthusiasts ("SIS") continued its growth trajectory
and booked another solid year of top-line growth, growing turnover by
30% in the year. This, combined with the announcement that they are
suppliers of products to the Olympic US Cycling team, helped buoy the
share price. SIS contributed GBP749,000 of unrealised gains to the
portfolio.
Amino Technologies plc, the global provider of digital TV entertainment
and cloud solutions to network operators, experienced an unrealised gain
of GBP469,000 in the portfolio. This was due to positive trading
announcements following a year of difficulty integrating the Entone
acquisition. The share price reflected the confidence that the
management team now have in the combined business.
Meanwhile, on the negative, Inland Homes plc, a housebuilder with a
specialist expertise in the acquisition and regeneration of brownfield
sites, has reduced in value by GBP679,000, reflecting caution on UK
housebuilding post Brexit and the fact that 23 legal completions were
deferred following financial difficulties with one of their contractors.
This meant that earnings would fall into 2017. There have been a number
of announcements on planning consents and new builds since then which
underpin our estimate of the Net Asset Value of this company.
Tracsis plc, leading provider of software and technology led products
and services for the traffic data and transportation industry was also a
negative contributor to performance, experiencing GBP655,000 of losses
in the portfolio. This was due to caution that the full year results to
the end of June 2017 would be heavily second half weighted; which the
stock market viewed as a potential looming profits warning. We engaged
with management and believe that although there were some short term and
quantifiable challenges in the first half, that the longer term
prospects of the company remain intact.
Angle plc, the specialist medtech company focusing on cancer related
solutions saw some profit taking in its shares. The company initiated
two 200 patient clinical studies in Europe and the US for the Company's
first clinical application for detection of ovarian cancer in women.
Interim evaluations of the first 50 patients in both studies have been
positive. The company is still loss making, however is adequately
funded for the medium term.
Generally we are confident of the longer term prospects for the Quoted
Portfolio.
Outlook
There has been significant unquoted investment activity in the period in
a number of sectors, including several smaller, higher risk and earlier
stage investments. The focus is now on supporting these businesses to
achieve growth over the next few years whilst also pursuing appropriate
exit strategies for the more mature investments.
The portfolio as a whole is well spread across a large number of
investments and remains relatively stable however, we believe upside
potential remains.
Downing LLP
REVIEW OF INVESTMENTS
Portfolio of investments
The following investments, all of which are incorporated in England and
Wales, were held at 31 March 2017:
Valuation % of
movement portfolio Total invested by Funds also managed by Downing LLP
Cost Valuation in year by value (1)
GBP'000 GBP'000 GBP'000 GBP'000
Top ten
venture
capital
investments
Vulcan
Renewables
Limited 5,030 5,548 - 6.0% 5,839
DoneLoans
Limited 5,000 5,000 - 5.4% -
Downing Care
Homes
Holdings
Limited 3,881 4,250 - 4.6% -
Tracsis plc * 1,443 3,198 (655) 3.5% 2,845
Cadbury House
Holdings
Limited 3,081 3,075 200 3.3% 1,613
Baron House
Developments
LLP 2,695 2,695 - 2.9% 2,055
Leytonstone
Pub Limited 1,061 2,650 750 2.9% -
Pilgrim
Trading
Limited 2,594 2,594 - 2.8% 3,072
Brownfields
Trading
Limited 2,500 2,500 - 2.7% 2,500
Jito Trading
Limited 2,500 2,500 - 2.7% 2,500
29,785 34,010 295 36.8% 20,424
Other venture
capital
investments
Rhodes
Solutions
Limited 2,500 2,500 - 2.7% 2,500
Vectis Alpha
Limited 2,500 2,500 - 2.7% 2,500
Yamuna
Renewables
Limited 2,500 2,500 - 2.7% 2,500
Universe Group
plc * 1,586 2,349 (212) 2.6% 2,476
Craneware plc* 850 2,201 867 2.4% 2,736
Anpario plc* 1,448 1,886 340 2.1% 3,174
Inland Homes
plc* 1,526 1,786 (679) 1.9% 2,357
Science in
Sport plc* 1,239 1,734 749 1.9% 4,306
Mosaic Spa and
Health Club
Limited 2,747 1,570 (260) 1.7% 2,337
Plastics
Capital plc* 849 1,528 310 1.7% 2,447
Pantheon
Trading
Limited 1,500 1,500 - 1.6% -
Quadrate
Catering
Limited 1,500 1,500 - 1.6% 2,300
Quadrate Spa
Limited 1,872 1,500 - 1.6% 2,300
Harrogate
Street LLP 1,400 1,400 - 1.5% -
Pearce &
Saunders
Limited 1,320 1,320 475 1.4% 1,680
Nomansland
Biogas
Limited 1,300 1,300 - 1.4% 4,374
Finsbury Food
Group plc* 655 1,165 (100) 1.3% 2,858
Amino
Technologies
plc* 700 1,061 469 1.2% 4,453
Vianet Group
plc* 952 936 (41) 1.0% -
Indigo
Generation
Limited 920 920 - 1.0% 5,880
Ironhide
Generation
Limited 920 920 - 1.0% 3,880
Redhall Group
plc* 500 900 225 1.0% 1,620
Pittards plc* 1,350 889 113 1.0% 1,379
Pabulum Pubs
Limited 807 844 8 0.9% 915
Cohort plc* 394 822 86 0.9% -
Oak Grove
Renewables
Limited 1,365 781 (284) 0.8% 6,774
Data Centre
Response
Limited 557 764 62 0.8% -
Fenkle Street
LLP 346 764 141 0.8% 1,660
Ludorum plc 3,573 750 - 0.8% 110
Rockhopper
Renewables
Limited 738 738 - 0.8% 3,819
Avid
Technology
Group
Limited 700 700 - 0.8% -
Gara Rock
Resort
Limited 672 672 - 0.7% 4,354
Sprue Aegis
plc* 545 637 (292) 0.7% 2,379
Kimbolton
Lodge
Limited 664 604 141 0.7% -
Wickham Solar
Limited 472 600 50 0.7% 6,637
Xupes Limited 600 600 - 0.7% 200
Tramps Night
Club Limited 849 523 171 0.6% -
Curo
Compensation
Limited 688 453 (235) 0.5% 430
SF Renewables
(Solar)
Limited 422 422 - 0.5% 6,778
Angle plc* 678 418 (276) 0.5% -
Fresh Green
Power
Limited 400 400 - 0.4% 600
Pennant
International
Group plc* 335 386 248 0.4% 1,638
Sanderson
Group plc* 336 381 (25) 0.4% 2,038
Augusta Pub
Company
Limited 290 349 25 0.4% 5,005
Brooks
Macdonald
Group plc* 257 340 31 0.4% 1,446
Norman
Broadbent
plc* 906 301 - 0.3% 752
Dillistone
Group plc* 411 298 (3) 0.3% -
Brady Public
Limited
Company* 272 296 83 0.3% -
SysGroup plc* 377 289 (89) 0.3% 588
Hoole Hall
Country Club
Holdings
Limited 2,316 250 - 0.3% -
City Falkirk
Limited 326 236 - 0.3% 1,062
FCT No.1
Limited 228 228 - 0.2% 448
Fubar Stirling
Limited 357 225 - 0.2% 1,014
Green Energy
Production UK
Limited 200 200 - 0.2% 300
Hornby plc* 500 159 (9) 0.2% 1,514
Avacta Group
plc* 168 114 (99) 0.1% -
London City
Shopping
Centre
Limited 110 110 - 0.1% 429
Pressure
Technologies
plc* 249 103 (3) 0.1% -
Pro-Global
Insurance
Solutions
plc* 61 100 - 0.1% -
Gatewales
Limited 71 98 2 0.1% 426
Frontier IP
Group plc* 30 95 39 0.1% -
Pearce &
Saunders
DevCo
Limited 88 88 - 0.1% 112
Giving Limited 83 83 - 0.1% -
Leytonstone
Pub No1
Limited 81 81 - 0.1% -
Flowgroup plc* 385 77 (212) 0.1% -
MI Downing UK
Micro-Cap
Growth Fund
B* 50 50 - 0.1%
Mi-Pay Group
plc
(Aimshell)* 136 41 (26) 0.0% -
Wheelsure
Holdings
plc** 48 30 - 0.0% -
Cheers
Dumbarton
Limited 64 22 - 0.0% 101
Future Biogas
(Reepham Rd)
Limited 427 - - 0.0% -
Top Ten
Holdings plc 399 - - 0.0% -
Future Biogas
(SF) Limited 320 - - 0.0% -
Hoole Hall Spa
and Leisure
Club Limited 297 - - 0.0% -
The Thames
Club Limited 175 - - 0.0% -
China Food
Company plc 149 - - 0.0% -
Resource
Reserve
Recovery
Limited 6 - - 0.0%
Commercial
Street Hotel
Limited - - - 0.0% -
Antelope Pub
No 1 Limited - - - 0.0% -
The 3D Pub Co
Limited - - - 0.0% -
57,612 52,387 1,790 56.9% 109,586
Total
investments 87,397 86,397 2,085 93.7% 130,010
Cash at bank
and in hand 5,523 6.3%
91,920 100.0%
The Company also invested into Heyford Homes VCT Limited, Imagelinx plc,
Invocas Group plc, Lochrise Limited, and Antelope Pub no 1 Limited.
These investments were acquired at negligible value and continued to be
valued at the same level.
All venture capital investments are unquoted unless otherwise stated.
* Quoted on AIM
** Quoted on the NEX Exchange Growth Market
(1) Other funds also managed by Downing LLP as Investment Manager or
Adviser as at 31 March 2017:
-- Downing TWO VCT plc
-- Downing THREE VCT plc
-- Downing FOUR VCT plc
-- MI Downing UK Micro-Cap Growth Fund
-- Downing AIM Estate Planning Service and Downing AIM NISA
Investment movements for the year ended 31 March 2017
Additions
GBP'000
Quoted
SysGroup plc 377
MI Downing UK Micro-Cap Growth Fund B 50
427
Unquoted
Doneloans Limited 5,000
Yamuna Renewables Limited 2,500
Vectis Alpha Limited 2,500
Morava Limited 2,500
Jito Trading Limited 2,500
Rhodes Solutions Limited 2,500
Brownfields Trading Limited 2,500
Pantheon Trading Limited 1,500
Pilgrim Trading Limited 1,594
Ironhide Generation Limited 920
Indigo Generation Limited 920
Rockhopper Renewables Limited 738
Avid Technology Group Limited 700
Xupes Limited 600
SF Renewables (Solar) Limited 422
27,394
27,821
Disposals
Profit/ Realised
Value at (loss) vs gain/
Cost 01/04/16* Proceeds cost (loss)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Quoted
Science in Sport plc 446 385 515 69 130
PHSC plc 52 42 56 4 14
Avacta plc 79 101 85 6 (16)
577 528 656 79 128
Unquoted (including loan
note redemptions)
Tramps Night Club Limited 343 206 427 84 221
Quadrate Catering Limited 34 34 195 161 161
Gatewales Limited 41 55 151 110 96
Future Biogas (Reepham
Road) Limited 174 130 174 - 44
Kilmarnock Monkey Bar
Limited - - 16 16 16
Kidspace Adventures
Holdings Limited 2,577 2,773 2,787 210 14
Liverpool Nurseries
(Holdings) Limited - - 14 14 14
Camandale Limited 75 7 15 (60) 8
Hobblers Heath Limited 912 912 912 - -
Kidspace Adventures
Limited 261 261 261 - -
Gara Rock Resort Limited
(previously Aminghurst) 197 197 197 - -
Norman Broadbent Limited 146 146 146 - -
Future Biogas (SF) Limited 131 131 131 - -
Rostima Holdings Limited 1,043 - - (1,043) -
Southampton Hotel Limited 395 - - (395) -
VCA Capital Limited - 11 - - (11)
Cedarville Trading Limited 1,000 1,000 993 (7) (7)
Morava Limited 2,500 2,500 2,496 (4) (4)
Redmed Limited 144 64 36 (108) (28)
9,973 8,427 8,951 (1,022) 524
10,550 8,955 9,607 (943) 652
* Adjusted for purchases in the year where applicable
Directors' responsibilities statement
The Directors are responsible for preparing the Strategic Report, the
Report of the Directors, the Directors' Remuneration Report, the
separate Corporate Governance Statement and the financial statements in
accordance with applicable law and regulations. They are also
responsible for ensuring that the annual report includes information
required by the Listing Rules of the Financial Conduct Authority.
Company law requires the Directors to prepare financial statements for
each financial year. Under that law the Directors have elected to
prepare the financial statements in accordance with United Kingdom
Generally Accepted Accounting Practice (United Kingdom Accounting
Standards and applicable law), including Financial Reporting Standard
102, the financial reporting standard applicable in the UK and Republic
of
Ireland (FRS 102). Under company law, the Directors must not approve the
financial statements unless they are satisfied that they give a true and
fair view of the state of affairs of the Company and of the profit or
loss of the Company for that period.
In preparing these financial statements, the Directors are required to:
- select suitable accounting policies and then apply them consistently;
- make judgments and accounting estimates that are reasonable and
prudent;
- state whether the financial statements have been prepared in
accordance with applicable UK Accounting Standards, subject to any
material departures disclosed and explained in the financial statements;
and
- prepare the financial statements on the going concern basis unless it
is inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records
that are sufficient to show and explain the Company's transactions and
to disclose with reasonable accuracy at any time the financial position
of the Company and to enable them to ensure that the financial
statements and the Directors Remuneration Report comply with the
Companies Act 2006.
They are also responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
In addition, each of the Directors considers that the Annual Report,
taken as a whole, is fair, balanced and undertakes and provides the
information necessary to assess the Company's position, performance,
business model and strategy.
INCOME STATEMENT
for the year ended 31 March 2017
Year ended 31 March 2017 Year ended 31 March 2016
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 1,736 209 1,945 2,790 - 2,790
Gains on
investments - 2,737 2,737 - 2,242 2,242
1,736 2,946 4,682 2,790 2,242 5,032
Investment
management
fees (875) (875) (1,750) (756) (756) (1,512)
Other expenses (652) - (652) (928) - (928)
Return on
ordinary
activities
before tax 209 2,071 2,280 1,106 1,486 2,592
Tax on total
comprehensive
income and
ordinary
activities (221) 221 - (227) 227 -
Return
attributable
to equity
shareholders (12) 2,292 2,280 879 1,713 2,592
Basic and - 2.3p 2.3p 1.0p 2.0p 3.0p
diluted return
per share
The total column within the Income Statement represents the Statement of
Total Comprehensive Income of the Company prepared in accordance with
Financial Reporting Standards ("FRS 102"). There are no other items of
comprehensive income. The supplementary revenue and capital return
columns are prepared in accordance with the Statement of Recommended
Practice issued in November 2014 by the Association of Investment
Companies ("AIC SORP").
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2017
Funds
held in
respect
of
Called Capital shares Capital
up Share redemption Share not yet Special reserve Revaluation Revenue
Capital reserve premium account allotted reserve -realised reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
For the year ended 31 March 2017
At 1 April
2016 932 1,525 2,792 4,423 86,483 - (4,680) 633 92,108
Total
comprehensive
income - - - - - 207 2,085 (12) 2,280
Realisation of
revaluations
from previous
years* - - - - - (1,593) 1,593 - -
Transfer
between
reserves* - - - - (6,716) 6,716 - - -
Transactions
with owners
Dividends paid - - - - - (5,330) - (754) (6,084)
Utilised in
share issue - - - (4,423) - - - - (4,423)
Issue of new
shares 112 - 10,595 - - - - - 10,707
Share issue
costs - - - - (234) - - - (234)
Purchase of
own shares (28) 28 - - (2,484) - - - (2,484)
At 31 March
2017 1,016 1,553 13,387 - 77,049 - (1,002) (133) 91,870
For the year ended 31 March 2016
At 1 April
2015 798 1,500 69,714 2,593 7,523 - (2,805) 594 79,917
Total
comprehensive
income - - - - - 2,809 (1,096) 879 2,592
Cancellation
of Share
Premium
account - - (82,321) - 82,321 - - - -
Realisation of
revaluations
from previous
years* - - - - - 779 (779) - -
Transfer
between
reserves* - - - - (803) 803 - - -
Transactions
with owners
Dividends paid - - - - - (4,391) - (840) (5,231)
Utilised in
share issue - - - (2,593) - - - - (2,593)
Unallotted
shares - - - 4,423 - - - - 4,423
Issue of new
shares 159 - 15,399 - - - - - 15,558
Share issue
costs - - - - (296) - - - (296)
Purchase of
own shares (25) 25 - - (2,262) - - - (2,262)
At 31 March
2016 932 1,525 2,792 4,423 86,483 - (4,680) 633 92,108
* A transfer of GBP1,593,000 representing previously recognised
unrealised losses on disposal of investments during the year ended 31
March 2017 (2016: gains GBP779,000) has been made from the Capital
Reserve realised to the Revaluation reserve. A transfer of GBP5.1
million representing realised gains on disposal of investments, less
capital expenses and capital dividends in the year (2016: GBP1.6
million) has been made from Capital Reserves - realised to Special
reserve.
BALANCE SHEET
as at 31 March 2017
2017 2016
GBP'000 GBP'000
Fixed assets
Investments 86,397 65,445
Current assets
Debtors 448 292
Cash at bank and in hand 5,523 26,713
5,971 27,005
Creditors: amounts falling due within one year (498) (342)
Net current assets 5,473 26,663
Net assets 91,870 92,108
Capital and reserves
Called up share capital 1,016 932
Capital redemption reserve 1,553 1,525
Share premium account 13,387 2,792
Funds held in respect of shares not yet allotted - 4,423
Special reserve 77,049 86,483
Capital reserve - realised - -
Revaluation reserve (1,002) (4,680)
Revenue reserve (133) 633
Total equity shareholders' funds 91,870 92,108
Basic and diluted net asset value per share 90.4p 94.1p
CASH FLOW STATEMENT
for the year ended 31 March 2017
2017 2016
GBP'000 GBP'000
Cash flow from operating activities
Profit on ordinary activities before taxation 2,280 2,592
Gains on investments (2,737) (2,242)
(Increase)/decrease in debtors (156) 300
(Decrease) in creditors (14) (385)
Cash from operations
Corporation tax paid - -
Net cash generated from operating activities (627) 265
Cash flow from investing activities
Purchase of investments (27,821) (21,456)
Proceeds from disposal of investments 9,607 27,448
Net cash (outflow)/inflow from investing activities (18,214) 5,992
Cash flows from financing activities
Proceeds from share issue 10,707 15,352
Funds held in respect of shares not yet allotted (4,423) 1,831
Share issue costs (234) (296)
Purchase of own shares (2,315) (2,262)
Equity dividends paid (6,084) (5,026)
Net cash (outflow)/inflow from financing activities (2,349) 9,599
(Decrease)/increase in cash (21,190) 15,856
Net movement in cash
Beginning of year 26,713 10,857
Net cash (outflow)/inflow (21,190) 15,856
End of year 5,523 26,713
NOTES TO THE ACCOUNTS
for the year ended 31 March 2017
1. General information
Downing ONE VCT plc ("the Company") is a venture capital trust
established under the legislation introduced in the Finance Act 1995 and
is domiciled in the United Kingdom and incorporated in England and Wales,
and its registered office is Ergon House, Horseferry Road, London SW1P
2AL.
2. Accounting policies
Basis of accounting
The Company has prepared its financial statements in accordance with the
Financial Reporting Standard 102 ("FRS 102") and in accordance with the
Statement of Recommended Practice "Financial Statements of Investment
Trust Companies" revised November 2014 ("SORP").
The Company implements new Financial Reporting Standards issued by the
Financial Reporting Council when required.
Presentation of income statement
In order to better reflect the activities of a Venture Capital Trust and
in accordance with guidance issued by the Association of Investment
Companies ("AIC"), supplementary information which analyses the income
statement between items of a revenue and capital nature has been
presented alongside the income statement. The net revenue is the measure
the Directors believe appropriate in assessing the Company's compliance
with certain requirements set out in Part 6 of the Income Tax Act 2007.
Investments
Venture capital investments are designated as "fair value through profit
or loss" assets due to investments being managed and performance
evaluated on a fair value basis. A financial asset is designated within
this category if it is both acquired and managed on a fair value basis,
with a view to selling after a period of time, in accordance with the
Company's documented investment policy.
Judgements in applying accounting policies and key sources of estimation
uncertainty
Of the Company's assets measured at fair value, it is possible to
determine their fair values within a reasonable range of estimates. The
fair value of an investment upon acquisition is deemed to be cost.
Thereafter, investments are measured at fair value in accordance with
FRS 102 sections 11 and 12 together with the International Private
Equity and Venture Capital Valuation Guidelines ("IPEV").
Investments quoted on recognised stock markets are measured using bid
prices.
The valuation methodologies for unlisted instruments (comprising equity
and loan notes), used by the IPEV to ascertain the fair value of an
investment, are as follows:
- Price of recent investment;
- Multiples;
- Net assets;
- Discounted cash flows or earnings (of the underlying business);
- Discounted cash flows (from the investment); and
- Industry valuation benchmarks.
The methodology applied takes account of the nature, facts and
circumstances of the individual investment and uses reasonable data,
market inputs, assumptions and estimates in order to ascertain fair
value.
Where an investee company has gone into receivership, liquidation or
administration where there is little likelihood of a recovery, the loss
on the investment, although not physically disposed of, is treated as
being realised.
Gains and losses arising from changes in fair value are included in the
income statement as a capital item.
It is not the Company's policy to exercise significant influence or
joint control over investee companies. Therefore the results of these
companies are not incorporated into the Income Statement except to the
extent of any income accrued. This is in accordance with the SORP and
FRS 102 sections 14 and 15 that do not require portfolio investments to
be accounted for using the equity method of accounting.
In respect of disclosures required by the SORP for the 10 largest
investments held by the Company, the most recent publicly available
accounts information, either as filed at Companies House, or announced
to the London Stock Exchange, is disclosed. In the case of unlisted
investments, this may be abbreviated information only.
Income
Dividend income from investments is recognised when the Shareholders'
right to receive payment has been established, normally the ex-dividend
date.
Loan stock interest is accrued on a time apportioned basis, by reference
to the principal outstanding and at the effective interest rate
applicable and only where there is reasonable certainty of collection.
Distributions from investments in limited liability partnerships
("LLPs") are recognised as they are paid to the Company. Where such
items are considered capital in nature they are recognised as capital
profits.
Expenses
All expenses are accounted for on an accruals basis. In respect of the
analysis between revenue and capital items presented within the income
statement, all expenses have been presented as revenue items except as
follows:
- Expenses which are incidental to the acquisition of an investment are
deducted from the Capital Account.
- Expenses which are incidental to the disposal of an investment are
deducted from the disposal proceeds of the investment.
- Expenses are split and presented partly as capital items where a
connection with the maintenance or enhancement of the value of the
investments held can be demonstrated. Investment management fees are
allocated 50% to revenue and 50% to capital, in order to reflect the
Directors' expected long-term view of the nature of the investment
returns of the Company.
Taxation
The tax effects on different items in the Income Statement are allocated
between capital and revenue on the same basis as the particular item to
which they relate using the Company's effective rate of tax for the
accounting period.
Due to the Company's status as a Venture Capital Trust and the continued
intention to meet the conditions required to comply with Part 6 of the
Income Tax Act 2007, no provision for taxation is required in respect of
any realised or unrealised appreciation of the Company's investments.
Deferred taxation is not discounted and is provided in full on timing
differences that result in an obligation at the balance sheet date to
pay more tax, or a right to pay less tax, at a future date, at rates
expected to apply when the obligations or rights crystallise based on
tax rates and law enacted or substantively enacted at the balance sheet
date. Timing differences arise from the inclusion of items of income and
expenditure in taxation computations in periods different from those in
which they are included in the accounts. Deferred tax assets are only
recognised if it is expected that future taxable profits will be
available to utilise such assets and are recognised on a non-discounted
basis.
Cash and cash equivalents
Cash and cash equivalents include cash in hand and deposits held at call
with banks with an original maturity of three months or less.
Other debtors and other creditors
Other debtors (including accrued income) and other creditors are
included within the accounts at amortised cost.
Share issue costs
Share issue costs have been deducted from the special reserve account.
Funds held in respect of shares not yet allotted
Cash received in respect of applications for new shares that have not
yet been allotted is shown as "Funds held in respect of shares not yet
allotted" and recorded on the Balance Sheet.
Segmental reporting
The Company only has one class of business and one market.
3. Basic and diluted return per share
2017 2016
Return per share based on: GBP'000 GBP'000
Net revenue return for the financial year (12) 879
Net capital gain for the financial year 2,292 1,713
Total return for the financial year 2,280 2,592
Weighted average number of shares in issue 101,137,288 85,175,415
As the Company has not issued any convertible securities or share
options, there is no dilutive effect on return per share. The return per
share disclosed therefore represents both the basic and diluted return
per share.
4. Principal Risks
The Company's investment activities expose the Company to a number of
risks associated with financial instruments and the sectors in which the
Company invests. The principal financial risks arising from the
Company's operations are:
- Investment risks;
- Credit risk; and
- Liquidity risk.
The Board regularly reviews these risks and the policies in place for
managing them. There have been no significant changes to the nature of
the risks that the Company is exposed to over the year and there have
also been no significant changes to the policies for managing those
risks during the year.
The risk management policies used by the Company in respect of the
principal financial risks and a review of the financial instruments held
at the year-end, are provided below:
Market risks
As a VCT, the Company is exposed to investment risks in the form of
potential losses and gains that may arise on the investments it holds in
accordance with its investment policy. The management of these
investment risks is a fundamental part of the investment activities
undertaken by the Investment Adviser and overseen by the Board. The
Investment Adviser monitors investments through regular contact with
management of investee companies, regular review of management accounts
and other financial information and attendance at investee company board
meetings. This enables the Investment Adviser to manage the investment
risk in respect of individual investments. Investment risk is also
mitigated by holding a diversified portfolio spread across various
business sectors and asset classes.
The key investment risks to which the Company is exposed are:
- Investment price risk; and
- Interest rate risk.
The Company has undertaken sensitivity analysis on its financial
instruments, split into the relevant component parts, taking into
consideration the economic climate at the time of review in order to
ascertain the appropriate risk allocation.
Investment price risk
Investment price risk arises from uncertainty about the future prices
and valuations of financial instruments held in accordance with the
Company's investment objectives. It represents the potential loss that
the Company might suffer through investment price movements in respect
of quoted investments and also changes in the fair value of unquoted investments that it holds. Interest risk The Company accepts exposure to interest rate risk on floating-rate financial assets through the effect of changes in prevailing interest rates. The Company receives interest on its cash deposits at a rate agreed with its bankers. Investments in loan stock and fixed interest securities attract interest predominately at fixed rates. A summary of the interest rate profile of the Company's investments is shown below. Interest rate profile of financial assets and financial liabilities There are three levels of interest which are attributable to the financial instruments as follows: - "Fixed rate" assets represent investments with predetermined yield targets and comprise fixed interest and loan note investments. - "Floating rate" assets predominantly bear interest at rates linked to the Bank of England base rate and comprise cash at bank. - "No interest rate" assets do not attract interest and comprise equity investments, non-interest bearing convertible loan notes, loans and receivables (excluding cash at bank) and other financial liabilities. The Company monitors the level of income received from fixed, floating and non interest rate assets and, if appropriate, may make adjustments to the allocation between the categories, in particular, should this be required to ensure compliance with the VCT regulations. As the Bank of England base rate fell for the first time in seven years by 0.25% to 0.25% per annum it is not believed that a further reduction from this level is likely. Any potential change in the base rate, at the current level, would have an immaterial impact on the net assets and total return of the Company. Credit risk Credit risk is the risk that the counterparty to a financial instrument is unable to discharge a commitment to the Company made under that instrument. The Company is exposed to credit risk through its holdings of loan stock in investee companies, investments in fixed interest securities, cash deposits and debtors. The Investment Adviser manages credit risk in respect of loan notes with a similar approach as described under investment risks above. In addition the credit risk is mitigated by registering floating charges, covering the full par value of the loan stock in the form of fixed and floating charges over the assets of the investee companies. The strength of this security in each case is dependent on the nature of the investee company's business and its identifiable assets. The level of security is a key means of managing credit risk. Similarly, the management of credit risk associated with interest, dividends and other receivables is covered within the investment management procedures. Cash is mainly held at Royal Bank of Scotland plc, with a balance also maintained at Bank of Scotland plc, both of which are A-rated financial institutions and ultimately part-owned by the UK Government. Consequently, the Directors consider that the credit risk associated with cash deposits is low. There have been no changes in fair value during the year that can be directly attributable to changes in credit risk. As at 31 March 2017, of the loan stock classified as "past due" below, GBP9,848,000 relates to the principal of loan notes where, although the principal remains within the term, the investee company is not fully servicing the interest obligations under the loan note and is in arrears. Notwithstanding the arrears of interest, the Directors do not consider that the loan note itself has been impaired or the maturity of the principal has altered. As at 31 March 2017, of the loan stock classified as "past due" below, GBP2,101,000 relates to the principal of loan notes where the principal has passed its maturity date. As at the balance sheet date, the extent to which the principal is past its maturity date, GBP1.4 million falls within the banding of nil to 2 years past due and GBP0.7 million is 3 to 5 years past due. Notwithstanding this information, the Directors do not consider the loan notes to be impaired at the current time or that maturity dates of the principal have altered. As at 31 March 2016, of the loan stock classified as "past due" below, GBP7,585,000 relates to the principal of loan notes where, although the principal remains within term, the investee company is not fully servicing the interest obligations under the loan note and is in arrears. Notwithstanding the arrears of interest, the Directors do not consider that the loan note itself has been impaired or the maturity of the principal has altered. As at 31 March 2016, of the loan stock classified as "past due" below, GBP2,605,000 relates to the principal of loan notes where the principal has passed its maturity date. As at the balance sheet date, the extent to which the principal is past its maturity date, GBP2.1 million falls within the banding of nil to 2 years past due and GBP0.5 million is 3 to 4 years past due. Notwithstanding this information, the Directors do not consider the loan notes to be impaired at the current time or that the maturity dates of the principals have altered. Liquidity risk Liquidity risk is the risk that the Company encounters difficulties in meeting obligations associated with its financial liabilities. Liquidity risk may also arise from either the inability to sell financial instruments when required at their fair values or from the inability to generate cash inflows as required. The Company normally has a relatively low level of creditors (2017: GBP498,000, 2016: GBP342,000) and has no borrowings. Also most quoted investments held by the Company are considered to be readily realisable. The Company always holds sufficient levels of funds as cash and readily realisable investments in order to meet expenses and other cash outflows as they arise. For these reasons the Board believes that the Company's exposure to liquidity risk is minimal. The Company's liquidity risk is managed by the Investment Adviser in line with guidance agreed with the Board and is reviewed by the Board at regular intervals. ANNOUNCEMENT BASED ON AUDITED ACCOUNTS The financial information set out in this announcement does not constitute the Company's statutory financial statements in accordance with section 434 Companies Act 2006 for the year ended 31 March 2017, but has been extracted from the statutory financial statements for the year ended 31 March 2017 which were approved by the Board of Directors on 17 July 2017 and will be delivered to the Registrar of Companies. The Independent Auditor's Report on those financial statements was unqualified and did not contain any emphasis of matter nor statements under s 498(2) and (3) of the Companies Act 2006. The statutory accounts for the year ended 31 March 2016 have been delivered to the Registrar of Companies and received an Independent Auditors report which was unqualified and did not contain any emphasis of matter nor statements under s 498(2) and (3) of the Companies Act 2006. A copy of the full annual report and financial statements for the year ended 31 March 2017 will be printed and posted to shareholders shortly. Copies will also be available to the public at the registered office of the Company at Ergon House, Horseferry Road, London SW1P 2AL and will be available for download from and www.downing.co.uk This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq Corporate Solutions clients. The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein. Source: Downing ONE VCT plc via Globenewswire
(END) Dow Jones Newswires
July 17, 2017 11:11 ET (15:11 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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