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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
LEI: 213800R88MRC4Y3OIW86
Report & Accounts for the year ended 31 March 2018
FINANCIAL SUMMARY
31 Mar 31 Mar
2018 2017
pence pence
Net asset value per share ("NAV") 87.5 90.4
Cumulative dividends paid since 12 November 2013 25.5 18.0
Total return (net asset value plus cumulative dividends
paid per share) 113.0 108.4
Dividends in respect of financial year
Interim dividend per share 3.0 3.0
Proposed final dividend per share 3.0 4.5
6.0 7.5
CHAIRMAN'S STATEMENT
I am pleased to present the Company's Annual Report for the year ended
31 March 2018.
The year saw a reasonable amount of investment activity along with the
completion of a successful offer for subscription which has provided the
Company with further funds for investment and increased the size of the
Company.
Net asset value and results
As at 31 March 2018, the net asset value per share ("NAV") stood at
87.5p, an increase of 4.6p (5.1%) after adding back dividends of 7.5p
per share which were paid during the year.
The Income Statement shows a return attributable to equity shareholders
for the year of GBP4.8 million comprising a revenue gain of GBP2.1
million and a capital return of GBP2.7 million.
Fundraising
The Company launched an offer for subscription in September 2017, which
closed in April 2018 having reached the full capacity of GBP30 million.
With the size of the Company now increased, the burden of the fixed
running costs on all Shareholders is reduced and the task of starting to
invest the new funds is now underway.
Investment activity and performance
At the year end, the Company held a portfolio of 79 investments. Of
these, 31 are either quoted on AIM or the NEX Exchange Growth Market and
have a value of GBP30.0 million (36.8% of the portfolio). The 48
unquoted investments have a value of GBP51.6 million and represent 63.2%
of the portfolio.
Further details on the investment activity are included in the
Investment Adviser's Reports.
Dividends
The Company has a policy of seeking to pay annual dividends of at least
4% of net assets per annum.
The Board is again proposing to pay a final dividend higher than the
target level in view of the level realisations achieved. A final
dividend of 3.0p per share to be paid on 24 August 2018, subject to
Shareholder approval at the forthcoming AGM, to Shareholders on the
register at 3 August 2018. This will bring total dividends in respect of
the year ended 31 March 2018 to 6.0p per share (2017: 7.5p), which
represents a yield based on opening NAV of 6.6% 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 2,099,238 shares at an average
price of 83.8p per share.
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.
Annual General Meeting
The Company's next Annual General Meeting ("AGM") will be held at
Downing LLP, 6(th) floor, St. Magnus House, 3 Lower Thames Street,
London, EC3R 6HD at 10:45 a.m. on 22 August 2018.
Three items of special business are proposed at the AGM:
- one in respect of the authority to buy back shares as noted above,
and.
- two in respect of authority to allotment of shares.
The offer for subscription mentioned above gave investors the
opportunity to make regular monthly subscriptions in the company. The
authority to allot shares ensures the Company will be able to allot
shares to monthly investors and also give the Board the opportunity to
consider further fundraising options without having to necessarily incur
the expense of seeking separate approval via a circular. Any decision on
future fundraising will, of course, give consideration to the level of
uninvested funds already held by the Company and the rate of investment.
Outlook
Shareholders will likely be aware that the Government has made
significant changes to the VCT scheme in the last two years in order to
refocus it towards young growth companies. A feature of Downing ONE is
that it holds a substantial portfolio of investments, in both the growth
and income focussed categories, made before the latest rule changes. The
Company can continue to benefit from holding this broader range of
assets, however additions made in the future will mainly now be growth
investments. The Board is pleased to report that that the Investment
Adviser is generating a steady flow of suitable investment opportunities
that fall within the new parameters. Over time, as the available funds
are invested, we expect the balance of the portfolio to shift gradually
towards growth investments. This will increase the risk profile of the
portfolio but also provides the opportunity for greater rewards.
Against this background, the Board has had some initial discussions with
the Investment Adviser about the possibility of introducing a
performance incentive scheme. Such schemes are common in the VCT
industry and are a helpful tool in assisting the Adviser to attract and
retain talented and experienced executives. This is particularly
important now that the investment focus has shifted to growth investing
and the environment is becoming increasingly competitive. The Board
will work with the Adviser to seek to design a scheme which it believes
to be in the best interests of Shareholders and expects to be able to
circulate formal proposals to Shareholders for approval in the coming
months.
In summary, the Board feels the Company is well positioned in holding a
diversified existing portfolio and further developing the portfolio of
growth investments with the new funds.
I look forward to meeting Shareholders at the AGM and to reporting
developments in my statement with the Half Year Report to 30 September
2018.
Chris Kay
Chairman
INVESTMENT ADVISER'S REPORT - OVERVIEW
Introduction
We are pleased to present a review of the investment portfolio and
activity over the last financial year. Our review is split into three
parts comprising this overview, a detailed report on the unquoted
investments and a report on quoted investments.
Portfolio Overview
At 31 March 2018, the Company held a portfolio with a value of GBP81.6
million comprising 79 quoted and unquoted companies, across a diverse
range of sectors in both growth and income-focussed investments.
A significant proportion of the portfolio is in maturing investments.
Portfolio Performance
The performance of the portfolio over the year has been positive with
unrealised gains of GBP2.3 million (2017: GBP2.1 million) evenly split
between the quoted and unquoted portfolios. Overall 79% of the portfolio
is held at a valuation either at or above cost.
The net unrealised gains in the quoted portfolio totalled GBP1.2
million. The largest unrealised gains in the quoted portfolio were
Craneware PLC (GBP950,000), Tracsis PLC (GBP732,000) and Anpario PLC
(GBP711,000). These were partially offset by unrealised losses on
Universe Group PLC (GBP567,000) and Downing Strategic Micro Cap
Investment Trust PLC (GBP400,000). Other smaller gains and losses
amounted to a net loss of GBP219,000.
The unrealised gains in the unquoted portfolio totalled GBP1.1 million.
Within the unquoted portfolio the largest unrealised gains were on Data
Centre Response Limited (GBP281,000) and Downing Care Home Limited
(GBP245,000).
Realised profits in the period mostly came from the unquoted portfolio
with GBP510,000 generated from the sale of the Anaerobic Digestion plant,
Vulcan Renewables Limited and GBP464,000 on the full exit from Giving
Limited.
Further details on these and other movements can be found within the
quoted and unquoted Investment Adviser Reports.
Increased focus on growth investments
The proportion of the portfolio represented by growth investments has
increased over the last year. This is mainly due to newer investments
made being mostly in the growth category in line with the changes in the
VCT regulations that have taken place over the last two years.
Several of the recent unquoted growth investments have been completed
alongside funds from the Downing EIS funds which invest in early-stage
UK technology companies. As these investee companies become more mature,
they generally require further funding rounds to support their growth
and this provides a good pipeline of investment opportunities for the
Company.
It is our expectation that the proportion of growth investments in the
portfolio will steadily increase over the coming years. This will result
in a gradual increase of the overall risk profile of the portfolio over
time but also provides the Company with greater prospects of benefitting
from the higher rewards that can arise from backing such businesses.
Reliable income generation
Whilst the proportion of income-focussed investments by value in the
portfolio has declined to 57% (2017:69%), it is comforting to see that
income generated in 2018 at over GBP3.5m across the portfolio is higher
than it has been in any year since the merger date (2013)
Portfolio Composition
Following the 2017/18 fundraising and some significant realisations, 30%
of the net assets of the Company are currently held in cash. Focus for
the coming year is on deploying these funds in to qualifying investments
within our investment pipeline.
The diversified portfolio of the Company shows that the main sectors in
which the Company has invested are Leisure, Alternative Energy and
Software and Computer Services albeit the maximum exposure to any sector
is 15%.
Net asset value and results
The net asset value per Share ("NAV") at 31 March 2018 stood at 87.5p,
compared to the NAV at 31 March 2017 of 90.4p. Total Return (NAV plus
cumulative dividends paid since the merger in 2013) is 113.0p.
The return on ordinary activities after taxation for the year was GBP4.8
million, comprising a revenue profit of GBP2.1 million and a capital
profit of GBP2.7 million.
Outlook
The recent changes to the VCT regulations have ensured that any new
investment activity is now focussed on growth investments, being the
area where the Government wishes to incentivise the investment of
capital. Downing has made adjustments to its investment team as these
changes have come into force to ensure that we are able to generate high
quality deal flow to meet the Company's demands. Our pipeline of
suitable investments is now developing well and should allow us to
invest a significant proportion of the available funds over the coming
year.
We are reasonably satisfied with the existing portfolio which comprises
a significant number of investments. Close monitoring and support of
these businesses will continue to be a primary activity for the team
over the next year, as well as pursuing exit opportunities from the more
mature businesses as and when they arise.
Downing LLP
INVESTMENT ADVISER'S REPORT - UNQUOTED PORTFOLIO
We present a review of the unquoted investment portfolio for the year
ended 31 March 2018.
Investment activity
At 31 March 2018, the unquoted portfolio of 48 investments was valued at
GBP51.6 million.
During the period, the Company invested a total of GBP5.1 million in
unquoted companies comprising five new opportunities and three follow-on
investments. In addition, there was a GBP490,000 share for share
restructure of two pub investments (Pabulum and Augusta), which are now
both held through Downing Pub EIS One Limited.
The five new investments were as follows: -
Empiribox Holdings Limited (GBP750,000) provides equipment and training
to enable teachers to deliver engaging and practical science lessons to
pupils in primary schools across the UK.
Volo Commerce Limited (GBP567,000) has created an SAAS-based Enterprise
Resource Planning platform to support online merchants and brands
selling through market places such as Amazon and eBay.
BridgeU Corporation (GBP394,000) is an educational technology business
focussing on student university applications by working to enhance
students' decision making and application processes.
E Fundamentals (Group) Limited (GBP278,000) has developed a Software as
a Service (SaaS) analytics tool sold to companies which own consumer
brands to enable them to accurately assess the performance of their
products when being sold through third party e-commerce sites.
Limitless Technology Limited (GBP174,000) is a technology company which
sells software to enable customer service inquiries to be answered by
"ambassadors" - people who don't work for the company, but earn money
based on the number of questions they answer and the quality of answers.
Follow on investments totalling GBP2.5 million were made into Xupes
Limited (GBP1.2 million), Leytonstone Pub Limited (GBP850,000) and Curo
Compensation Limited (GBP400,000).
Details of the realisations of investments in the year are set out on
below. Total proceeds of GBP17.7 million were generated, producing
profits over holding value of GBP1.2 million.
Vulcan Renewables Limited, the anaerobic digestion plant near Doncaster,
was the biggest disposal during the year and was sold during the summer
at a profit of GBP510,000.
Giving Limited, which operates the leading online platform for
charitable sponsorship in the UK, justgiving.com, in which the Company
held a minority interest, was bought out by a US based software
developer for 5.5 times the amount invested, a profit of GBP464,000 for
the VCT.
The Scottish licenced leisure companies (City Falkirk Limited, Cheers
Dumbarton Limited, Lochrise Limited, and Fubar Stirling Limited) were
also disposed of in full, exiting at a modest profit of GBP121,000
against holding value, after recent years of difficult trading.
Gatewales Limited and Tramps Night Club Limited continue to repay loan
notes in line with their agreed repayment schedules.
Rhodes Solutions Limited, Brownfields Trading Limited and Vectis Alpha
Limited were set up in 2016 to seek investment opportunities in specific
sectors. No appropriate deals were identified and so the companies have
been wound up, returning GBP7.5 million to the Company in order to
invest in new qualifying investments.
Gara Rock Resort Limited (previously Aminghurst Limited) loan notes were
redeemed in full and generated proceeds of GBP672,000.
Loan notes from Mosaic Spa and Health Clubs were partially redeemed
generating realised losses recognised in previous year's valuation write
downs.
Portfolio valuation
The unquoted portfolio performance for the year was positive, with an
uplift in value of GBP1.1 million (2.0% of opening value).
Data Response Centre Limited has recently completed a bolt-on
acquisition and the group is continuing to outperform its budget. There
are significant expected synergies from the new partnership which have
been ignored for valuation purposes, but give us reason to be positive
about the future outlook of the business. A valuation increase of
GBP281,000 has been recognised in the year.
Downing Care Homes Limited, which owns four care homes, was uplifted in
value by GBP245,000 following good performance in the year when
occupancy levels at all four homes have continued to improve. We expect
the budget will be achieved for this financial year.
The underlying value of the property held in Leytonstone Pub Limited has
resulted in a further uplift of GBP186,000.
FCT No.1 Limited was formerly known as First Care Limited. The Company
holds a small interest in the business and an offer was recently
received for the shares that was turned down because it is believed that
it undervalued the potential value of the company. The valuation has
been uplifted to the offer price and this resulted in an uplift of
GBP171,000 (75% uplift over the opening value).
Kimbolton Lodge Limited, the care home in Bedford was valued up by
GBP121,000 in the year on the back of stronger trading.
These gains were partially offset by some valuation write downs in the
period totalling GBP200,000. The most significant decrease in value was
Tramps Night Club Limited, the owner of three nightclub sites in central
Worcester which reduced in value by GBP74,000 following a challenging
period of trading.
Outlook
Following a series of new investments during the period, we are
satisfied with the composition of the portfolio for the year to 31 March
2018 and are confident that the current deal flow will provide the
opportunity to build further. In addition, we shall continue to closely
monitor the current portfolio companies as they reach maturity.
Downing LLP
INVESTMENT ADVISER'S REPORT - QUOTED PORTFOLIO
Investment activity
As at 31 March 2018, the quoted portfolio was valued at GBP30.0 million
comprising of 31 holdings. Over 48% of the quoted portfolio is accounted
for in the top 10 holdings.
The quoted portfolio saw relatively little change in the year. One
partial and two full disposals were made, realising gains (versus cost)
of GBP182,000. Hornby plc, the international hobby products group, was a
full disposal from the portfolio resulting in a loss against cost of
GBP384,000 and a loss against the brought forward valuation of
GBP43,000. The position was exited prior to a profit warning due to a
lack of confidence in new management and the strategy it was seeking to
deploy. There were two new quoted holdings in the year, the largest
being an investment of GBP5 million into the Downing Strategic Micro-Cap
Investment Trust.
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 GBP950,000 of unrealised gains. Growing market
opportunities, a record sales pipeline and increasing long-term revenue
visibility supports Craneware's continued future growth.
Tracsis plc, a traffic data software company, delivered strong revenue
growth over the period. All key financial and operational metrics were
comfortably ahead of the previous year, with good progress being made on
a number of strategic initiatives. Tracsis' core target markets of rail
technology and traffic and transport data services continue to be
supported by a favourable market backdrop and positive growth drivers.
Tracsis contributed GBP732,000 of unrealised gains to the portfolio.
Negative contributors to the portfolio included Universe Group plc, a
company that develops and supports point of sale, payment and online
loyalty solutions for the UK petrol forecourt and convenience store
markets. Universe reduced the value of the portfolio by GBP567,000. The
company's performance was dependant on a small number of high value
contracts being executed, and delays to these projects drove down the
share price. However, Universe has had a solid start to 2018, with a
contract extension with a large food retailer as well as the prospect of
new business from a major international forecourt operator. Management
report that take-up of next generation products and feed-back from
customers bodes well for the future.
The Company holds a non-qualifying investment in Downing Strategic
Micro-Cap Investment Trust which is a focused portfolio of UK micro-cap
investments with the target to achieve compound returns of 15% per year
over the long term. The Trust, which is currently trading at a premium,
is managed by the Downing team who manage the quoted portfolio of the
Company.
This holding was also a negative contributor, reducing the value of the
portfolio by GBP400,000. While the net asset value per share fell,
management reported the investment rate is encouraging. The Trust
overlays various strategic mechanisms meaning that it seeks definable
catalysts to realise the underlying value of portfolio holdings. However,
these mechanisms take time to deploy and typically even longer to mature,
hence the average investment horizon is around five to seven years.
As the Trust's portfolio matures and these strategic mechanisms evolve,
the investment strategy should deliver returns regardless of prevailing
market sentiment.
Generally, we are confident of the longer-term prospects for the quoted
portfolio.
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 2018:
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
Doneloans
Limited 5,000 5,000 - 4.3% -
Downing
Strategic
Micro-Cap
Investment
Trust plc*** 5,000 4,600 (400) 3.9% 4,800
Downing Care
Homes Holdings
Limited 3,880 4,495 245 3.8% -
Tracsis plc* 1,443 3,930 732 3.4% 2,538
Leytonstone Pub
Limited 1,911 3,686 186 3.1% -
Craneware plc* 850 3,151 950 2.7% 1,091
Cadbury House
Holdings
Limited 3,081 3,075 - 2.6% 1,410
Baron House
Developments
LLP 2,695 2,695 - 2.3% 2,055
Anpario plc* 1,448 2,598 711 2.2% 2,610
Pilgrim Trading
Limited 2,594 2,594 - 2.2% 3,176
27,902 35,824 2,424 30.5% 17,680
Other quoted
investments
Inland Homes
plc* 1,526 1,862 76 1.6% -
Universe Group
plc* 1,586 1,781 (567) 1.5% 1,948
Science in
Sport plc* 1,239 1,458 (276) 1.2% 4,397
Vianet Group
plc* 951 1,323 387 1.1% -
Finsbury Food
Group plc* 655 1,298 133 1.1% 1,951
Amino
Technologies
plc* 700 1,066 5 0.9% 3,154
Impact
Healthcare
REIT plc*** 1,017 1,000 (18) 0.9% -
Pittards plc* 1,350 923 34 0.8% 1,994
Redhall Group
plc* 500 725 (175) 0.6% 5,672
Cohort plc* 394 660 (163) 0.6% -
Sprue Aegis
plc* 545 515 (121) 0.4% 7,580
Angle plc* 678 437 19 0.4% -
Pennant
International
Group plc* 335 390 5 0.3% 990
Sanderson Group
plc* 336 376 (5) 0.3% 2,100
Norman
Broadbent
plc* 906 331 30 0.3% 1,323
Dillistone
Group plc* 411 330 32 0.3% -
Brooks
Macdonald
Group plc* 257 313 (27) 0.3% 1,751
SysGroup plc* 377 251 (38) 0.2% 767
Brady Public
Limited
Company* 272 233 (63) 0.2% -
Frontier IP
Group plc* 30 189 95 0.2% -
ACHP plc* 61 100 - 0.1% -
Pressure
Technologies
plc* 249 89 (13) 0.1% -
Avacta Group
plc* 168 67 (48) 0.1% -
MI Downing UK
Micro-Cap
Growth
Fund*** 50 50 - 0.0% 4,975
Wheelsure
Holdings
plc** 48 29 (1) 0.0% -
Mi-Pay Group
plc* 113 22 (12) 0.0% -
Flowgroup plc* 385 1 (75) 0.0% -
15,139 15,819 (786) 13.5% 38,602
Other unquoted
investments
Jito Trading
Limited 2,500 2,500 - 2.1% 2,500
Yamuna
Renewables
Limited 2,500 2,500 - 2.1% 4,100
Xupes Limited 1,800 1,800 - 1.5% 600
Pantheon
Trading
Limited 1,500 1,500 - 1.3% -
Quadrate
Catering
Limited 1,500 1,500 - 1.3% 1,610
Quadrate Spa
Limited 1,872 1,500 - 1.3% 2,568
Harrogate
Street LLP 1,400 1,400 - 1.2% -
Pearce and
Saunders
Limited 1,320 1,320 - 1.1% 1,680
Nomansland
Biogas
Limited 1,300 1,300 - 1.1% 4,860
Data Centre
Response
Limited 557 1,045 281 0.9% -
Indigo
Generation
Limited 920 920 - 0.8% 6,580
Ironhide
Generation
Limited 920 920 - 0.8% 6,630
Oak Grove
Renewables
Limited 1,365 852 71 0.7% 6,983
Curo
Compensation
Limited 1,088 828 (25) 0.7% 705
Fenkle Street
LLP 346 813 50 0.7% 1,340
Ludorum plc 3,269 750 - 0.7% 110
Empiribox
Holdings
Limited 750 750 - 0.7% 1,022
Rockhopper
Renewables
Limited 738 738 - 0.6% 5,570
Kimbolton Lodge
Limited 664 724 121 0.6% -
Avid
Technologies
Group Limited 700 700 - 0.6% -
Wickham Solar
Limited 472 650 50 0.6% 5,673
Pabulum Pubs
Limited 607 607 - 0.5% -
Downing Pub EIS
One Limited 490 601 15 0.5% 5,862
Volo Commerce
Limited 567 567 - 0.5% 567
Fresh Green
Power Limited 377 462 84 0.4% 566
SF Renewables
(Solar)
Limited 422 422 - 0.4% 2,360
FCT No.1
Limited 228 398 171 0.3% -
BridgeU
Corporation 394 394 - 0.3% 394
Tramps Night
Club Limited 756 365 (74) 0.3% -
E-Fundamentals
(Group)
Limited 278 278 - 0.3% 556
Limitless
Technology
Limited 174 174 - 0.2% 1,076
Green Energy
Production
Limited 200 159 (41) 0.1% 300
Mosaic Spa and
Health Club
Limited 725 128 (50) 0.1% 251
London City
Shopping
Centre
Limited 110 110 - 0.1% 489
Gatewales
Limited 55 94 19 0.1% 344
Pearce and
Saunders DevCo
Limited 88 88 - 0.1% 112
Leytonstone Pub
No1 Limited 81 81 - 0.1% -
Fubar Stirling
Limited 127 7 (11) 0.0% 538
Chester (HH)
Spa and
Leisure Club
Limited 297 - - 0.0% -
The Thames Club
Limited 175 - - 0.0% 2,800
Top Ten
Holdings plc 399 - - 0.0% -
Resource
Reserve
Recovery
Limited 6 - - 0.0% -
34,037 29,945 661 25.7% 68,746
Total
investments 77,078 81,588 2,299 69.7% 125,028
Cash at bank
and in hand 35,456 30.3%
117,044 100.0%
The Company also invested into Imagelinx plc and Invocas Group plc.
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
*** Quoted on the Main Market of the London Stock Exchange
(1) Other funds also managed by Downing LLP as Investment Manager or
Adviser as at 31 March 2018:
- 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 2018
Additions
GBP'000
Quoted
Downing Strategic Micro Cap Investment Trust plc 5,000
Impact Healthcare REIT plc 1,017
6,017
Unquoted
Xupes Limited 1,200
Leytonstone Pub Limited 850
Empiribox Holdings Limited 750
Volo Commerce Limited 566
Downing Pub EIS One Limited 490
Curo Compensation Limited 400
BridgeU Corporation 393
E Fundamentals (Group) Limited 278
Limitless Technology Limited 173
5,100
11,117
Disposals
Profit/ Realised
Value at (loss) vs gain/
Cost 01/04/17* Proceeds cost (loss)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Quoted
Mi-Pay Group plc 23 7 5 (18) (2)
Hornby plc 500 159 116 (384) (43)
Plastics Capital plc 849 1,528 1,433 584 (95)
1,372 1,694 1,554 182 (140)
Unquoted (including loan
note redemptions)
Vulcan Renewables Limited 5,030 5,548 6,058 1,028 510
Giving Limited 84 84 548 464 464
City Falkirk Limited 326 236 324 (2) 88
Tramps Night Club Limited 93 83 122 29 39
Gatewales Limited 17 23 61 44 38
Cheers Dumbarton Limited 64 22 37 (27) 15
Lochrise Limited - - 10 10 10
Fubar Stirling Limited 231 208 217 (14) 9
Cedarville Trading Limited - - 2 2 2
Brownfields Trading
Limited 2,500 2,500 2,501 1 1
Vectis Alpha Limited 2,500 2,500 2,501 1 1
Mosaic Spa and Health
Clubs Limited 2,023 1,393 1,393 (630) -
Rhodes Solutions Limited 2,500 2,500 2,500 - -
Augusta Pub Company
Limited 290 290 290 - -
Pabulum Pubs Limited 200 200 200 - -
Fresh Green Power Limited 22 22 22 - -
Future Biogas (Reepham
Road) Limited 427 - - (427) -
Future Biogas (SF) Limited 319 - - (319) -
Gara Rock Resort Limited 672 672 672 - -
Chester (HH) Country Club
Limited 2,316 250 250 (2,066) -
Other 452 - - (452) -
20,066 16,531 17,708 (2,358) 1,177
21,438 18,225 19,262 (2,176) 1,037
* 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 2018
Year ended 31 March 2018 Year ended 31 March 2017
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 3,858 - 3,858 1,736 209 1,945
Gains on
investments - 3,336 3,336 - 2,737 2,737
3,858 3,336 7,194 1,736 2,946 4,682
Investment
management
fees (835) (835) (1,670) (875) (875) (1,750)
Other expenses (687) - (687) (652) - (652)
Return on
ordinary
activities
before tax 2,336 2,501 4,837 209 2,071 2,280
Tax on total
comprehensive
income and
ordinary
activities (238) 238 - (221) 221 -
Return
attributable
to equity
shareholders 2,098 2,739 4,837 (12) 2,292 2,280
Basic and 2.0p 2.6p 4.6p - 2.3p 2.3p
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 and updated in January 2017 by the
Association of Investment Companies ("AIC SORP").
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2018
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 2018
At 1 April
2017 1,016 1,553 13,387 - 77,049 - (1,002) (133) 91,870
Total
comprehensive
income - - - - - 440 2,299 2,098 4,837
Realisation of
revaluations
from previous
years* - - - - - (3,213) 3,213 - -
Realisation of
impaired
valuations - - - - - (399) 399 - -
Transfer
between
reserves* - - - - (9,958) 9,958 - - -
Transactions
with owners
Dividends paid - - - - - (6,786) - (1,137) (7,923)
Utilised in
share issue - - - - - - - - -
Unalloted
shares - - - 12,876 - - - - 12,876
Issue of new
shares 205 - 18,274 - - - - - 18,479
Share issue
costs - - - - (464) - - - (464)
Purchase of
own shares (21) 21 - - (1,768) - - - (1,768)
At 31 March
2018 1,200 1,574 31,661 12,876 64,859 - 4,909 828 117,907
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
* A transfer of GBP3,213,000 representing previously recognised
unrealised losses on disposal of investments during the year ended 31
March 2018 (2017: GBP1,593,000) has been made from the Capital Reserve
realised to the Revaluation reserve. A transfer of GBP6.3 million
representing realised gains on disposal of investments, less capital
expenses and capital dividends in the year (2017: GBP5.1 million) has
been made from Capital Reserves - realised to Special reserve.
BALANCE SHEET
as at 31 March 2018
2018 2017
GBP'000 GBP'000
Fixed assets
Investments 81,588 86,397
Current assets
Debtors 1,574 448
Cash at bank and in hand 35,456 5,523
37,030 5,971
Creditors: amounts falling due within one year (711) (498)
Net current assets 36,319 5,473
Net assets 117,907 91,870
Capital and reserves
Called up share capital 1,200 1,016
Capital redemption reserve 1,574 1,553
Share premium account 31,661 13,387
Funds held in respect of shares not yet allotted 12,876 -
Special reserve 64,859 77,049
Capital reserve - realised - -
Revaluation reserve 4,909 (1,002)
Revenue reserve 828 (133)
Total equity shareholders' funds 117,907 91,870
Basic and diluted net asset value per share 87.5p 90.4p
CASH FLOW STATEMENT
for the year ended 31 March 2018
2018 2017
GBP'000 GBP'000
Cash flow from operating activities
Profit on ordinary activities after taxation 4,837 2,280
Gains on investments (3,336) (2,737)
(Increase)/decrease in debtors (1,126) (156)
(Decrease) in creditors 38 (14)
Cash from operations
Corporation tax paid - -
Net cash generated from operating activities 413 (627)
Cash flow from investing activities
Purchase of investments (10,627) (27,821)
Proceeds from disposal of investments 18,772 9,607
Net cash (outflow)/inflow from investing activities 8,145 (18,214)
Cash flows from financing activities
Proceeds from share issue 18,479 10,707
Funds held in respect of shares not yet allotted 12,876 (4,423)
Share issue costs (464) (234)
Purchase of own shares (1,593) (2,315)
Equity dividends paid (7,923) (6,084)
Net cash (outflow)/inflow from financing activities 21,375 (2,349)
(Decrease)/increase in cash 29,933 (21,190)
Net movement in cash
Beginning of year 5,523 26,713
Net cash (outflow)/inflow 29,933 (21,190)
End of year 35,456 5,523
NOTES TO THE ACCOUNTS
for the year ended 31 March 2018
1. General information
Downing ONE VCT plc ("the Company") is a venture capital trust
established under the legislation introduced in the Finance Act 1995 and
is domiciled in the United Kingdom and incorporated in England and Wales,
and its registered office is St. Magnus House, 3 Lower Thames Street,
London EC3R 6HD.
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" issued November 2014 and updated January 2017 ("SORP").
The financial statements are presented in Sterling (GBP) and rounded to
thousands.
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 as explained in the investment accounting policy above.
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.
Segmental reporting
The Company only has one class of business and one market.
Dividends payable
Dividends payable are recognised as distributions in the financial
statements when the company's liability to make payment has been
established.
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.
3. Basic and diluted return per share
2018 2017
Return per share based on: GBP'000 GBP'000
Net revenue return for the financial year 2,098 (12)
Net capital gain for the financial year 2,739 2,292
Total return for the financial year 4,837 2,280
Weighted average number of shares in issue 105,306,924 101,137,288
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. The Bank of England base rate increased from 0.25% per annum to 0.5% per annum in November 2017. Any potential change in the base rate at the current level wouldn't have a material 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 referred to below. 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 2018, of the loan stock classified as "past due" below, GBP5,848,000 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 2018, of the loan stock classified as "past due" below, GBP2,690,000 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, GBP2.7 million falls within the banding of nil to 2 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 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 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 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 (2018: GBP711,000, 2017: GBP498,000) 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 2018, but has been extracted from the statutory financial statements for the year ended 31 March 2018 which were approved by the Board of Directors on 12 July 2018 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 2017 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 2018 will be printed and posted to shareholders shortly. Copies will also be available to the public at the registered office of the Company at St. Magnus House, 3 Lower Thames Street, London EC3R 6HD 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 12, 2018 11:41 ET (15:41 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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