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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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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 |
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0 | 0 | N/A | 0 |
TIDMDDV1 Downing ONE VCT plc Half-Yearly Report for the six months ended 30 September 2018 FINANCIAL SUMMARY 30 Nov 30 Sep 31 Mar 30 Sep Nov 2018 2018 2018 2017 2013 Pence pence pence pence pence Net Asset Value per share ("NAV") 84.4 87.7 87.5 88.8 100.4 Cumulative dividends paid since 12 Nov 2013 28.5 28.5 25.5 22.5 0.0 Total return 112.9 116.2 113.0 111.3 100.4 (NAV plus cumulative dividends paid per share) CHAIRMAN'S STATEMENT I am pleased to present the Company's half-yearly report for the six-month period ended 30 September 2018. The portfolio made positive progress during the period under review however the correction to global stock markets in October and November has caused the NAV to fall back since the period end. The period saw a reasonable level of investment activity following the close of the successful fundraising in April 2018, having reached full capacity of GBP30 million. Net asset value and results As at 30 September 2018, the Company's NAV stood at 87.7p, an increase of 3.2p (or 3.7%) compared to the 31 March 2018 year-end position, after adding back the 3.0p dividend paid during the period. The return attributable to equity shareholders for the period was GBP4.4 million, comprising a revenue return of GBP731,000 and a capital return of GBP3.6 million. Investment activity and performance The Company has been an active investor during the period with nine qualifying investments made totalling GBP6.3 million. Five of these were new investments and four were follow on investments into existing portfolio companies. There were also a small number of partial realisations. At the period end, the Company held a portfolio of 85 investments. Of these, 31 are either quoted on AIM or the NEX Exchange Growth Market and have a value of GBP34.5 million (38% of the portfolio). The 54 unquoted investments have a value of GBP57.1 million and represent 62% of the investment portfolio. At the period end the Board has undertaken a review of the unquoted valuations and made a number of adjustments. Net unrealised gains across the unquoted and quoted portfolio over the period were GBP3.9 million. The most significant uplift was the AIM quoted investment in Craneware plc, the financial solutions provider for the healthcare market, which contributed GBP2.9 million of unrealised gains. Further details of the investment activities of the Company are in the Investment Advisers Report below. Dividends The Company has a stated policy of seeking to pay dividends equivalent to at least 4% of net asset value each year. Consistent with this policy, the Board has declared an interim dividend of 3.0p which will be paid on 22 February 2019 to Shareholders on the register as at 1 February 2019. This will take the total dividends paid since the merger in November 2013 to 31.5p. Share buybacks The Company operates a policy of buying in its own shares that become available in the market at a 5% discount to NAV (subject to liquidity and any regulatory restrictions). During the period, the Company purchased 1,186,349 shares at an average price of 81.3p per Ordinary Share, being a 5% discount to the latest announced NAV at the time of purchase. Performance incentive arrangements As mentioned in my statement with the last Annual Report, the Board continues its discussions with the Manager regarding the introduction of a performance incentive scheme. Further details are expected with the year end accounts to 31 March 2019. Outlook In October and November there were significant falls in global stock markets indices. This has been reflected in the valuations of many of the Company's quoted stocks, resulting in a fall in the NAV of 3.3p from 87.7p to 84.4p per share as at 30 November 2018, which brings Total Return down from 116.2p to 112.9p, a decrease of 0.1p (0.1%) compared to the 31 March 2018 year end position. Despite this small setback, the Manager is satisfied that the prospects of the underlying businesses remain positive, although continuing political and economic uncertainty may produce more market volatility. Over the remainder of the year, we expect to see a further significant level of new investment activity as the Manager continues to deploy the available funds in order to maintain VCT qualification status. In line with the current VCT regulations, we expect all new investments to be into relatively young growth businesses, where the Manager has developed a steady pipeline of investment opportunities. I look forward to updating the Shareholders on developments and the progress of the portfolio in my statement with the Annual Report covering the year to 31 March 2019. Chris Kay Chairman INVESTMENT ADVISER'S REPORT - OVERVIEW Introduction We are pleased to present a review of the investment portfolio and activity over the six months to 30 September 2018. Our review is split into three parts comprising this overview, an unquoted investments review and a report on the quoted investments. Portfolio Overview At 30 September 2018, the Company held a portfolio of 85 investments, valued in total at GBP91.6 million. There have been some positives and negatives within the portfolio over the period, however overall there has been a rise in value across both the quoted and unquoted portfolios. Overall 82% of the portfolio is held at a valuation either at or above cost. Portfolio Performance The net unrealised gains in the quoted portfolio totalled GBP3.5 million. The largest unrealised gains in the quoted portfolio were Craneware plc (GBP2.9 million), Tracsis plc (GBP1.5 million) and Anpario plc (GBP371,000). These were partially offset by unrealised losses on Universe Group plc (GBP425,000) and Redhall Group plc (GBP275,000). There were several valuation movements in the unquoted portfolio in the period totalling an unrealised gain over valuation of GBP355,000. Within the unquoted portfolio, the largest unrealised gains were Ludorum plc (GBP785,000), Doneloans Limited (GBP600,000), Pearce and Saunders Limited (GBP238,000) and Kimbolton Lodge Limited (GBP121,000). Further details on these and other movements can be found within the quoted and unquoted Investment Adviser Reports below. Portfolio Composition The 2017/18 fundraising closed in April 2018, having reached full capacity of GBP30 million. As a result, a significant proportion of the net assets were held in cash at the prior year end. Since the year end, GBP6.3 million has been deployed into new or follow on investments. As a result, 21% of the net assets of the Company remains held in cash at the period end. The chart overleaf shows the diversification of the portfolio illustrating that the main sectors in which the Company has invested are Leisure, Alternative Energy and Software and Computer Services, albeit the maximum exposure to any sector is 15%. Net assets value and results The net asset value per Share ("NAV") at 31 September 2018 stood at 87.7p, compared to the NAV at 31 March 2018 of 87.5p. Total Return (NAV plus cumulative dividends paid since the merger in 2013) is 116.2p. Outlook The existing portfolio now comprises of a significant number of investments which we are broadly satisfied with and can provide good returns for Shareholders. As demonstrated over the past six months, the Company has a high quality deal flow to utilise the remaining cash in the portfolio. Focus remains on younger growth investments and although the environment remains challenging and competitive, we expect there to be a steady pipeline of such businesses to utilise the remaining cash over the following six months. INVESTMENT ADVISER'S REPORT -- UNQUOTED PORTFOLIO We present a review of the unquoted investment portfolio for the six months ended 30 September 2018. Investment activity At 30 September 2018, the unquoted portfolio was valued at GBP57.1 million, comprising 54 investments spread across a number of sectors. During the period, the Company invested a total of GBP5.3 million in unquoted companies comprising five new investments and four follow-on investments. The five new qualifying investments that were made during the six month period are as follows: Lignia Wood Company Limited (GBP1.1 million) is a producer of modified sustainable wood based in Barry Wales. The VCT invested as part of a GBP7.6 million net equity funding round. Live Better With Limited (GBP991,000) has developed a healthcare platform aiming to help people with long-term medical conditions, focussing on non-medical products that make day to day life better for patients. Glownet Limited (GBP741,000) has developed a technology solution for organisers of mass-attendance live events and festivals, which allows attendees to make cashless payments. Virtual Class Limited (GBP525,000), trading as Third Space Learning, has developed an online educational platform that provides mathematics tuition to pupils studying for their Key Stage 2 exams. Masters of Pie Limited (GBP166,000) is an early stage technology firm specialising in virtual and augmented reality software for manufacturing and wider enterprise solutions. Follow on investments totalling GBP1.8 million were made into E-fundamentals Limited (GBP639,000), Xupes Limited (GBP450,000), BridgeU Corporation (GBP417,000) and Avid Technology Group Limited (GBP260,000). Details of the small number of realisations in the year are set out below. Total proceeds of GBP61,000 were generated, producing profits over holding value of GBP33,000.
Tramps Nightclub Limited, the owner of three nightclub sites in central Worcester, was the largest disposal during the period after redeeming GBP43,000 as the company continues to repay loan notes. Portfolio valuation A number of adjustments to carrying values have been made at the period end, resulting in an overall gain of GBP355,000. The most significant of which are summarised below: Ludorum plc, the owner of the intellectual property rights to various children's entertainment brands, was uplifted in the period by GBP785,000 to reflect post period end expected receipts. Doneloans Limited, a non-qualifying investment company was uplifted by GBP600,000 as a result of positive outcomes on its loan book. Pearce and Saunders Limited, the owner of three freehold pubs in south east London, was uplifted by GBP238,000 supported by independent valuations from industry specialists. Kimbolton Lodge Limited, which operates a care home for the elderly in Bedford was valued up by GBP121,000 in the year on the back of stronger trading. The most significant decrease in value was Quadrate Spa Limited, which owns and operates a health club business in The Cube complex in Birmingham. The company has been written down by GBP808,000 following poor performance. The other notable decrease in value was to Tramps Nightclub Limited, the owner of three nightclub sites in central Worcester. Following a challenging period of trading, the valuation was reduced by GBP251,000. Outlook We remain satisfied with the composition of the portfolio for the period to 30 September 2018 as focus remains on the close monitoring of the current portfolio companies as they reach maturity. In addition, we shall continue to utilise the remaining cash in the Company and expect the Company to be an active investor over the remainder of the year. INVESTMENT ADVISER'S REPORT -- QUOTED PORTFOLIO Quoted investments Investment activity At 30 September 2018 the quoted portfolio was valued at GBP34.5 million comprising 31 active investments. During the period, there was a full exit in Mi-Pay Group plc, a full redemption on the Universe Group plc loan notes, a partial sale in Amino Technologies plc and a new qualifying investment in to Bonhill Group plc. GBP1 million was invested in Bonhill Group plc, a leading B2B media business specialising in business information, live events and data and insight. Realisations of quoted investments generated proceeds of GBP128,000 and a gain over holding value of GBP6,000. The most significant divestment was Universe Group plc, a designer and supporter of point of sale, payment and online loyalty solutions for the UK petrol forecourt and convenience store markets. The company fully redeemed its loan notes at par. The investment in Mi-Pay Group plc, who manage and mitigate fraud risk in the payment solutions market was sold, generating proceeds of GBP26,000 and a gain over holding value of GBP4,000. Portfolio valuation Overall the quoted portfolio produced unrealised gains of GBP3.5 million. The most notable movements are discussed below. Craneware plc is a provider of billing and auditing software to the US healthcare industry. It experienced appreciation in its share price following its reporting of very positive results for the year ended 30 June 2018, highlighting five significant contracts wins or contract extensions. This resulted in an increase in market value of GBP2.9 million. Tracsis plc, a provider of transport software solutions for rail and bus services, issued a trading update for the year ended 31 July 2018. It was reported that group trading for the year has been strong. An increase to the broker forecast given confidence in future growth prospects resulted in an increase in market value of GBP1.5 million. The most significant decrease was to Universe Group plc. The interim profit decreased as a result of new product development costs which resulted in a decrease in market value of GBP425,000. Redhall Group plc, a high integrity engineering company, also had a decrease in value across the period. Delays on key projects and slower than expected operational efficiency gains mean the company's board now anticipates that the group's full year performance will be materially below its previous expectations. This resulted in a decrease in market value of GBP275,000. Outlook While we believe that it is a competitive market for AIM VCT qualifying investments, in general, we remain confident in the longer-term prospects for the existing portfolio. Macro trends and political uncertainty have been consistent features this year, however we believe that the outlook for the UK equity market is not as bleak as some have predicted. Although the overall UK economy has slowed resulting in significant falls in the AIM index since the period end, it is still growing. Despite the headwinds, we believe that the outlook for young and growing companies remains positive and should support future growth. Downing LLP UNAUDITED BALANCE SHEET as at 30 September 2018 30 Sep 30 Sep 31 Mar 2018 2017 2018 GBP'000 GBP'000 GBP'000 Fixed assets Investments 91,628 81,037 81,588 Current assets Debtors 2,168 767 1,574 Cash at bank and in hand 24,021 8,337 35,456 26,189 9,104 37,030 Creditors: amounts falling due within one year (403) (248) (711) Net current assets 25,786 8,856 36,319 Net assets 117,414 89,893 117,907 Capital and reserves Called up share capital 1,338 1,008 1,200 Capital redemption reserve 1,586 1,564 1,574 Share premium 44,923 13,710 31,661 Funds held in respect of shares not yet allotted 60 361 12,876 Special reserve 60,390 73,559 64,859 Capital reserve -- unrealised 8,899 (259) 4,909 Revenue reserve 218 (50) 828 Equity shareholders' funds 117,414 89,893 117,907 Basic and diluted 87.7p 88.8p 87.5p net asset value per share UNAUDITED INCOME STATEMENT for the six months ended 30 September 2018 Year ended 31 Six Months ended 30 Six Months ended 30 March September 2018 September 2017 2018 Revenue Capital Total Revenue Capital Total Total GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Income 1,750 90 1,840 2,102 - 2,102 3,858 Gains on investments - realised - 39 39 - 590 590 1,037 - unrealised - 3,890 3,890 - 1,314 1,314 2,299 ------- ------- ------- ------- ------- ------- 1,750 4,019 5,769 2,102 1,904 4,006 7,194 Investment management fees (510) (510) (1,020) (413) (413) (826) (1,670) Other expenses (381) - (381) (345) - (345) (687) Return on ordinary activities before tax 859 3,509 4,368 1,344 1,491 2,835 4,837 Tax on total comprehensive income and ordinary activities (128) 128 - (124) 124 - - Return/(loss) attributable to equity shareholders 731 3,637 4,368 1,220 1,615 2,835 4,837 ======= ======= ======= ======= ======= ======= Basic and 0.5p 2.7p 3.2p 1.2p 1.6p 2.8p 4.6p diluted return per share The total column within the Income Statement represents the Statement of Total Comprehensive Income of the Company prepared in accordance with Financial Reporting Standards ("FRS102"). There are no other items of comprehensive income. The supplementary revenue and capital return columns are prepared in accordance with the Statement of Recommended Practice issued in November 2014 by the Association of Investment Companies ("AIC SORP"). STATEMENT OF CHANGES IN EQUITY for the six months ended 30 September 2018 Funds held in Capital respect of Capital Share redemption Share shares not yet Special reserve Revaluation Revenue Capital reserve premium account allotted reserve -realised reserve reserve Total GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 For the six months ended 30 September 2018 At 1 April 2018 1,200 1,574 31,661 12,876 64,859 - 4,909 828 117,907 Total comprehensive income - - - - - (254) 3,890 731 4,367 Realisation of revaluations from previous years* - - - - - (100 ) 100 - - Transfer between reserves** - - - - (3,032) 3,032 - - - Transactions with owners
Dividends paid - - - - - (2,678) - (1,341) (4,019) Utilised in share issue - - - (12,816) - - - - (12,816) Issue of new shares 150 - 13,262 - - - - - 13,412 Share issue costs - - - - (468) - - - (468) Purchase of own shares (12) 12 - - (969) - - - (969) At 30 September 2018 1,338 1,586 44,923 60 60,390 - 8,899 218 117,414 *A transfer of GBP100,000 representing previously recognised unrealised losses on disposal of investments during the period ended 30 September 2018 (year ended 31 March 2018: losses GBP3.2 million) has been made from the Capital reserve realised to the Revaluation reserve. ** A transfer of GBP3.0 million representing realised gains on disposal of investments, less capital expenses and capital dividends in the year (year ended 31 March 2018: GBP6.3 million) has been made from Capital Reserves -- realised to Special reserve. STATEMENT OF CHANGES IN EQUITY for the year ended 31 March 2018 Funds Capital held in respect of shares Capital Share redemption Share not yet Special reserve Revaluation Revenue Capital reserve premium account allotted reserve -realised reserve reserve Total GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 For the year ended 31 March 2018 At 1 April 2017 1,016 1,553 13,387 - 77,049 - (1,002) (133) 91,870 Total comprehensive income - - - - - 440 2,299 2,098 4,837 Realisation of revaluations from previous years - - - - - (3,213 ) 3,213 - - Realisation of impaired valuations - - - - - (399 ) 399 - - Transfer between reserves - - - - (9,958) 9,958 - - - Transactions with owners Unallotted shares - - - 12,876 - - - - 12,876 Dividends paid - - - - - (6,786) - (1,137) (7,923) Issue of new shares 205 - 18,274 - - - - - 18,479 Share issue costs - - - - (464) - - - (464) Purchase of own shares (21) 21 - - (1,768) - - - (1,768) At 31 March 2018 1,200 1,574 31,661 12,876 64,859 - 4,909 828 117,907 UNAUDITED CASH FLOW STATEMENT for the six months ended 30 September 2018 30 Sep 30 Sep 31 Mar 2018 2017 2018 GBP'000 GBP'000 GBP'000 Cash flow from operating activities Profit on ordinary activities before taxation 4,368 2,835 4,837 Gains on investments (3,929) (1,904) (3,336) (Increase)/decrease in debtors (594) (317) (1,126) Decrease in creditors (180) (77) 38 Cash from operations Corporation tax paid - - - Net cash generated/(utilised) from operating activities (335) 537 413 Cash flow from investing activities Purchase of investments (6,300) (7,910) (10,627) Proceeds from disposal of investments 189 15,171 18,772 Net cash generated/(utilised) from investing activities (6,111) 7,261 8,145 Cash flows from financing activities Proceeds from share issue 13,412 323 18,479 Funds held in respect of shares not yet allotted (12,816) 361 12,876 Share issue costs (468) - (464) Purchase of own shares (1,098) (1,119) (1,593) Equity dividends paid (4,019) (4,549) (7,923) Net cash (utilised)/generated from financing activities (4,989) (4,984) 21,375 Increase/(Decrease) in cash (11,435) 2,814 29,933 Net increase in cash Beginning of year 35,456 5,523 5,523 Net cash inflow/(outflow) (11,435) 2,814 29,933 End of year 24,021 8,337 35,456 SUMMARY OF INVESTMENT PORTFOLIO as at 30 September 2018 % of Valuation portfolio movement by Cost Valuation in period value GBP'000 GBP'000 GBP'000 Top twenty venture capital investments (by value) Craneware plc* 850 6,029 2,877 5.2% Doneloans Limited 5,000 5,600 600 4.8% Tracsis plc* 1,443 5,471 1,541 4.7% Downing Care Homes Holdings Limited 3,880 4,495 - 3.9% Downing Strategic Micro-Cap Investment Trust plc** 5,000 4,400 (200) 3.8% Leytonstone Pub Limited 1,911 3,686 - 3.2% Cadbury House Holdings Limited 3,082 3,075 - 2.7% Anpario plc* 1,448 2,969 371 2.6% Baron House Developments LLP 2,695 2,695 - 2.4% Pilgrim Trading Limited 2,594 2,594 - 2.2% Jito Trading Limited 2,500 2,500 - 2.2% Yamuna Renewables Limited 2,500 2,500 - 2.2% Xupes Limited 2,250 2,250 - 1.9% Inland Homes plc* 1,526 1,801 (61) 1.6% Pearce and Saunders Limited 1,320 1,558 238 1.3% Ludorum plc 3,269 1,535 785 1.3% Pantheon Trading Limited 1,500 1,500 - 1.3% Quadrate Catering Limited 1,500 1,500 - 1.3% Science in Sport plc* 1,239 1,418 (39) 1.2% Harrogate Street LLP 1,400 1,400 - 1.2% 46,907 58,976 6,112 51.0% Other venture capital investments 36,222 32,652 (2,222) 28.2% 83,129 91,628 3,890 79.2% Cash at bank and in hand 24,021 20.8% Total investments 115,649 100.0% All venture capital investments are unquoted unless otherwise stated. * Quoted on AIM ** Listed and traded on the Main Market of the London Stock Exchange SUMMARY OF INVESTMENT MOVEMENTS for the six months ended 30 September 2018 Additions GBP'000 Quoted Bonhill Group plc 1,000 1,000 ------- Unquoted Lignia Wood Company Limited 1,111 Live Better With Limited 991 Glownet Limited 741 E-Fundamentals Limited 639 Virtual Class Limited 525 Xupes Limited 450 BridgeU Corporation 417 Avid Technology Group Limited 260 Masters of Pie Limited 166 5,300 ------- Total additions 6,300 Disposals Realised Value Gain/(loss) gain at Disposal against in Cost 31/03/18* Proceeds cost period GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Quoted Universe Group plc 80 80 80 - - Mi-Pay Group plc 113 22 26 (87) 4 Amino Technologies plc 13 20 22 9 2 206 122 128 (78) 6 ------- ----------- ---------- ------------- -------- Unquoted Including loan
note redemptions Tramps Nightclub Limited 33 24 43 10 19 VSA Capital Limited - - 7 7 7 Fubar Stirling Limited 11 4 11 - 7 44 28 61 17 33 ------- ----------- ---------- ------------- -------- 250 150 189 (61) 39 * adjusted for purchases in the period NOTES TO THE UNAUDITED FINANCIAL STATEMENTS for the six months ended 30 September 2018 1.General Information Downing ONE VCT plc ("the Company") is a Venture Capital Trust established under the legislation introduced in the Finance Act 1995 and is domiciled in the United Kingdom and incorporated in England and Wales. 2. Basis of accounting The unaudited half-yearly financial results cover the six months to 30 September 2018 and have been prepared in accordance with the accounting policies set out in the statutory accounts for the year ended 31 March 2018, which were prepared in accordance with the Financial Reporting Standard 102 ("FRS102") and in accordance with the Statement of Recommended Practice "Financial Statements of Investment Trust Companies" revised November 2014 ("SORP"). 3. The Company has only one class of business and derives its income from investments made in shares, securities and bank deposits. 4. The comparative figures were in respect of the six months ended 30 September 2017 and the year ended 31 March 2018 respectively. 5. Return per share Revenue Capital Return Gain Weighted average number of shares in issue GBP'000 GBP'000 Period ended 30 September 2018 133,284,857 731 3,637 Period ended 30 September 2017 101,366,948 1,220 1,615 Year ended 31 March 2018 105,306,924 2,098 2,739 6. Dividends paid in the period Six months Year ended ended 30 September 31 March 2018 2018 Revenue Capital Total Total Date paid GBP'000 GBP'000 GBP'000 GBP'000 24 August 2018 Final 2018: 3.0p 1,341 2,678 4,019 - 23 February 2018 Interim 2018: 3.0p - - - 3,374 18 August 2017 Final 2017: 4.5p - - - 4,549 1,341 2,678 4,019 7,923 7. Basic and diluted net asset value per share NAV Shares per in issue Net assets share GBP'000 pence Period ended 30 September 2018 133,822,737 117,414 87.7 Period ended 30 September 2017 100,829,225 89,893 88.8 Year ended 31 March 2018 119,997,574 117,907 87.5 8. Called up share capital Shares in issue GBP'000 Period ended 30 September 2018 133,822,737 1,338 Period ended 30 September 2017 100,829,225 1,008 Year ended 31 March 2018 119,997,574 1,200 9. Reserves The Special reserve is available to the Company to enable the purchase of its own shares in the market without affecting its ability to pay dividends/capital distributions. 31 30 Sep 30 Sep Mar 2018 2017 2018 GBP'000 GBP'000 GBP'000 Capital redemption reserve 1,586 1,564 1,574 Share premium account 44,923 13,710 31,661 Funds held in respect of shares not yet allotted 60 361 12,876 Special reserve 60,390 73,559 64,859 Revaluation reserve 8,899 (259) 4,909 Revenue reserve 218 (50) 828 Total reserves 116,076 88,885 116,707 Distributable reserves are calculated as follows: 30 Sep 30 Sep 31 Mar 2018 2017 2018 GBP'000 GBP'000 GBP'000 Special reserve 60,390 73,559 64,859 Revenue reserve 218 (50) 828 Unrealised gains/(losses) (excluding unrealised unquoted gains) 3,629 (4,115) 523 64,237 69,394 66,210 10. Investments The fair value of investments is determined using the detailed accounting policy as shown in the audited financial statements for the year ended 31 March 2018. The Company has categorised its financial instruments using the fair value hierarchy as follows: Level 1 Reflects financial instruments quoted in an active market (quoted companies and fixed interest bonds); Level 2 Reflects financial instruments that have prices that are observable either directly or indirectly; and Level 3 Reflects financial instruments that use valuation techniques that are not based on observable market data (investments in unquoted shares and loan note investments). 11. The unaudited financial statements set out herein do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006 and have not been delivered to the Registrar of Companies. The figures for the year ended 31 March 2018 have been extracted from the financial statements for that year, which have been delivered to the Registrar of Companies; the Auditor's report on those financial statements was unqualified. Level Level Level 30 Sep Level Level Level 31 Mar 1 2 3 2018 1 2 3 2018 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Quoted on AIM 29,067 - - 29,067 24,390 - - 24,390 Quoted on NEX 15 - - 15 29 - - 29 Quoted on Main Market 5,430 - - 5,430 5,600 - - 5,600 Unquoted loan notes - - 23,490 23,490 - - 22,477 22,477 Unquoted equity - - 33,626 33,626 - - 29,092 29,092 34,512 - 57,116 91,628 30,019 - 51,569 81,588 ======= ======= ======= ======= ======= ======= ======= ======= 12. Going concern The Directors have reviewed the Company's financial resources at the period end and concluded that the Company is well placed to manage its business risks. The Directors confirm that they are satisfied that the Company has adequate resources to continue to operate for the foreseeable future. For this reason, the Directors believe that the Company continues to be a going concern and that it is appropriate to apply the going concern basis in preparing the financial statements. 13. Risks and uncertainties Under the Disclosure and Transparency Rules, the Board is required, in the Company's half-year results, to report on principal risks and uncertainties facing the Company over the remainder of the financial year. The Board has concluded that the key risks are: (i) compliance risk of failure to maintain approval as a VCT; and (ii) investment risk associated with investing in small and immature businesses. The Company's compliance with the VCT regulations is continually monitored by the Adviser, who regularly reports to the Board on the current position. The Company also retains Philip Hare & Associates LLP to provide regular reviews and advice in this area. In order to make VCT qualifying investments, the Company has to invest in small businesses which are often immature. It also has a limited period in which it must invest the majority of its funds into VCT qualifying investments. The Adviser follows a rigorous process in vetting and careful structuring of new investments, including taking a charge over the assets of the business wherever possible and, after an investment is made, closely monitoring the business. The Board is satisfied that these approaches provide satisfactory management of the key risks. 14. The Directors confirm that, to the best of their knowledge, the half yearly financial report has been prepared in accordance with the "Statement: Half-Yearly Financial Reports" issued by the UK Accounting Standards Board as well as in accordance with FRS 104 Interim Financial Reporting and the half-yearly financial report includes a fair review of the information required by: (a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the year; and (b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place during the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period, and any changes in the related party transactions described in the last annual report that could do so. 15. Copies of the unaudited half-yearly financial results will be sent to Shareholders shortly. Further copies can be obtained from the Company's Registered Office and will be available for download from www.downing.co.uk
(END) Dow Jones Newswires
December 17, 2018 12:33 ET (17:33 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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