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DDV1 Downing One Vct Plc

57.00
0.00 (0.00%)
28 Mar 2024 - Closed
Delayed by 15 minutes
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 00:00:00
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
0 0 N/A 0

Downing One VCT Plc Half-year Report - Downing One Vct Plc

26/11/2019 11:02am

UK Regulatory


 
TIDMDDV1 
 
 
   Downing ONE VCT plc 
 
   Half-Yearly Report for the 
 
   six months ended 30 September 2019 
 
   FINANCIAL SUMMARY 
 
 
 
 
                                               30 Sep  31 Mar  30 Sep   Nov 
                                                2019    2019    2018   2013 
                                               pence   pence   pence   pence 
 
Net Asset Value per share ("NAV")                75.5    78.3    87.7  100.4 
Cumulative dividends paid since 12 Nov 2013      33.5    31.5    28.5    0.0 
                                               ------  ------  ------  ----- 
Total return                                    109.0   109.8   116.2  100.4 
                                               ======  ======  ======  ===== 
(NAV plus cumulative dividends paid per share) 
 
 
   CHAIRMAN'S STATEMENT 
 
   I present the Company's half-yearly report for the six-month period 
ended 30 September 2019. The period saw a continued high level of 
investment activity as the task of deploying the company's available 
funds continues, as well as a number of realisations from the existing 
investment portfolio. 
 
   The uncertain market conditions in the quoted portfolio, coupled with a 
small number of disappointing setbacks in the unquoted portfolio has 
resulted in a minor decrease in NAV (after adjusting for dividends paid) 
since the 31 March 2019 year end. 
 
   Net asset value and results 
 
   As at 30 September 2019, the Company's NAV stood at 75.5p, a decrease of 
0.8p (or 1.0%) compared to the 31 March 2019 year-end position, after 
adding back the 2.0p dividend paid during the period. 
 
   The return attributable to equity shareholders for the period was a loss 
of GBP1.1 million, comprising a revenue loss of GBP99,000 and a capital 
loss of GBP983,000. 
 
   Investment activity and performance 
 
   The Company has been an active investor during the period with ten 
qualifying investments and one non-qualifying investment made totalling 
GBP4.2 million. Four of these were new investments and seven were follow 
on investments into existing portfolio companies.  There were a number 
of disposals and part disposals in the period. Total realisations in the 
period generated proceeds of GBP6.6 million, resulting in a minor net 
realised loss of GBP4,000. 
 
   At the period end, the Company held a portfolio of 89 investments, with 
29% (by value) held in quoted growth, 47% (by value) in unquoted income 
and 24% (by value) in unquoted growth. 30 investments are held in the 
quoted growth category which are either quoted on AIM or the NEX 
Exchange Growth Market and have a value of GBP23.7 million. The 59 
unquoted investments have a value of GBP57.7 million. 
 
   At the period end the Board has reviewed the unquoted valuations and 
approved a number of adjustments. Net unrealised losses across the 
unquoted and quoted portfolio over the period were GBP730,000. 
 
   Further details of the investment activities of the Company are in the 
Investment Adviser's 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 2.0p which will be paid on 
28 February 2020 to Shareholders on the register as at 7 February 2020. 
 
   This will take the total dividends paid since the merger in November 
2013 to 35.5p. 
 
   Fundraising 
 
   The Company launched a new offer for subscription on 19 September 2019, 
seeking to raise up to GBP15 million, with the option of a further GBP25 
million. The offer has been well received by the market in the three 
months that it has been opened, with GBP3.4 million being raised to 
date. 
 
   General Meeting 
 
   The Company held a General Meeting on 6 November 2019 seeking 
Shareholder approval for resolutions in connection with the new 
fundraising offer, to revise the investment strategy to align with 
future investment into young growth businesses and amend arrangements 
with the Investment Adviser. All resolutions proposed were approved. 
 
   In line with the resolutions, Downing LLP's annual management charge has 
been increased from 1.8% to 2.0% per annum and the cap on annual running 
costs provided by Downing LLP has reduced from 2.75% to 2.6% with effect 
from 1 October 2019. 
 
   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 1,159,749 shares at an average 
price of 73.5p per Ordinary Share, being a 5% discount to the latest 
announced NAV at the time of purchase. 
 
   VCT Qualification 
 
   From 1 April 2020, the proportion of funds required to be invested in 
VCT qualifying investments for the Company will increase from 70% to 
80%. Currently, the VCT holds 76.4% of its total investments in 
qualifying assets. The Board continues to monitor the qualification 
level closely and is confident of exceeding the 80% target by the end of 
the current accounting period. 
 
   Outlook 
 
   In the period from the merger in 2013 to 30 September 2018, the Company 
experienced moderate but consistent growth in its Total Return. In the 
last 12 months, the Company has suffered from a number of factors that 
have impacted performance. 
 
   The unquoted income-focussed investments suffered from a small number of 
major setbacks in the last financial year. The quoted investments have 
suffered from uncertain market conditions producing falls in share 
prices from which they have yet to recover significantly. Unfortunately, 
the VCT regulations now mostly prevent the Company from taking advantage 
of these lower prices by adding to the existing quoted holdings. 
 
   With the continued delay to Brexit, the political and economic 
uncertainty in the UK is expected to remain for some time. The 
Investment Adviser believes that the quoted portfolio share prices do 
not currently reflect the intrinsic value of the underlying businesses 
and there are therefore prospects for growth. However, any significant 
recovery is unlikely to take place until the outcome and full impact of 
Brexit are clear. 
 
   It is too early to form a view as to the ultimate success of the 
portfolio of young unquoted growth investments that the Company has made 
over the last couple of years. Weaker businesses in this sector tend to 
become apparent well before the stronger businesses prove themselves. 
This is the effect that we have started to see recently. The Investment 
Adviser works very closely with all of these businesses to ensure that 
the potential successes are identified and nurtured, while tough 
decisions about the businesses which ultimately may fail are taken at 
the earliest opportunity. 
 
   Funds raised under the new share offer will ensure that the Company is 
able to continue to add new businesses to the portfolio as well as 
support existing investments that require further funds.  The Company's 
next report to Shareholders will be the Annual Report of the year ended 
31 March 2020 which is expected to be published in July 2020. 
 
   Chris Kay 
 
   Chairman 
 
   INVESTMENT ADVISER'S REPORT - OVERVIEW 
 
   Introduction 
 
   We present a review of the investment portfolio and activity over the 
six months to 30 September 2019. 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 2019, the Company held a portfolio of 89 investments, 
valued in total at GBP81.4 million. 
 
   There have been some positives and negatives within the portfolio over 
the period, resulting in a fall in value across both the quoted and 
unquoted portfolios. Despite the decrease to investment valuations in 
the period, over three quarters of the portfolio remains held at a 
valuation either at or above cost. 
 
   Portfolio Performance 
 
   The net unrealised losses in the quoted portfolio totalled GBP434,000. 
The largest unrealised gains in the quoted portfolio were Inland Homes 
plc (GBP611,000), Cohort plc (GBP318,000) and Angle plc (GBP247,000). 
These were offset by unrealised losses on Bonhill Group plc (GBP438,000), 
Downing Strategic Micro-Cap Investment Trust plc (GBP328,000) and 
Tracsis plc (GBP270,000). 
 
   There were several valuation movements in the unquoted portfolio in the 
period totalling an unrealised loss over valuation of GBP296,000. Within 
the unquoted portfolio, the largest unrealised gains related to Baron 
House Developments LLP (GBP1.1 million) and Harrogate Street LLP 
(GBP657,000). These gains were offset but a small number of material 
unrealised losses in the unquoted portfolio, most notably to Empiribox 
Limited (GBP747,000), Jito Trading Limited (GBP727,000) and Live Better 
With Limited (GBP495,000). 
 
   Further details on these and other movements can be found within the 
quoted and unquoted Investment Adviser Reports below. 
 
   Portfolio Composition 
 
   As noted in the 2019 annual report, the underlying investments in the 
portfolio are expected to shift from income to growth investments, in 
line with changes in the VCT regulations. In the six months to 30 
September 2019, this has not been proven as a result of a number of 
write downs in the period, mainly attributable to the growth portfolio, 
with the quoted growth and unquoted growth sectors returning an 
unrealised loss of 0.4p and 1.1p respectively, contrasting to a 0.9p 
unrealised gain in the unquoted income sector. 
 
   However, it is our expectation that the proportion of growth investments 
in the portfolio, particularly the unquoted growth investments, will 
increase over the coming years. 
 
   The diversified portfolio illustrates that that the main sectors that 
the Company are invested continue to be Alternative Energy, Leisure 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 30 September 2019 stood at 
75.5p, compared to the NAV at 31 March 2019 of 78.3p. Total Return (NAV 
plus cumulative dividends paid since the merger in 2013) is 109.0p. 
 
   Outlook 
 
   In the period to 30 September 2019, the Company has demonstrated a high 
level of deal flow with GBP4.2 million being invested to date, which we 
expect to maintain over the remainder of the year. 
 
   It has been disappointing to report further write downs to a small 
number of the earlier stage companies. However, shareholders should be 
assured that the investment adviser has devoted notable resources to 
address the issues that have occurred. Uncertain market conditions have 
also resulted in falls in the quoted stocks, however we remain positive 
in the longer-term prospects for the existing portfolio. 
 
   We remain satisfied with the composition of the portfolio for the period 
to 30 September 2019, as focus remains on the close monitoring of the 
current portfolio. In addition, we shall continue to utilise the 
remaining cash in the Company as well as the additional funds raised 
from the current offer and expect the Company to be an active investor 
over the remainder of the year. 
 
   INVESTMENT ADVISER'S REPORT -- UNQUOTED PORTFOLIO 
 
   We present a review of the unquoted investment portfolio for the six 
months ended 30 September 2019. 
 
   Investment activity 
 
   At 30 September 2019, the unquoted portfolio was valued at GBP57.7 
million, comprising 59 investments spread across a number of sectors. 
 
   During the period, the Company invested a total of GBP4.0 million in 
unquoted companies comprising four new investments and six follow-on 
investments. 
 
   The four new qualifying investments that were made during the six month 
period are as follows: 
 
   JRNI Limited (GBP525,000) is a leading, business to business (B2B) 
software platform that enables companies to offer online appointment and 
event booking to their customers and staff in real-time. 
 
   Hummingbird Technologies Limited (GBP500,000) is an advanced crop 
analytics platform that is powered by machine learning and aerial 
imagery to asses and predict crop health. 
 
   Cambridge Touch Technologies Limited (GBP459,000) is developing pressure 
sensitive multi touch technology that is simpler to integrate in touch 
panels such as mobile phone devices. 
 
   StreetHub Limited, trading as Trouva (GBP300,000) is an online 
marketplace for curated homeware and lifestyle products. 
 
   Follow on investments totalling GBP2.2 million were made into Limitless 
Limited (GBP584,000), Volo Commerce Limited (GBP510,000), Lignia Wood 
Company Limited (GBP333,000), Channel Mum Limited (GBP300,000), 
Empiribox Limited (GBP250,000) and E-Fundamentals Limited (GBP250,000). 
 
   Details of the small number of realisations in the year are set out 
below. Total proceeds of GBP2.9 million were generated, producing 
profits over holding value of GBP56,000. 
 
   Leytonstone Pub Limited, the owner of The Red Lion located in 
Leytonstone, London, was the largest disposal during the period after 
redeeming loans of GBP1.6 million in full. 
 
   One other notable exit was in Wickham Solar Limited, the owner of a 
5.6MW ground mounted solar farm in Bourne, Lincolnshire which was exited 
in full, realising a gain over holding value of GBP56,000. 
 
   Portfolio valuation 
 
   A number of adjustments to carrying values have been made at the period 
end, resulting in an overall loss of GBP296,000. The most significant of 
which are summarised below. 
 
   The largest fall in value was in Empiribox Limited, the provider of 
equipment and training to primary schools across the UK. Due to 
operational issues experienced in the company and cash restrictions 
within primary schools in the UK, the equity value has been reduced to 
nil, resulting in an unrealised loss of GBP747,000. 
 
   Jito Trading Limited, the developer of a wood pelleting plant in Weitra, 
Austria has suffered a further write down of GBP727,000. This has arisen 
as a result of it becoming clear that the company's projections were 
overoptimistic in terms of both costs to develop the plant and future 
trading prospects. 
 
   Live Better With Limited, a developer of a healthcare website aiming to 
help people with long-term medical conditions, has been reduced in value 
by GBP495,000 as a result of significant underperformance. 
 
   The losses encountered were partly offset by a number of gains across 
the portfolio. The most significant gain in the period related to Baron 
House Developments LLP, a company created to fund the purchase of a 
property opposite Newcastle station, which qualifies under the BPRA 
scheme. At the period end, an uplift of GBP1.1 million was recognised, 
following improved trading and an uplift in the value of the hotel site. 
 
   Outlook 
 
   We remain satisfied with the composition of the portfolio for the period 
to 30 September 2019, despite the significant challenges faced by a 
limited number of investments which has impacted performance. 
 
   We believe that the portfolio includes businesses that can deliver good 
rewards over time and expect to see further investment into a good 
pipeline of investment over the remainder of the period. 
 
   INVESTMENT ADVISER'S REPORT -- QUOTED PORTFOLIO 
 
   Quoted investments 
 
   Investment activity 
 
   At 30 September 2019 the quoted portfolio was valued at GBP23.7 million 
comprising 30 active investments. 
 
   It was a relatively quiet period, during which the quoted portfolio made 
one full exit in Finsbury Food Group plc, a partial sale in Craneware 
plc, and a follow-on investment in the Downing Strategic Micro-Cap 
Investment Trust plc. 
 
   In August 2019, the boards of Sanderson Group plc and Aptean Bidco 
announced they had agreed terms of a recommended cash acquisition by 
Aptean Bidco to acquire the entire issued share capital of Sanderson 
Group. Following shareholder approval, shareholders were entitled to 
receive 140 pence per share. 
 
   Realisations of quoted investments generated proceeds of GBP128,000 and 
a gain over holding value of GBP6,000. The largest of these gains 
related to Finsbury Food Group plc, a leading UK speciality bakery 
manufacturer of cake, break and morning goods for the retail and 
foodservice channels, generating proceeds of GBP843,000 and producing a 
gain over holding value of GBP155,000. 
 
   Portfolio valuation 
 
   Overall, the quoted portfolio produced unrealised losses of GBP434,000. 
The most notable movements are summarised below. 
 
   Cohort plc provides a wide range of services and products for domestic 
and export customers in defence and related markets. During the period 
its share price appreciated as the group announced positive progress, 
achieving a record adjusted operating profit and record order intake. 
 
   In addition, three significant new contract wins in the period enhanced 
the visibility of future group revenue. This resulted in an increase in 
market value of GBP318,000. 
 
   Inland Homes plc is a land developer focusing on residentially-led, 
mixed-use brownfield sites in the South of England. During the period, 
the group announced that it had received planning consent for its 
flagship site at Wilton Park Buckinghamshire, a site that has an 
estimated gross development value of GBP350 million. We believe that 
strategic land is now making a positive contribution to the group's 
profitability. This led to an increase in market value of GBP611,000. 
 
   The most significant decrease in the period was to Bonhill Group plc 
(formerly Vitesse Media plc), a business to business (B2B) media company 
providing business information, live events and data and insight 
propositions to international business communities. The group reported 
that a challenging US market impacted trading at InvestmentNews, its US 
business. In addition, the lack of fund flows in the UK fund management 
industry and the ongoing issues in Hong Kong have impacted performance. 
Full year revenue and EBITDA will be below market expectations and this 
resulted in a decrease in market value of GBP437,000. However, we are 
confident that the group will enter 2020 in a stronger position. 
 
   Downing Strategic Micro-Cap Investment Trust plc also had a decrease in 
value across the period. We believe a combination of uncertainty, 
failing markets and poor sentiment towards UK smaller companies has 
driven micro-cap share prices down excessively over the last six months. 
The Trust's share price fell and the discount to net asset value widened 
over the last reporting period. This has resulted in a decrease in 
market value over the period of GBP328,000. Given the upside that the 
manager sees in this portfolio, an additional investment of GBP197,000 
was made to take advantage on the discount on the NAV. 
 
   Outlook 
 
   We believe the portfolio is well positioned to grow over the coming 
years, but the political and economic background remains challenging. 
This environment is particularly difficult for small and micro-cap 
companies that have been impacted by poor market sentiment and whose 
share prices have been driven down because they are generally perceived 
to raise most of their revenues from the domestic market. 
 
   However, 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 2019 
 
 
 
 
                                           30 Sep   30 Sep 
                                             2019     2018   31 Mar 2019 
                                           GBP'000  GBP'000    GBP'000 
 
Fixed assets 
Investments                                 81,388   91,628       84,483 
                                           -------  -------  ----------- 
 
Current assets 
Debtors                                      3,519    2,168        3,228 
Cash at bank and in hand                    16,517   24,021       17,222 
                                           -------  -------  ----------- 
                                            20,036   26,189       20,450 
 
Creditors: amounts falling due within one 
 year                                        (868)    (403)        (383) 
 
Net current assets                          19,168   25,786       20,067 
                                           -------  -------  ----------- 
 
Net assets                                 100,556  117,414      104,550 
                                           =======  =======  =========== 
 
Capital and reserves 
Called up share capital                      1,329    1,338        1,334 
Capital redemption reserve                   1,608    1,586        1,597 
Share premium                               45,989   44,923       45,515 
Funds held in respect of shares not yet 
 allotted                                      237       60          114 
Special reserve                             51,965   60,390       52,526 
Capital reserve -- unrealised              (1,709)    8,899        1,343 
Revenue reserve                              1,137      218        2,121 
 
 
Equity shareholders' funds                 100,556  117,414      104,550 
                                           =======  =======  =========== 
 
Basic and diluted net asset value per        75.5p    87.7p        78.3p 
 share 
 
   UNAUDITED INCOME STATEMENT 
 
   for the six months ended 30 September 2019 
 
 
 
 
                                                                       Year ended 
                      Six months ended           Six months ended        31 March 
                      30 September 2019          30 September 2018           2019 
                 Revenue  Capital   Total   Revenue  Capital   Total     Total 
                 GBP'000  GBP'000  GBP'000  GBP'000  GBP'000  GBP'000   GBP'000 
 
Income             1,232      100    1,332    1,750       90    1,840       4,727 
 
Gains on 
investments 
- realised             -      (4)      (4)        -       39       39        (30) 
- unrealised           -    (730)    (730)        -    3,890    3,890     (6,287) 
                   1,232    (634)      598    1,750    4,019    5,769     (1,590) 
 
Investment 
 management 
 fees              (461)    (461)    (922)    (510)    (510)  (1,020)     (1,950) 
Other expenses     (758)        -    (758)    (381)        -    (381)       (732) 
 
Return on 
 ordinary 
 activities 
 before tax           13  (1,095)  (1,082)      859    3,509    4,368     (4,272) 
 
Tax on total 
 comprehensive 
 income and 
 ordinary 
 activities        (112)      112        -    (128)      128        -           - 
 
Return 
 attributable 
 to equity 
 shareholders       (99)    (983)  (1,082)      731    3,637    4,368     (4,272) 
                 =======  =======  =======  =======  =======  =======  ========== 
 
Basic and 
 diluted return 
 per share        (0.1p)   (0.7p)   (0.8p)     0.5p     2.7p     3.2p      (3.2p) 
 
 
   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 2019 
 
 
 
 
                                                                 Funds held in 
                                          Capital     Share         respect of             Capital 
                                 Share   redemption   premium   shares not yet  Special     reserve   Revaluation  Revenue 
                               Capital    reserve     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 2019 
 
At 1 Apr 2019                    1,334        1,597    45,515              114    52,526           -        1,343     2,121  104,550 
Total comprehensive 
 income                              -            -         -                -         -       (253)        (730)      (99)  (1,082) 
Realisation of revaluations 
 from previous years*                -            -         -                -         -       1,752      (1,752)         -        - 
Realisation of impaired 
 valuations                          -            -         -                -         -         570        (570)         -        - 
Transfer between 
 reserves**                          -            -         -                -       298       (298)            -         -        - 
Transactions with owners 
Unallotted shares                    -            -         -              123         -           -            -         -      123 
Dividends paid                       -            -         -                -         -     (1,771)            -     (885)  (2,656) 
Issue of new shares                  6            -       474                -         -           -            -         -      480 
Share issue costs                    -            -         -                -       (3)           -            -         -      (3) 
Purchase of own 
 shares                           (11)           11         -                -     (856)           -            -         -    (856) 
 
 
 At 30 Sept 2019                 1,329        1,608    45,989              237    51,965           -      (1,709)     1,137  100,556 
                              ========  ===========  ========  ===============  ========  ==========  ===========  ========  ======= 
 
 
   * A transfer of GBP1.8 million representing previously recognised 
unrealised gains on disposal of investments during the period ended 30 
September 2019 (year ended 31 March 2019: losses GBP1.6 million) has 
been made from the Capital reserve - realised to the Revaluation 
reserve. 
 
   ** A transfer of GBP298,000 representing realised gains on disposal of 
investments, less net investment impairments and the excess of capital 
expenses over capital income and capital dividends in the year (year 
ended 31 March 2019: GBP7.3 million) has been made from Capital Reserves 
- realised to Special reserve. 
 
   STATEMENT OF CHANGES IN EQUITY 
 
   for the year ended 31 March 2019 
 
 
 
 
                                                           Funds 
                                                       held in respect 
                                 Capital     Share        of shares                Capital 
                        Share   redemption   premium       not yet      Special     reserve   Revaluation  Revenue 
                      Capital    reserve     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 2019 
 
At 1 Apr 2018           1,200        1,574    31,661            12,876    64,859           -        4,909       828   117,907 
Total comprehensive 
 income                     -            -         -                 -         -       (618)      (6,287)     2,634   (4,271) 
Realisation of 
 revaluations from 
 previous years             -            -         -                 -         -     (1,598)        1,598         -         - 
Realisation of 
 impaired 
 valuations                 -            -         -                 -         -     (1,123)        1,123         -         - 
Transfer between 
 reserves                   -            -         -                 -  (10,018)      10,018            -         -         - 
Transactions with owners 
Unallotted shares           -            -         -          (12,762)         -           -            -         -  (12,762) 
Dividends paid              -            -         -                 -         -     (6,679)            -   (1,341)   (8,020) 
Issue of new shares       157            -    13,854                 -         -           -            -         -    14,011 
Share issue costs           -            -         -                 -     (470)           -            -         -     (470) 
Purchase of own 
 shares                  (23)           23         -                 -   (1,845)           -            -         -   (1,845) 
                      -------  -----------  --------  ----------------  --------  ----------  -----------  --------  -------- 
 
At 31 Mar 2019          1,334        1,597    45,515               114    52,526           -        1,343     2,121   104,550 
                      =======  ===========  ========  ================  ========  ==========  ===========  ========  ======== 
 
 
   UNAUDITED CASH FLOW STATEMENT 
 
   for the six months ended 30 September 2019 
 
 
 
 
                                           30 Sep     30 Sep    31 Mar 
                                             2019      2018       2019 
                                           GBP'000   GBP'000    GBP'000 
  Cash flow from operating activities 
  Profit/(loss) on ordinary activities 
  before taxation                           (1,082)    4,368     (4,272) 
  (Gains)/loss on investments                   734   (3,929)      6,317 
  Increase in debtors                         (291)     (594)    (1,654) 
  (Decrease)/increase in creditors              279     (179)       (76) 
 
Cash from operations 
Corporation tax paid                              -         -          - 
 
Net cash (utilised)/generated from 
 operating activities                         (360)     (334)        315 
                                          ---------  --------  --------- 
 
Cash flow from investing activities 
Purchase of investments                     (4,208)   (6,300)   (12,501) 
Proceeds from disposal of investments         6,570       189      3,289 
 
Net cash (utilised)/generated from 
 investing activities                         2,362   (6,111)    (9,212) 
                                          ---------  --------  --------- 
 
Cash flows from financing activities 
Proceeds from share issue                       480    13,412     14,011 
Funds held in respect of shares not yet 
 allotted                                       123  (12,816)   (12,762) 
Share issue costs                               (3)     (468)      (470) 
Purchase of own shares                        (651)   (1,098)    (2,096) 
Equity dividends paid                       (2,656)   (4,020)    (8,020) 
 
Net cash (utilised)/generated from 
 financing activities                       (2,707)   (4,990)    (9,337) 
                                          ---------  --------  --------- 
 
(Decrease)/increase in cash                   (705)  (11,435)   (18,234) 
                                          =========  ========  ========= 
 
 
  Net increase in cash 
 
  Beginning of period                        17,222    35,456     35,456 
  Net cash (outflow)/inflow                   (705)  (11,435)   (18,234) 
                                          ---------  --------  --------- 
 
  End of period                              16,517    24,021     17,222 
                                          =========  ========  ========= 
 
 
 
 
   SUMMARY OF INVESTMENT PORTFOLIO 
 
   as at 30 September 2019 
 
 
 
 
                                                        Valuation      % of 
                                                         movement    portfolio 
                                     Cost    Valuation   in period   by value 
                                    GBP'000   GBP'000    GBP'000 
 
Top twenty venture capital 
investments (by value) 
Doneloans Limited                     5,000      5,627           1        5.7% 
Tracsis plc*                          1,443      4,585       (270)        4.7% 
Downing Care Homes Holdings 
 Limited                              3,880      4,495           -        4.6% 
Baron House Developments LLP          2,695      3,773       1,078        3.9% 
Downing Strategic Micro-Cap 
 Investment Trust plc**               5,197      3,418       (328)        3.5% 
Cadbury House Holdings Limited        3,082      3,075           -        3.1% 
Pilgrim Trading Limited               2,594      2,594           -        2.6% 
Inland Homes plc*                     1,526      2,412         611        2.5% 
Xupes Limited                         2,250      2,250           -        2.3% 
Leytonstone Pub Limited                 361      2,061        (75)        2.1% 
Harrogate Street LLP                  1,400      2,057         657        2.1% 
Anpario plc*                          1,448      1,979           -        2.0% 
Craneware plc*                          353      1,877          61        1.9% 
Avid Technologies Group Limited       1,351      1,659           -        1.7% 
Pearce & Sanders Limited              1,320      1,605        (48)        1.6% 
Lignia Wood Company Limited           1,444      1,533           -        1.6% 
Pantheon Trading Limited              1,500      1,500           -        1.5% 
Data Centre Response Limited            557      1,414         148        1.4% 
Universe Group plc*                   1,506      1,350        (11)        1.4% 
Nomansland Biogas Limited             1,300      1,300           -        1.3% 
                                     40,207     50,564       1,824       51.5% 
 
Other venture capital investments    43,842     30,824     (2,554)       31.6% 
                                    -------  ---------  ----------  ---------- 
 
                                     84,049     81,388       (730)       83.1% 
                                    =======             ========== 
 
Cash at bank and in hand                        16,517                   16.9% 
                                             ---------              ---------- 
 
Total investments                               97,905                    100% 
                                             =========              ========== 
 
 
   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 2019 
 
   Additions 
 
 
 
 
                                                   GBP'000 
Quoted 
Downing Strategic Micro-Cap Investment Trust plc       197 
                                                   ------- 
                                                       197 
                                                   ------- 
 
Unquoted 
Limitless Limited                                      584 
JRNI Limited                                           525 
Volo Commerce Limited                                  510 
Hummingbird Technologies Limited                       500 
Cambridge Touch Technologies Limited                   459 
Lignia Wood Company Limited                            333 
Channel Mum Limited                                    300 
StreetHub Limited                                      300 
Empiribox Limited                                      250 
E-Fundamentals Limited                                 250 
                                                   ------- 
                                                     4,011 
                                                   ------- 
 
Total additions                                      4,208 
                                                   ======= 
 
 
   Disposals 
 
 
 
 
                                                       Gain/(loss)   Realised 
                                Value at    Disposal     against       gain 
                       Cost     31/03/19*    Proceeds      cost      in period 
                      GBP'000   GBP'000     GBP'000      GBP'000     GBP'000 
Quoted 
Sanderson Group plc       336         461         701          365         240 
Finsbury Food Group 
 plc                      655         688         843          188         155 
Craneware plc             497       2,550       2,095        1,598       (455) 
                        1,488       3,699       3,639        2,151        (60) 
                      -------  ----------  ----------  -----------  ---------- 
 
Unquoted 
Including loan note 
redemptions 
Wickham Solar 
 Limited                  473         660         716          243          56 
Mosaic Spa and 
 Health Clubs 
 Limited                  706          58          58        (648)           - 
Pabulum Limited           607         607         607            -           - 
Leytonstone Pub 
 Limited                1,550       1,550       1,550            -           - 
                        3,336       2,875       2,931        (405)          56 
                      -------  ----------  ----------  -----------  ---------- 
                        4,824       6,574       6,570        1,746         (4) 
                      =======  ==========  ==========  ===========  ========== 
 
 
   * adjusted for purchases in the period 
 
   NOTES TO THE UNAUDITED FINANCIAL STATEMENTS 
 
   for the six months ended 30 September 2019 
 
   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 2019 and have been prepared in accordance with the accounting 
policies set out in the statutory accounts for the year ended 31 March 
2019, which were prepared in accordance with the Financial Reporting 
Standard 102 ("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 2018 and the year ended 31 March 2019 respectively. 
 
   5. Return per share 
 
 
 
 
                                                           Capital 
                                Weighted average  Revenue   Gain/ 
                       number of shares in issue   Return   (loss) 
                                                  GBP'000  GBP'000 
 
    Period ended 30 September 2019   133,357,325     (99)    (983) 
                                                  =======  ======= 
 
    Period ended 30 September 2018   133,284,857      731    3,637 
                                                  =======  ======= 
 
    Year ended 31 March 2019         133,474,895    2,634  (6,906) 
                                                  =======  ======= 
 
 
   6. Dividends paid in the period 
 
 
 
 
                                           Six months ended       Year ended 
                                              30 September         31 March 
                                                  2019               2019 
                                       Revenue  Capital   Total     Total 
                   Date paid           GBP'000  GBP'000  GBP'000   GBP'000 
 
                   30 August 2019: 
    2019 Final      2.0p                   885    1,771    2,656           - 
                   22 February 2019: 
    2019 Interim    3.0p                     -        -        -       4,001 
                   24 August 2018: 
    2018 Final      3.0p                     -        -        -       4,019 
                                       -------  -------  -------  ---------- 
                                           885    1,771    2,656       8,020 
                                       =======  =======  =======  ========== 
 
 
   7. Basic and diluted net asset value per share 
 
 
 
 
                                                          Net    NAV per 
                                       Shares in issue   assets   share 
                                                        GBP'000   pence 
 
    Period ended 30 September 2019         132,902,307  100,556     75.5 
                                                        ======= 
    Period ended 30 September 2018         133,822,737  117,414     87.7 
                                                        ======= 
    Year ended 31 March 2019               133,444,807  104,550     78.3 
                                                        ======= 
 
 
   8. Called up share capital 
 
 
 
 
                                        Shares in 
                                          issue     GBP'000 
 
    Period ended 30 September 2019     132,902,307    1,329 
                                                    ======= 
    Period ended 30 September 2018     133,822,737    1,338 
                                                    ======= 
    Year ended 31 March 2019           133,444,807    1,334 
                                                    ======= 
 
   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. 
 
 
 
 
                                             30 Sep      30 Sep    31 Mar 
                                               2019        2018      2019 
                                             GBP'000     GBP'000   GBP'000 
 
    Capital redemption reserve                   1,608      1,586    1,597 
    Share premium account                       45,989     44,923   45,515 
    Funds held in respect of shares not 
     yet allotted                                  237         60      114 
    Special reserve                             51,965     60,390   52,526 
    Revaluation reserve                        (1,709)      8,899    1,343 
    Revenue reserve                              1,137        218    2,121 
                                           -----------  ---------  ------- 
    Total reserves                              99,227    116,076  103,216 
                                           ===========  =========  ======= 
 
 
   Distributable reserves are calculated as follows: 
 
 
 
 
                                              30 Sep    30 Sep    31 Mar 
                                                2019      2018     2019 
                                              GBP'000   GBP'000  GBP'000 
 
    Special reserve                             51,965   60,390    52,526 
    Revenue reserve                              1,137      218     2,121 
    Unrealised gains/(losses) 
     (excluding unrealised unquoted gains)    (10,144)    3,629   (5,989) 
                                             ---------  -------  -------- 
                                                42,958   64,237    48,658 
                                             =========  =======  ======== 
 
   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 2019. The Company has categorised its financial 
instruments using the fair value hierarchy as follows: 
 
   Level 1 Reflects financial instruments quoted in an active market 
(quoted companies 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). 
 
 
 
 
                                                30 Sep                                    31 Mar 
                 Level 1    Level 2    Level 3    2019     Level 1    Level 2    Level 3    2019 
                GBP'000    GBP'000    GBP'000   GBP'000   GBP'000    GBP'000    GBP'000   GBP'000 
Quoted on AIM     19,203          -          -   19,203     23,027          -          -   23,027 
Quoted on NEX          8          -          -        8         18          -          -       18 
Quoted on 
 Main market       4,499          -          -    4,499      4,600          -          -    4,600 
Unquoted loan 
 notes                 -          -     22,330   22,330          -          -     21,645   21,645 
Unquoted 
 equity                -          -     35,348   35,348          -          -     35,193   35,193 
                  23,710          -     57,678   81,388     27,645          -     56,838   84,483 
               =========  =========  =========  =======  =========  =========  =========  ======= 
 
 
   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 2019 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. 
 
   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

November 26, 2019 06:02 ET (11:02 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.

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