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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Downing Two Vct Plc | LSE:DP2F | London | Ordinary Share | GB00B6ZS0J90 | F SHS 0.1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 14.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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TIDMDP2F
Downing TWO VCT plc
Half-Yearly Report
for the six months ended 30 June 2018
Performance summary
30 Jun 31 Dec 30 Jun
'D' Share pool 2018 2017 2017
Pence Pence Pence
Net asset value per 'D' Share - - 23.9
Net asset value per 'E' Share - - 0.1
Cumulative distributions per 'D' Share 103.98 103.98 80.0
------ ------ ------
Total return per 'D' Share and 'E' Share 103.98 103.98 104.0
====== ====== ======
30 Jun 31 Dec 30 Jun
'F' Share pool 2018 2017 2017
Pence Pence Pence
Net asset value per 'F' Share 53.8 69.6 70.0
Cumulative distributions per 'F' Share 49.0 30.0 27.5
------ ------ ------
Total return per 'F' Share 102.8 99.6 97.5
====== ====== ======
30 Jun 31 Dec 30 Jun
'G' Share pool 2018 2017 2017
Pence Pence Pence
Net asset value per 'G' Share 81.4 82.1 82.5
Cumulative distributions per 'G' Share 27.5 25.0 22.5
------ ------ ------
Total return per 'G' Share 108.9 107.1 105.0
====== ====== ======
30 Jun 31 Dec 30 Jun
'K' Share pool 2018 2017 2017
Pence Pence Pence
Net asset value per 'K' Share 94.1 97.7 98.4
====== ====== ======
CHAIRMAN'S STATEMENT
Introduction
I am pleased to present the Half-Yearly Report for the six months ended
30 June 2018. The Company has a number of share pools, each of which is
in a different stage in its planned exit life. Generally progress has
been satisfactory over the period for the share pools that have recently
passed or are approaching their planned exit date.
Net asset values and overview
'F' Share pool
The 'F' Share pool launched in 2012 and began exiting from its
investments earlier this year. In April the share class paid its first
dividends in its realisation phase of 19.0p per share.
At 30 June 2018 the remaining net asset value ("NAV") was 53.8p per F
Share, an increase of 3.2p (4.6%) over the period. Total Return (NAV
plus dividends paid to date) is now 102.8p for a combined holding,
compared to the original cost, net of income tax relief, of 70p per
share.
The pool still holds 12 investments, but plans are being progressed for
exits from each of them.
Since the period end one further exit has been achieved. As a result,
the Share pool will pay a further dividend of 18.0p per 'F' Share on 9
November 2018. This will bring total distributions to 67.0p and leave a
remaining NAV of 35.8p.
The task of exiting the remaining investments is likely to take some
time to complete, although we expect significant progress to be made
over the remainder of the year. The Manager does not, however expect to
be in a position to make the final distribution until 2019.
'G' Share pool
The 'G' Share pool raised funds in 2013 and is now starting the main
process of seeking to realise the investments to return funds to
Shareholders.
At 30 June 2018, the pool held 15 investments and the net asset value
("NAV") was 81.4p per G Share which represents a net increase of 1.8p
(2.2%) over the period after adjusting for the dividends paid out. Total
Return (NAV plus dividends paid to date) is now 108.9p, compared to the
original cost, before income tax relief, of 100.0p per share.
One significant investment was realised in the period which generated
funds for its first dividend in its realisation phase. A dividend of
10.0p will be paid on 9 November 2018 to shareholders on the register at
19 October 2018. This will bring total distributions to 37.5p and leave
a remaining NAV of 71.4p.
The process of realising all of the investments in the portfolio will
take some time. Plans are being pursued for exits from each of the
investments, but the Manager estimates that it may take up to 12 months
for the process to complete. The 'G' Share pool will however make
further distributions as realisations are achieved.
'K' Share pool
The 'K' Share pool raised funds in 2016 and is continuing to build its
initial investment portfolio. The target date to start realising
investments is late 2021.
At 30 June 2018, the share pool held 18 investments and had a net asset
value ("NAV") and total return 94.1p per K Share. This represents a net
decrease of 3.6p (3.7%) over the period. This deficit has arisen partly
due to "cash drag" of holding uninvested funds during the investing
period and also from a provision that has been required against one
investment.
The Investment Manager's Report will provide more detail on each of the
share pools.
Dividends
As discussed above, dividends have been declared in respect of two of
the share pools
'F' Shares 18.0p per share
'G' Shares 10.0p per share
Each of the above dividends will be paid on 9 November 2018 to
Shareholders on the register at 19 October 2018.
No dividend is being declared in respect of the 'K' Share pool as the
VCT regulations effectively prohibit dividends at this stage in the
pool's life.
Share buybacks
The Company has a general policy in the first five years after the
launch of a share class, of buying in its own shares that become
available in the market for cancellation. Accordingly, the Company will
currently buy 'K' Shares that become available in the market and will,
subject to liquidity and regulatory constraints, buy at prices
approximately equal to net asset value i.e. with no discount. No further
share buybacks in respect of the 'F' Shares and 'G' Shares are expected
to take place now.
During the period to 30 June 2018, the Company repurchased and
subsequently cancelled 16,275 'K' Shares for an aggregate consideration
of GBP15,868, being an average price of 97.5p per 'K' Share.
No share buybacks in respect of any other share classes were undertaken
during the period.
Outlook
Over the remainder of the year we expect to see significant headway made
in realising most of the remaining investments in the 'F' Share pool and
some initial disposals from the 'G' Share pool. As the process of
realising investments usually includes transactions with third parties,
timings can be unpredictable, and Shareholders should note that the exit
process will take time to complete. While the Manager is focussing on
delivering exits in a timely manner, the Board is keen to see that full
value is achieved for all investments even if this may sometimes take
longer to deliver.
In respect of the 'K' Share pool, we expect this to be a stable period
with the Manager focussing on nurturing the investments such that they
will be well positioned to deliver successful exits when the time comes.
I look forward to updating Shareholders on progress in my statement with
the year end report to 31 December 2018 but will also communicate
additionally with 'F' and 'G' Shareholders as and when there is any news
of further distributions.
Hugh Gillespie
Chairman
INVESTMENT MANAGER'S REPORT
'F' SHARE POOL
As at 30 June 2018, the 'F' Share pool holds 12 investments and focus
has now shifted to the process of realising its investments in order to
return funds to 'F' Shareholders.
Investment activity
During the period, the full exit of Goonhilly Earth Station Limited
completed and resulted in a good outcome for 'F' Shareholders generating
proceeds of GBP1.2 million and an uplift over cost of GBP216,000.
Partial disposals also completed in two of the smaller portfolio
companies. There was a partial loan note redemption in the Scottish
licensed leisure company, Fubar Stirling Limited which generated a total
gain over carrying value of GBP4,000.
There was also a partial loan note redemption in Fresh Green Power
Limited, the domestic rooftop solar company, which was redeemed at par.
The majority of the portfolio investments remain valued at or above cost
with there being several valuation movements in the period which
generated an uplift over opening value of GBP104,000.
The most significant increase in valuation was in Merlin Renewables
Limited, the anaerobic digestion plant in Norfolk. In August 2018, the
plant was exited with the carrying value uplifted to reflect the sale
price at the period end.
An uplift of GBP20,000 was recognised in Atlantic Dogstar Limited, which
owns a group of London pubs, following a revaluation of the sites.
Downing Pub EIS One Limited, which acquired the holdings of Pabulum Pubs
Limited and Augusta Pub Company Limited in the prior year, was uplifted
by GBP18,000 supported by independent valuations from industry
specialists.
Other smaller movements in the portfolio included an uplift of GBP10,000
in Lambridge Solar Limited and GBP3,000 in Fresh Green Power Limited.
One valuation write down took place in the period. Green Energy
Production UK Limited, the operator of rooftop solar assets in
Lincolnshire, had a reduction in value of GBP24,000 following a period
of recurring operational issues.
Realisation plans
The pool's second most significant investment holding is Merlin
Renewables Limited, the anaerobic digestion plant in Norfolk. Following
the period end, an exit was achieved which delivered a significant
return to the pool.
Plans are in place for the successful exit of the remaining portfolio
companies however we anticipate that the exercise will take some time to
complete in full.
Net asset value, results and dividend
At 30 June 2018, the net asset value ("NAV") for a holding of one 'F'
Share was 53.8p, an increase of 3.2p (4.6%) over the period. Total
Return (NAV plus dividends paid to date) is now 102.8p for a combined
holding.
The gain on ordinary activities for the 'F' Shares, after taxation was
GBP344,000 for the period, comprising a revenue profit of GBP20,000 and
a capital gain of GBP324,000.
The Company will pay an interim dividend of 18.0p per 'F' Share on 9
November 2018 to 'F' Shareholders on the register at 19 October 2018.
Outlook
The focus for the 'F' Share portfolio remains on exiting from its
remaining investments. Progress continues to be made however exact
timing on the final exit is dependent on transactions involving third
parties.
Downing LLP
SUMMARY OF INVESTMENT PORTFOLIO
'F' SHARE POOL
as at 30 June 2018
Unrealised % of
gain/(loss) portfolio
Cost Valuation in period by value
GBP'000 GBP'000 GBP'000
VCT qualifying and
partially qualifying
investments
Apex Energy Limited 1,000 1,000 - 17.0%
Merlin Renewables
Limited 500 718 77 12.2%
Downing Pub EIS One
Limited 490 607 18 10.3%
Lambridge Solar Limited 500 605 10 10.3%
Pearce and Saunders
Limited 497 497 - 8.5%
Atlantic Dogstar
Limited 200 255 20 4.3%
Fresh Green Power
Limited 189 231 3 3.9%
Green Energy Production
UK Limited 100 76 (24) 1.3%
Fubar Stirling Limited 95 5 - 0.1%
Non-qualifying investments
Baron House Developments
LLP 481 481 - 8.2%
London City Shopping
Centre Limited 66 66 - 1.1%
Pearce and Saunders
DevCo Limited 46 46 - 0.8%
4,164 4,587 104 78.0%
Cash at bank and
in hand 1,289 22.0%
Total 5,876 100.0%
SUMMARY OF INVESTMENT MOVEMENTS
'F' SHARE POOL
as at 30 June 2018
Total
Marketvalue Gainagainst realised
Disposals Cost at 01/01/18 Disposalproceeds cost gain
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Goonhilly Earth
Station Limited 955 955 1,171 216 216
Fubar Stirling
Limited 6 2 6 - 4
Fresh Green Power
Limited 11 11 11 - -
972 968 1,188 216 220
======= ================ ==========
INVESTMENT MANAGER'S REPORT
'G' SHARE POOL
The 'G' Share pool raised funds in 2013 and the focus for the share pool
now switches to the process of realising investments. The pool will make
its first significant dividend in its realisation phase to investors on
9 November 2018.
Investment activity
During the period, there were no new investments, however one full exit
was made in the six months to 30 June 2018.
Goonhilly Earth Station Limited, which operates a satellite earth
station in Cornwall, generated proceeds of GBP2.6 million and an uplift
over cost of GBP488,000.
The majority of investments remain valued at or above cost, however
there were two significant reductions in value to Quadrate Spa Limited
and Ormsborough Limited.
Quadrate Spa Limited owns and operates a health club business in The
Cube complex in Birmingham. The company has been written down by
GBP781,000 following poor performance.
Ormsborough Limited owns several pubs and restaurants across Yorkshire.
The company has had a reduction in value of GBP159,000 due to overspend
on recent developments.
The valuation uplifts in the period totalled GBP432,000 with the
majority as a result of an uplift in value of Atlantic Dogstar Limited.
The company owns a group of London pubs and following a revaluation of
the sites, valuation has been increased by GBP357,000.
The other notable uplift in the period relates to Downing Pub EIS One
Limited, which acquired the holdings of Pabulum Pubs Limited and Augusta
Pub Company Limited in the prior year. The Company was uplifted by
GBP36,000 supported by independent valuations from industry specialists.
Net asset value
At 30 June 2018, the net asset value ("NAV") for a holding of one 'G'
Share was 81.4p which represents a net increase of 1.8p (2.2%) over the
period after adjusting for the dividends paid out. Total Return (NAV
plus dividends paid to date) is now 108.9p.
Results and dividend
The profit on ordinary activities for the 'G' Shares, after taxation,
for the period was GBP469,000, comprising a revenue profit of GBP489,000
and a capital loss of GBP20,000.
The Company will pay an interim dividend of 10.0p per 'G' Share, on 9
November 2018 to 'G' Shareholders on the register at 19 October 2018.
Outlook
The focus for the 'G' Share portfolio is shifting towards exiting its
investments as it reaches its five year anniversary in November 2018.
Good progress is being made and the first major distribution to 'G'
Shareholders of 10.0p per share will be paid to investors on 9 November
2018.
Downing LLP
SUMMARY OF INVESTMENT PORTFOLIO
'G' SHARE POOL
as at 30 June 2018
Unrealised % of
gain/(loss) portfolio
Cost Valuation in period by value
GBP'000 GBP'000 GBP'000
VCT qualifying and
partially qualifying
investments
Atlantic Dogstar
Limited 3,500 4,470 357 22.2%
Antelope Pub Limited 1,760 1,760 - 8.7%
Quadrate Catering
Limited 1,450 1,450 - 7.2%
Walworth House Pub
Limited 1,330 1,330 - 6.6%
Apex Energy Limited 1,300 1,300 - 6.5%
Downing Pub EIS One
Limited 980 1,214 36 6.0%
Hermes Wood Pellets
Limited 1,000 1,000 - 5.0%
Zora Energy Renewables
Limited 750 750 - 3.7%
Ormsborough Limited 500 374 (159) 1.8%
Oak Grove Renewables
Limited 420 252 21 1.3%
Pearce and Saunders
Limited 193 193 - 1.0%
Non-qualifying investments
Hedderwick Limited 1,250 1,320 18 6.6%
Baron House Developments
LLP 1,093 1,093 - 5.4%
Quadrate Spa Limited 1,450 669 (781) 3.3%
London City Shopping
Centre Limited 110 110 - 0.5%
17,086 17,285 (508) 85.8%
Cash at bank and
in hand 2,852 14.2%
Total 20,137 100%
SUMMARY OF INVESTMENT MOVEMENTS
'G' SHARE POOL
as at 30 June 2018
Market
value Total
at Gainagainst realised
Disposals Cost 01/01/18 Disposalproceeds cost gain
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Goonhilly Earth
Station Limited 2,146 2,146 2,634 488 488
2,146 2,146 2,634 488 488
======= ========= ================ =========== ==========
INVESTMENT MANAGER'S REPORT
'K' SHARE POOL
The 'K' Share pool closed its fundraising in September 2016 having
raised GBP16.2 million. The process of investing the funds is well under
way with GBP12.0 million invested in qualifying and non-qualifying
investments as focus now shifts to the close monitoring of investee
companies and utilising the remaining cash in the pool.
Investment activity
Valuations movements during the period totalled an unrealised loss of
GBP428,000 with one valuation uplift and one write down.
Ormsborough Limited owns several pubs and restaurants across Yorkshire.
The 'K' Share pool provided further investment to the company towards
the back end of 2017 to help the company continue their expansion.
Following overspend on recent developments the company has had a
reduction in value of GBP430,000.
Net asset value, results and dividend
At 30 June 2018, the net asset value ("NAV") and total return for a
holding of one 'K' Share was 94.1p, which represents a net decrease of
3.6p (3.7%) over the period.
The loss on ordinary activities for the 'K' Share pool, after taxation
was GBP565,000 for the period, comprising a revenue loss of GBP137,000
and a capital loss of GBP428,000.
Outlook
The emphasis for the 'K' share pool now gradually shifts to the close
monitoring of the Share pool's investments as we seek to optimise growth
over the planned exit life, however we also expect there to be a small
number of further additions to utilise the remaining cash of the pool.
Downing LLP
SUMMARY OF INVESTMENT MOVEMENTS
'K' SHARE POOL
as at 30 June 2018
Unrealised % of
gain/(loss) portfolio
Cost Valuation in period by value
GBP'000 GBP'000 GBP'000
VCT qualifying investments
Jito Trading Limited 1,500 1,500 - 10.2%
Apprise Pubs Limited 1,300 1,300 - 8.8%
Garthcliff Shipping
Limited 1,300 1,300 - 8.8%
Yamuna Renewables
Limited 1,300 1,300 - 8.8%
Ormsborough Limited 1,400 1,012 (430) 6.9%
Managed Storage Services
(1) Limited 1,000 1,000 - 6.8%
Ironhide Generation
Limited 736 736 - 5.0%
Indigo Generation
Limited 736 736 - 5.0%
Rockhopper Renewables
Limited 591 591 - 4.0%
Walworth House Pub
Limited 500 500 - 3.4%
Exclusive Events
Venues Limited 500 500 - 3.4%
Pilgrim Trading Limited 432 432 - 2.9%
Zora Energy Renewables
Limited 350 350 - 2.4%
SF Renewables (Solar)
Limited 337 337 - 2.3%
Mosaic Spa and Health
Clubs Limited 27 29 2 0.2%
Non-qualifying investments
Fenkle Street LLP 287 287 - 1.9%
Snow Hill Developments
LLP 43 43 - 0.3%
London City Shopping
Centre Limited 15 15 - 0.1%
12,354 11,968 (428) 81.2%
Cash at bank and
in hand 2,779 18.8%
Total 14,747 100%
UNAUDITED SUMMARISED BALANCE SHEET
as at 30 June 2018
30 Jun 31 Dec
30 Jun 2018 2017 2017
'D' 'K'
Shares 'F' Shares 'G' Shares Shares Total Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Fixed assets
Unquoted
investments - 4,587 17,285 11,968 33,840 39,356 37,786
Current assets
Debtors - 39 780 76 895 474 767
Cash at bank
and in hand 12 1,289 2,852 2,779 6,932 6,981 5,589
12 1,328 3,632 2,855 7,827 7,455 6,356
Creditors:
amounts
falling due
within one
year (12 ) (99 ) (291 ) (35 ) (437 ) (476 ) (457 )
Net current
assets - 1,229 3,341 2,820 7,390 6,979 5,899
Net assets - 5,816 20,626 14,788 41,230 46,335 43,685
Capital and
reserves
Called up
share
capital 25 11 25 16 77 77 77
Capital
redemption
reserve 124 - - - 124 124 124
Special
reserve - 6,038 20,694 (3) 26,729 31,493 28,313
Share premium
account - - - 16,170 16,170 16,170 16,170
Revaluation
reserve (249) 424 199 (386) (12) 360 815
Capital
reserve --
realised - (1,033) (1,221) 2 (2,252) (2,253) (2,252)
Revenue
reserve 100 376 929 (1,011) 394 364 438
Total equity
shareholders'
funds - 5,816 20,626 14,788 41,230 46,335 43,685
Basic and
diluted net
asset value
per:
'D' Share - 23.9p -
'E' Share - 0.1p -
'F' Share 53.8p 70.0p 69.6p
'G' Share 81.4p 82.5p 82.1p
'K' Share 94.1p 98.4p 97.7p
STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2018
Called Capital Share Capital
up redemption Special Premium Revaluation reserve Revenue
share capital Reserve Reserve Reserve reserve realised reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January
2017 95 106 33,666 16,170 (115) (2,254) 289 47,957
Total comprehensive
income - - - - 388 306 618 1,312
Transactions
with owners
Purchase
of own shares - - - - - - (24) (24)
Issue of
new shares - - - - - - - -
Share issue
costs - - - - - - - -
Transfer
between
reserves - - (5,353) - 542 5,256 (445) -
Dividends
paid - - - - - (5,560) - (5,560)
Cancellation
of shares (18) 18 - - - - - -
At 31 December
2017 77 124 28,313 16,170 815 (2,252) 438 43,685
Total comprehensive
income - - - - (832) 708 372 248
Transaction
with owners
Purchase
of own shares - - - - - - (16) (16)
Transfer
between reserves - - (1,584) - 5 1,579 - -
Dividends
paid - - - - - (2,287) (400) (2,687)
Cancellation
of shares - - - - - - -
-----
At 30 June
2018 77 124 26,729 16,170 (12) (2,252) 394 41,230
===========
INCOME STATEMENT
for the six months ended 30 June 2018
Company Total
Year
ended
Six months ended Six months ended 31 Dec
30 Jun 2018 30 Jun 2017 2017
Revenue Capital Total Revenue Capital Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 948 - 948 719 34 753 1,808
Gains/(losses)
on investments
- realised - 708 708 - 67 67 272
- unrealised - (832) (832) - 455 455 388
948 (124) 824 719 556 1,275 2,468
Investment
management
fees (383) - (383) (445) - (445) (886)
Other expenses (138) - (138) (150) - (150) (282)
Return/(loss)
on ordinary
activities
before
taxation 427 (124) 303 124 556 680 1,300
Tax on total
comprehensive
income and
ordinary
activities (55) - (55) (24) - (24) 12
Return/(loss)
attributable
to equity
shareholders 372 (124) 248 100 556 656 1,312
=======
Return per 'D'
Share - - - (0.2p) 1.0p 0.8p 0.9p
Return per 'E'
Share - - - - - - -
Return per 'F'
Share 0.2p 3.0p 3.2p 0.8p 1.9p 2.7p 4.9p
Return per 'G'
Share 1.9p (0.1p) 1.8p 0.6p 0.9p 1.5p 3.6p
Return per 'K'
Share (0.9p) (2.7p) (3.6p) (1.2p) 0.2p (1.0p) (1.3p)
INCOME STATEMENT
for the six months ended 30 June 2018
Year
ended
Six months ended Six months ended 31 Dec
'D' Shares 30 Jun 2018 30 Jun 2017 2017
Revenue Capital Total Revenue Capital Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income - - - 9 34 43 46
Gains/(losses)
on investments
- realised - - - - 68 68 58
- unrealised - - - - (4) (4) -
- - - 9 98 107 104
Investment
management
fees - - - (19) - (19) (32)
Other expenses - - - (15) - (15) (25)
(Loss)/return
on ordinary
activities
before
taxation - - - (25) 98 73 47
Tax on total
comprehensive
income and
ordinary
activities - - - 5 - 5 43
(Loss)/return
attributable
to equity
shareholders - - - (20) 98 78 90
======= ======= ======= ==== ==== === ===== =======
INCOME STATEMENT
for the six months ended 30 June 2018
Year
ended
Six months ended Six months ended 31 Dec
'F' Shares 30 Jun 2018 30 Jun 2017 2017
Revenue Capital Total Revenue Capital Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 118 - 118 222 - 222 451
Gains on
investments
- realised - 220 220 - - - 214
- unrealised - 104 104 - 205 205 132
118 324 442 222 205 427 797
Investment
management
fees (58) - (58) (68) - (68) (137)
Other expenses (39) - (39) (43) - (43) (77)
Return on
ordinary
activities
before
taxation 21 324 345 111 205 316 583
Tax on total
comprehensive
income and
ordinary
activities (1) - (1) (22) - (22) (55)
Return
attributable
to equity
shareholders 20 324 344 89 205 294 528
===== ======== ===== ==== === ======= ======== =======
INCOME STATEMENT
for the six months ended 30 June 2018
Year
ended
Six months ended Six months ended 31 Dec
'G' Shares 30 Jun 2018 30 Jun 2017 2017
Revenue Capital Total Revenue Capital Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 778 - 778 451 - 451 1,217
Gains/(losses)
on investments
- realised - 488 488 - - - -
- unrealised - (508) (508) - 229 229 215
778 (20) 758 451 229 680 1,432
Investment
management
fees (200) - (200) (207) - (207) (415)
Other expenses (56) - (56) (53) - (53) (108)
Return/(loss)
on ordinary
activities
before
taxation 522 (20) 502 191 229 420 909
Tax on total
comprehensive
income and
ordinary
activities (33) - (33) (37) - (37) (3)
Return/(loss)
attributable
to equity
shareholders 489 (20) 469 154 229 383 906
=======
INCOME STATEMENT
for the six months ended 30 June 2018
Year
ended
Six months ended Six months ended 31 Dec
'K' Shares 30 Jun 2018 30 Jun 2017 2017
Revenue Capital Total Revenue Capital Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 52 - 52 37 - 37 94
(Losses)/gains
on investments
- realised - - - - (1) (1) -
- unrealised - (428) (428) - 25 25 41
52 (428) (376) 37 24 61 135
Investment
management
fees (125) - (125) (151) - (151) (302)
Other expenses (43) - (43) (39) - (39) (72)
(Loss)/gain on
ordinary
activities
before
taxation (116) (428) (544) (153) 24 (129) (239)
Tax on total
comprehensive
income and
ordinary
activities (21) - (21) 30 - 30 27
(Loss)/gain
attributable to
equity
shareholders (137) (428) (565) (123) 24 (99) (212)
===== ====== ===== ===== ==== === ===== =======
UNAUDITED CASH FLOW STATEMENT
for the six months ended 30 June 2018
30 31
Jun Dec
30 Jun 2018 2017 2017
'D' 'F' 'G' 'K'
Shares Shares Shares Shares Total Total Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Net cash inflow/(outflow)
from operating
activities 1 (10) 76 335 (177) 224 (36) 168
Cash flows from
investing activities
Purchase of
investments - - - - - (1,972) (8,904)
Sale of investments - 1,188 2,634 - 3,822 2,806 11,448
---------
Net cash inflow
from
investing activities - 1,188 2,634 - 3,822 834 2,544
---------
Net cash inflow/(outflow)
before financing
activities
before investing
activities (10) 1,264 2,969 (177) 4,046 798 2,712
Cash flows from
financing activities
Equity dividend
paid - (2,054) (633) - (2,687) (2,253) (5,560)
Purchase of
own shares - - - (16) (16) (25) (24)
--------- ---------
Net cash outflow
from
financing activities - (2,054) (633) (16) (2,703) (2,278) (5,584)
---------
(Decrease)/increase
in cash 2 (10) (790) 2,336 (193) 1,343 (1,480) (2,872)
NOTES TO THE UNAUDITED CASH FLOW STATEMENT
for the six months ended 30 June 2018
30 Jun 31 Dec
30 Jun 2018 2017 2017
'D' 'F' 'G' 'K'
Shares Shares Shares Shares Total Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
1 Cash inflow/(outflow) from operating activities
Return/loss) on ordinary
activities before taxation - 345 502 (544 ) 303 680 1,300
Corporation tax - - - (29) (29) - 4
(Gains)/losses on investments - (324) 20 428 124 (522) (660)
Decrease/(increase) in other
debtors - 84 (182) (30 ) (128) (157) (453)
(Decrease)/increase in other
creditors (10) (29) (5) (2 ) (46) (37) (23)
Net cash inflow/(outflow) from
operating activities (10) 76 335 (177 ) 224 (36) 168
==== ====== ====== ====== ====== ====== ======
2 Analysis of net funds
Beginning of period 22 2,079 516 2,972 5,589 8,461 8,461
Net cash (outflow)/inflow (10) (790) 2,336 (193) 1,343 (1,480) (2,872)
End of period 12 1,289 2,852 2,779 6,932 6,981 5,589
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
1. General information
Downing TWO 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. Accounting policies - Basis of accounting
The unaudited half-yearly results cover the six months to 30 June 2018
and have been prepared in accordance with the Statement of Recommended
Practice "Financial Statements of Investment Trust Companies and Venture
Capital Trusts" revised January 2009 and in accordance with the
accounting policies set out in the statutory accounts for the year ended
31 December 2017, which were prepared 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 ("FRS102").
3. All revenue and capital items in the Income Statement derive from
continuing operations.
4. The Company has only one class of business and derives its income
from investments made in shares, securities and bank deposits.
5. The comparative figures are in respect of the six month period ended
30 June 2017 and the year ended 31 December 2017 respectively.
6. Dividends
Six months ended Year to
30 June 2018 31 Dec 2017
Per share Revenue Capital Total Total
Paid in
period pence GBP'000 GBP'000 GBP'000 GBP'000
'D' Shares
Special 'D'
2017 23.88p - - - 2,388
Special 'E'
2017 0.1p - - - 15
Y/e Dec 2016
Final 13.5p - - - 1,350
- - - 3,753
========= ======= ======= ============
'F' Shares
Y/E Dec 2017
Final 19.0p - 2,054 2,054 -
Y/E Dec 2016
Final 2.5p - - - 271
Y/E Dec 2016
Interim 2.5p - - - 270
- 2,054 2,054 541
========= ======= ======= ============
'G' Shares
Y/E Dec 2017
Final 2.5p 400 233 633 -
Y/E Dec 2016
Final 2.5p - - - 634
Y/E Dec 2016
Interim 2.5p - - - 632
400 233 633 1,266
========= ======= ======= ============
No dividends have been paid or declared in respect of the 'K' Shares.
7. Basic and diluted return per share
Weighted average
number of Revenue Capital
shares in issue return/(loss) return/(loss)
GBP'000 Per share GBP'000 Per share
'D'
Shares 10,000,000 - - - -
'E'
Shares 14,950,000 - - - -
'F'
Shares 10,810,859 20 0.2p 324 3.0p
'G'
Shares 25,528,664 489 1.9p (20) (0.1p)
'K'
Shares 15,717,302 (137) (0.9p) (428) (2.7p)
372 (124)
8. Net asset value per share
Shares in issue Net asset value
Per
GBP'000 share
'D' Shares 10,000,000 - -
'E' Shares 14,950,000 - -
'F' Shares 10,810,859 5,816 53.8p
'G' Shares 25,328,571 20,626 81.4p
'K' Shares 15,718,154 14,788 94.1p
---------
41,230
=========
9. Reserves
Period ended Year ended
30 Jun 2018 31 Dec 2017
GBP'000 GBP'000
Capital redemption reserve 124 124
Special reserve 26,729 28,313
Share premium reserve 16,170 16,170
Revaluation reserve (12) 815
Capital reserve - realised (2,252) (2,252)
Revenue reserve 394 438
41,153 43,608
============ ============
The Special reserve, Capital reserve - realised and Revenue reserve are
all distributable reserves. The Revaluation reserve includes losses of
GBP1,827,000 which are included in the calculation of distributable
reserves. Total distributable reserves are GBP23,044,000 (31 Dec 2017:
GBP25,698,000).
10. The fair value of investments is determined using the detailed
accounting policy set out in the statutory accounts for the year ended
31 December 2017.
The Company has categorised its financial instruments using the fair
value hierarchy as follows:
Level 1 Reflects financial instruments quoted in an active market;
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 (unquoted equity investments and loan note
investments).
Period Year
ended ended
30 June Level Level 31 Dec
Level 1 Level 2 Level 3 2018 1 2 Level 3 2017
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Loan
notes - - 5,965 5,965 - - 6,907 6,907
Unquoted
equity - - 27,875 27,875 - - 30,879 30,879
- - 33,840 33,840 - - 37,786 37,786
========= ========= ========= ======== ========= ======= ========= =======
11. The unaudited condensed 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 December 2017 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. The Directors confirm that, to the best of their knowledge, the
half-yearly financial statements have been prepared in accordance with
the "Statement: Half-Yearly Financial Reports" issued by the UK
Accounting Standards Board as well as in accordance with FRS 104 Interim
Financial Reporting and the half-yearly financial report includes a fair
review of the information required by:
a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an
indication of important events that have occurred during the first six
months of the financial year and their impact on the condensed set of
financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the year; and
b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related
party transactions that have taken place in the first six months of the
current financial year and that have materially affected the financial
position or performance of the entity during that period, and any changes in the related party transactions described in the last annual report that could do so. 13. Risks and uncertainties Under the Disclosure and Transparency Directive, the Board is required, in the Company's half-yearly results, to report on principal risks and uncertainties facing the Company over the remainder of the financial year. The Board concluded that the key risks facing the Company over the remainder of the financial period are as follows: (i) Compliance risk of failure to maintain approval as a VCT; 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 Manager, who reports regularly to the Board on the current position. The Company has also reappointed Philip Hare and 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. The Manager follows a rigorous process in vetting and carefully structuring new investments, including taking a charge over the assets of the business wherever possible and, after an investment is made, closely monitoring the business. The Board is satisfied that these approaches provide satisfactory management of the key risks. 14. Going concern The Directors have reviewed the Company's financial resources at the period end and conclude that the Company is well placed to manage its business risks. The Board confirms that it is satisfied that the Company has adequate resources to continue in business for the foreseeable future. For this reason, the Board believes that the Company continues to be a going concern and that it is appropriate to apply the going concern basis in preparing the financial statements. 15. Copies of the unaudited half-yearly report will be sent to Shareholders shortly. Further copies can be obtained from the Company's registered office or will be available for download from www.downing.co.uk.
(END) Dow Jones Newswires
September 27, 2018 11:09 ET (15:09 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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