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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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Downing TWO VCT plc
Half-Yearly Report
for the six months ended 30 June 2017
Performance summary
30 Jun 31 Dec 30 Jun
'D' Share pool 2017 2016 2016
Pence Pence Pence
Net asset value per 'D' Share 23.9 36.6 34.8
Net asset value per 'E' Share 0.1 0.1 0.1
Cumulative distributions per 'D' Share 80.0 66.5 66.5
Total return per 'D' Share and 'E' Share 104.0 103.2 101.4
30 Jun 31 Dec 30 Jun
'F' Share pool 2017 2016 2016
Pence Pence Pence
Net asset value per 'F' Share 70.0 69.7 70.0
Cumulative distributions per 'F' Share 27.5 25.0 22.5
Total return per 'F' Share 97.5 94.7 92.5
30 Jun 31 Dec 30 Jun
'G' Share pool 2017 2016 2016
Pence Pence Pence
Net asset value per 'G' Share 82.5 83.5 85.4
Cumulative distributions per 'G' Share 22.5 20.0 17.5
Total return per 'G' Share 105.0 103.5 102.9
30 Jun 31 Dec 30 Jun
'K' Share pool 2017 2016 2016
Pence Pence Pence
Net asset value per 'K' Share 98.4 99.0 99.7
CHAIRMAN'S STATEMENT
Introduction
I am pleased to present the Half-Yearly Report for the six months ended
30 June 2017. 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, with all the mature share pools
seeing an increase in their total return.
Net asset values and overview
'D' Share pool
The 'D' Share pool is now in the process of exiting from its
investments.
At 30 June 2017, the net asset value ("NAV") for a combined holding of
one 'D' Share and one 'E' Share was 24.0p. Total Return (NAV plus
dividends paid to date) is now 104.0p for a combined holding, compared
to the original cost, net of income tax relief, of 70p per share.
Total dividends of 80p per combined share have been paid to date. The
Manager is optimistic that one final dividend can be paid before the end
of the year to bring the share pool to a close.
'F' Share pool
The 'F' Share pool launched in 2012 and is scheduled to start exiting
from investments in early 2018.
At 30 June 2017, the net asset value ("NAV") for a holding of one 'F'
Share was 70.0p, an increase of 2.8p (4.0%) over the period. Total
Return (NAV plus dividends paid to date) is now 97.5p for a combined
holding, compared to the original cost, net of income tax relief, of 70p
per share.
The Manager anticipates that the first major distribution will be paid
in the first quarter of 2018.
'G' Share pool
The 'G' Share pool raised funds in 2013 and has completed its initial
investment phase. The target date to start realising investments is late
2018.
At 30 June 2017, the net asset value ("NAV") for a holding of one 'G'
Share was 82.5p which represents a net increase of 1.5p (1.8%) over the
period after adjusting for the dividends paid out. Total Return (NAV
plus dividends paid to date) is now 105.0p, compared to the initial NAV,
before income tax relief, of 100.0p.
'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 2017, the net asset value ("NAV") and total return for a
holding of one 'K' Share was 98.4p which represents a net decrease of
0.6p (0.6%) over the period, compared to the initial NAV of 100.0p. This
deficit arises from that fact that initially the share pool holds funds
awaiting investment in cash which generates very little yield. As the
portfolio is developed this effect will diminish.
The Investment Manager's Report below will provide more detail on each
of the share pools.
Dividends
In line with the Company's stated policies, interim dividends will be
paid as follows:
'F' Shares 2.5p per share
'G' Shares 2.5p per share
Each of the above dividends will be paid on 15 December 2017 to
Shareholders on the register at 24 November 2017.
No interim dividend is being declared in respect of the 'D' Shares as
additional dividends will be declared once further investment
realisations have been completed. No dividend is being declared in
respect of the 'K' Share pool as the VCT regulations effectively
prohibit dividends at this early 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. As a result, the Company will
currently buy 'G' Shares and '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.
During the period to 30 June 2017, the Company repurchased and
subsequently cancelled 24,000 'G' Shares for an aggregate consideration
of GBP20,040, being an average price of 83.5p per 'G' Share.
No share buybacks in respect of any other share classes were undertaken
during the period.
Outlook
The Manager will be engaged in a number of different activities for each
of the share pools over the remainder of the year. We hope to see the
'D' Share come to the end of its life with a final dividend and expect
preparations for investment realisations in the 'F' Share pool to
advance significantly. The 'G' Share pool is expected to have limited
investment activity over the remainder of the year while the Manager
focuses on the existing portfolio, but we expect to see a number of new
additions to the 'K' Share portfolio as the funds raised continue to be
employed.
Shareholders may be aware of the "Patient Capital Review" currently
being undertaken by the Government which is seeking to strengthen the UK
as a place for growing innovative businesses. It is possible that this
review could result in some changes to the VCT regulations and the
associated tax reliefs. We expect that any planned changes will be
announced in the Budget in November. The Board and Manager are closely
monitoring developments and we will communicate with Shareholders if we
believe there are any changes which could have a significant impact on
Shareholders' investments.
In addition to any communications in connection with the above, I will
update all Shareholders in my statement in the next Annual Report, and I
also expect to write separately to 'D' Shareholders as and when there is
news of a final distribution.
Hugh Gillespie
Chairman
INVESTMENT MANAGER'S REPORT
'D' SHARE POOL
The 'D' Share pool is in the process of realising its investments in
order to return funds to 'D' Shareholders. Progress has continued
through the period and we are optimistic it will be completed in the
near future.
Investment activity
During the period under review, there was one partial disposal of
GBP245,000 in Mosaic Spa and Health Clubs Limited. This represented a
gain of GBP68,000 against the previous carrying value. Further proceeds
for this investment are expected in due course at which point the
company will be fully exited from the pool.
At 30 June 2017, the pool held seven investments with a valuation of
GBP2.2 million. Three small valuation changes were made at the period
end resulting in a total valuation reduction of GBP4,000. The carrying
values adopted at the end of the period are consistent with the values
at which we believe the investments can be exited.
Realisation plans
The pools most significant holding is in Gara Rock Resort Limited,
formerly Aminghurst Limited. We are pleased to report that we have
recently exchanged contracts for the sale of the investment and expect
this transaction to complete shortly.
Of the remaining six investments Avon Solar Energy Limited and
Westcountry Solar Solutions Limited are expected to exit in the next two
months. Mosaic Spa and Health Clubs Limited has partially exited in the
period and we are exploring options to facilitate a complete exit for
the share pool. No further proceeds are expected from Quadrate Spa
Limited or Future Biogas (Reepham Road) Limited.
Net asset value and results
At 30 June 2017, the net asset value ("NAV") for a combined holding of
one 'D' Share and one 'E' Share was 24.0p. Total Return (NAV plus
dividends paid to date) is now 104.0p for a combined holding.
The profit on ordinary activities for the 'D' Shares, after taxation,
for the period was GBP78,000, comprising a revenue loss of GBP20,000 and
a capital profit of GBP98,000.
Outlook
The end of the task of realising all the share pool's investments is now
in sight. The exact timing is dependent on transactions involving third
parties so is somewhat uncertain, however we anticipate that the pool
should be able to make one final payment before the end of the year.
Downing LLP
SUMMARY OF INVESTMENT PORTFOLIO
'D' SHARE POOL
as at 30 June 2017
Unrealised gain/ % of portfolio by
Cost Valuation (loss) in period value
GBP'000 GBP'000 GBP'000
VCT qualifying and
partially
qualifying
investments
Avon Solar Energy
Limited 210 252 12 10.2%
Westcountry Solar
Solutions
Limited 250 216 (34) 8.8%
Mosaic Spa and
Health Clubs
Limited* 325 123 - 5.0%
Quadrate Spa
Limited 144 - - 0.0%
Non-qualifying
investments
Gara Rock Resort
Limited 1,322 1,322 - 53.6%
Fenkle Street LLP 122 287 18 11.6%
Future Biogas
(Reepham Road)
Limited 320 - - 0.0%
2,693 2,200 (4) 89.2%
Cash at bank and
in hand 266 10.8%
Total 2,466 100%
* Partially qualifying investment
SUMMARY OF INVESTMENT MOVEMENTS
'D' SHARE POOL
for the six months ended 30 June 2017
Total
Market value Disposal Gain against realised
Disposals Cost at 01/01/17 proceeds cost gain
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Mosaic Spa
and Health
Clubs
Limited 196 177 245 49 68
196 177 245 49 68
* Adjusted for additions made in the period
INVESTMENT MANAGER'S REPORT
'F' SHARE POOL
The 'F' Share pool is fully invested in a portfolio focussed on asset
backed businesses and those with predictable revenue streams. Planning
has begun in respect of the process to realise investments and start
returning funds to Shareholders which can commence early in 2018.
Investment activity
With the pool being fully invested, no new investments were made in the
period although one follow-on investment of GBP194,000 was made in
Goonhilly Earth Station Limited, where further funding was required.
Funds had previously been invested in two companies, Morava Limited and
Brownfields Trading Limited to explore business opportunities in
specific sectors. In the event both companies were unable to find
suitable opportunities, the GBP275,000 of funds invested were returned
to the Share pool.
One partial divestment took place in the period being the part repayment
of a non-qualifying loan to Gara Rock Resort Limited, formerly
Aminghurst Limited, which generated proceeds of GBP95,000.
The majority of investments remain valued at or above cost and there
were several valuation movements in the period.
Merlin Renewables Limited, the anaerobic digestion plant in Norfolk
continues to perform well and the valuation was increased by GBP67,000.
Vulcan Renewables Limited has been sold after the period and the
increase in value of GBP66,000 reflected expected sales proceeds minus a
discount for execution risk. The sale subsequently completed at a higher
value than shown overleaf.
An uplift of GBP39,000 was recognised in the period on Fresh Green Power
Limited. The domestic rooftop solar company is generating profits in
line with our expectations and we are now exploring options to sell the
investment.
The valuation of Lambridge Solar Limited, the owner of commercial solar
arrays in Lincolnshire, has been increased by GBP26,000 as it continues
to perform well.
Atlantic Dogstar Limited continues to perform to plan and a small
valuation uplift of GBP7,000 has been recognised in the period.
Net asset value, results and dividend
At 30 June 2017, the net asset value ("NAV") for a holding of one 'F'
Share was 70.0p, an increase of 2.8p (4.0%) over the period. Total
Return (NAV plus dividends paid to date) is now 97.5p for a combined
holding.
The gain on ordinary activities for the 'F' Shares, after taxation, for
the period was GBP294,000, comprising a revenue profit of GBP89,000 and
a capital gain of GBP205,000.
The Company will pay an interim dividend of 2.5p per 'F' Share, on 15
December 2017 to 'F' Shareholders on the register at 24 November 2017.
Outlook
The focus now for the 'F' Share portfolio is shifting towards planning
for exits. Good progress is being made and we anticipate that the first
major distribution will be paid in the first quarter of 2018.
Downing LLP
SUMMARY OF INVESTMENT PORTFOLIO
'F' SHARE POOL
as at 30 June 2017
Unrealised gain in % of portfolio by
Cost Valuation period value
GBP'000 GBP'000 GBP'000
VCT qualifying and
partially
qualifying
investments
Apex Energy
Limited 1,000 1,000 - 13.4%
Goonhilly Earth
Station Limited 954 954 - 12.8%
Vulcan Renewables
Limited 653 844 66 11.3%
Merlin Renewables
Limited 500 642 67 8.6%
Lambridge Solar
Limited 500 595 26 8.0%
Pearce and
Saunders Limited 497 497 - 6.6%
Augusta Pub
Company Limited 290 349 - 4.7%
Vectis Alpha
Limited 300 300 - 4.0%
Fresh Green Power
Limited 200 239 39 3.2%
Pabulum Pubs
Limited 200 237 - 3.2%
Atlantic Dogstar
Limited 200 234 7 3.2%
City Falkirk
Limited 422 177 - 2.4%
Fubar Stirling
Limited 268 169 - 2.3%
Rhodes Solutions
Limited 125 125 - 1.7%
Green Energy
Production UK
Limited 100 100 - 1.3%
Cheers Dumbarton
Limited 48 17 - 0.2%
Lochrise Limited 13 - - 0.0%
Non-qualifying
investments
Baron House
Developments
Limited 481 481 - 6.5%
Gara Rock Resort
Limited 163 163 - 2.2%
London City
Shopping Centre
Limited 66 66 - 0.9%
Pearce and
Saunders DevCo
Limited 46 46 - 0.6%
7,026 7,235 205 97.1%
Cash at bank and
in hand 218 2.9%
Total 7,453 100.0%
* Partially qualifying investment
SUMMARY OF INVESTMENT MOVEMENTS
'F' SHARE POOL
as at 30 June 2017
Additions GBP'000
Goonhilly Earth Station Limited 194
Total 194
Total
Market value Disposal Gain against realised
Disposals Cost at 01/01/17 proceeds cost gain
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Brownfields
Trading
Limited 150 150 150 - -
Morava
Limited 125 125 125 - -
Gara Rock
Resort
Limited 95 95 95 - -
370 370 370 - -
* adjusted for purchases made in the period
INVESTMENT MANAGER'S REPORT
'G' SHARE POOL
The 'G' Share pool raised funds in 2013 the task of building the initial
VCT qualifying portfolio is now complete.
Investment activity
No new investments were made in the period and one follow-on investment
of GBP436,000 was made in Goonhilly Earth Station Limited, where further
funding was required.
In the period, proceeds of GBP92,000 were received from the repayment in
full of a loan to Craft Beer Pub Co Limited.
The majority of investments remain valued at or above cost and there
were three valuation uplifts in the period totalling a gain of
GBP229,000.
Atlantic Dogstar Limited continues to perform to plan and a valuation
uplift of GBP133,000 has been recognised in the period.
The Antelope Pub Limited owns a pub of the same name in Tooting which
continues to trade well and ahead of budget resulting in an increase in
value of GBP82,000 being recognised in the period.
Ormsborough Limited owns several pubs and restaurants in Yorkshire with
some trading well and others are under construction. Overall performance
of the group has been good resulting in an uplift in valuation of
GBP14,000.
Net asset value
At 30 June 2017, the net asset value ("NAV") for a holding of one 'G'
Share was 82.5p which represents a net increase of 1.5p (1.8%) over the
period after adjusting for the dividends paid out. Total Return (NAV
plus dividends paid to date) is now 105.0p.
Results and dividend
The profit on ordinary activities for the 'G' Shares, after taxation,
for the period was GBP383,000, comprising a revenue profit of GBP154,000
and a capital profit of GBP229,000.
The Company will pay an interim dividend of 2.5p per 'G' Share, on 15
December 2017 to 'G' Shareholders on the register at 24 November 2017.
Outlook
The focus for the 'G' Share pool is on close monitoring and support of
the portfolio companies in order to nurture growth before the
commencement of the exit process expected in early 2019.
Downing LLP
SUMMARY OF INVESTMENT PORTFOLIO
'G' SHARE POOL
as at 30 June 2016
Unrealised gain/ % of portfolio by
Cost Valuation (loss) in period value
GBP'000 GBP'000 GBP'000
VCT qualifying and
partially
qualifying
investments
Atlantic Dogstar
Limited 3,500 4,113 133 19.7%
Goonhilly Earth
Station Limited 2,146 2,146 - 10.3%
Antelope Pub
Limited 1,760 1,842 82 8.8%
Quadrate Catering
Limited 1,450 1,450 - 6.9%
Walworth House Pub
Limited 1,330 1,330 - 6.4%
Apex Energy
Limited 1,300 1,300 - 6.2%
Hermes Renewables
Limited 1,000 1,000 - 4.8%
Zora Energy
Limited 750 750 - 3.6%
Augusta Pub
Company Limited 580 697 - 3.3%
Ormsborough
Limited 500 523 14 2.5%
Pabulum Pubs
Limited 400 475 - 2.3%
Oak Grove
Renewables
Limited 420 231 - 1.1%
Non-qualifying
investments
Quadrate Spa
Limited 1,450 1,450 - 6.9%
Hedderwick Limited 1,250 1,250 - 6.0%
Baron House
Developments LLP 1,093 1,093 - 5.2%
Gara Rock Resort
Limited 801 801 - 3.8%
Pearce and
Saunders Limited 193 193 - 0.9%
London City
Shopping Centre
Limited 110 110 - 0.5%
20,033 20,754 229 99.3%
Cash at bank and
in hand 158 0.7%
Total 20,912 100%
SUMMARY OF INVESTMENT MOVEMENTS
'G' SHARE POOL
as at 30 June 2017
Additions GBP'000
Goonhilly Earth Station Limited 436
Total 436
Total
Market value Disposal Gain against realised
Disposals Cost at 01/01/17 proceeds cost gain
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Craft Beer
Pub Co
Limited 92 92 92 - -
92 92 92 - -
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 GBP9.2 million invested in qualifying investments.
Investment activity
During the last six months, three new qualifying investments have been
made totalling GBP1.3 million as we continue to build the qualifying
portfolio of the 'K' Share pool.
The qualifying investments include a GBP900,000 investment into
Ormsborough Limited. The company owns several pubs and restaurants
across Yorkshire and this investment supported their continued
expansion.
GBP432,000 was invested in Pilgrim Trading Limited. The company acquired
two sites to be converted in to children's nurseries, one of which has
recently been opened in Twickenham and the other is in the planning
stage.
A GBP10,000 investment was made in Exclusive Events Venues Limited to
pay a deposit to secure a site in Chester that will be used exclusively
as a wedding venue. Since the period end, following a successful
planning application, a further investment has been made to acquire and
develop the site.
Funds had previously been invested in two companies, Morava Limited and
Brownfields Trading Limited to explore business opportunities in
specific sectors. In the event both companies were unable to find
suitable opportunities, the GBP2.1 million of funds invested were
returned to the Share pool. There were no other disposals in the period.
One valuation adjustment was made in the period on Ormsborough Limited
following good overall performance of the group which resulted in an
uplift in valuation of GBP25,000.
Net asset value, results and dividend
At 30 June 2017, the net asset value ("NAV") and total return for a
holding of one 'K' Share was 98.4p which represents a net decrease of
0.6p (0.6%) over the period.
The loss on ordinary activities for the 'K' Shares, after taxation, for
the period was GBP99,000, comprising a revenue loss of GBP123,000 and a
capital profit of GBP24,000.
Outlook
Over the remainder of the year, we will continue to pursue investment
opportunities in order to add to the investment portfolio. We are
satisfied with progress to date but there is a significant level of
funds still to invest before the task of building the portfolio is
complete.
Downing LLP
SUMMARY OF INVESTMENT MOVEMENTS
'K' SHARE POOL
as at 30 June 2017
Unrealised gain/ % of portfolio by
Cost Valuation (loss) in period value
GBP'000 GBP'000 GBP'000
VCT qualifying
investments
Jito Trading
Limited 1,500 1,500 - 9.7%
Yamuna Renewables
Limited 1,300 1,300 - 8.4%
Rhodes Solutions
Limited 1,250 1,250 - 8.1%
Vectis Alpha
Limited 1,000 1,000 - 6.4%
Ormsborough Limited 900 925 25 6.0%
Ironhide Generation
Limited 736 736 - 4.7%
Indigo Generation
Limited 736 736 - 4.7%
Rockhopper
Renewables
Limited 591 591 - 3.8%
Pilgrim Trading
Limited 432 432 - 2.8%
Zora Energy
Renewables
Limited 350 350 - 2.2%
SF Renewables
(Solar) Limited 337 337 - 2.2%
Exclusive Events
Venues Limited 10 10 - 0.1%
9,142 9,167 25 59.1%
Cash at bank and in
hand 6,339 40.9%
Total 15,506 100%
SUMMARY OF INVESTMENT MOVEMENTS
'K' SHARE POOL
as at 30 June 2017
Additions GBP'000
Ormsborough Limited 900
Pilgrim Trading Limited 432
Exclusive Events Venues Limited 10
Total 1,342
Total
Market value Disposal Gain against realised
Disposals Cost at 01/01/17 proceeds cost gain
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Morava
Limited 1,100 1,100 1,099 (1) (1)
Brownfields
Trading
Limited 1,000 1,000 1,000 - -
2,100 2,100 2,099 (1) (1)
UNAUDITED SUMMARISED BALANCE SHEET
as at 30 June 2017
*
30 Jun 31 Dec
30 Jun 2017 2016 2016
'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 2,200 7,235 20,754 9,167 39,356 40,497 39,670
Current assets
Debtors 3 185 269 17 474 484 312
Cash at bank
and in hand 266 218 158 6,339 6,981 5,307 8,461
269 403 427 6,356 7,455 5,791 8,773
Creditors:
amounts
falling due
within one
year (78) (76) (281) (41) (476) (1,593) (486)
Net current
assets 191 327 146 6,315 6,979 4,198 8,287
Net assets 2,391 7,562 20,900 15,482 46,335 44,695 47,957
Capital and
reserves
Called up
share
capital 25 11 25 16 77 91 95
Capital
redemption
reserve 124 - - - 124 106 106
Special
reserve 2,312 8,110 21,073 (2) 31,493 35,072 33,666
Share premium
account - - - 16,170 16,170 12,237 16,170
Revaluation
reserve (597) 211 721 25 360 (1,366) (115)
Capital
reserve -
realised - (1,033) (1,221) 1 (2,253) (2,254) (2,254)
Revenue
reserve 527 263 302 (728) 364 809 289
Total equity
shareholders' 2,391 7,562 20,900 15,482 46,335 44,695 47,957
funds
Basic and
diluted net
asset value
per:
'C' Share - - -
'A' Share - - -
'D' Share 23.9p 34.8p 36.6p
'E' Share 0.1p 0.1p 0.1p
'F' Share 70.0p 70.0p 69.7p
'G' Share 82.5p 85.4p 83.5p
'K' Share 98.4p 99.7p 99.0p
* The comparative Balance Sheet at 30 June 2016 and 31 December 2016
includes the 'C' Share pool which has subsequently been cancelled.
STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2017
Called Capital Share
up redemption Special Premium Revaluation Capital 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
2016 79 106 40,086 - (1,248) (2,252) 1,962 38,733
Total
comprehensive
income - - - - 908 217 (280) 845
Transactions
with owners
Purchase of own
shares - - - - - - (36) (36)
Issue of new
shares 16 - - 16,170 - - - 16,186
Share issue
costs - - - - - - (448) (448)
Transfer
between
reserves - - (6,420) - 225 7,104 (909) -
Dividends paid - - - - - (7,323) - (7,323)
At 31 December
2016 95 106 33,666 16,170 (115) (2,254) 289 47,957
Total
comprehensive
income - - - - 455 101 100 656
Transaction
with owners
Purchase of own
shares - - - - - - (25) (25)
Transfer
between
reserves - - (2,173) - 20 2,153 - -
Dividends paid - - - - - (2,253) - (2,253)
Cancellation of
shares (18) 18 - - - - -
At 30 June 2017 77 124 31,493 16,170 360 (2,253) 364 46,335
INCOME STATEMENT
for the six months ended 30 June 2017
Company Total
Year
ended
Six months ended Six months ended 31 Dec
30 Jun 2017 30 Jun 2016* 2016
Revenue Capital Total Revenue Capital Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 719 34 753 634 - 634 1,046
Gains on
investments
- realised - 67 67 - 266 266 177
- unrealised - 455 455 - 109 109 908
719 556 1,275 634 375 1,009 1,085
Investment
management
fees (445) - (445) (409) - (409) (861)
Other expenses (150) - (150) (174) - (174) (308)
Return on
ordinary
activities
before
taxation 124 556 680 51 375 426 962
Tax on total
comprehensive
income and
ordinary
activities (24) - (24) - - - (117)
Return
attributable
to equity
shareholders 100 556 656 51 375 426 845
Return per 'C'
Share - - - (0.4p) - (0.4p) (0.4p)
Return per 'A'
Share - - - - - - -
Return per 'D'
Share (0.2p) 1.0p (0.8p) (0.4p) 0.5p 0.1p 1.7p
Return per 'E'
Share - - - - - - -
Return per 'F'
Share 0.8p 1.9p 2.7p 0.5p 0.2p 0.7p 2.8p
Return per 'G'
Share 0.6p 0.9p 1.5p 0.4p 1.2p 1.6p 2.2p
Return per 'K'
Share (1.2p) 0.2p (1.0p) (0.4p) - (0.4p) (1.4p)
* The comparative Income Statement as at 30 June 2016 and 31 December
2016 includes the 'C' Share Pool which has subsequently been cancelled.
INCOME STATEMENT
for the six months ended 30 June 2017
Year
ended
Six months ended Six months ended 31 Dec
'D' Shares 30 Jun 2017 30 Jun 2016 2016
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 (14) - (14) 90
Gains/(losses)
on investments
- realised - 68 68 - 109 109 167
- unrealised - (4) (4) - (58) (58) 27
9 98 107 (14) 51 37 284
Investment
management
fees (19) - (19) (27) - (27) (50)
Other expenses (15) - (15) (19) - (19) (34)
(Loss)/return
on ordinary
activities
before
taxation (25) 98 73 (60) 51 (9) 200
Tax on total
comprehensive
income and
ordinary
activities 5 - 5 18 - 18 (24)
Return/(loss)
attributable
to equity
shareholders (20) 98 78 (42) 51 9 176
INCOME STATEMENT
for the six months ended 30 June 2017
Year
ended
Six months ended Six months ended 31 Dec
'F' Shares 30 Jun 2017 30 Jun 2016 2016
Revenue Capital Total Revenue Capital Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 222 - 222 170 - 170 98
Gains/(losses)
on investments
- realised - - - - - - 5
- unrealised - 205 205 - 18 18 410
222 205 427 170 18 188 513
Investment
management
fees (68) - (68) (70) - (70) (138)
Other expenses (43) - (43) (40) - (40) (78)
Return on
ordinary
activities
before
taxation 111 205 316 60 18 78 297
Tax on total
comprehensive
income and
ordinary
activities (22) - (22) (9) - (9) 5
Return
attributable
to equity
shareholders 89 205 294 51 18 69 302
INCOME STATEMENT
for the six months ended 30 June 2017
Year
ended
Six months ended Six months ended 31 Dec
'G' Shares 30 Jun 2017 30 Jun 2016 2016
Revenue Capital Total Revenue Capital Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 451 - 451 413 - 413 780
Gains on
investments
- realised - - - - - - 4
- unrealised - 229 229 - 306 306 472
451 229 680 413 306 719 1,256
Investment
management
fees (207) - (207) (219) - (219) (436)
Other expenses (53) - (53) (70) - (70) (127)
Return on
ordinary
activities
before
taxation 191 229 420 124 306 430 693
Tax on total
comprehensive
income and
ordinary
activities (37) - (37) (24) - (24) (143)
Return
attributable
to equity
shareholders 154 229 383 100 306 406 550
INCOME STATEMENT
for the six months ended 30 June 2017
Year
ended
Six months ended Six months ended 31 Dec
'K' Shares 30 Jun 2017 30 Jun 2016 2016
Revenue Capital Total Revenue Capital Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 37 - 37 59 - 59 71
Gains on
investments
- realised - (1) (1) - - - -
- unrealised - 25 25 - - - -
37 24 61 59 - 59 71
Investment
management
fees (151) - (151) (84) - (84) (228)
Other expenses (39) - (39) (14) - (14) (36)
Loss on
ordinary
activities
before
taxation (153) 24 (129) (39) - (39) (193)
Tax on total
comprehensive
income and
ordinary
activities 30 - 30 8 - 8 39
Loss
attributable
to equity
shareholders (123) 24 (99) (31) - (31) (154)
UNAUDITED CASH FLOW STATEMENT
for the six months ended 30 June 2017
30 Jun 31 Dec
30 Jun 2017 2016 2016
'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 from operating
activities 1 2 (65) 191 (164) (36) 1,506 281
Cash flows from investing activities
Purchase of investments - (194) (436) (1,342) (1,972) (14,150) (17,080)
Sale of investments 245 370 92 2,099 2,806 5,394 9,860
Net cash inflow/(outflow) from investing activities 245 176 (344) 757 834 (8,756) (7,220)
Net cash inflow/(outflow) before financing activities
before financing activities 247 111 (153) 593 798 (7,250) (6,939)
Cash flows from financing
activities
Proceeds from share issue - - - - - 12,249 16,186
Share issue costs - - - - - - (294) (448)
Equity dividend paid (1,350) (270) (633) - (2,253) (6,419) (7,323)
Purchase of own shares - - (20) (5) (25) - (36)
Net cash (outflow)/inflow from financing activities (1,350) (270) (653) (5) (2,278) 5,536 8,379
(Decrease)/increase in cash 2 (1,103) (159) (806) 588 (1,480) (1,714) 1,440
NOTES TO THE UNAUDITED CASH FLOW STATEMENT
for the six months ended 30 June 2017
30 Jun 31 Dec
30 Jun 2017 2016 2016
'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 from operating activities
(Loss)/return on ordinary
activities before taxation 73 316 420 (129) 680 426 962
Corporation tax - - - - - 12 (224)
(Gains)/losses on investments (64) (205) (229) (24) (522) (375) (1,085)
Decrease/(increase) in other
debtors 3 (160) 14 (14) (157) 395 564
(Decrease)/increase in other
creditors (10) (16) (14) 3 (37) 1,048 64
Net cash inflow from operating
activities 2 (65) 191 (164) (36) 1,506 281
2 Analysis of net funds
Beginning of period 1,369 377 964 5,751 8,461 7,021 7,021
Net cash (outflow)/inflow (1,103) (159) (806) 588 (1,480) (1,714) 1,440
End of period 266 218 158 6,339 6,981 5,307 8,461
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 2017
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 2016, 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 2016 and the year ended 31 December 2016 respectively.
6. Dividends
Six months ended Year to
30 June 2017 31 Dec 2016
Per share Revenue Capital Total Total
Paid in period pence GBP'000 GBP'000 GBP'000 GBP'000
'C' Shares
Special 'C' 2016 30.6p - - - 2,182
Special 'A' 2016 15.2p - - - 1,632
- - - 3,814
'D' Shares
Y/E Dec 2016 Final 13.5p - 1,350 1,350 -
Y/E Dec 2015 Final 17.0p - - - 1,700
- 1,350 1,350 1,700
'F' Shares
Y/E Dec 2016 Final 2.5p - 270 270 -
Y/E Dec 2015 Final 2.5p - - - 270
Y/E Dec 2015 Interim 2.5p - - - 270
- 270 270 540
'G' Shares
Y/E Dec 2016 Final 2.5p - 633 633 -
Y/E Dec 2015 Final 2.5p - - - 634
Y/E Dec 2015 Interim 2.5p - - - 635
- 633 633 1,269
No dividends have been paid or declared in respect of the 'E' Shares or
'K' Shares.
7. Basic and diluted return per share
Weighted average
number of Revenue Capital
shares in issue return/(loss) return
GBP'000 Per share GBP'000 Per share
'D' Shares 10,000,000 (20) (0.2p) 98 1.0p
'E' Shares 14,950,000 - - - -
'F' Shares 10,810,859 89 0.8p 205 1.9p
'G' Shares 25,318,897 154 0.6p 229 0.9p
'K' Shares 15,734,402 (123) (1.2p) 24 0.2p
100 556
8. Net asset value per share
Shares in issue Net asset value
Per
GBP'000 share
'D' Shares 10,000,000 2,376 23.9p
'E' Shares 14,950,000 15 0.1p
'F' Shares 10,810,859 7,562 70.0p
'G' Shares 25,328,571 20,900 82.5p
'K' Shares 15,734,429 15,482 98.4p
46,335
9. Reserves
Period ended Year ended
30 Jun 2017 31 Dec 2016
GBP'000 GBP'000
Capital redemption reserve 124 106
Special reserve 31,493 33,666
Share premium reserve 16,170 16,170
Revaluation reserve 360 (115)
Capital reserve- realised (2,253) (2,254)
Revenue reserve 364 289
46,258 47,862
The Special reserve, Capital reserve - realised and Revenue reserve are
all distributable reserves. The Revaluation reserve includes losses of
GBP1,381,000 which are included in the calculation of distributable
reserves. Total distributable reserves are GBP28,223,000 (31 Dec 2016:
GBP30,323,000).
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 2016.
The Company has categorised its financial instruments using the fair
value hierarchy as follows:
Level a Reflects financial instruments quoted in an active market;
Level b Reflects financial instruments that have prices that are
observable either directly or indirectly; and
Level c i) Reflects financial instruments that use valuation techniques
that are based on observable market data.
ii) 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 a Level b Level c (ii) 2017 a b Level c (ii) 2016
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Loan
notes - - 9,914 9,914 - - 9,943 9,943
Unquoted
equity - - 29,442 29,442 - - 29,727 29,727
- - 39,356 39,356 - - 39,670 39,670
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 2016 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 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. 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.
This announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the information
contained therein.
Source: Downing TWO VCT plc via Globenewswire
(END) Dow Jones Newswires
September 28, 2017 11:21 ET (15:21 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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