TIDMDP2F 
 
 
   Downing TWO VCT plc 
 
   LEI: 213800HJGTPW7F8YEY55 
 
   Half-Yearly Report 
 
   for the six months ended 30 June 2020 
 
   Performance summary 
 
 
 
 
                                         30 Jun  31 Mar  31 Dec  30 Jun 
'F' Share pool                            2020    2020    2019    2019 
                                         Pence   Pence   Pence   Pence 
Net asset value per 'F' Share              18.8    21.6    24.7    30.6 
Cumulative distributions per 'F' Share     72.0    72.0    72.0    67.0 
                                         ------  ------  ------  ------ 
Total return per 'F' Share                 90.8    93.6    96.7    97.6 
                                         ======  ======  ======  ====== 
 
 
 
 
 
 
                                         30 Jun  31 Mar  31 Dec  30 Jun 
'G' Share pool                            2020    2020    2019    2019 
                                         Pence   Pence   Pence   Pence 
Net asset value per 'G' Share              34.1    36.0    48.1    63.2 
Cumulative distributions per 'G' Share     53.5    51.5    51.5    37.5 
                                         ------  ------  ------  ------ 
Total return per 'G' Share                 87.6    87.5    99.6   100.7 
                                         ======  ======  ======  ====== 
 
 
 
 
 
 
                                         30 Jun  31 Mar  31 Dec  30 Jun 
'K' Share pool                            2020    2020    2019    2019 
                                         Pence   Pence   Pence   Pence 
Net asset value per 'K' Share              36.6    50.3    58.2    72.9 
Cumulative distributions per 'K' Share      7.5       -       -       - 
                                         ------  ------  ------  ------ 
Total return per 'K' Share                 44.1    50.3    58.2    72.9 
                                         ======  ======  ======  ====== 
 
 
   Forthcoming dividends 
 
 
 
 
                                              'K' Shares 
Interim 2020 -- Payable 27 November 2020            2.5p 
 
 
   CHAIRMAN'S STATEMENT 
 
   Introduction 
 
   I present the Half-Yearly Report for the six months ended 30 June 2020. 
 
   As Shareholders will be aware, a number of the Company's portfolio 
businesses have faced some significant challenges over the last couple 
of years. With significant exposure to the hospitality sector, the 
coronavirus pandemic has unfortunately further impacted a number of the 
portfolio companies 
 
   The Company has three share pools, two of which are in process of 
realising investments and one which is preparing to start the 
realisation process. 
 
   A brief summary of each share pool is provided below. 
 
   Net asset values and overview 
 
   'F' Share pool 
 
   The 'F' Share pool launched in 2012 and is currently in its realisation 
phase. Exits from a number of investments have been effectively put on 
hold as a result of the ongoing pandemic, however the Manager is still 
working on a number of possible divestments in order to return funds to 
Shareholders. 
 
   At 30 June 2020, the remaining net asset value ("NAV") was 18.8p per F 
Share, a decrease of 5.9p (23.9%) over the period. Total Return (NAV 
plus dividends paid to date) is now 90.8p, compared to the original cost, 
net of income tax relief, of 70p per share. 
 
   The 'F' Share pool still holds nine investments, with plans resuming for 
exits from each of them. 
 
   The task of exiting from the remaining investments is dependent on third 
parties and it is therefore difficult to accurately estimate when this 
process will complete. A number of investments in the portfolio are in 
industries that have been severely impacted by the pandemic, and as a 
result have suffered delays in the divestment timeline. 
 
   The Investment Manager believes there are reasonable prospects for 
completion of some exits from the portfolio during the course of this 
year. The Manager anticipates that the next major distribution will be 
paid in 2021. 
 
   'G' Share pool 
 
   The 'G' Share pool passed its five-year anniversary in November 2018 and 
the focus remains on the process of realising the remaining investments, 
in order to return funds to Shareholders. 
 
   At 30 June 2020, the pool held 12 investments and the net asset value 
("NAV") was 34.1p per 'G' Share, which represents a net decrease of 
12.0p (24.9%) over the period, after adjusting for the dividends paid 
out. Total Return (NAV plus dividends paid to date) is now 87.6p, 
compared to the initial NAV, before income tax relief, of 100.0p (or 
original cost, net of income tax relief, which was typically between 
70.0p and 75.0p, depending on costs). 
 
   The 'G' Share pool is expected to make distributions as realisations are 
achieved. The Investment Manager expects to resume this process over the 
remainder of the year. 
 
   'K' Share pool 
 
   The 'K' Share pool raised funds in 2016. The target date to start 
realising investments is 2021. 
 
   Unfortunately, the portfolio has suffered heavily over the six-month 
period with most investments badly impacted by the consequences of the 
pandemic. 
 
   At 30 June 2020, the share pool held 15 investments and the net asset 
value ("NAV") was 36.6p per 'K' Share, which represents a net decrease 
of 14.1p (24.2%) over the period, after adjusting for the dividends paid 
out of 7.5p. Total Return (NAV plus dividends paid to date) is now 44.1p 
per K Share, compared to the initial NAV before income tax relief, of 
100.0p (or original cost, net of income tax relief, which was typically 
between 70.0p and 75.0p, depending on costs). 
 
   The Board acknowledges that overall performance of the K Share pool is 
extremely poor. As noted previously, the Board has reached agreement 
with the Investment Manager such that no further management fees will be 
paid in respect of the K Share pool. 
 
   The K Share pool does have cash available so will pay an interim 
dividend of 2.5p per 'K' Share on 27 November 2020, to Shareholders on 
the register at the close of business on 6 November 2020. 
 
   Share buybacks 
 
   The Company is now unlikely to make any further purchases of any of its 
shares as the process of returning funds to all groups of shareholders 
is progressing. 
 
   No share buybacks in respect of any share class were undertaken during 
the period. 
 
   Outlook 
 
   The further losses of value on all pools since the valuation at 31 March 
2020 are extremely disappointing. Although there is the possibility of 
recoveries in value, the recent increase in coronavirus infections in 
the UK may further harm the sectors in which many of the portfolio 
companies operate and could result in further losses. 
 
   The Board has given consideration to the best way forward from this 
position. The Board does not consider that a change of manager at this 
stage is practical or would be in the best interest of shareholders, but 
believes that continuing to work closely with the existing manager to 
ensure everything is done to recover value is the best route. 
 
   The Board does not expect to raise any new funds for the Company in 
future and so is now considering putting proposals to Shareholders for 
the Company to take advantage of the VCT winding up regulations which 
involves entering into a members' voluntary liquidation.  This will 
allow the company to reduce its running cost while it realises the 
investments across all share pools. The Board intends to prepare 
proposals for shareholder approval in the coming months. 
 
   Hugh Gillespie 
 
   Chairman 
 
   30 September 2020 
 
   INVESTMENT MANAGER'S REPORT 
 
   'F' SHARE POOL 
 
   As at 30 June 2020, the 'F' Share pool held nine investments. Focus for 
the 'F' Share pool remains on the realisation of its investments and 
maximising Shareholder returns which has been delayed due to the ongoing 
coronavirus pandemic. 
 
   Net asset value, results and dividend 
 
   At 30 June 2020, the net asset value ("NAV") for a holding of one 'F' 
Share was 18.8p, a decrease of 5.9p (23.9%) over the period. Total 
Return (NAV plus dividends paid to date) is now 90.8p. 
 
   The loss on ordinary activities for the 'F' Shares, after taxation was 
GBP641,000 for the period, comprising a revenue loss of GBP32,000 and a 
capital loss of GBP609,000. 
 
   'F' Share pool -- Portfolio valuation 
 
   The period to 30 June 2020 has seen a number of unforeseen developments 
which has impacted the 'F' Share portfolio. The portfolio companies are 
heavily exposed to the effective lockdown in the UK economy, resulting 
in an unrealised loss of GBP609,000. 
 
   The most significant decreases in valuation were in respect of Pearce 
and Saunders Limited and Downing Pub EIS ONE Limited which both operate 
in the pub and hospitality industry. 
 
   Pearce and Saunders Limited, the owner of freehold pubs in south east 
London, was decreased by GBP457,000 to reflect the forced closure of the 
site and the wider economic impact of COVID-19. 
 
   Downing Pub EIS ONE Limited, which acquired the holdings of two other 
pub companies in 2017, was decreased in value by GBP134,000 following 
the collapse of the proposed management buy out that was due to complete 
in March 2020. 
 
   The Investment Manager has supported both of the above investee 
companies during this difficult time as well as ensuring the businesses 
have taken advantage of the Government support that has been made 
available. 
 
   There were a small number of valuation increases in the period. The most 
notable being a GBP42,000 increase in value to Fresh Green Power Limited, 
the domestic rooftop solar company, which was increased due to improved 
operating performance over the period. 
 
   Realisation plans 
 
   A number of the investment companies within the portfolio had proposed 
exit plans in place which have now been effectively paused or have 
collapsed as a result of the ongoing pandemic and have forced the 
Investment Manager to seek other opportunities to exit. 
 
   Despite the divestment timeline suffering, the Investment Manager is 
hopeful that there are reasonable prospects for completion from a small 
number of the investee companies across the remainder of the year if 
conditions improve, although shareholders should note it is currently 
unclear when and if these will be achieved. The exact timing will be 
dependent on third parties and a number of external factors. 
 
   Outlook 
 
   Valuations of investments within the 'F' Share pool have been impacted 
as a result of the ongoing coronavirus pandemic. The pool is exposed to 
a number of the sectors which have suffered heavily from the effective 
lockdown in the UK. Focus for the Investment Manager remains on the exit 
of the final nine investments in the portfolio as well as continuing to 
support all investee companies during this difficult period. 
 
   Downing LLP 
 
   30 September 2020 
 
   SUMMARY OF INVESTMENT PORTFOLIO 
 
   'F' SHARE POOL 
 
   as at 30 June 2020 
 
 
 
 
                                                     Unrealised        % of 
                                                    gain/(loss) in   portfolio 
                                Cost    Valuation       period       by value 
                               GBP'000   GBP'000       GBP'000 
 
VCT qualifying and partially 
qualifying investments 
Downing Pub EIS ONE Limited        490        522            (134)       26.2% 
Fresh Green Power Limited          189        273               42       13.7% 
Atlantic Dogstar Limited           200        179             (79)        9.0% 
Pearce and Saunders Limited        497         93            (457)        4.6% 
Green Energy Production UK 
 Limited                           100         64               10        3.2% 
Apex Energy Limited              1,000         26                9        1.3% 
 
 
Non-qualifying investments 
Baron House Developments LLP       481        673                -       33.8% 
London City Shopping Centre 
 Limited                            66          -                -        0.0% 
Pearce and Saunders DevCo 
 Limited                            44          -                -        0.0% 
 
                                 3,067      1,830            (609)       91.8% 
                               =======             =============== 
 
Cash at bank and in hand                      162                         8.2% 
                                        ---------                   ---------- 
 
Total                                       1,992                       100.0% 
                                        =========                   ========== 
 
   SUMMARY OF INVESTMENT MOVEMENTS 
 
   'F' SHARE POOL 
 
   as at 30 June 2020 
 
 
 
 
                                 Market                                Total 
                                 value at  Disposal   Gain against    realised 
Disposals               Cost     01/01/20   proceeds      cost          gain 
                       GBP'000   GBP'000    GBP'000     GBP'000      GBP'000 
 
Pearce and Saunders 
 DevCo Limited               2          2          2             -           - 
 
                             2          2          2             -           - 
                       =======  =========  =========  ============  ========== 
 
 
   INVESTMENT MANAGER'S REPORT 
 
   'G' SHARE POOL 
 
   The 'G' Share pool raised funds in 2013 and focus for the Share pool 
remains on the process of realising investments, as it looks to maximise 
Shareholder returns. Over the period to 30 June 2020, the process has 
been significantly delayed as a result of the ongoing coronavirus 
pandemic. 
 
   Investment activity 
 
   During the period a partial exit was successfully completed from Pearce 
and Saunders Limited, the owner of freehold pubs in south east London. 
Proceeds of GBP230,000 were generated, which represented an uplift over 
cost of GBP173,000. 
 
   'G' Share pool -- Portfolio valuation 
 
   The period to 30 June 2020 has seen a number of disappointing valuation 
movements, resulting in an unrealised loss of GBP3.6 million. 
 
   The majority of the unrealised loss is driven from holding a portfolio 
of investments which have been severely impacted by the effective 
lockdown within the UK and its resulting consequences. 
 
   The largest decrease in value at the period end related to Atlantic 
Dogstar Limited, which owns a group of London pubs. As a result of the 
lockdown restrictions, the two London pubs were forced to close and the 
planned management buy out that was due to complete in March 2020 
collapsed, leading to a reduction in value of GBP1.4 million. 
 
   The investments in Quadrate Spa Limited and Quadrate Catering Limited, 
which own and operate a health club business and a top floor restaurant 
in The Cube complex in Birmingham were both written down to nil, 
generating a combined loss of GBP1.9 million. 
 
   A sale and leaseback transaction was due to complete in February 2020. 
However as a result of the coronavirus pandemic, both companies are not 
operational following government-imposed lockdown measures and the offer 
has been withdrawn. We continue to monitor the situation and are 
assisting management where possible. 
 
   Realisation plans 
 
   Prior to the unforeseen coronavirus pandemic, there were a number of 
realisation plans in place for the exit of several portfolio companies. 
As a result of the ongoing situation, these plans have either collapsed 
or have been delayed. It is currently unclear when further exits will be 
achieved, although the manager is seeking opportunities where possible. 
 
   Net asset value 
 
   At 30 June 2020, the net asset value ("NAV") for a holding of one 'G' 
Share was 34.1p, which represents a net decrease of 12.0p (24.9%) over 
the period. Total Return (NAV plus dividends paid to date) is now 87.6p. 
 
   Results 
 
   The loss on ordinary activities for the 'G' Share pool, after taxation, 
for the period was GBP3.0 million, comprising a revenue profit of 
GBP344,000 and a capital loss of GBP3.4 million. 
 
   Outlook 
 
   The falls in value experienced by the 'G' Share pool during the year are 
extremely disappointing. Businesses in the leisure and hospitality 
sector have clearly suffered heavily from the lockdown and provisions 
have been required as a result. 
 
   We continue to dedicate substantial resources to supporting the investee 
companies through these difficult and unprecedented times as we look to 
continue the process of realising investments and return funds to 
investors. 
 
   Downing LLP 
 
   30 September 2020 
 
   SUMMARY OF INVESTMENT PORTFOLIO 
 
   'G' SHARE POOL 
 
   as at 30 June 2020 
 
 
 
 
                                                  Unrealised         % of 
                                                 gain/(loss) in   portfolio by 
                             Cost    Valuation       period          value 
                            GBP'000   GBP'000       GBP'000 
 
VCT qualifying and 
partially qualifying 
investments 
Atlantic Dogstar Limited      3,500      3,142          (1,379)          42.1% 
Walworth House Pub Limited    1,330      1,176             (47)          15.8% 
Downing Pub EIS ONE 
 Limited                        980      1,044            (267)          14.0% 
Hermes Wood Pellets 
 Limited                      1,000        152                -           2.0% 
Pearce and Saunders 
 Limited                        136        136                -           1.8% 
Zora Energy Renewables 
 Limited                        750         49             (19)           0.7% 
Apex Energy Limited           1,300         33               11           0.4% 
Ormsborough Limited             500          -                            0.0% 
Quadrate Catering Limited     1,450          -          (1,196)           0.0% 
 
Non-qualifying investments 
Baron House Developments 
 LLP                          1,093      1,530                           20.5% 
Quadrate Spa Limited          1,450          -            (669)           0.0% 
London City Shopping 
 Centre Limited                 110          -                            0.0% 
 
                             13,599      7,262          (3,566)          97.3% 
                            =======             =============== 
 
Cash at bank and in hand                   204                            2.7% 
                                     ---------                   ------------- 
 
Total                                    7,466                            100% 
                                     =========                   ============= 
 
   SUMMARY OF INVESTMENT MOVEMENTS 
 
   'G' SHARE POOL 
 
   as at 30 June 2020 
 
 
 
 
                             Market value                              Total 
                                  at       Disposal   Gain against    realised 
Disposals            Cost      01/01/20     proceeds      cost          gain 
                    GBP'000    GBP'000      GBP'000     GBP'000      GBP'000 
 
Pearce and 
 Saunders Limited        57            57        230           173         173 
 
                         57            57        230           173         173 
                    =======  ============  =========  ============  ========== 
 
   INVESTMENT MANAGER'S REPORT 
 
   'K' SHARE POOL 
 
   At the period end, the 'K' Share pool held 15 investments across a range 
of industries. It is very disappointing to have to report that several 
investee companies have suffered further setbacks which have required 
significant provisions for the six months to 30 June 2020. 
 
   'K' Share pool -- Portfolio valuation 
 
   As noted in the year end accounts, the portfolio faced a number of 
challenges in the first few months of 2020, leading to an unrealised 
loss of GBP2.0 million as at 30 June 2020. 
 
   A significant portion of the unrealised loss for the period related to 
three investments. Further details on each is noted below. 
 
   The most notable provision is in respect of Garthcliff Shipping Limited, 
which owns a feeder container vessel that is chartered to third parties 
to transport containers to and from ports. Following a period of reduced 
demand for container vessels as worldwide economies suffered as a result 
of the coronavirus pandemic, a buyer for the vessel has been sought and 
the value has been reduced by GBP1.0 million in line with anticipated 
exit proceeds. 
 
   Apprise Pubs Limited, was established to build an estate of quality 
freehold pubs across the south of England alongside long-term Downing 
partner, Oakman Inns. As a result of the government-imposed lockdown, 
one site was forced to close whilst refurbishment at a second site was 
postponed leading to a provision of GBP442,000. 
 
   Exclusive Events Venues Limited, the operator of an exclusive use 
wedding venue in Chester, England, completed refurbishment in February 
2020. In line with government-imposed measures, the venue was forced to 
postpone events, resulting in a provision of GBP157,000. 
 
   We continue to work closely and support each of the portfolio companies, 
ensuring that they have benefited from the Government aid that is 
available and take sensible decisions as they deal with these 
extraordinary circumstances. 
 
   Net asset value, results and dividend 
 
   At 30 June 2020, the net asset value ("NAV") and Total Return for a 
holding of one 'K' Share was 36.6p, which represents a net decrease of 
14.1p (24.2%) over the period. The loss on ordinary activities for the 
'K' Share pool, after taxation, was GBP2.2 million for the period, 
comprising a revenue loss of GBP186,000 and a capital loss of GBP2.0 
million. 
 
   The Company will pay an interim dividend of 2.5p per 'K' Share on 27 
November 2020, to Shareholders on the register at 6 November 2020. 
 
   Outlook 
 
   Regrettably, the coronavirus pandemic has further hit investment 
valuations during the period to 30 June 2020, with a large number of 
portfolio companies within the leisure and hospitality sectors being 
impacted most severely. 
 
   The process of realising the investments to return funds to shareholders 
is due to commence 2021. Prior to this, we shall be supporting each 
investee company within the portfolio as much as possible, seeking to 
position them as well as we can to facilitate an exit in line with the 
divestment timeline and at optimal value. 
 
   Downing LLP 
 
   30 September 2020 
 
   SUMMARY OF INVESTMENT PORTFOLIO 
 
   'K' SHARE POOL 
 
   as at 30 June 2020 
 
 
 
 
                                                     Unrealised        % of 
                                                    (loss)/gain in   portfolio 
                                Cost    Valuation       period       by value 
                               GBP'000   GBP'000       GBP'000 
 
VCT qualifying investments 
Apprise Pubs Limited             1,300        858            (442)       15.0% 
Walworth House Pub Limited         500        442             (18)        7.7% 
Pilgrim Trading Limited            432        347             (85)        6.1% 
Exclusive Events Venues 
 Limited                           500        343            (157)        6.0% 
SF Renewables (Solar) Limited      337        292             (12)        5.1% 
Garthcliff Shipping Limited      1,300        255          (1,045)        4.4% 
Rockhopper Renewables Limited      591        222             (73)        3.9% 
Indigo Generation Limited          736        179             (79)        3.1% 
Ironhide Generation Limited        736        161             (96)        2.8% 
Zora Energy Renewables 
 Limited                           350         23              (8)        0.4% 
Ormsborough Limited              1,400          -                -        0.0% 
Yamuna Renewables Limited        1,300          -                -        0.0% 
Jito Trading Limited             1,500          -                -        0.0% 
 
Non-qualifying investments 
Fenkle Street LLP                  287        306             (12)        5.3% 
London City Shopping Centre 
 Limited                            15          -                -        0.0% 
 
                                11,284      3,428          (2,027)       59.8% 
                               =======             =============== 
 
Cash at bank and in hand                    2,308                        40.2% 
                                        ---------                   ---------- 
 
Total                                       5,736                         100% 
                                        =========                   ========== 
 
 
   UNAUDITED SUMMARISED BALANCE SHEET 
 
   as at 30 June 2020 
 
 
 
 
                                                        30 Jun   31 Dec 
                              30 Jun 2020                 2019     2019 
                   'F'      'G'       'K' 
                 Shares    Shares    Shares    Total     Total    Total 
                 GBP'000  GBP'000   GBP'000   GBP'000   GBP'000  GBP'000 
 
Fixed assets 
Unquoted 
 investments       1,830     7,262     3,428    12,520   22,452   18,781 
 
Current assets 
Debtors               93     1,450         6     1,549    1,438    1,374 
Cash at bank 
 and in hand         162       204     2,308     2,674    7,337    4,136 
                 -------  --------  --------  --------  -------  ------- 
                     255     1,654     2,314     4,223    8,775    5,510 
 
Creditors: 
 amounts 
 falling due 
 within one 
 year               (53)     (302)         9     (346)    (494)    (306) 
                 -------  --------  --------  --------  -------  ------- 
 
Net current 
 assets              202     1,352     2,323     3,877    8,281    5,204 
 
Net assets         2,032     8,614     5,751    16,397   30,733   23,985 
                 =======  ========  ========  ========  =======  ======= 
 
Capital and 
reserves 
Called up share 
 capital              11        25        16        52       52       52 
Capital 
 redemption 
 reserve             149         -         -       149      149      149 
Special reserve    3,949    14,671    14,986    33,606   38,681   34,938 
Share premium 
account                -         -         -         -        -        - 
Revaluation 
 reserve         (1,419)   (5,726)   (3,642)  (10,787)  (6,361)  (4,585) 
Capital reserve 
 -- realised     (1,099)   (1,831)   (4,155)   (7,085)  (2,249)  (7,105) 
Revenue reserve      441     1,475   (1,454)       462      461      536 
                 -------  --------  --------  --------  -------  ------- 
Total equity 
 shareholders' 
 funds             2,032     8,614     5,751    16,397   30,733   23,985 
                 =======  ========  ========  ========  =======  ======= 
 
Basic and diluted net 
 asset value per: 
'F' Share          18.8p                                  30.6p    24.7p 
'G' Share                    34.1p                        63.2p    48.1p 
'K' Share                              36.6p              72.9p    58.2p 
 
   STATEMENT OF CHANGES IN EQUITY 
 
   for the six months ended 30 June 2020 
 
 
 
 
             Called 
                 up                                  Share                  Capital 
              share        Capital        Special    Premium  Revaluation   reserve   Revenue 
            capital   redemption 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 
 2019            52                  149    38,471         -      (3,911)    (2,250)       349     32,860 
Total 
 comprehensive 
 income           -                    -         -         -      (5,388)        256       337    (4,795) 
Realisation of 
 impaired 
 valuations       -                    -         -         -        4,891    (4,891)         -          - 
Transactions 
with owners 
Purchase of own 
shares            -                    -         -         -            -          -         -          - 
Transfer 
 between 
 reserves         -                    -   (3,533)         -        (177)      3,710         -          - 
Dividends paid    -                    -         -         -            -    (3,930)     (150)    (4,080) 
Cancellation of 
shares            -                    -         -         -            -          -         -          - 
                     -------------------  --------  --------  -----------  ---------  --------  --------- 
At 31 December 
 2019            52                  149    34,938         -      (4,585)    (7,105)       536     23,985 
Total 
 comprehensive 
 income           -                    -         -         -      (6,202)        173       126    (5,903) 
Transaction 
with owners 
Purchase of own 
shares            -                    -         -         -            -          -         -          - 
Transfer 
 between 
 reserves         -                    -   (1,332)         -            -      1,332         -          - 
Dividends paid    -                    -         -         -            -    (1,485)     (200)    (1,685) 
At 30 June 2020  52                  149    33,606         -     (10,787)    (7,085)       462   (16,397) 
                     ===================  ========  ========  ===========  =========  ========  ========= 
 
 
   INCOME STATEMENT 
 
   for the six months ended 30 June 2020 
 
   Company Total 
 
 
 
 
                                                                             Year 
                        Six months ended           Six months ended          ended 
                           30 Jun 2020                30 Jun 2019         31 Dec 2019 
                   Revenue  Capital   Total   Revenue  Capital   Total      Total 
                   GBP'000  GBP'000  GBP'000  GBP'000  GBP'000  GBP'000    GBP'000 
 
  Income             1,908        -    1,908      619       16      635         1,198 
 
  Gains/(losses) 
  on investments 
  - realised             -      173      173        -      125      125           240 
  - unrealised           -  (6,202)  (6,202)        -  (2,380)  (2,380)       (5,388) 
                     1,908  (6,029)  (4,121)      619  (2,239)  (1,620)       (3,950) 
 
  Investment 
   management 
   fees              (116)        -    (116)    (289)        -    (289)         (551) 
  Other expenses   (1,557)        -  (1,557)    (123)        -    (123)         (244) 
 
  Return/(loss) 
   on ordinary 
   activities 
   before 
   taxation            235  (6,029)  (5,794)      207  (2,239)  (2,032)       (4,745) 
 
  Tax on total 
   comprehensive 
   income and 
   ordinary 
   activities        (109)        -    (109)     (95)        -     (95)          (50) 
 
  Return/(loss) 
   attributable 
   to equity 
   shareholders        126  (6,029)  (5,903)      112  (2,239)  (2,127)       (4,795) 
                   =======  =======  =======  =======  =======  =======  ============ 
 
  Return per 'F' 
   Share            (0.3p)   (5.6p)   (5.9p)        -     1.9p     1.9p          1.0p 
  Return per 'G' 
   Share              1.4p  (13.4p)  (12.0p)     0.8p     1.4p     2.2p          1.2p 
  Return per 'K' 
   Share            (1.2p)  (12.9p)  (14.1p)   (0.6p)  (17.8p)  (18.4p)       (33.2p) 
 
 
   INCOME STATEMENT (analysed by Share pool) 
 
   for the six months ended 30 June 2020 
 
 
 
 
                                                                               Year 
                        Six months ended            Six months ended           ended 
  'F' Shares               30 Jun 2020                 30 Jun 2019          31 Dec 2019 
                   Revenue  Capital   Total   Revenue  Capital    Total       Total 
                   GBP'000  GBP'000  GBP'000  GBP'000  GBP'000   GBP'000     GBP'000 
 
  Income               111        -      111       76        -         76           105 
 
  Gains/(losses) 
  on investments 
  - realised             -        -        -        -        -          -           110 
  - unrealised           -    (609)    (609)        -      201        201          (10) 
                       111    (609)    (498)       76      201        277           205 
 
  Investment 
   management 
   fees               (20)        -     (20)     (24)        -       (24)          (49) 
  Other expenses     (118)        -    (118)     (19)        -       (19)          (39) 
 
  Return/(loss) 
   on ordinary 
   activities 
   before 
   taxation           (27)    (609)    (636)       33      201        234           117 
 
  Tax on total 
   comprehensive 
   income and 
   ordinary 
   activities          (5)        -      (5)     (27)        -       (27)           (7) 
 
  Return/(loss) 
   attributable 
   to equity 
   shareholders       (32)    (609)    (641)        6      201        207           110 
                   =======  =======  =======  =======  =======  =========  ============ 
 
 
   INCOME STATEMENT (analysed by Share pool) 
 
   for the six months ended 30 June 2020 
 
 
 
 
                                                                             Year 
                        Six months ended           Six months ended          ended 
  'G' Shares               30 Jun 2020                30 Jun 2019         31 Dec 2019 
                   Revenue  Capital   Total   Revenue  Capital   Total      Total 
                   GBP'000  GBP'000  GBP'000  GBP'000  GBP'000  GBP'000    GBP'000 
 
  Income             1,738        -    1,738      491        -      491           941 
 
  Gains/(losses) 
  on investments 
  - realised             -      173      173        -      125      125           125 
  - unrealised           -  (3,566)  (3,566)        -      236      236         (271) 
                     1,738  (3,393)  (1,655)      491      361      852           795 
 
  Investment 
   management 
   fees               (96)        -     (96)    (148)        -    (148)         (288) 
  Other expenses   (1,189)        -  (1,189)     (55)        -     (55)         (110) 
 
  Return/(loss) 
   on ordinary 
   activities 
   before 
   taxation            453  (3,393)  (2,940)      288      361      649           397 
 
  Tax on total 
   comprehensive 
   income and 
   ordinary 
   activities        (109)        -    (109)     (86)        -     (86)          (94) 
 
  Return/(loss) 
   attributable 
   to equity 
   shareholders        344  (3,393)  (3,049)      202      361      563           303 
                   =======  =======  =======  =======  =======  =======  ============ 
 
 
   INCOME STATEMENT (analysed by Share pool) 
 
   for the six months ended 30 June 2020 
 
 
 
 
                                                                              Year 
                         Six months ended           Six months ended          ended 
  'K' Shares                30 Jun 2020                30 Jun 2019         31 Dec 2019 
                    Revenue  Capital   Total   Revenue  Capital   Total      Total 
                    GBP'000  GBP'000  GBP'000  GBP'000  GBP'000  GBP'000    GBP'000 
 
  Income                 59        -       59       52       16       68           152 
 
  (Losses)/gains 
  on investments 
  - realised              -        -        -        -        -        -             5 
  - unrealised            -  (2,027)  (2,027)        -  (2,817)  (2,817)       (5,107) 
                         59  (2,027)  (1,968)       52  (2,801)  (2,749)       (4,950) 
 
  Investment 
   management 
   fees                   -        -        -    (117)        -    (117)         (214) 
  Other expenses      (250)        -    (250)     (49)        -     (49)          (95) 
 
  Loss on ordinary 
   activities 
   before 
   taxation           (191)  (2,027)  (2,218)    (114)  (2,801)  (2,915)       (5,259) 
 
  Tax on total 
   comprehensive 
   income and 
   ordinary 
   activities             5        -        5       18        -       18            51 
 
  Loss 
   attributable to 
   equity 
   shareholders       (186)  (2,027)  (2,213)     (96)  (2,801)  (2,897)       (5,208) 
                    =======  =======  =======  =======  =======  =======  ============ 
 
 
   UNAUDITED CASH FLOW STATEMENT 
 
   for the six months ended 30 June 2020 
 
 
 
 
                                                                             30 Jun       31 Dec 
                                            30 Jun 2020                        2019         2019 
                                       'F'      'G'      'K' 
                                      Shares   Shares   Shares    Total        Total        Total 
                                     GBP'000  GBP'000  GBP'000  GBP'000      GBP'000      GBP'000 
 
Net cash (outflow)/ 
 inflow from operating 
 activities                            (46)      119     (82)      (9)          65           166 
 
Cash flows from investing 
activities 
Sale of investments                        2      230        -      232            3,217    3,995 
                                     -------  -------  -------  -------  ---------------  ------- 
Net cash inflow from investing 
 activities                                2      230        -      232            3,217    3,995 
                                     -------  -------  -------  -------  ---------------  ------- 
 
Net cash (outflow) 
 /inflow before 
 financing 
 activities                             (44)      349     (82)      223            3,282    4,161 
 
Cash flows from 
 financing activities 
Equity dividend paid                       -    (506)  (1,179)  (1,685)                -  (4,080) 
Net cash outflow from financing 
 activities                                -    (506)  (1,179)  (1,685)                -  (4,080) 
                                     -------  -------  -------  -------  ---------------  ------- 
(Decrease)/increase in cash             (44)    (157)  (1,261)  (1,462)            3,282       81 
                                     =======  =======  =======  =======  ===============  ======= 
 
   NOTES TO THE UNAUDITED CASH FLOW STATEMENT 
 
   for the six months ended 30 June 2020 
 
 
 
 
                                                                                        30 Jun   31 Dec 
                                                                30 Jun 2020               2019    2019 
                                                      'F'      'G'      'K' 
                                                     Shares   Shares   Shares    Total    Total    Total 
                                                    GBP'000  GBP'000  GBP'000  GBP'000  GBP'000  GBP'000 
 
 Cash inflow/(outflow) from operating 
 activities 
   Return/(loss) on ordinary activities before 
    taxation                                          (636)  (2,940)  (2,218)  (5,794)  (2,032)  (4,745) 
   Corporation tax                                        -        -        -        -      (8)    (145) 
   (Gains)/losses on investments                        609    3,393    2,027    6,029    2,255    5,148 
   (Increase)/decrease in other debtors                (24)    (310)      159    (175)    (108)     (45) 
   (Decrease)/increase in other creditors                 5     (24)     (50)     (69)     (42)     (47) 
   Net cash (outflow)/inflow from operating 
    activities                                         (46)      119     (82)      (9)       65      166 
                                                    =======  =======  =======  =======  =======  ======= 
 
 Analysis of net funds 
   Beginning of period                                  206      361    3,569    4,136    4,055    4,055 
   Net cash (outflow)/inflow                           (44)    (157)  (1,261)  (1,462)    3,282       81 
                                                    -------  -------  -------  -------  -------  ------- 
   End of period                                        162      204    2,308    2,674    7,337    4,136 
                                                    =======  =======  =======  =======  =======  ======= 
 
 
   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 2020 
and have been prepared in accordance with the Statement of Recommended 
Practice "Financial Statements of Investment Trust Companies and Venture 
Capital Trusts" issued in February 2018 ("AIC SORP") and in accordance 
with the accounting policies set out in the statutory accounts for the 
year ended 31 December 2019, 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 ("FRS 102"). 
 
   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 2019 and the year ended 31 December 2019 respectively. 
 
   6. Dividends 
 
 
 
 
 
                                       Six months ended         Year to 
                                         30 June 2020          31 Dec 2019 
                     Per share    Revenue   Capital   Total      Total 
     Paid in 
     period              pence     GBP'000  GBP'000  GBP'000    GBP'000 
 
     'F' Shares 
     Y/E Dec 2019 
      Interim              5.0p          -        -        -           541 
                                         -        -        -           541 
                                 =========  =======  =======  ============ 
 
     'G' Shares 
     Y/E Dec 2019 
      Interim              2.0p        200      306      506 
     Y/E Dec 2019 
      Interim             14.0p          -        -        -         3,539 
                                       200      306      506         3,539 
                                 =========  =======  =======  ============ 
 
     'K' Shares 
     Y/E Dec 2019 
      Interim              7.5p          -    1,179    1,179             - 
                                 ---------  -------  -------  ------------ 
                                         -    1,179    1,179             - 
                                 =========  =======  =======  ============ 
 
 
   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 
 
    'F' Shares         10,810,859     (32)     (0.3p)    (609)     (5.6p) 
    'G' Shares         25,281,571      344       1.4p  (3,393)    (13.4p) 
    'K' Shares         15,718,154    (186)     (1.2p)  (2,027)    (12.9p) 
                                   -------             ------- 
                                       126             (6,029) 
                                   =======             ======= 
 
 
   8. Net asset value per share 
 
 
 
 
                 Shares in issue   Net asset value 
                                              Per 
                                    GBP'000   share 
 
    'F' Shares        10,810,859      2,032   18.8p 
    'G' Shares        25,281,571      8,614   34.1p 
    'K' Shares        15,718,154      5,751   36.6p 
                                  --------- 
                                     16,397 
                                  ========= 
 
 
   9. Reserves 
 
 
 
 
                                 Period ended   Year ended 
                                  30 Jun 2020   31 Dec 2019 
                                   GBP'000       GBP'000 
 
    Capital redemption reserve            149           149 
    Special reserve                    33,606        34,938 
    Revaluation reserve              (10,787)       (4,585) 
    Capital reserve - realised        (7,085)       (7,105) 
    Revenue reserve                       462           536 
                                       16,345        23,933 
                                 ============  ============ 
 
 
   The Special reserve, Capital reserve - realised and Revenue reserve are 
all distributable reserves. The Revaluation reserve includes losses of 
GBP11,616,000 which are included in the calculation of distributable 
reserves. Total distributable reserves are GBP15,367,000 (31 Dec 2019: 
GBP21,453,000). 
 
   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 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; 
 
   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 
                                                   ended                                      Year 
                                                  30 June     Level     Level                 ended 
                  Level 1    Level 2    Level 3    2020         1         2      Level 3   31 Dec 2019 
                  GBP'000   GBP'000    GBP'000   GBP'000     GBP'000  GBP'000   GBP'000     GBP'000 
 
     Loan 
      notes             -          -      4,512     4,512          -        -      5,424         5,424 
     Unquoted 
      equity            -          -      8,008     8,008          -        -     13,357        13,357 
                        -          -     12,520    12,520          -        -     18,781        18,781 
                =========  =========  =========  ========  =========  =======  =========  ============ 
 
 
   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 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. 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 impact of the coronavirus pandemic has created heightened 
uncertainty but has not changed the nature of these risks. 
 
   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 & 
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. The impact of the 
coronavirus pandemic has been significant on some portfolio companies 
and, in many cases, the VCT regulations restrict the Company from making 
further investment into these businesses, so the Manager seeks to 
provide whatever other support they can to these businesses, including 
encouraging them to take advantage of government support that may be 
available. The Company 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 despite the current economic outlook and impact of the 
COVID-19 pandemic that is still being experienced 
 
   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 30, 2020 13:14 ET (17:14 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.
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