TIDMDDV1
Downing ONE VCT plc
LEI: 213800R88MRC4Y3OIW86
Half-Yearly Report for the
Six months ended 30 September 2020
Financial Summary
30 30 31 30
Nov Sep Mar Sep Nov
2020 2020 2020 2019 2013
pence pence pence pence pence
------------------------------------------------ ----- ----- ----- ----- -----
Net Asset Value per share ("NAV") 57.9 56.3 57.6 75.5 100.4
------------------------------------------------ ----- ----- ----- ----- -----
Cumulative dividends paid since Nov 13 37.5 37.5 35.5 33.5 0.0
------------------------------------------------ ----- ----- ----- ----- -----
Total Return
(NAV plus cumulative dividends paid per share) 95.4 93.8 93.1 109.0 100.4
------------------------------------------------ ----- ----- ----- ----- -----
Chairman's Statement
I present the Company's half-yearly report for the six-month period
ended 30 September 2020.
When I last reported to shareholders in July, the UK was just starting
to come out of the first lockdown, and it was clear that some of the
portfolio companies had been significantly negatively impacted by the
coronavirus pandemic. Since then, we have seen the setback of the second
wave and a further government-imposed lockdown.
Although some investments have been further hindered by the ongoing
pandemic, particularly those within the leisure and hospitality sectors,
many have now been able to adapt to the conditions and some have been
able to benefit from the new environment, for example in the education
technology sector.
The Company has been a very active investor in recent months, completing
investments in a number of attractive new prospects within the software
and computer technology, education, retail and biotechnology sectors
totalling GBP12.7 million.
Net asset value and results
As at 30 September 2020, the Company's NAV stood at 56.3p, an increase
of 0.7p (or 1.2%) compared to the 31 March 2020 year-end position, after
adding back the 2.0p dividend paid during the period.
The return attributable to equity shareholders for the period was a gain
of GBP1.3 million, comprising a revenue loss of GBP366,000 and a capital
gain of GBP1.6 million.
Investment activity and performance
Over the last six months, Downing, the Investment Adviser, has been able
to strengthen its investment team which has generated a significant
number of new investment opportunities.
During the period, the Company made 17 VCT qualifying investments,
totalling GBP12.7 million. This is the highest rate of investment in a
six month period that the Company has achieved under the current VCT
regulations. 11 of these additions were new investments and six were
follow on investments into existing portfolio companies.
In line with the current VCT regulations,
GBP11.4 million of the additions were in unquoted growth businesses,
which tend to be younger businesses with a high risk/reward ratio.
Unquoted growth companies now make up almost 40% of the total portfolio
(by value) and the proportion is expected to continue to increase going
forward.
There were also a small number of disposals and part disposals in the
period. Total realisations generated proceeds of GBP1.2 million,
resulting in a net realised gain of GBP328,000.
At the period end, the Company held a portfolio of 80 active investments,
with 26% (by value) held in quoted growth, 36% (by value) in unquoted
yield focused and 38% (by value) in unquoted growth. 30 investments are
held in the quoted growth category which are either quoted on AIM or the
NEX Exchange Growth Market and have a value of GBP20.4 million. The 50
unquoted investments have a value of GBP56.6 million.
At the period end the Board has reviewed the unquoted valuations and
approved a number of adjustments. Net unrealised gains across the
unquoted and quoted portfolio over the period were GBP1.6 million.
Further details of the investment activities of the Company are in the
Investment Adviser's Report.
Dividends
The Company has a stated policy of seeking to pay dividends equivalent
to at least 4% of net asset value (currently 56.3p) each year.
Consistent with this policy, the Board has declared an interim dividend
of 1.25p (equivalent to 2.2% of current NAV) which will be paid on 26
February 2021 to Shareholders on the register as at 5 February 2021.
This will take the total dividends paid since the merger in November
2013 to 38.75p.
Fundraising
The Company launched a new offer for subscription in September 2020,
seeking to raise up to GBP15 million, plus an over-allotment facility.
GBP2.6 million has been raised to date under the offer. If existing
investors wish to subscribe under the offer, they will receive a
discount of 1.0% for applications processed by 26 February 2021.
With the Investment Adviser reporting a continuing strong pipeline of
new investment opportunities, funds raised under the offer will allow
the Company to take advantage of these as well as supporting existing
portfolio companies.
Share buybacks
The Company operates a policy of buying in its own shares that become
available in the market at a 5% discount to NAV (subject to liquidity
and any regulatory restrictions).
During the period, the Company purchased 1,343,282 shares at an average
price of 54.3p per Ordinary Share, being a 5% discount to the latest
announced NAV at the time of purchase.
VCT Qualification
Following the significant number of new qualifying investments made over
the past six months, qualifying investments now represent 83.8% of total
investments (including cash). The minimum VCT qualification level of 80%
is expected to continue to be comfortably exceeded for the foreseeable
future.
Outlook
Since 30 September 2020, there has been some further recovery by the
quoted stocks due, in part, to the prospect of a return to more normal
conditions in 2021. At 30 November 2020, the estimated unaudited NAV had
risen to 57.9p (Total Return of 95.4p), an increase of 1.6p since 30
September 2020.
Although the Company remains exposed to sectors that have been heavily
affected by the pandemic, many of the portfolio companies have now been
able to modify their plans to operate successfully in the current
conditions. The Investment Adviser continues to work closely with all
portfolio companies, ensuring that they benefit from any government and
other support that is available.
We now have a significant number of investments which are new additions
to the portfolio since the original coronavirus outbreak. A number of
the new investments are within the deep tech field, that have been made
alongside industry leaders and where the Investment Adviser is upbeat
about prospects.
With the recent positive news regarding coronavirus vaccines and the
feeling that there is now light at the end of the tunnel, we believe the
portfolio is well placed to deliver growth over the medium term.
Chris Kay
Chairman
Investment Adviser's Report - Overview
Introduction
We present a review of the investment portfolio and activity over the
six months to 30 September 2020. Our review is split into three parts
comprising this overview, an unquoted investments review and a report on
the quoted investments.
Net asset value and results
The net asset value per Share ("NAV") at 30 September 2020 stood at
56.3p, compared to the NAV at 31 March 2020 of 57.6p. Total Return (NAV
plus cumulative dividends paid since the merger in 2013) is 93.8p,
resulting in an increase of 0.7p after adjusting for the dividends paid
during the period of 2.0p.
Portfolio Overview
At 30 September 2020, the Company held a portfolio of 80 active
investments, valued in total at GBP77.0 million, with GBP12.7 million of
additions in the six months.
The period to 30 September 2020 has seen mixed performance across the
portfolio with the coronavirus pandemic negatively impacting some
investments, while others have adapted and made progress despite, or in
some cases supported by, the current conditions. This has resulted in an
overall increase in value across both the quoted and unquoted portfolios
since 31 March 2020. As a result, more than 70% of the portfolio is now
held at a valuation either at or above cost.
Performance
The net unrealised gains in the quoted portfolio totalled GBP1.6 million
There were several valuation movements in the unquoted portfolio in the
period totalling an unrealised gain over valuation of GBP105,000.
Further details on these and other movements can be found within the
quoted and unquoted Investment Adviser Reports overleaf.
Portfolio Composition
The shift in the balance of the portfolio towards younger, unquoted
growth investments, in line with the current VCT regulations, has
continued with the proportion of funds (by value) in these investments
increasing from 24% to 40% over the last 12 months.
It is our expectation that the proportion of growth investments in the
portfolio, particularly the unquoted growth investments, will continue
to increase over the coming years as we gradually exit from the older
unquoted yield focused investments and new funds are deployed mostly in
unquoted growth investments.
The investment portfolio continues to be well diversified with recent
new investments made in software and computer technology, education,
retail and biotechnology during the period. Further details on all new
investments can be found below.
Outlook
For those portfolio companies to which it is relevant, we have ensured
that they have taken full advantage of government support that has been
made available and encouraged management to act swiftly and decisively
where necessary. Although some businesses, particularly those in the
leisure sector, are still vulnerable to further impact from the pandemic,
we believe there are good prospects in the portfolio that can start to
drive improved performance.
We expect to see the recent high level of new investment activity to
continue over the remainder of the year as we seek to deploy the
existing funds and new funds from the current offer for subscription
Investment Adviser's Report -- Unquoted portfolio
We present a review of the unquoted investment portfolio for the six
months ended 30 September 2020.
Investment activity
At 30 September 2020, the unquoted portfolio was valued at GBP56.6
million, comprising 50 investments spread across a number of sectors.
During the period, the Company invested a total of GBP11.4 million in
unquoted companies comprising seven new investments and five follow-on
investments.
The seven new qualifying investments that were made during the six-month
period are summarised as follows:
Carbice Corporation (GBP3.0 million) has developed a suite of products
based on its carbon material which is primarily used as thermal
management solutions.
Cornelis Networks (GBP2.1 million) has developed purpose-built
high-performance fabrics used within commercial, scientific, academic
and government organisations.
Parsable (GBP1.5 million) has developed mobile applications and
administration system software to improve operational efficiency within
the corporate and manufacturing industry.
Ayar Labs Inc (GBP1.3 million) has developed components for high
performance computing and data centre applications.
Genincode Limited (GBP600,000) is a biotechnology company that offers
analysis of a patient's cardio health risk through clinical genetic
tests combined with AI.
Trinny London Limited (GBP443,000) is an e-commerce-based beauty and
cosmetics brand launched by Trinny Woodall.
MIP Diagnostics Limited (GBP150,000) is a manufacturer of polymer based
synthetic antibodies which are used across a variety of sectors
including diagnostics, sensors, food testing and reagent purification.
Follow on investments totalling GBP2.3 million were made into Empiribox
Limited (GBP1.3 million), FundingXchange Limited (GBP525,000), Curo
Compensation Limited (GBP244,000), ADC Biotechnology Limited
(GBP167,000) and Virtual Class Limited (GBP125,000).
Details of the small number of realisations in the year are set out
below. Total proceeds of GBP1.2 million were generated, producing
profits over holding value of GBP328,000.
Empiribox Limited, the provider of equipment and training to primary
schools across the UK, converted their existing loan notes during the
period into further qualifying equity.
Pearce and Saunders Limited, a freehold pub business, redeemed part of
their loan notes during the period, receiving proceeds of GBP440,000.
Portfolio valuation
A number of adjustments to carrying values have been made at the period
end, resulting in an overall gain of GBP105,000. The most significant of
which are summarised below.
The largest gain in value was in E-Fundamentals (Group) Limited, a
Software as a Service (SaaS) analytics company. At the period end an
uplift of GBP1.1 million was recognised following strong revenue growth
both in the UK and US markets.
Downing Care Homes Holdings Limited, which owns four specialist care
homes, was uplifted in value by GBP1.0 million. This was partially
driven by the unwinding of provisions made at onset of the coronavirus
pandemic (which were based on assumptions that proved to be overly
cautious) and improving occupancy and tight control of costs. These have
resulted in the company performing ahead of budget, leading to an
increase in valuation.
Virtual Class Limited, trading as Third Space Learning, has been
increased in value by GBP665,000 reflecting recent improvements in
financial performance driven by increased demand for remote teaching
solutions.
Baron House Developments LLP, a company created to fund the purchase of
a property opposite Newcastle Central station for redevelopment as a
hotel, was uplifted by GBP539,000 during the year, This movement is
driven by the latest trading projections, which are stronger than
originally anticipated at the outbreak of the pandemic.
The gains recognised at the period end were partly offset by a number of
losses across the portfolio. The most significant loss in the period
related to Lignia Wood Company Limited, a producer of modified
sustainable wood based in Barry, Wales, which is, amongst other
application used in yacht building. Since the start of the pandemic,
Lignia has experienced a substantial reduction in demand. We are now
unlikely to support a further investment in the company and it may
ultimately fail. As a result, the company has been written down to nil,
generating an unrealised loss of GBP1.2 million.
Avid Technologies Group Limited, a manufacturer of electrified ancillary
equipment for internal combustion engines, has been written down by
GBP687,000 given economic uncertainty, which has resulted in significant
delays to a planned sale of the company.
Pearce and Saunders Limited, a freehold pub business, has been impacted
by the ongoing coronavirus pandemic and the lockdown restrictions
imposed on the UK. As a result, a write down of GBP646,000 has been
recognised to reflect the closure of the site and the anticipated impact
on future revenue and profit.
Outlook
The period to 30 September 2020 has seen an unprecedented situation
which has severely impacted the UK and Worldwide economies. Although
some businesses have been able to quickly adapt and move forward, the
pandemic will affect others, particularly those in the leisure and
hospitality sectors, for an extended period.
The unquoted portfolio is however well diversified, and we take some
encouragement from the fact that that the portfolio saw an overall
uplift over the last six months. We are optimistic that unquoted
portfolio includes businesses, particularly the newer investments, which
can drive performance going forward.
Investment Adviser's Report -- Quoted portfolio
Investment activity
At 30 September 2020, the quoted portfolio was valued at GBP20.5 million
comprising 30 active investments.
During the period, the quoted portfolio made four new qualifying
investments in Feedback plc, a specialist medical imaging technology
company, Deepmatter Group plc, a company focusing on digitising
chemistry, One Media IP Group plc, a digital music rights acquirer, and
Pelatro plc, a precision marketing software specialist. An increase was
made to an existing investment in Immotion Group plc, an immersive
entertainment group. These additions totalled GBP1.4 million.
There were partial sales in Science in Sport plc, a performance
nutrition company and Flowgroup plc, which is currently in liquidation.
The only full disposal made in the period related to Redhall Group plc,
an engineering business which is currently in administration.
Portfolio valuation
Overall, in the six months to 30 September 2020, the quoted portfolio
produced a positive result, with an unrealised gain of GBP1.6 million.
The most notable movements are discussed below.
Anpario plc is an international producer and distributor of natural
animal feed additives for animal health, nutrition and biosecurity.
After falling sharply in early March, its share price recovered strongly
and at reporting period end, was trading c.14% higher than its
pre-COVID-19 levels. The group delivered strong sales and profit
performance in the first half of 2020, despite the extreme challenges
posed by the pandemic. Management seeks to continue the on-line and
direct marketing tactics that produced such a strong first half
performance.
Additionally, it will be able to build upon new business gained from
those competitors unable to supply during lock-down. The group's strong
balance sheet provides the resources to expand its global reach and to
undertake earnings enhancing and complementary acquisitions which may
arise in these uncertain times. The market valuation increased by
GBP495,000.
Universe Group plc is a developer and supplier of retail management
solutions, payment and loyalty systems. The group reported in its latest
published results for the six months ended 30 June 2020, that first half
revenues had held up despite the effects of COVID-19. While market
conditions were difficult, Universe won further significant business
with several major clients in the payment processing space, as well as a
major payment device contract. The group is a second half weighted
business, dependent on a small number of high value projects. Following
completed revenues of GBP9.8 million in the first half, there are
further revenues of GBP12.5 million visible through existing recurring
and repeatable revenue contracts and the order book to year end. The
group needs to fully execute the order book over the rest of the year,
however, together with a sound balance sheet showing net cash and
undrawn banking facilities, the board remains cautiously optimistic for
2020 and beyond. As a result, the market valuation has increased by
GBP482,000.
The most significant decrease was to Craneware plc, a market leader in
Value Cycle software solutions for the US healthcare market. The group
reported good progress in the year ended 30 June 2020, despite the
difficulties imposed by COVID-19 in its final quarter. Management stated
that it has experienced strong sales momentum in Q1 and continues to
have sales discussions with hospitals across the US.
The board is cautiously optimistic that it is seeing the first signs of
sales cycles slowly normalising, however, it remains cognisant of the
ongoing macro uncertainties. The business benefits from a strong balance
sheet and high levels of recurring revenue, entering the new financial
year with an annuity revenue base of over $65 million, providing it with
a strong foundation for future growth. The market valuation decreased by
GBP236,000.
Tracis plc, a provider of transport software solutions and condition
monitoring equipment that automates and optimises the process of labour
scheduling for rail and bus services, also decreased in value over the
period by GBP193,000. The group provided a trading update for the year
ended 31 July 2020 and reported that revenues are expected to be around
GBP48 million, compared to GBP49.2 million for the same period the year
prior. COVID-19 has had a negative impact of around GBP10 million on
overall revenues mainly in its Traffic & Data Services Division, though
the impact was much less than originally feared. Under the circumstances,
the board is pleased with the overall revenue performance, which was
assisted by a very strong performance from the Rail Technology &
Services Division. The board remains confident that the group is well
positioned to navigate through this period of uncertainty whilst
continuing to pursue and invest in future growth opportunities.
Outlook
The coronavirus crisis has hit all parts of the UK market, but large cap
companies have held up slightly better than their smaller company peers
as they are considered more exposed to the UK domestic economy. We are
encouraged by the action's management teams have taken and portfolio
companies are now structurally in a better position than they were
pre-COVID and we believe that they are now more resilient to a second
wave of the pandemic. The result is a portfolio of companies with strong
balance sheets, more resilient earnings, better returns on capital and
less debt, but on considerably more attractive valuations than the
broader market.
We believe that markets will continue to be volatile given the ongoing
challenges caused both by COVID-19 and the political uncertainties due
to the Brexit transition and the aftermath of the US election. While it
is difficult to be positive in the short term, we believe the portfolio
is well positioned to continue to grow over the medium to longer term.
Downing LLP
Unaudited Balance Sheet
as at 30 September 2020
30 Sep 30 Sep 31 Mar
2020 2019 2020
GBP'000 GBP'000 GBP'000
-------------------------------------------- ------- ------- -------
Fixed assets
-------------------------------------------- ------- ------- -------
Investments 77,048 81,388 63,590
--------------------------------------------- ------- ------- -------
Current assets
-------------------------------------------- ------- ------- -------
Debtors 1,182 3,519 1,944
--------------------------------------------- ------- ------- -------
Cash at bank and in hand 10,569 16,517 23,471
--------------------------------------------- ------- ------- -------
11,751 20,036 25,415
-------------------------------------------- ------- ------- -------
Creditors: amounts falling due within one
year (443) (868) (263)
--------------------------------------------- ------- ------- -------
Net current assets 11,308 19,168 25,152
--------------------------------------------- ------- ------- -------
Net assets 88,356 100,556 88,742
--------------------------------------------- ------- ------- -------
Capital and reserves
-------------------------------------------- ------- ------- -------
Called up share capital 1,564 1,329 1,440
--------------------------------------------- ------- ------- -------
Capital redemption reserve 1,628 1,608 1,615
--------------------------------------------- ------- ------- -------
Share premium 62,494 45,989 54,703
--------------------------------------------- ------- ------- -------
Funds held in respect of shares not yet
allotted 264 237 5,775
--------------------------------------------- ------- ------- -------
Special reserve 30,388 51,965 34,587
--------------------------------------------- ------- ------- -------
Capital reserve -- unrealised (5,703) (1,709) (8,504)
--------------------------------------------- ------- ------- -------
Revenue reserve (2,279) 1,137 (874)
--------------------------------------------- ------- ------- -------
Equity shareholders' funds 88,356 100,556 88,742
--------------------------------------------- ------- ------- -------
Basic and diluted net asset value per share 56.3p 75.5p 57.6p
--------------------------------------------- ------- ------- -------
Unaudited Income Statement
For the six months ended 30 September 2020
Year ended
31
Six months ended Six months ended March
30 September 2020 30 September 2019 2020
Revenue Capital Total Revenue Capital Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- -------- ------- ------- ------- -------- -------- ----------
Income 644 - 644 1,232 100 1,332 2,218
---------------- -------- ------- ------- ------- -------- -------- ----------
(Losses)/gains
on investments
--------------- -------- ------- ------- ------- -------- -------- ----------
- realised
gains/(losses)
on disposal - 328 328 - (4) (4) (304)
--------------- -------- ------- ------- ------- -------- -------- ----------
- unrealised
valuation
gains/(losses) - 1,660 1,660 - (730) (730) (20,790)
--------------- -------- ------- ------- ------- -------- -------- ----------
- unrealised
foreign
exchange
gains/(losses) - (36) (36) - - - -
--------------- -------- ------- ------- ------- -------- -------- ----------
644 1,952 2,596 1,232 (634) 598 (18.876)
--------------- -------- ------- ------- ------- -------- -------- ----------
Investment
management
fees (448) (448) (896) (461) (461) (922) (1,940)
---------------- -------- ------- ------- ------- -------- -------- ----------
Other expenses (434) - (434) (758) - (758) (3,000)
---------------- -------- ------- ------- ------- -------- -------- ----------
(Loss)/gain on
ordinary
activities
before tax (238) 1,504 1,266 13 (1,095) (1,082) (23,816)
---------------- -------- ------- ------- ------- -------- -------- ----------
Tax on total
comprehensive
income and
ordinary
activities (128) 128 - (112) 112 - -
---------------- -------- ------- ------- ------- -------- -------- ----------
(Loss)/return
attributable to
equity
shareholders (366) 1,632 1,266 (99) (983) (1,082) (23,816)
---------------- -------- ------- ------- ------- -------- -------- ----------
Basic and (0.1p)
diluted return (0.2p) 1.1p 0.9p (0.7p) (0.8p) (17.7p)
per share
---------------- -------- ------- ------- ------- -------- -------- ----------
The total column within the Income Statement represents the Statement of
Total Comprehensive Income of the Company prepared in accordance with
Financial Reporting Standards ("FRS102"). There are no other items of
comprehensive income. The supplementary revenue and capital return
columns are prepared in accordance with the Statement of Recommended
Practice issued in November 2014 by the Association of Investment
Companies ("AIC SORP").
Statement of Changes in Equity
For the six months ended 30 September 2020
Capital Capital
Share redemption Share Funds held in respect of shares Special reserve Revaluation Revenue
Capital reserve premium account not yet allotted reserve -realised reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
For the six months ended 30 September 2020
--------------------------------------------------------------------- ------------------------------- -------- ---------- ----------- -------- -------
At 1 Apr 2020 1,440 1,615 54,703 5,775 34,587 - (8,504) (874) 88,742
---------------------------- -------- ----------- ---------------- ------------------------------- -------- ---------- ----------- -------- -------
Total comprehensive income - - - - - 8 1,624 (366) 1,266
---------------------------- -------- ----------- ---------------- ------------------------------- -------- ---------- ----------- -------- -------
Realisation of revaluations
from previous years* - - - - - (773) 773 - -
---------------------------- -------- ----------- ---------------- ------------------------------- -------- ---------- ----------- -------- -------
Realisation of impaired
valuations - - - - - (404) 404 - -
---------------------------- -------- ----------- ---------------- ------------------------------- -------- ---------- ----------- -------- -------
Transfer between
reserves** - - - - (3,251) 3,251 - - -
---------------------------- -------- ----------- ---------------- ------------------------------- -------- ---------- ----------- -------- -------
Transactions with owners
--------------------------------------------------- ---------------- ------------------------------- -------- ---------- ----------- -------- -------
Unallotted shares - - - (5,511) - - - (5,511)
---------------------------- -------- ----------- ---------------- ------------------------------- -------- ---------- ----------- -------- -------
Dividends paid - - - - - (2,082) - (1,039) (3,121)
---------------------------- -------- ----------- ---------------- ------------------------------- -------- ---------- ----------- -------- -------
Issue of new shares 137 - 7,791 - - - - - 7,928
---------------------------- -------- ----------- ---------------- ------------------------------- -------- ---------- ----------- -------- -------
Share issue costs - - - - (215) - - - (215)
---------------------------- -------- ----------- ---------------- ------------------------------- -------- ---------- ----------- -------- -------
Purchase of own
shares (13) 13 - - (733) - - - (733)
---------------------------- -------- ----------- ---------------- ------------------------------- -------- ---------- ----------- -------- -------
At 30 Sept 2020 1,564 1,628 62,494 264 30,388 - (5,703) (2,279) 88,356
---------------------------- -------- ----------- ---------------- ------------------------------- -------- ---------- ----------- -------- -------
* A transfer of GBP773,000 million representing previously recognised
unrealised losses on disposal of investments during the period ended 30
September 2019 (year ended 31 March 2020: gains GBP2.5 million) has been
made from the Capital reserve - realised to the Revaluation reserve.
** A transfer of GBP3.3 million representing realised gains on disposal
of investments, less net investment impairments and the excess of
capital expenses over capital income and capital dividends in the year
(year ended 31 March 2020: GBP16.5 million) has been made from the
Special Reserve to the Capital Reserves - realised.
Statement of Changes in Equity
For the year ended 31 March 2020
Funds
Capital held in respect of shares Capital
Share redemption Share not yet Special reserve Revaluation Revenue
Capital reserve premium account allotted reserve -realised reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
For the year ended 31 March 2020
------------------------------------------------------- ---------------- -------------------------- -------- ---------- ----------- -------- --------
At 1 Apr 2019 1,334 1,597 45,515 114 52,526 - 1,343 2,121 104,550
--------------------------------- ------- ----------- ---------------- -------------------------- -------- ---------- ----------- -------- --------
Total comprehensive
income - - - - - (917) (20,790) (2,109) (23,816)
--------------------------------- ------- ----------- ---------------- -------------------------- -------- ---------- ----------- -------- --------
Realisation of revaluations from
previous years - - - - - 2,488 (2,488) - -
--------------------------------- ------- ----------- ---------------- -------------------------- -------- ---------- ----------- -------- --------
Realisation of impaired
valuations - - - - - (13,431) 13,431 - -
--------------------------------- ------- ----------- ---------------- -------------------------- -------- ---------- ----------- -------- --------
Transfer between
reserves - - - - (16,499) 16,499 - - -
--------------------------------- ------- ----------- ---------------- -------------------------- -------- ---------- ----------- -------- --------
Transactions with owners
------------------------------------------ ----------- ---------------- -------------------------- -------- ---------- ----------- -------- --------
Dividends paid - - - - - (4,639) - (886) (5,525)
--------------------------------- ------- ----------- ---------------- -------------------------- -------- ---------- ----------- -------- --------
Utilised in share issue - - - (114) - - - - (114)
--------------------------------- ------- ----------- ---------------- -------------------------- -------- ---------- ----------- -------- --------
Unallotted shares - - - 5,775 - - - - 5,775
--------------------------------- ------- ----------- ---------------- -------------------------- -------- ---------- ----------- -------- --------
Issue of new shares 124 - 9,188 - - - - - 9,312
--------------------------------- ------- ----------- ---------------- -------------------------- -------- ---------- ----------- -------- --------
Share issue costs - - - - (151) - - - (151)
--------------------------------- ------- ----------- ---------------- -------------------------- -------- ---------- ----------- -------- --------
Purchase of own
shares (18) 18 - - (1,289) - - - (1,289)
--------------------------------- ------- ----------- ---------------- -------------------------- -------- ---------- ----------- -------- --------
At 31 Mar 2020 1,440 1,615 54,703 5,775 34,587 - (8,504) (874) 88,742
--------------------------------- ------- ----------- ---------------- -------------------------- -------- ---------- ----------- -------- --------
Unaudited Cash Flow Statement
For the six months ended 30 September 2020
30 Sep
2020 30 Sep 2019 31 Mar 2020
GBP'000 GBP'000 GBP'000
----------------------------------- ---------- ------ ----------- -----------
Cash flow from operating
activities
----------------------------------- ---------- ------ ----------- -----------
Profit/(loss) on ordinary activities
before taxation 1,266 (1,082) (23,816)
------------------------------------ ---------- ------ ----------- -----------
Loss/(gain) on investments (1,952) 734 21,094
------------------------------------ ---------- ------ ----------- -----------
Decrease/(increase) in debtors 763 (291) 1,284
------------------------------------ ---------- ------ ----------- -----------
(Decrease)/increase in creditors (86) 279 (28)
------------------------------------ ---------- ------ ----------- -----------
Cash from operations
----------------------------------- ---------- ------ ----------- -----------
Corporation tax paid - - -
----------------------------------- ---------- ------ ----------- -----------
Net cash (utilised)/generated
from operating activities (9) (360) (1,466)
------------------------------------ ---------- ------ ----------- -----------
Cash flow from investing activities
----------------------------------- ---------- ------ ----------- -----------
Purchase of investments (12,713) (4,208) (11,197)
------------------------------------ ---------- ------ ----------- -----------
Proceeds from disposal of
investments 1,206 6,570 10,997
------------------------------------ ---------- ------ ----------- -----------
Net cash generated/(utilised) from
investing activities (11,507) 2,362 (200)
------------------------------------ ---------- ------ ----------- -----------
Cash flows from financing
activities
----------------------------------- ---------- ------ ----------- -----------
Proceeds from share issue 7,928 480 9,312
------------------------------------ ---------- ------ ----------- -----------
Funds held in respect of shares not
yet allotted (5,511) 123 5,661
------------------------------------ ---------- ------ ----------- -----------
Share issue costs (215) (3) (151)
------------------------------------ ---------- ------ ----------- -----------
Purchase of own shares (467) (651) (1,382)
------------------------------------ ---------- ------ ----------- -----------
Equity dividends paid (3,121) (2,656) (5,525)
------------------------------------ ---------- ------ ----------- -----------
Net cash utilised from financing
activities (1,386) (2,707) 7,915
------------------------------------ ---------- ------ ----------- -----------
Decrease in cash (12,902) (705) 6,249
------------------------------------ ---------- ------ ----------- -----------
Net increase in cash
----------------------------------- ---------- ------ ----------- -----------
Beginning of period 23,471 17,222 17,222
------------------------------------ ---------- ------ ----------- -----------
Net cash outflow (12,902) (705) 6,249
------------------------------------ ---------- ------ ----------- -----------
End of period 10,569 16,517 23,471
------------------------------------ ---------- ------ ----------- -----------
Summary of Investment Portfolio
as at 30 September 2020
Valuation
movement % of portfolio
Cost Valuation in period by value
GBP'000 GBP'000 GBP'000
---------------------------- ------- --------- ---------- --------------
Top twenty venture capital
investments (by value)
---------------------------- ------- --------- ---------- --------------
Doneloans Limited 5,000 5,455 (36) 6.2%
---------------------------- ------- --------- ---------- --------------
Downing Care Homes Holdings
Limited 3,880 5,158 1,041 5.9%
---------------------------- ------- --------- ---------- --------------
Tracsis plc* 1,443 4,316 (193) 4.9%
---------------------------- ------- --------- ---------- --------------
Baron House Developments LLP 2,695 3,773 539 4.3%
---------------------------- ------- --------- ---------- --------------
Carbice Corporation 3,020 3,020 - 3.4%
---------------------------- ------- --------- ---------- --------------
Anpario plc* 1,448 2,412 495 2.8%
---------------------------- ------- --------- ---------- --------------
E-Fundamentals (Group)
Limited 1,342 2,408 1,067 2.7%
---------------------------- ------- --------- ---------- --------------
Downing Strategic Micro-Cap
Investment Trust plc** 5,197 2,332 106 2.7%
---------------------------- ------- --------- ---------- --------------
Pilgrim Trading Limited 2,594 2,120 - 2.4%
---------------------------- ------- --------- ---------- --------------
Cornelis Networks Inc 2,102 2,102 - 2.4%
---------------------------- ------- --------- ---------- --------------
Harrogate Street LLP 1,400 2,057 - 2.3%
---------------------------- ------- --------- ---------- --------------
Cadbury House Holdings
Limited 3,082 1,801 52 2.1%
---------------------------- ------- --------- ---------- --------------
Rated People Limited 1,282 1,583 301 1.8%
---------------------------- ------- --------- ---------- --------------
Parsable Inc 1,532 1,532 - 1.7%
---------------------------- ------- --------- ---------- --------------
Inland Homes plc* 1,526 1,496 214 1.7%
---------------------------- ------- --------- ---------- --------------
Virtual Class Limited t/a
Third Space Learning 1,039 1,471 665 1.7%
---------------------------- ------- --------- ---------- --------------
Curo Compensation Limited 1,663 1,459 316 1.7%
---------------------------- ------- --------- ---------- --------------
Impact Healthcare REIT plc** 1,518 1,442 140 1.6%
---------------------------- ------- --------- ---------- --------------
Data Centre Response Limited 557 1,316 8 1.5%
---------------------------- ------- --------- ---------- --------------
Nomansland Biogas Limited 1,300 1,300 - 1.5%
---------------------------- ------- --------- ---------- --------------
43,620 48,553 4,715 55.3%
---------------------------- ------- --------- ---------- --------------
Other venture capital
investments 52,156 28,495 (3,091) 32.6%
---------------------------- ------- --------- ---------- --------------
95,776 77,048 1,624 87.9%
---------------------------- ------- --------- ---------- --------------
Cash at bank and in hand 10,569 12.1%
---------------------------- ------- --------- ---------- --------------
Total investments 87,617 100%
---------------------------- ------- --------- ---------- --------------
All venture capital investments are unquoted unless otherwise stated.
* Quoted on AIM
** Listed and traded on the Main Market of the London Stock Exchange
The valuation movement in the period includes unrealised foreign
exchange losses of GBP36,000
Summary of Investment Movements
For the six months ended 30 September 2020
Additions
GBP'000
---------------------------- -------
Quoted growth investments
---------------------------- -------
Deepmatter plc 350
---------------------------- -------
Pelatro plc 290
---------------------------- -------
Feedback plc 250
---------------------------- -------
Immotion Group plc 200
---------------------------- -------
One Media IP Group plc 175
---------------------------- -------
1,265
---------------------------- -------
Unquoted growth investments
---------------------------- -------
Carbice Corporation 3,020
---------------------------- -------
Cornelis Networks Inc 2,102
---------------------------- -------
Parsable Inc 1,532
---------------------------- -------
Ayar Labs Inc 1,280
---------------------------- -------
Empiribox Limited 1,260
---------------------------- -------
Genincode Limited 600
---------------------------- -------
FundingXchange Limited 525
---------------------------- -------
TrinnyLondon Limited 443
---------------------------- -------
Curo Compensation Limited 244
---------------------------- -------
ADC Biotechnology Limited 167
---------------------------- -------
MIP Diagnostics Limited 150
---------------------------- -------
Virtual Class Limited 125
---------------------------- -------
11,448
---------------------------- -------
Total additions 12,713
---------------------------- -------
Summary of Investment Movements
For the six months ended 30 September 2020
Disposals
(Loss)/gain Realised
Value at Disposal against gain
Cost 31/03/20 proceeds cost in period
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------- ------- ---------- ---------- ----------- ----------
Quoted growth
investments
-------------------- ------- ---------- ---------- ----------- ----------
Science in Sport plc 210 109 112 (98) 3
-------------------- ------- ---------- ---------- ----------- ----------
Redhall Group plc 500 - - (500) -
-------------------- ------- ---------- ---------- ----------- ----------
Flowgroup plc 178 - - (178) -
-------------------- ------- ---------- ---------- ----------- ----------
888 109 112 (776) 3
-------------------- ------- ---------- ---------- ----------- ----------
Unquoted growth investments (including loan note redemptions)
------------------------------------------------------------------------------
Empiribox Limited 650 325 650 - 325
-------------------- ------- ---------- ---------- ----------- ----------
650 325 650 - 325
-------------------- ------- ---------- ---------- ----------- ----------
Unquoted yield focused investments (including loan
note redemptions)
------------------------------------------------------------------------------
Pearce and Saunders
Limited 110 440 440 330 -
-------------------- ------- ---------- ---------- ----------- ----------
Pearce and Saunders
DevCo Limited 4 4 4 - -
-------------------- ------- ---------- ---------- ----------- ----------
Quadrate Spa Limited 1,500 - - (1,500) -
-------------------- ------- ---------- ---------- ----------- ----------
1,614 444 444 (1,170) -
-------------------- ------- ---------- ---------- ----------- ----------
3,152 878 1,206 (1,946) 328
-------------------- ------- ---------- ---------- ----------- ----------
* adjusted for purchases in the period
Notes to the Unaudited Financial Statements
For the six months ended 30 September 2020
1. General information
Downing ONE VCT plc ("the Company") is a Venture Capital Trust
established under the legislation introduced in the Finance Act 1995 and
is domiciled in the United Kingdom and incorporated in England and
Wales.
2. Basis of accounting
The unaudited half-yearly financial results cover the six months to 30
September 2020 and have been prepared in accordance with the accounting
policies set out in the statutory accounts for the year ended 31 March
2020, which were prepared in accordance with the Financial Reporting
Standard 102 ("FRS102") and in accordance with the Statement of
Recommended Practice "Financial Statements of Investment Trust
Companies" revised November 2014 ("SORP").
3. The Company has only one class of business and derives its income
from investments made in shares, securities and bank deposits.
4. The comparative figures were in respect of the six months ended 30
September 2019 and the year ended 31 March 2020 respectively.
5. Return per share
Capital
Weighted average Revenue gain/
number of shares in issue (deficit)/return (loss)
---------------------------------------------
GBP'000 GBP'000
-------------------------------- ----------- ----------------- --------
Period ended 30 September
2020 153,783,770 (366) 1,632
-------------------------------- ----------- ----------------- --------
Period ended 30 September
2019 133,357,325 (99) (983)
-------------------------------- ----------- ----------------- --------
Year ended 31 March 2020 134,726,743 (2,109) (21,707)
-------------------------------- ----------- ----------------- --------
6. Dividends paid in the period
Six months ended Year ended
30 September 2020 31 March 2020
Revenue Capital Total Total
Date paid GBP'000 GBP'000 GBP'000 GBP'000
---------------- --------------- ------- ------- ------- --------------
18 Sept 2020:
2020 Final 2.0p 1,039 2,082 3,121 -
---------------- --------------- ------- ------- ------- --------------
28 Feb 2020:
2020 Interim 2.0p - - - 2,868
---------------- --------------- ------- ------- ------- --------------
30 Aug 2019:
2019 Final 2.0p - - - 2,657
---------------- --------------- ------- ------- ------- --------------
1,039 2,082 3,121 5,525
--------------------------------- ------- ------- ------- --------------
7. Basic and diluted net asset value per share
NAV
Shares in Net per
issue assets share
GBP'000 pence
----------------------------------- ----------- -------- ------
Period ended 30 September 2020 156,354,880 88,356 56.3
----------------------------------- ----------- -------- ------
Period ended 30 September 2019 132,902,307 100,556 75.5
----------------------------------- ----------- -------- ------
Year ended 31 March 2020 143,984,140 88,742 57.6
----------------------------------- ----------- -------- ------
8. Called up share capital
Shares in issue GBP'000
----------------------------------- --------------- -------
Period ended 30 September 2020 156,354,880 1,564
------------------------------------- --------------- -------
Period ended 30 September 2019 132,902,307 1,329
------------------------------------- --------------- -------
Year ended 31 March 2020 143,984,140 1,440
------------------------------------- --------------- -------
9. Reserves
The Special reserve is available to the Company to enable the purchase
of its own shares in the market without affecting its ability to pay
dividends/capital distributions.
30 Sep 30 Sep 31 Mar
2020 2019 2020
GBP'000 GBP'000 GBP'000
------------------------------------- ----------- ----------- -------
Capital redemption reserve 1,628 1,608 1,615
------------------------------------- ----------- ----------- -------
Share premium account 62,494 45,989 54,703
------------------------------------- ----------- ----------- -------
Funds held in respect of shares
not yet allotted 264 237 5,775
------------------------------------- ----------- ----------- -------
Special reserve 30,388 51,965 34,587
------------------------------------- ----------- ----------- -------
Revaluation reserve (5,703) (1,709) (8,504)
------------------------------------- ----------- ----------- -------
Revenue reserve (2,279) 1,137 (874)
------------------------------------- ----------- ----------- -------
Total reserves 86,792 99,227 87,302
------------------------------------- ----------- ----------- -------
Distributable reserves are calculated as follows:
30 Sep 30 Sep 31 Mar
2020 2019 2020
GBP'000 GBP'000 GBP'000
------------------------------------------------------------- -------- --------- --------
Special reserve 30,388 51,965 34,587
------------------------------------------------------------- -------- --------- --------
Revenue reserve (2,279) 1,137 (874)
------------------------------------------------------------- -------- --------- --------
Unrealised gains/(losses) (excluding unrealised unquoted
gains) (12,839) (10,144) (12,381)
------------------------------------------------------------- -------- --------- --------
15,270 42,958 21,332
------------------------------------------------------------- -------- --------- --------
10. Investments
The fair value of investments is determined using the detailed
accounting policy as shown in the audited financial statements for the
year ended 31 March 2020. The Company has categorised its financial
instruments using the fair value hierarchy as follows:
Level 1 Reflects financial instruments quoted in an active market
(quoted companies and fixed interest bonds);
Level 2 Reflects financial instruments that have prices that are
observable either directly or indirectly; and
Level 3 Reflects financial instruments that use valuation techniques
that are not based on observable market data (investments in unquoted
shares and loan note investments).
30 Sep 31 Mar
Level 1 Level 2 Level 3 2020 Level 1 Level 2 Level 3 2020
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------- --------- --------- --------- ------- --------- --------- --------- -------
Quoted on
AIM 16,672 - - 16,672 14,210 - - 14,210
--------- --------- --------- --------- ------- --------- --------- --------- -------
Quoted on
NEX 3 - - 3 - - - -
--------- --------- --------- --------- ------- --------- --------- --------- -------
Quoted on
main
market 3,775 - - 3,775 3,528 - - 3,528
--------- --------- --------- --------- ------- --------- --------- --------- -------
Unquoted
loan
notes - - 19,043 19,043 - - 19,039 19,039
--------- --------- --------- --------- ------- --------- --------- --------- -------
Unquoted
equity - - 37,555 37,555 - - 26,813 26,813
--------- --------- --------- --------- ------- --------- --------- --------- -------
20,450 - 56,598 77,048 17,738 - 45,852 63,590
--------- --------- --------- --------- ------- --------- --------- --------- -------
11. The unaudited financial statements set out herein do not constitute
statutory accounts within the meaning of Section 434 of the Companies
Act 2006 and have not been delivered to the Registrar of Companies. The
figures for the year ended 31 March 2020 have been extracted from the
financial statements for that year, which have been delivered to the
Registrar of Companies; the Auditor's report on those financial
statements was unqualified.
12. Going concern
The Directors have reviewed the Company's financial resources at the
period end and concluded that the Company is well placed to manage its
business risks.
The Directors confirm that they are satisfied that the Company has
adequate resources to continue to operate for the foreseeable future.
For this reason, the Directors believe that the Company continues to be
a going concern and that it is appropriate to apply the going concern
basis in preparing the financial statements.
13. Risks and uncertainties
Under the Disclosure and Transparency Rules, the Board is required, in
the Company's half-year results, to report on principal risks and
uncertainties facing the Company over the remainder of the financial
year. The impact of the coronavirus pandemic has created heightened
uncertainty buy has not changed the nature of these risks.
The Board has concluded that the key risks are:
(i) compliance risk of failure to maintain approval as a VCT; and
(ii) investment risk associated with investing in small and immature
businesses.
The Company's compliance with the VCT regulations is continually
monitored by the Adviser, who regularly reports to the Board on the
current position. The Company also retains Philip Hare & Associates LLP
to provide regular reviews and advice in this area.
In order to make VCT qualifying investments, the Company has to invest
in small businesses which are often immature. 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 into VCT qualifying investments. The Adviser
follows a rigorous process in vetting and careful structuring of new
investments, including taking a charge over the assets of the business
wherever possible and, after an investment is made, closely monitoring
the business.
The Board is satisfied that these approaches provide satisfactory
management of the key risks.
14. The Directors confirm that, to the best of their knowledge, the half
yearly financial report has been prepared in accordance with the
"Statement: Half-Yearly Financial Reports" issued by the UK Accounting
Standards Board as well as in accordance with FRS 104 Interim Financial
Reporting and the half-yearly financial report includes a fair review of
the information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an
indication of important events that have occurred during the first six
months of the financial year and their impact on the condensed set of
financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related
party transactions that have taken place during the first six months of
the current financial year and that have materially affected the
financial position or performance of the entity during that period, and
any changes in the related party transactions described in the last
annual report that could do so.
15. Copies of the unaudited half-yearly financial results will be sent
to Shareholders shortly. Further copies can be obtained from the
Company's Registered Office and will be available for download from
www.downing.co.uk/d1
(END) Dow Jones Newswires
December 18, 2020 09:18 ET (14:18 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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