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Downing One VCT Plc (DDV1)

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Tuesday 09 July, 2019

Downing One VCT Plc

Annual Financial Report

Annual Financial Report

Report & Accounts for the year ended 31 March 2019


 31 Mar 31 Mar
 2019 2018
 Pence Pence
Net asset value per share (“NAV”)78.3 87.5
Cumulative dividends paid since 12 November 201331.5 25.5
Total return (net asset value plus cumulative dividends paid per share)109.8 113.0
Dividends in respect of financial year   
Interim dividend per share3.0 3.0
Proposed final dividend per share2.0 3.0
 5.0 6.0


I present the Company’s Annual Report for the year ended 31 March 2019.

The year saw an increased level of investment activity as the task of employing new funds got underway, along with a number of realisations from some of the existing investments.

The general falls in stock markets in the last quarter of 2018 were reflected in the Company’s quoted investments with only limited recovery seen up to the 31 March 2019.  In the first quarter of 2019, it is disappointing to note that there were also some negative developments in a small number of the unquoted investee companies. This has resulted in a decrease in net asset value (after adjusting for dividends) across the year.

Net asset value and results
As at 31 March 2019, the net asset value per share (“NAV”) stood at 78.3p, a decrease of 3.2p (3.7%) after adding back dividends of 6.0p per share which were paid during the year.

The Income Statement shows a loss attributable to equity shareholders for the year of £4.3 million comprising a revenue gain of £2.6 million and a capital loss of £6.9 million.

Investment activity and performance
At the year end, the Company held a portfolio of 89 investments. Of these, 32 are either quoted on AIM or the NEX Exchange Growth Market and have a value of £27.6 million (32.7% of the portfolio). The 57 unquoted investments have a value of £56.8 million and represent 67.3% of the portfolio.

The year under review saw an unrealised loss of £6.3 million across the portfolio, with the unrealised losses in the unquoted portfolio totalling £4.1 million and the unrealised losses in the quoted portfolio totalling £2.2 million. The quoted investments followed the general stock market falls in late 2018. Although markets have recovered somewhat since, the prices of many of our quoted stocks remain depressed although the Investment Adviser is confident that prospects remain positive for these businesses.

In the unquoted investments, there have been some businesses where valuation reductions have been recognised at an early stage.

As the Board and Investment Adviser anticipated, a typical feature of investing in young growth companies is that the weaker businesses in a portfolio tend to become more apparent before the stronger businesses prove themselves as such. It is therefore in line with expectations that some investments have underperformed so far which have not been offset by uplifts and provisions have been made as a result.

Provisions have been required against the investments in Yamuna Renewables Limited, Glownet Limited, Jito Trading Limited and Quadrate Spa Limited, accounting for the majority of the unquoted fall. Prospects for recovery are less clear here although the Investment Adviser is working closely with each business to that end.

Further details on the investment activity are included in the Investment Adviser’s Reports below.

The Company has a policy of seeking to pay annual dividends of at least 4% of net assets per annum.

The Board is proposing to pay a final dividend of 2.0p per share to be paid on 30 August 2019, subject to Shareholder approval at the forthcoming AGM, to Shareholders on the register at 9 August 2019. This will bring total dividends in respect of the year ended 31 March 2019 to 5.0p per share (2018: 6.0p), which represents a yield based on opening NAV of 5.7% pa.

Shareholders are reminded that the Company operates a Dividend Reinvestment Scheme for those investors that wish to reinvest their dividends and obtain further income tax relief on the reinvested dividend. A Dividend Reinvestment Form is available on Downing’s website or further information can be obtained by contacting Downing.

Share buybacks
The Company continues to operate 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 year, the Company purchased and subsequently cancelled 2,300,328 shares at an average price of 79.8p per share.

The Company retains Panmure Gordon as its corporate broker to assist in operating the share buyback process and ensuring that the quoted spread on the Company’s shares remains at a reasonable level.

Annual General Meeting
The Company’s next Annual General Meeting (“AGM”) will be held at Downing LLP, 6th floor, St. Magnus House, 3 Lower Thames Street, London, EC3R 6HD at 10.45 a.m. on 29 August 2019.

Three items of special business are proposed at the AGM:
- one in respect of the authority to buy back shares as noted above, and
- two in respect of the authority to allot shares.

The authority to allot shares ensures the Company will be able to allot shares to monthly investors and also give the Board the opportunity to consider further fundraising options without having to necessarily incur the expense of seeking separate approval via a shareholder circular. Any decision on future fundraising will, of course, give consideration to the level of uninvested funds already held by the Company and the rate of investment.

The year to 31 March 2019 has been another busy period for your Company, which we expect to continue throughout the next financial year.

With the backdrop of Brexit, the economic and political environment in the UK has remained uncertain over the past year and little clarity has been obtained as to the likely outcome of the continued negotiations between the UK and EU. The Board believes that this may result in some volatility in the quoted portfolio until this is resolved, but that in the longer term the quoted investments can deliver good results.

Close monitoring and support of the investee companies has always been a key part of the Investment Adviser’s role. With all new investments tending now to be younger growth businesses as a result of some significant changes to the VCT scheme in the last three years, this task is more important than ever and requires a wide range of skills. As the portfolio generally shifts towards a greater proportion of younger businesses, the associated risk level also increases. However, the potential rewards from such investments is also much greater and the success rate from those will ultimately drive the future returns of the Company.

Over the next year, we expect to see a significant number of new investments made. The Board has firm plans to undertake a new Offer for Subscription for the 2019/20 tax year to ensure that the Company has resources to continue investing. As part of the discussions with the Investment Adviser, the Board are also planning the introduction of a performance incentive scheme, changes to the investment advisory arrangements and also refreshing the investment policy in line with recent HMRC changes. Full details will be sent to Shareholders as they become available.

I look forward to meeting Shareholders at the AGM and to reporting developments in my statement with the Half Year Report to 30 September 2019.

Chris Kay


We are pleased to present a review of the investment portfolio and activity over the last financial year. Our review is split into three parts comprising this overview, a detailed report on the unquoted investments and a report on quoted investments.

Portfolio Overview
At 31 March 2019, the Company held a portfolio with a value of £84.5 million comprising 89 quoted and unquoted companies, across a diverse range of sectors in both growth and income-focussed investments.

The underlying investments in the portfolio have shifted from income to growth investments in line with changes in the VCT regulations, with there being a 50/50 split between the two categories as at the 2019 year end.

It is our expectation that the proportion of growth investments in the portfolio, particularly unquoted growth investments, will continue to increase over the coming years. By way of an example, five of the six follow on investments during the year were into growth companies.

As a result, we expect to see the portfolio benefitting from the higher rewards that can arise from backing such growth businesses going forward.

As demonstrated in the prior period, the proportion of the portfolio in maturing investments has increased further over the year.

Portfolio Performance
The performance of the portfolio over the year has resulted in an unrealised loss of £6.3 million (2018: £2.3 million) with the unquoted portfolio generating an unrealised loss of £4.1 million and the quoted portfolio generating an unrealised loss of £2.2 million. Overall 76% of the portfolio is held at a valuation either at or above cost.

The net unrealised losses in the quoted portfolio totalled £2.2 million. The largest unrealised gains in the quoted portfolio were Craneware plc (£1.2 million), Tracsis plc (£925,000) and Pennant International Group plc (£151,000). These were offset by unrealised losses on Downing Strategic Micro Cap Investment Trust plc (£1.05 million), Anpario plc (£619,000) and Finsbury Food Group plc (£610,000). An analysis of the unrealised gains and losses are detailed further within the report on quoted investments.

The unrealised losses in the unquoted portfolio totalled £4.1 million. Within the unquoted portfolio the largest unrealised gains were on Doneloans Limited (£626,000) and Pearce and Saunders Limited (£333,000). These were offset by unrealised losses on Yamuna Renewables Limited (£2.5 million), Quadrate Spa Limited (£808,000), Jito Trading Limited (£625,000) and Glownet Limited (£556,000).

Realised losses (over carrying value) in the period mostly came from the quoted portfolio with a £617,000 loss generated from the sale of Amino Technologies plc. This was offset by the realised gain on Ludorum plc of £750,000. Other net realised losses over the period totalled £163,000.

The losses over the period have arisen mainly from the quoted portfolio and unquoted income focussed portfolio. The quoted portfolio has fallen as a result of a sustained period of volatility and uncertainty over the year 31 March 2019. The unquoted income focussed investment portfolio incurred some negative developments at the period end, resulting in valuation write downs.

Further details on these and other movements can be found within the quoted and unquoted Investment Adviser Reports.

Continued income generation
As noted above, whilst the proportion of income-focussed investments by value in the portfolio continues to decline to 50% (2018: 57%), we continue to see income generated increase to £4.7 million in 2019 (2018: £3.9 million) across the portfolio, which is higher than it has been in any year since the merger date (2013).
A main contributor to the increased revenue over the period as a result of receiving large loan stock receipts that were previously provided for, as well as increased dividend receipts from the quoted portfolio.

Portfolio Composition
Following the close of the 2017/18 fundraising during the year, the level of funds held in cash fell as the Company invested a total of £12.5 million into 12 new and six follow on investments with a good pipeline in place for the remaining funds.

The diversified portfolio of the Company shows that the main sectors in which the Company has invested are Leisure, Alternative Energy and Software and Computer Services, albeit the maximum exposure to any sector is 15%.

Net asset value and results
The net asset value per Share (“NAV”) at 31 March 2019 stood at 78.3p, compared to the NAV at 31 March 2018 of 87.5p. Total Return (NAV plus cumulative dividends paid since the merger in 2013) is 109.8p, compared to the Total Return at 31 March 2018 of 113.0p.

The loss on ordinary activities after taxation for the year was £4.3 million (2018: profit of £4.8 million), comprising a revenue profit of £2.6 million (2018: £2.1 million) and a capital loss of £6.9 million (2018: gain of £2.7 million).

As demonstrated over the period, our pipeline of suitable investments continues to develop which we expect to maintain for the remainder of the period.

The falls in value experienced at the end of the reporting period are disappointing. We have dedicated significant resources to the unquoted portfolio companies in question to address the issues that are developing. The falls in the quoted stocks are driven partly by market conditions. We remain positive on the key drivers within the quoted portfolio on the basis of the fundamentals and the valuations on which they trade. We are confident that we have a well diversified quoted and unquoted portfolio that offers upside potential despite the current challenges faced and expect to see progress over the next year.

Close monitoring and support of the entire portfolio will continue to be the primary focus, as well as deploying the remaining funds held.

We present a review of the unquoted investment portfolio for the year ended 31 March 2019.

Investment activity
At 31 March 2019, the unquoted portfolio of 57 investments was valued at £56.8 million.  

During the period, the Company invested a total of £11.5 million in unquoted companies comprising 11 new opportunities and six follow-on investments. 

The 11 new investments were as follows: -

Rated People Limited (£1.3 million) is the UK’s leading home services marketplace and recommendation website, covering over 30 trade categories.

Lignia Wood Company Limited (£1.1 million) has developed a patented production process to turn softwood into modified wood with hardwood properties.

Firefly Learning Limited (£1.0 million) is an educational technology business that provides virtual learning management software to over 500 schools globally.

Imagen Limited (£1.0 million) has developed a cloud-based enterprise video platform that allows users to store, curate and sell video content.

Live Better With Limited (£990,000) is a developer of a healthcare website aiming to help people with long-term medical conditions, focusing on non-medical products that improve the quality of life for patients.

Virtual Class Limited (£914,000) is an educational technology business which provides online maths tuition for Key Stage 2 primary school children.

Hackajob Limited (£784,000) is a disruptive recruitment software business for sourcing, screening and hiring technical talent into the software industry.

Glownet Limited (£741,000) provides a cashless payment system for live events, such as festivals, concerts and fairs.

Exonar Limited (£500,000) is a “SaaS” (Software as a Service) business that helps enterprises map and index data stored across various data stores and databases.

Channel Mum Limited (£200,000) is a digital online media company targeting millennial mums. The company has an audience of c7 million and charges blue-chip FMCG and parenting brands for hosting video advertising content on the company’s website.

Masters of Pie Limited (£167,000) is the software author of a collaborative virtual reality software package for Computer Aided Design (“CAD”) systems that has been developed with Siemens.

Follow on investments totalling £2.8 million were made into Avid Technology Group Limited (£651,000), E-Fundamentals Limited (£639,000), Xupes Limited (£450,000), BridgeU Corporation (£417,000), Curo Compensation Limited (£330,000) and Empiribox Limited (£278,000).

Details of the realisations of investments in the year are set out below. Total proceeds of £2.8 million were generated, producing profits over holding value of £587,000.

Ludorum plc, the owner of the intellectual property rights to various children’s entertainment brands, was the biggest disposal during the year and with its loan notes being redeemed prior to the end of 2018 at a profit over carrying value of £750,000.

Oak Grove Renewables Limited, an anaerobic digestion plant in Norfolk, achieved proceeds of £869,000, representing a gain over opening value of £17,000.

The gains in the portfolio were offset against the loss from Tramps Night Club Limited, a night club complex in central Worcester. The loan stock was redeemed during the year at a loss over carrying value of £192,000.

Portfolio valuation
The unquoted portfolio performance for the year was a fall in value of £4.1 million (7.9% of the unquoted opening value).

Doneloans Limited, a non-qualifying investment company was uplifted by £626,000 as a result of positive outcomes on its loan book.

Pearce and Saunders Limited, the owner of three freehold pubs in south east London, was uplifted by £333,000 in line with expected exit proceeds from site sales that are currently underway.

Avid Technologies Group Limited, a manufacturer of electrified ancillaries for internal combustion engines, was uplifted by £308,000 following a recent funding round led by Maven Capital.

The period to 31 March 2019 has also seen a number of disappointing developments, resulting in a number of valuation write downs at the period end. The most notable write down related to Yamuna Renewables Limited, the developer of a wood pelleting plant in Gars am Kamp, Austria, which suffered a fall in value of £2.5 million following some substantial operational issues experienced at the site. The facility has been brought back to full operational capability and an insurance claim is being pursued, but the interruption in supply during the key season trading period has impacted customer confidence.

Quadrate Spa Limited, which owns and operates a health club business in The Cube complex in Birmingham, has been written down by £808,000 following poor performance.

Jito Trading Limited, the operator of a wood pelleting plant in Weitra, Austria, has been written down by £625,000 following concerns over the future prospects of the business.

Glownet Limited, the provider of a cashless payment platform for live events has been written down by £556,000 following the requirement for further funding and significant underperformance.

Indigo Generation Limited and Ironhide Generation Limited are developing solar farms in India. Both plants were expected to complete during 2019, however due to monsoon season, construction of the sites has been delayed leading to each company being written down by £276,000 respectively.

Over the year to 31 March 2019, a number of portfolio companies have faced significant challenges which has impacted performance. We continue to work closely with these companies to optimise return and we believe the portfolio includes businesses that can deliver good rewards over time. We are confident that the current deal flow will continue throughout the next period as we continue to employ the company’s funds.

Downing LLP


Investment activity
As at 31 March 2019, the quoted portfolio was valued at £27.6 million comprising of 32 holdings. Over 46% of the quoted portfolio is accounted for in the top 10 holdings, reflecting the Manager’s focused investment strategy.

The quoted portfolio saw relatively little investment activity during the year. During the period there were three full exits in Amino Technologies plc, Avacta Group plc and Mi-Pay Group plc, and one new VCT qualifying investment in Bonhill Group plc.

Overall the quoted portfolio produced unrealised losses of £2.2 million. The most notable movements in the portfolio over the period are discussed below.

Portfolio Movements
The main positive contributor to performance was Craneware plc, a market leader in Value Cycle solutions for the US healthcare industry. Its latest unaudited results for the six months ended 31 December 2018 highlighted that revenues had increased by 15%, adjusted EBITDA increased by 20% and profit before tax increased by 7%. The valuation of Craneware increased by 38.6% over the period, contributing £1.2 million of unrealised gains to the portfolio. Since the year end, Craneware announced that whilst the group continues to sign new contracts with hospitals of all strata, the timing and quantity of sales closed recently has been lower than anticipated. The market has reacted negatively to this resulting in a sharp fall in share price.

Tracsis plc, a leading provider of transport software and services for the rail, traffic data and wider transportation industries, also delivered positive returns over the period. The group announced interim results for the six months ended 31 January 2019 which demonstrated that the group continues to trade well and has experienced a further period of profitable growth. Management reported that Tracsis has secured a five year framework agreement, its largest software contract to date, and made two acquisitions over the period. Tracsis is well placed to deliver full year results in line with market expectations, with the second half of the year expected to be stronger given the seasonality in the business and the contribution from the new acquisitions. The valuation of the company increased by 24% over the period, contributing an unrealised gain of £925,000.

Negative contributors included the Downing Strategic Micro-Cap Investment Trust plc (“DSM”), which reported a decrease in value of £1.05 million as its share price fell by 22.8%. DSM is a concentrated portfolio of UK micro-cap investments with the target to achieve compound returns of 15% per year over a three to seven year period. DSM overlays various strategic mechanisms to unlock and realise the underlying value of holdings. The majority of these companies are experiencing some degree of change and recovery, but these are not ‘quick fixes’ and tend to have a natural gestation period, hence the portfolio is not expected to perform over the very short term while transformations are underway. Notably, we believe that the quantifiable unrealised intrinsic value of the portfolio is higher than at any point in its history.

Anpario plc also suffered a fall in its share price, reporting a decrease of 23.8% over the period, resulting in an unrealised loss of £619,000. Anpario is an international producer and distributor of natural animal feed additives for animal health, nutrition and biosecurity. Management reported that the challenging trading environment had held back sales, while the rapid spread of African Swine Fever in China and the strengthening of the US dollar had influenced the groups’ performance. The board is focused on controlling costs while implementing development initiatives that deliver encouraging results.

Investment activity
The one new investment to the portfolio, Bonhill Group plc, is a leading business to business (B2B) media business specialising in three key areas, business information, live events and data and insight. Recently reported operational highlights for the group include the transformational acquisition of InvestmentNews, a market-leading US brand, which completed in August 2018. Management reported that the integration plan is on track and InvestmentNews is performing well, which gives confidence in Bonhill’s acquisition strategy. The company also announced the proposed acquisition of Last Word Media, a leading B2B media company supporting the global asset management industry. Last Word is aligned to the group’s growth strategy and we believe that it will be an excellent partner for the InvestmentNews business.

While macro trends and political uncertainty have remained consistent features over the period, we are cautiously optimistic that once the outcome of the Brexit negotiations becomes clearer, the performance of the UK equity market will improve. While stock markets may well remain volatile in the short term, we believe the outlook for young and growing UK companies remains positive.

We are confident that we have a well diversified portfolio of attractive companies of varying maturities that offer significant upside potential.

Downing LLP


Portfolio of investments
The following investments, all of which are incorporated in England and Wales, were held at 31 March 2019:










in year


% of
by value

Total invested
 by Funds also
 managed by
 Downing LLP
 £’000£’000£’000  £’000
Top ten venture capital investments       
Doneloans Limited5,0005,6266265.5% -
Tracsis plc1,4434,8559254.8% 2,343
Downing Care Homes Holdings Limited3,8814,495-4.4% -
Craneware plc8504,3661,2154.3% 1,093
Leytonstone Pub Limited1,9113,686-3.6% -
Downing Strategic Micro-Cap Investment Trust plc5,0003,550(1,050)3.5% 4,800
Cadbury House Holdings Limited3,0813,075-3.0% 882
Baron House Developments LLP2,6952,695-2.6% 2,055
Pilgrim Trading Limited2,5942,594-2.6% 3,827
Xupes Limited2,2502,250-2.2% 1,127
 28,70537,1921,71636.5% 16,127
Other quoted investments      
Anpario plc*1,4481,979(619)1.9% 2,206
Inland Homes plc*1,5261,801(61)1.8% 2,283
Universe Group plc*1,5051,361(340)1.3% 1,853
Vianet Group plc*9521,170(153)1.2% -
Bonhill Group plc*1,0001,1001001.1% 2,543
Impact Healthcare REIT plc***1,0181,050501.0% -
Science in Sport plc*1,2391,005(453)1.0% 3,227
Pittards plc*1,350698(225)0.7% 1,898
Cohort plc*393689290.7% -
Finsbury Food Group plc*655688(610)0.7% 1,301
Pennant International Group plc*3355421510.5% 1,310
Angle plc*678523860.5% -
Sanderson Group plc*336461850.5% 2,240
Norman Broadbent plc*906316(15)0.3% 1,322
Brooks Macdonald Group plc*257290(23)0.3% 1,885
SysGroup plc*377238(13)0.2% 1,561
Brady Public Limited Company*272225(8)0.2% -
Frontier IP Group plc*30180(9)0.2% -
Redhall Group plc*500170(555)0.2% 5,845
Dillistone Group plc*411131(199)0.1% -
Fireangel Safety Technology Group plc*54572(443)0.1% 8,224
ACHP plc*6165(35)0.1% -
Pressure Technologies plc*24956(33)0.1% -
MI Downing UK Micro-Cap Growth Fund***5043(7)0.0% 5,150
Wheelsure Holdings plc**4818(11)0.0% -
AIQ Limited-330.0% -
Flowgroup plc*385-(1)0.0% -
 16,52614,874(3,309)14.7% 42,848
Other unquoted investments      
Jito Trading Limited2,5001,875(625)1.8% 2,500
Avid Technologies Group Limited1,3501,6593081.6% -
Pearce and Saunders Limited1,3201,6533331.6% 1,680
Pantheon Trading Limited1,5001,500-1.5% -
Harrogate Street LLP1,4001,400-1.4% -
Nomansland Biogas Limited1,3001,300-1.3% 5,260
Rated People Limited1,2821,282-1.3% 2,949
Data Centre Response Limited5571,2662221.2% -
Quadrate Catering Limited1,5001,237(263)1.2% 2,300
Lignia Wood Company Limited1,1111,200891.2% 2,222
Curo Compensation Limited1,4181,197381.2% 705
Firefly Learning Limited1,0471,047-1.0% 2,271
Imagen Limited1,0001,000-1.0% 2,086
Live Better With Limited991991-1.0% 3,970
E-Fundamentals (Group) Limited917917-0.9% 1,472
Kimbolton Lodge Limited6649051810.9% -
Empiribox Limited1,028897(131)0.9% 1,577
Fenkle Street LLP346836220.8% 1,300
BridgeU Corporation810810-0.8% 810
Hackajob Limited784784-0.8% 1,324
Quadrate Spa Limited1,872692(808)0.7% 3,258
Virtual Class Limited914663(251)0.7% 1,469
Wickham Solar Limited473660100.6% 4,553
Indigo Generation Limited920644(276)0.6% 3,880
Ironhide Generation Limited920644(276)0.6% 3,880
Rockhopper Renewables Limited738642(96)0.6% 3,820
Downing Pub EIS One Limited490626260.6% 5,862
Pabulum Pubs Limited607607-0.6% -
Volo Commerce Limited567567-0.6% 567
Exonar Limited500500-0.5% 1,035
SF Renewables (Solar) Limited422447250.4% 6,778
Fresh Green Power Limited378420(42)0.4% 566
FCT No.1 Limited228398-0.4% -
Limitless Technology Limited174219460.2% 1,076
Channel Mum Limited200200-0.2% 1,551
Glownet Limited741185(556)0.2% 1,479
Masters of Pie Limited167167-0.2% 1,000
Green Energy Production UK Limited200102(57)0.1% 300
Pearce and Saunders DevCo Limited8888-0.1% 112
Leytonstone Pub No1 Limited8181-0.1% -
Mosaic Spa and Health Clubs Limited70658(54)0.1% 224
Ludorum plc1,76935350.0% -
Tawa Associates Limited-16160.0% -
Yamuna Renewables Limited2,500-(2,500)0.0% 2,500
London City Shopping Centre Limited110-(110)0.0% 489
The Thames Club Limited175--0.0% 2,800
Top Ten Holdings plc399--0.0% -
Resource Reserve Recovery Limited6--0.0% -
Tramps Night Club Limited263--0.0% -
 39,43332,417(4,694)31.9% 79,625
Total investments84,66484,483(6,287)83.1% 138,600
Cash at bank and in hand 17,222 16.9%  
  101,705 100.0%  

The Company also invested into Golden Rock Global plc and Mining, Minerals & Metals plc. These investments were acquired at negligible value and continued to be valued at the same level.

All venture capital investments are unquoted unless otherwise stated.

* Quoted on AIM
** Quoted on the NEX Exchange Growth Market
*** Quoted on the Main Market of the London Stock Exchange

(1) Other self-managed and discretionary managed funds also managed by Downing LLP as Investment Manager or Adviser as at 31 March 2019:

- Downing TWO VCT plc
- Downing THREE VCT plc
- Downing FOUR VCT plc
- MI Downing UK Micro-Cap Growth Fund
- MI Downing Monthly Income Fund
- Downing Strategic Micro-Cap Investment Trust plc
- Downing AIM Estate Planning Service and Downing AIM NISA
- Downing Renewables EIS
- Downing Indian Solar EIS
- Downing Ventures EIS
- Downing Pub EIS
- Downing EIS

Investment movements for the year ended 31 March 2019


Bonhill Group plc1,000
Rated People Limited1,282
Lignia Wood Company Limited1,111
Firefly Learning Limited1,047
Imagen Limited1,000
Live Better With Limited990
Virtual Class Limited914
Hackajob Limited784
Glownet Limited741
Avid Technology Group Limited651
E-Fundamentals Limited639
Exonar Limited500
Xupes Limited450
BridgeU Corporation417
Curo Compensation Limited330
Empiribox Limited278
Channel Mum Limited200
Masters of Pie Limited167


  Value at (loss) vsgain/
Mi-Pay Group plc1132226(87)4
Avacta Group plc1676763(104)(4)
Amino Technologies plc7001,066449(251)(617)
Unquoted (including loan note redemptions)     
Ludorum plc1,5007501,500-750
Oak Grove Renewables Limited1,365852869(496)17
VSA Capital Limited--777
Mosaic Spa and Health Clubs Limited191619-3
Kidspace Adventures Holdings Limited--111
Fubar Stirling Limited12778(119)1
Universe Group plc808080--
Chester (HH) Spa and Leisure Club Limited297--(297)-
Gatewales Limited55949439-
Tramps Night Club Limited493365173(320)(192)

* Adjusted for purchases in the year where applicable

Directors’ responsibilities statement

The Directors are responsible for preparing the Strategic Report, the Report of the Directors, the Directors’ Remuneration Report, the separate Corporate Governance Statement and the financial statements in accordance with applicable law and regulations. They are also responsible for ensuring that the annual report includes information required by the Listing Rules of the Financial Conduct Authority.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements 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). Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.

In preparing these financial statements, the Directors are required to:

- select suitable accounting policies and then apply them consistently;
- make judgments and accounting estimates that are reasonable and prudent;
- state whether the financial statements have been prepared in accordance with applicable UK Accounting Standards, subject to any material departures disclosed and explained in the financial statements; and
- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and to disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements and the Directors Remuneration Report comply with the Companies Act 2006.

They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

In addition, each of the Directors considers that the Annual Report, taken as a whole, is fair, balanced and undertakes and provides the information necessary to assess the Company’s position, performance, business model and strategy.

for the year ended 31 March 2019

 Year ended 31 March 2019 Year ended 31 March 2018
 RevenueCapitalTotal RevenueCapitalTotal
 £’000£’000£’000 £’000£’000£’000
Income 4,5931344,727 3,858-3,858
Gains on investments -(6,317)(6,317) -3,3363,336
  4,593(6,183)(1,590) 3,8583,3367,194
Investment management fees (975)(975)(1,950) (835)(835)(1,670)
Other expenses (732)-(732) (687)-(687)
Return on ordinary activities before  tax 2,886(7,158)(4,272) 2,3362,5014,837
Tax on total comprehensive income and ordinary activities   






Return/(loss) attributable to equity shareholders

2,634(6,906)(4,272) 2,0982,7394,837
Basic and diluted return per share  2.0p(5.2p)(3.2p) 2.0p2.6p4.6p

The total column within the Income Statement represents the Statement of Total Comprehensive Income of the Company prepared in accordance with Financial Reporting Standards (“FRS 102”). 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 and updated in January 2017 by the Association of Investment Companies (“AIC SORP”).

for the year ended 31 March 2019



up Share
premium account
Funds held in respect of shares not yet allottedSpecial


For the year ended 31 March 2019       
At 1 April
Total comprehensive









Realisation of revaluations
 from previous years*









Realisation of impaired valuations 









Transfer between









Transactions with owners         
Dividends paid-----(6,679)-(1,341)(8,020)
Unallotted shares---(12,762)----(12,762)
Issue of new shares157-13,854-----14,011
Share issue costs----(470)---(470)
Purchase of own shares**(23)23--(1,845)---(1,845)
At 31 March 20191,3341,59745,51511452,526-1,3432,121104,550
For the year ended 31 March 2018       
At 1 April 20171,0161,55313,387-77,049-(1,002)(133)91,870
Total comprehensive










Realisation of revaluations from previous years* 









Realisation of impaired valuations 







Transfer between










Transactions with owners         
Dividends paid-----(6,786)-(1,137)(7,923)
Unallotted shares---12,876----12,876
Issue of new shares205-18,274-----18,479
Share issue costs----(464)---(464)
Purchase of own shares**(21)21--(1,768)---(1,768)
At 31 March 20181,2001,57431,66112,87664,859-4,909828117,907

* A transfer of £1,598,000 representing previously recognised unrealised losses on disposal of investments during the year ended 31 March 2019 (2018: £3,213,000) has been made from the Capital Reserve realised to the Revaluation reserve. A transfer of £7.3 million representing realised gains on disposal of investments, less capital expenses and capital dividends in the year (2018: £6.3 million) has been made from Capital Reserves – realised to Special reserve.

** These shares were subsequently cancelled.

as at 31 March 2019

   2019 2018
   £’000 £’000
Fixed assets     
Investments  84,483 81,588
Current assets     
Debtors  3,228 1,574
Cash at bank and in hand  17,222 35,456
   20,450 37,030
Creditors: amounts falling due within one year  (383) (711)
Net current assets  20,067 36,319
Net assets  104,550 117,907
Capital and reserves     
Called up share capital  1,334 1,200
Capital redemption reserve  1,597 1,574
Share premium account  45,515 31,661
Funds held in respect of shares not yet allotted  114 12,876
Special reserve  52,526 64,859
Capital reserve – realised  - -
Revaluation reserve  1,343 4,909
Revenue reserve  2,121 828
Total equity shareholders’ funds  104,550 117,907
Basic and diluted net asset value per share  78.3p 87.5p

for the year ended 31 March 2019

  2019 2018
  £’000 £’000
Cash flow from operating activities    
(Loss)/profit on ordinary activities after taxation (4,272) 4,837
Loss/(gains) on investments 6,317 (3,336)
(Increase) in debtors (1,654) (1,126)
Increase/(decrease) in creditors (76) 38
Cash from operations    
Corporation tax paid - -
Net cash generated from operating activities 315 413
Cash flow from investing activities     
Purchase of investments (12,501) (10,627)
Proceeds from disposal of investments 3,289 18,772
Net cash inflow/(outflow) from investing activities (9,212) 8,145
Cash flows from financing activities    
Proceeds from share issue 14,011 18,479
Funds held in respect of shares not yet allotted (12,762) 12,876
Share issue costs (470) (464)
Purchase of own shares (2,096) (1,593)
Equity dividends paid (8,020) (7,923)
Net cash inflow/(outflow) from financing activities (9,337) 21,375
Increase/(decrease) in cash (18,234) 29,933
Net movement in cash    
Beginning of year 35,456 5,523
Net cash (outflow)/inflow (18,234) 29,933
End of year 17,222 35,456

for the year ended 31 March 2019

1. General information
Downing ONE VCT plc (“the Company”) is a venture capital trust established under the legislation introduced in the Finance Act 1995 and is domiciled in the United Kingdom and incorporated in England and Wales, and its registered office is St. Magnus House, 3 Lower Thames Street, London EC3R 6HD.

2. Accounting policies
Basis of accounting
The Company has prepared its financial statements in accordance with the Financial Reporting Standard 102 (“FRS 102”) and in accordance with the Statement of Recommended Practice “Financial Statements of Investment Trust Companies” issued November 2014 and updated January 2017 (“SORP”).

The financial statements are presented in Sterling (£) and rounded to thousands.

Presentation of income statement
In order to better reflect the activities of a Venture Capital Trust and in accordance with guidance issued by the Association of Investment Companies (“AIC”), supplementary information which analyses the income statement between items of a revenue and capital nature has been presented alongside the income statement. The net revenue is the measure the Directors believe appropriate in assessing the Company’s compliance with certain requirements set out in Part 6 of the Income Tax Act 2007.

Venture capital investments are designated as “fair value through profit or loss” assets due to investments being managed and performance evaluated on a fair value basis. A financial asset is designated within this category if it is both acquired and managed on a fair value basis, with a view to selling after a period of time, in accordance with the Company’s documented investment policy.

Judgements in applying accounting policies and key sources of estimation uncertainty
Of the Company’s assets measured at fair value, it is possible to determine their fair values within a reasonable range of estimates. The fair value of an investment upon acquisition is deemed to be cost. Thereafter, investments are measured at fair value in accordance with FRS 102 sections 11 and 12 together with the International Private Equity and Venture Capital Valuation Guidelines (“IPEV”).

Investments quoted on recognised stock markets are measured using bid prices.

The valuation methodologies for unlisted instruments (comprising equity and loan notes), used by the IPEV to ascertain the fair value of an investment, are as follows:
- Price of recent investment;
- Multiples;
- Net assets;
- Discounted cash flows or earnings (of the underlying business);
- Discounted cash flows (from the investment); and
- Industry valuation benchmarks.

The methodology applied takes account of the nature, facts and circumstances of the individual investment and uses reasonable data, market inputs, assumptions and estimates in order to ascertain fair value as explained in the investment accounting policy above and addressed further below.

Where an investee company has gone into receivership, liquidation or administration where there is little likelihood of a recovery, the loss on the investment, although not physically disposed of, is treated as being realised.

Gains and losses arising from changes in fair value are included in the income statement as a capital item.

It is not the Company’s policy to exercise significant influence or joint control over investee companies. Therefore the results of these companies are not incorporated into the Income Statement except to the extent of any income accrued. This is in accordance with the SORP and FRS 102 sections 14 and 15 that do not require portfolio investments to be accounted for using the equity method of accounting.

In respect of disclosures required by the SORP for the 10 largest investments held by the Company, the most recent publicly available accounts information, either as filed at Companies House, or announced to the London Stock Exchange, is disclosed. In the case of unlisted investments, this may be abbreviated information only.

Dividend income from investments is recognised when the Shareholders’ right to receive payment has been established, normally the ex-dividend date.

Loan stock interest is accrued on a time apportioned basis, by reference to the principal outstanding and at the effective interest rate applicable and only where there is reasonable certainty of collection.

Distributions from investments in limited liability partnerships (“LLPs”) are recognised as they are paid to the Company. Where such items are considered capital in nature they are recognised as capital profits.

All expenses are accounted for on an accruals basis. In respect of the analysis between revenue and capital items presented within the income statement, all expenses have been presented as revenue items except as follows:

- Expenses which are incidental to the acquisition of an investment are deducted from the Capital Account.
- Expenses which are incidental to the disposal of an investment are deducted from the disposal proceeds of the investment.
- Expenses are split and presented partly as capital items where a connection with the maintenance or enhancement of the value of the investments held can be demonstrated. Investment management fees are allocated 50% to revenue and 50% to capital, in order to reflect the Directors’ expected long-term view of the nature of the investment returns of the Company.


The tax effects on different items in the Income Statement are allocated between capital and revenue on the same basis as the particular item to which they relate using the Company’s effective rate of tax for the accounting period.

Due to the Company’s status as a Venture Capital Trust and the continued intention to meet the conditions required to comply with Part 6 of the Income Tax Act 2007, no provision for taxation is required in respect of any realised or unrealised appreciation of the Company’s investments.

Deferred taxation is not discounted and is provided in full on timing differences that result in an obligation at the balance sheet date to pay more tax, or a right to pay less tax, at a future date, at rates expected to apply when the obligations or rights crystallise based on tax rates and law enacted or substantively enacted at the balance sheet date. Timing differences arise from the inclusion of items of income and expenditure in taxation computations in periods different from those in which they are included in the accounts. Deferred tax assets are only recognised if it is expected that future taxable profits will be available to utilise such assets and are recognised on a non-discounted basis.

Cash and cash equivalents
Cash and cash equivalents include cash in hand and deposits held at call with banks with an original maturity of three months or less.

Other debtors and other creditors
Other debtors (including accrued income) and other creditors are included within the accounts at amortised cost.

Share issue costs

Share issue costs have been deducted from the special reserve account.

Segmental reporting

The Company only has one class of business and one market.

Dividends payable
Dividends payable are recognised as distributions in the financial statements when the company’s liability to make payment has been established.

Funds held in respect of shares not yet allotted

Cash received in respect of applications for new shares that have not yet been allotted is shown as “Funds held in respect of shares not yet allotted” and recorded on the Balance Sheet.

3. Basic and diluted return per share

 2019 2018
 £’000 £’000
Return per share based on:   
Net revenue return/(loss) for the financial year2,634 2,098
Net capital gain for the financial year(6,906) 2,739

Total return for the financial year


Weighted average number of shares in issue133,474,895 105,306,924

As the Company has not issued any convertible securities or share options, there is no dilutive effect on return per share. The return per share disclosed therefore represents both the basic and diluted return per share.

4. Principal Risks

The Company’s investment activities expose the Company to a number of risks associated with financial instruments and the sectors in which the Company invests. The principal financial risks arising from the Company’s operations are:

- Investment risks;
- Credit risk; and
- Liquidity risk.

The Board regularly reviews these risks and the policies in place for managing them. There have been no significant changes to the nature of the risks that the Company is exposed to over the year and there have also been no significant changes to the policies for managing those risks during the year.

The risk management policies used by the Company in respect of the principal financial risks and a review of the financial instruments held at the year-end, are provided below:

Market risks
As a VCT, the Company is exposed to investment risks in the form of potential losses and gains that may arise on the investments it holds in accordance with its investment policy. The management of these investment risks is a fundamental part of the investment activities undertaken by the Investment Adviser and overseen by the Board. The Investment Adviser monitors investments through regular contact with management of investee companies, regular review of management accounts and other financial information and attendance at investee company board meetings. This enables the Investment Adviser to manage the investment risk in respect of individual investments. Investment risk is also mitigated by holding a diversified portfolio spread across various business sectors and asset classes.

The key investment risks to which the Company is exposed are:

- Investment price risk; and
- Interest rate risk.

The Company has undertaken sensitivity analysis on its financial instruments, split into the relevant component parts, taking into consideration the economic climate at the time of review in order to ascertain the appropriate risk allocation.

Investment price risk
Investment price risk arises from uncertainty about the future prices and valuations of financial instruments held in accordance with the Company’s investment objectives. It represents the potential loss that the Company might suffer through investment price movements in respect of quoted investments and also changes in the fair value of unquoted investments that it holds.

Interest risk
The Company accepts exposure to interest rate risk on floating-rate financial assets through the effect of changes in prevailing interest rates. The Company receives interest on its cash deposits at a rate agreed with its bankers. Investments in loan stock and fixed interest securities attract interest predominately at fixed rates. A summary of the interest rate profile of the Company’s investments is shown below.

Interest rate profile of financial assets and financial liabilities
There are three levels of interest which are attributable to the financial instruments as follows:

- “Fixed rate” assets represent investments with predetermined yield targets and comprise fixed interest and loan note investments.
- “Floating rate” assets predominantly bear interest at rates linked to the Bank of England base rate and comprise cash at bank.
- “No interest rate” assets do not attract interest and comprise equity investments, non-interest bearing convertible loan notes, loans and receivables (excluding cash at bank) and other financial liabilities.

The Company monitors the level of income received from fixed, floating and non interest rate assets and, if appropriate, may make adjustments to the allocation between the categories, in particular, should this be required to ensure compliance with the VCT regulations.

The Bank of England base rate increased from 0.5% per annum to 0.75% per annum in August 2018. Any potential change in the base rate at the current level wouldn’t have a material impact on the net assets and total return of the Company.

Credit risk
Credit risk is the risk that the counterparty to a financial instrument is unable to discharge a commitment to the Company made under that instrument. The Company is exposed to credit risk through its holdings of loan stock in investee companies, investments in fixed interest securities, cash deposits and debtors.

The Investment Adviser manages credit risk in respect of loan notes with a similar approach as described under investment risks above. In addition the credit risk is mitigated by registering floating charges, covering the full par value of the loan stock in the form of fixed and floating charges over the assets of the investee companies. The strength of this security in each case is dependent on the nature of the investee company’s business and its identifiable assets. The level of security is a key means of managing credit risk. Similarly, the management of credit risk associated with interest, dividends and other receivables is covered within the investment management procedures.

Cash is mainly held at Bank of Scotland plc, with a balance also maintained at Royal Bank of Scotland plc, both of which are A-rated financial institutions and ultimately part-owned by the UK Government. Consequently, the Directors consider that the credit risk associated with cash deposits is low.

There have been no changes in fair value during the year that can be directly attributable to changes in credit risk.

As at 31 March 2019, of the loan stock classified as “past due”, £4,829,000 relates to the principal of loan notes where, although the principal remains within the term, the investee company is not fully servicing the interest obligations under the loan note and is in arrears.  Notwithstanding the arrears of interest, the Directors do not consider that the loan note itself has been impaired or the maturity of the principal has altered.

As at 31 March 2019, of the loan stock classified as “past due”, £2,134,000 relates to the principal of loan notes where the principal has passed its maturity date. As at the balance sheet date, the extent to which the principal is past its maturity date, £2.1 million falls within the banding of nil to 2 years past due and £58,000 is 3 to 4 years past due. Notwithstanding this information, the Directors do not consider the loan notes to be impaired at the current time or that maturity dates of the principal have altered.

As at 31 March 2018, of the loan stock classified as “past due”, £5,848,000 relates to the principal of loan notes where, although the principal remains within term, the investee company is not fully servicing the interest obligations under the loan note and is in arrears.  Notwithstanding the arrears of interest, the Directors do not consider that the loan note itself has been impaired or the maturity of the principal has altered.

As at 31 March 2018, of the loan stock classified as “past due”, £2,690,000 relates to the principal of loan notes where the principal has passed its maturity date. As at the balance sheet date, the extent to which the principal is past its maturity date, the total falls within the banding of nil to 2 years past due. Notwithstanding this information, the Directors do not consider the loan notes to be impaired at the current time or that the maturity dates of the principals have altered.

Liquidity risk
Liquidity risk is the risk that the Company encounters difficulties in meeting obligations associated with its financial liabilities. Liquidity risk may also arise from either the inability to sell financial instruments when required at their fair values or from the inability to generate cash inflows as required. The Company normally has a relatively low level of creditors (2019: £383,000, 2018: £711,000) and has no borrowings. Also most quoted investments held by the Company are considered to be readily realisable. The Company always holds sufficient levels of funds as cash and readily realisable investments in order to meet expenses and other cash outflows as they arise. For these reasons the Board believes that the Company’s exposure to liquidity risk is minimal.

The Company’s liquidity risk is managed by the Investment Adviser in line with guidance agreed with the Board and is reviewed by the Board at regular intervals.

The financial information set out in this announcement does not constitute the Company's statutory financial statements in accordance with section 434 Companies Act 2006 for the year ended 31 March 2019, but has been extracted from the statutory financial statements for the year ended 31 March 2019 which were approved by the Board of Directors on 9 July 2019 and will be delivered to the Registrar of Companies. The Independent Auditor's Report on those financial statements was unqualified and did not contain any emphasis of matter nor statements under s 498(2) and (3) of the Companies Act 2006.

The statutory accounts for the year ended 31 March 2018 have been delivered to the Registrar of Companies and received an Independent Auditors report which was unqualified and did not contain any emphasis of matter nor statements under s 498(2) and (3) of the Companies Act 2006.

A copy of the full annual report and financial statements for the year ended 31 March 2019 will be printed and posted to shareholders shortly. Copies will also be available to the public at the registered office of the Company at St. Magnus House, 3 Lower Thames Street, London EC3R 6HD and will be available for download from and

a d v e r t i s e m e n t