Final Results
Thames Ventures VCT 2
PLCLEI:
21380035MV1VRYEXPR9531
July 2023Final Results for the year ended
31 March 2023
|
31 March 2023 |
31 March 2022 |
|
Pence |
Pence |
|
|
|
Ventures
Share pool |
|
|
Net Asset Value
(“NAV”) per Ventures Share |
59.4 |
68.20 |
Cumulative
distributions |
8.0 |
5.25 |
Total Return per Ventures Share |
67.4 |
73.45 |
|
|
|
Healthcare Share pool |
|
|
Net Asset Value
(“NAV”) per Healthcare Share |
61.60 |
84.40 |
Cumulative
distributions |
8.75 |
5.25 |
Total Return per Healthcare Share |
70.35 |
89.65 |
|
|
|
AIM Share
pool |
|
|
Net Asset Value
(“NAV”) per AIM Share |
101.1 |
99.9 |
Cumulative
distributions |
- |
- |
Total Return per AIM Share |
101.1 |
99.9 |
|
|
|
DSO D
Share pool |
|
|
Net Asset Value
(“NAV”) per DSO D Share |
2.6 |
2.6 |
Cumulative
distributions |
102.0 |
102.0 |
Adjustment for
Performance Incentive estimate |
- |
- |
Total Return per DSO D Share |
104.6* |
104.6 |
|
|
|
DP67
Share pool |
|
|
Net Asset Value
(“NAV”) per DP67 Share |
24.8 |
26.8 |
Cumulative
distributions (since original launch) |
67.8 |
67.8 |
Total Return per DP67 Share |
92.6 |
94.6 |
*Based on Total Return to
Shareholders at 31 March 2023, no Performance Incentive is expected
to become due to management.
Chairman’s
StatementIntroductionI report on what has
been an eventful year for your Company, with the main Investment
Manager changing from Downing LLP to Foresight Group LLP following
the sale of Downing’s non-healthcare ventures division to Foresight
in a transaction that completed on 4 July 2022.
The structure of the transaction has ensured a good
level of continuity with the core investment team members moving to
Foresight and Downing continuing to provide investment management
services for the Healthcare share pool, quoted and non-ventures
investments, as well as administration services for a handover
period.
The Company changed its name to Thames Ventures VCT 2 plc on 2
September 2022 following the change of main Investment Manager.
Evergreen Share pool
reviewVentures Share poolThe Ventures
Share portfolio developed over the year, with £5.1 million invested
in 12 VCT-qualifying companies, five of which were new additions to
the portfolio.
The Ventures Share NAV at the year-end was 59.4p, representing a
decrease of 6.1p per share or 8.9% over the year. This is after
adding back the dividend of 2.75p per share, which was paid on 30
September 2022.
There has been a general decline in the portfolio investment
valuations across the year, in line with sector trends for lower
revenue and earnings multiples, due to economic concerns. Net
unrealised losses for the period were £2.4 million.
There were four full exits during the year, plus a partial exit
from one investment where part of the proceeds were rolled over
into the acquirer. This produced net realised gains over cost of
£1.2 million.
A more detailed review of the Ventures Share pool is included in
the Investment Manager’s Report.
Healthcare Share poolThe Healthcare Share pool
had a limited level of activity over the year with one new
investment and two follow-ons made. There was also one full exit
and some deferred consideration collected on an earlier
investment.
The Healthcare Share NAV at the year-end was 61.6p, representing
a decrease of 19.3p per share or 21.5% in NAV over the year after
adjusting for the Healthcare dividend of 3.50p per share, which was
paid on 30 September 2022.
The most significant movements in the portfolio were a full
provision of £1.8 million which was made against Adaptix Limited,
as well as falls in the share prices of a small number of
AIM-quoted stocks (Arecor falling by £1.2 million, GENinCode by
£573,000 and Destiny Pharma by £98,000), which accounted for the
majority of the £4.1 million of net unrealised losses for the
period. The Healthcare Share pool remains heavily exposed to the
relatively volatile AIM market, with more that 30% of the pool’s
value accounted for by two AIM-quoted investments.
A more detailed review of the Healthcare Share pool is included
in the Investment Manager’s Report.
AIM Share poolThe AIM Share Pool launched in
2022 and is a small pool with net assets of £2.7 million.
Conditions for VCT AIM investing since the launch have been weak,
with a very limited number of VCT eligible AIM flotations and
fundraisings.
Consequently, no AIM investments have been made to date,
although funds have been placed in a money market fund and an
equity income fund pending improved conditions for AIM
investing.
The AIM Share NAV stood at 101.1p at the year end, representing
an increase of 1.2p per share or 1.2% in NAV over the year.
The Board will continue to consider how beneficial the different
share pools are for Shareholders. Any proposals by the Board will
be put to Shareholders in due course.
Planned Exit Share pool
reviewThe Company continues to hold two planned
exit share pools which hold a small number of investments from
which exits are sought in order to return funds to shareholders and
wind up those share classes.
DSO D Share poolThe DSO D Share portfolio held
two remaining investments as at 31 March 2023.
The two remaining investments are in a pub company Pearce and
Saunders Limited and a related business, which have both sold their
main assets. Attempts are being made to wind up both companies and
extract the small amount of remaining value from them.
The DSO D Share NAV stood at 2.6p at the year end, showing no
movement over the year. The Total Return to DSO Shareholders
remains 104.6p per share, as reported at 31 March 2022, compared to
the cost for Shareholders who invested in the original DSO D Share
offer of 100.0p, or 70.0p per share net of income tax relief.
A more detailed review of the DSO D Share pool is included in
the Investment Manager’s Report.
DP67 Share poolThe remaining value in the DP67
Share portfolio is in two investments which are both in the
hospitality sector.
As at 31 March 2023, the DP67 Share NAV stood at
24.8p and Total Return stood at 92.6p per share, a decrease of 2.0p
per share, equivalent to 2.1% in Total Return terms since 31 March
2022.
We are expecting final proceeds from Gatewales Limited in the
near future. Cadbury House Holdings Limited owns a leisure and
hotel facility in Bristol. The property is being marketed for sale
although the current market is weak and the Investment Manager is
keen to avoid a sale at undervalue.
A more detailed review of the DP67 Share pool is included in the
Investment Manager’s Report.
Responsible investmentThe Board is pleased to
note the Investment Manager, Foresight Group’s, commitment to being
a “Responsible Investor”. Foresight places Environmental, Social
and Governance (ESG) criteria at the forefront of its business and
investment activities in line with best practice and in order to
enhance returns for their investors.
FundraisingAs noted in the half
yearly report, a new offer for subscription was launched in
September 2022. The offer has raised £1.6 million to date between
the Ventures and Healthcare Share classes and is scheduled to close
on 31 July 2023.
Fundraising was impacted by the various changes to the Company
during the year and the Board is reviewing with the Investment
Manager plans for renewed focus and momentum in the current
year.
With a lower level of funds than expected raised, supporting the
existing portfolio will be prioritised with the main impact being
reduced potential for new investments, albeit in a market in which
fundraising volumes are significantly reduced.
DividendsThames Ventures 2 has a target of
seeking to pay annual dividends for the Ventures and Healthcare
share classes of at least 4% of the respective NAVs per annum.
The Board is now reviewing, with the new Manager, how the
Company can best achieve its objectives for Shareholders, including
future fundraising plans. While this review is being undertaken,
the Board believes it is prudent to be cautious with the Company’s
uninvested funds until the plans of the future become clearer. For
this reason, the proposed final dividends for the Ventures and
Healthcare share classes are being reduced from their normal levels
at this time. The Board will, however, give consideration to
declaring further dividends once this review is complete.
The Board is proposing to pay final dividends of 1.25p per
Ventures Share and 1.25p per Healthcare Share on 29 September 2023,
to Shareholders on the register as at 1 September 2023. The
proposed dividends are subject to Shareholder approval at the
forthcoming AGM. Following the payment of the proposed dividends,
the Company will have paid cumulative dividends of 9.25p per
Ventures Share and 10.0p per Healthcare Share.
Further dividends in respect of the Company’s Planned Exit Share
pools will be paid once further realisations have taken place. No
dividends are expected to be paid by the AIM Share class in its
initial years.
Share buybacksThe Company usually operates a
policy of buying back its own shares that become available in the
market, subject to regulatory and liquidity factors. The Board
review these on a regular basis and will make appropriate
adjustments as it sees fit. Any such purchases are undertaken at a
price approximately equal to NAV (i.e. at a nil discount).
As mentioned above, while the Board is reviewing plans for the
future of the Company. While this review is undertaken, for a
period, the Board does not expect to undertake share buybacks in
the Ventures, Healthcare and AIM Share pools. This review will
allow a clear strategy for the allocation of the Company’s cash
resources to be drawn up. The Board does, however, expect share
buybacks to resume in due course.
As the focus for the two remaining Planned Exit Share pools is
on returning funds to Shareholders via distributions, the Company
will not undertake any further buybacks in respect of those share
classes.
Panmure Gordon continues to act as the Company’s corporate
broker, operating the share buyback process and ensuring that the
quoted spread on the Company’s shares remains at a reasonable
level. If you wish to sell or buy shares in the Company, the
contact details of Panmure Gordon can be found within the Annual
Report.
During the year ended 31 March 2023, the Company repurchased
3,014,102 Ventures Shares at an average price of 66.9p per Share
and 1,007,037 Healthcare Shares at an average price of 72.8p per
Share.
Annual General Meeting (“AGM”)The Company
invites Shareholders to attend this year’s AGM in person once more.
The AGM is planned to take place at the offices of Foresight Group
LLP, The Shard, 32 London Bridge Street, London, SE1 9SG at 3:30
p.m. on 12 September 2023.
Shareholders wishing to attend the AGM are requested to please
notify Downing LLP via email, to tv2agm@downing.co.uk, in case
there are changes to arrangements which need to be communicated at
short notice.
Three items of special business are proposed at the AGM as
follows:
- one resolution in respect of the authority to buy back shares
as noted above; and
- two resolutions in respect of authority to allot shares and
disapply pre-emption rights to give the Company flexibility in
respect of further fundraising plans.
This year Shareholders will be able submit proxy votes
electronically. The details required for voting will be sent to
each shareholder. The deadline for proxy votes to be received is
3:30 p.m. on 8 September 2023.
OutlookAlthough the main share classes have
seen their portfolios fall in value over the year, these movements
are not out of line with general market conditions for young growth
businesses. Increasing interest rates, inflation and fears of
recession have knocked investor confidence about growth prospects
and valuation metrics.
The Board is cognisant that it takes time to nurture and realise
value from potential outperformer companies whereas economic
turmoil pushes weaker companies into difficulty. By reviewing the
Managers’ portfolios and discussing proposed actions, the Board is
generally satisfied that the Ventures and Healthcare portfolios
have sufficient weight of stronger investments to generate growth
in return for Shareholders in future.
The Board is committed to the Company’s strategy of nurturing
young growth businesses through the stages of their development
with the Managers providing full support to the companies that have
the potential to deliver the targeted returns. The Board and the
Managers have agreed suitable strategies for the available cash
funds, with appropriate allocation between existing portfolio
companies meriting further support, limited investment in new
companies as well as meeting other demands on cash.
In respect of the planned exit share classes, the Board is
encouraging the Manager to pursue transactions that will bring both
share classes to a close this year.
As mentioned above, the Board is now reviewing possible options
for the future of the Company, seeking to identity a way to execute
the Company's strategy which will best serve Shareholders’
interests. I will, of course, report any significant developments
to this end to Shareholders as soon as practicable.
Sir Aubrey Brocklebank Bt.Chairman
Ventures Share
PoolShare Pool Summary
|
31 March 2023 |
31 March 2022 |
Financial highlights |
Pence |
Pence |
|
|
|
Net Asset Value
per Ventures Share |
59.40 |
68.20 |
Cumulative
distributions |
8.00 |
5.25 |
Total Return per
Ventures Share |
67.40 |
73.45 |
Investment Manager’s Report -
Ventures Share
Pooli. OverviewIntroductionWe
present a review of the investment portfolio and activity for the
Ventures Share pool for the year ended 31 March 2023.
This Investment Manager’s Report is split into three sections
comprising this overview, a review of the Venture Capital Portfolio
and a report on the portfolio of Liquidity Investments.
Net Asset Value and resultsAs
at 31 March 2023, the NAV of a Ventures Share stood at 59.4p, a
decrease of 6.1p (8.9%) for the year after adding back the Ventures
dividend, of 2.75p per share, which was paid on 30 September
2022.
The return on ordinary activities for the Ventures Share pool
for the year was a loss of £3.2 million (2022: gain of £1.8
million), comprising a revenue loss of £494,000 (2022: loss of
£491,000) and a capital loss of £2.7 million (2022: gain of £2.3
million).
It is disappointing to report the Total Return to Shareholders
as at 31 March 2023 of 67.4p which continues to be considered an
underperformance against our expectations for the Ventures Share
pool.
A final dividend of 1.25p per share is proposed to be paid on 29
September 2023, to Shareholders on the register at 1 September
2023.
Portfolio OverviewAs at 31
March 2023, the Ventures Share pool held a portfolio of 36 Venture
Capital investments and one Liquidity investment, with a combined
value of £27.8 million.
Following the impact of the pandemic, there have continued to be
challenges for businesses in the UK and internationally caused by
the impact of the economic downturn with rising rates of inflation
and interest.
The investment team continue to work closely with portfolio
companies to provide guidance and, where appropriate, additional
funding in support of potential value growth. The stronger
companies in the portfolio have proven capable of delivering good
performances and positive updates which is encouraging.
The valuation movements during the period are discussed in more
detail in the following sections of this Investment Manager’s
Report.
Portfolio PerformanceOverall,
several larger valuation uplifts in the Venture Capital Portfolio
were outweighed by a number of valuation decreases during the
period, resulting in a net valuation decrease of £2.4 million
across the portfolio. The carrying value of the Liquidity
Investment portfolio has been adjusted to reflect quoted prices as
at 31 March 2023. This resulted in a valuation decrease of £174,000
for the period. Of the two Liquidity Investments brought forward,
one was exited during the period.
ii. Ventures
PortfolioInvestment activityDuring the period, a
total of £5.1 million was invested in 12 businesses, five of which
are new VCT Qualifying investments.
New Ventures
investmentsA total of £3.0 million was invested
into new VCT Qualifying investments during the year. A description
of each of these five companies is shown below.
CommerceIQ Inc (£1,749,000) is
a pioneer in helping brands win on retail ecommerce channels. Their
unified platform applies machine learning and automation across
marketing, supply chain, and sales operations to help brands gain
market share profitably.
Maestro Media Limited (£340,000) has developed
a talent-led, e-learning media platform of multichannel e-commerce
technology. This is a subscription-based platform which has secured
a licence to use the BBC brand and has partnered with a number of
recognised celebrities across various industries to deliver
engaging content.
Vivacity Labs Limited (£493,000) provides
traffic management software to optimise traffic flow by avoiding
congestion and improve safety within cities and traffic
junctions.
Audioscenic Limited (£200,000) is a spin-out
from the University of Southampton’s Institute of Sound and
Vibrational Research and has developed a software-based solution
that unlocks the full potential of 3D audio.
Glisser Limited (£200,000) has built a platform
that supports virtual and hybrid events.
Follow-on Ventures
investmentsA total of £2.1 million was invested as
follow-on capital into existing businesses in the Venture Capital
Portfolio, most notably:
FVRVS Limited (trading as Fundamental VR)
(£537,000) has developed a platform, Fundamental Surgery, which is
the market leading medical education platform delivering multimodal
simulation and education across tethered and all‐in‐one VR, mixed
reality and mobile, harnessing the very latest AI techniques.
Masters of Pie Limited (£219,000) developed
Radical, a software solution that enables remote sharing and
collaboration on large data sets.
Rated People Limited (£200,000) is an online
marketplace connecting homeowners with local tradespeople.
Hackajob Limited (£1.0 million) is an online
recruitment platform for employers seeking developers and
engineers.There were four full exits during the year from the
Venture Capital portfolio. Total proceeds of £5.3 million were
generated, producing a gain over cost of £1.1 million, although
representing a loss over holding value of £131,000.
E‐Fundamentals Group Limited, a B2B developer
of a Software as a Service (SaaS) analytics platform allowing
ecommerce companies to accurately assess the performance of their
products, generated proceeds of £3.7 million, realising a profit
over cost of £2.2 million however a loss over the opening value of
£137,000.
Firefly Learning Limited, an edtech e-learning
platform which allows teachers, students and parents to share
lesson plans and review homework, was sold during the period,
generating proceeds of £1.0 million. The opening value of this
investment was held at cost therefore there was an immaterial loss
realised against both cost and value of £32,000.
Streethub Limited (trading as Trouva), an
online marketplace for a curated range of homeware and lifestyle
products, was sold during the period, generating proceeds of
£242,000. The value of this investment was written down in 2022 as
a result of the business trading significantly behind budget
therefore a gain over value of £100,000 was realised. It should be
noted, however, that this was a disappointing overall loss against
the original cost of £1.1 million.
Fenkle Street LLP, a non-qualifying investment,
was created to fund the purchase of a property in central Newcastle
and carry out its subsequent refurbishment under the Business
Premises Renovation Allowance (BPRA) scheme. This sale generated
proceeds of £343,000, realising a gain over cost of £42,000 however
a loss over the opening value of £62,000.
Deferred consideration of £114,000 was also received in relation
to the exit of ADC Biotechnology Limited which occurred in the year
ended 31 March 2021.
Portfolio valuationDuring the period, the
Venture Capital portfolio of the Ventures Share pool recognised an
unrealised loss in value of £2.4 million, including unrealised
foreign exchange gains of £286,000. Whilst there have been a number
of positive developments within the Venture Capital portfolio, this
was offset by the reduction in value of several companies
predominantly due to underperformance in a challenging
macroeconomic environment. Of the £2.4 million total unrealised
loss, the most significant movements are noted below.
The largest gain in value was in Cornelis Networks, Inc, who
delivers purpose-built high-performance fabrics for High
Performance Computing (HPC), High Performance Data Analytics (HPDA)
and Artificial Intelligence (AI). During the period, the company
was uplifted by £1.5 million, including the impact of foreign
exchange. This revaluation is the result of a calibration to the
price set by a funding round during the year.
Virtual Class Limited (trading as Third Space Learning), a
platform offering personalised online lessons from specialist
tutors, was uplifted by £383,000 as a result of continued growth in
revenues and their customer base.
Ayar Labs Inc, the developer of components for high performance
computing and data centre applications, was uplifted by £314,000,
including the impact of foreign exchange. This revaluation is the
result of a calibration to the price set by a funding round during
the year.
Bulbshare Limited, a company that enables brands to build
communities from their existing customers, has performed well
during the year with revenues continuing to grow, resulting in a
valuation uplift of £178,000 as at the year end.
Disappointingly, there were a number of unrealised losses
recognised during the period. Some of these came from the more
vulnerable businesses within the portfolio, however there were some
material losses recognised to account for funding and liquidity
risks faced by some of the larger portfolio companies. The greatest
unrealised loss in the period was from Cambridge Touch
Technologies, a company developing pressure sensitive multi touch
technology. The investment suffered an unrealised fair value loss
of £764,000 as a result of the challenging macroeconomic
environment and weaker access to funding.
FundingXchange Limited, a fintech platform delivering SME
lenders insights into their portfolio trends, was revalued
downwards by £510,000 to calibrate to the price of last funding
round.
Hackajob Limited, a marketplace for technical hires, was
revalued downwards by £358,000 to calibrate to the price of last
funding round.
Trinny London Limited, a cosmetics and skincare brand, was
revalued downwards by £306,000 due to reduced confidence in
consumer spending.
Carbice Corporation Inc. This company has developed a suite of
products based on its carbon material called Carbice Carbon which
is primarily used as thermal management solutions to enable greater
thermal conductivity. The valuation was reduced by £233,000,
including the impact of foreign exchange, as a result of the
challenging macroeconomic environment and access to funding.
There were three investments that were written down to nil
during the year. These were Glisser Limited, Hummingbird
Technologies Limited and Channel Mum Limited, resulting in a
combined unrealised loss over original cost of £1.7 million and a
loss over carrying value of £761,000.
The remaining investments in the Venture Capital Portfolio were
adjusted in value by a total net loss of £1.4 million as at 31
March 2023, including the impact of foreign exchange.
Liquidity InvestmentsThe carrying value of the
remaining Liquidity Investment has been adjusted to reflect its
quoted price as at 31 March 2023. This resulted in a total
reduction of £174,000 for the year.
Foresight Group LLP
Review of Investments –
Ventures Share PoolThe following
investments were held at 31 March 2023:
|
Cost |
Valuation |
Valuationmovementin period |
% ofportfolio |
Portfolio of
investments |
£’000 |
£’000 |
£’000 |
|
Ventures investments |
|
|
|
|
Cornelis Networks, Inc. |
1,402 |
2,874 |
1,504 |
9.2% |
Virtual Class Limited (Third Space Learning) |
1,053 |
2,199 |
383 |
7.1% |
Ayar Labs, Inc. |
764 |
1,840 |
314 |
5.9% |
Rated People Limited |
1,582 |
1,821 |
(274) |
5.8% |
CommerceIQ Limited |
1,749 |
1,731 |
(18) |
5.6% |
Imagen Limited |
1,000 |
1,703 |
(60) |
5.5% |
Hackajob Limited |
1,284 |
1,665 |
(358) |
5.3% |
Ecstase Limited (t/a ADAY) |
1,000 |
1,000 |
(257) |
3.2% |
Trinny London Limited |
219 |
934 |
(306) |
3.0% |
Upp Technologies Group Limited (previously Volo Commerce) |
1,136 |
923 |
(213) |
3.0% |
Masters of Pie Limited |
886 |
876 |
(10) |
2.8% |
Arecor Therapeutics
plc^ |
418 |
822 |
(319) |
2.6% |
Parsable, Inc. |
766 |
753 |
42 |
2.4% |
Limitless Technology Limited |
757 |
703 |
(217) |
2.3% |
FVRVS Limited (t/a Fundamental VR) |
787 |
678 |
(218) |
2.2% |
Cambridge Touch Technologies Limited |
959 |
605 |
(764) |
1.9% |
Congenica Limited |
734 |
605 |
(141) |
1.9% |
Vivacity Labs Limited |
493 |
490 |
(3) |
1.6% |
Maverick Pubs (Holdings) Limited |
1,000 |
444 |
(6) |
1.4% |
Bulbshare Limited |
249 |
427 |
178 |
1.4% |
BBC Maestro Limited |
340 |
419 |
79 |
1.3% |
Carbice Corporation |
656 |
406 |
(233) |
1.3% |
MIP Discovery Limited |
300 |
300 |
- |
1.0% |
FundingXchange Limited |
1,050 |
276 |
(510) |
0.9% |
Distributed Limited |
275 |
275 |
- |
0.9% |
Audioscenic Limited |
200 |
200 |
- |
0.6% |
Destiny Pharma plc^ |
500 |
88 |
(65) |
0.3% |
Lignia Wood Company Limited |
1,778 |
- |
- |
- |
Empiribox Holdings Limited |
1,563 |
- |
- |
- |
Live Better With Limited |
1,211 |
- |
- |
- |
Ormsborough Limited |
900 |
- |
- |
- |
Channel Mum Limited |
757 |
- |
(311) |
- |
Hummingbird Technologies Limited |
750 |
- |
(250) |
- |
Lineten Limited |
400 |
- |
- |
- |
Glisser Limited |
200 |
- |
(200) |
- |
London City Shopping Centre Limited* |
30 |
- |
- |
- |
|
29,148 |
25,057 |
(2,233) |
80.4% |
Liquidity investments |
|
|
|
|
Downing Strategic Micro-Cap Investment Trust plc*^ |
4,269 |
2,701 |
(174) |
8.7% |
|
|
|
|
|
|
33,417 |
27,758 |
(2,407) |
89.1% |
Cash at bank
and in hand |
|
3,430 |
|
10.9% |
Total
investments |
|
31,188 |
|
100.0% |
*non-qualifying
investment ^listed
and traded on the London Stock
Exchange
All Ventures investments are incorporated in England and Wales,
except Ayar Labs, Inc. Cornelis Networks, Inc. and Parsable, Inc.
which are incorporated in USA.
Investment movements for the year ended 31
March 2023
|
Cost |
Additions |
£’000 |
Ventures
investments |
|
CommerceIQ
Limited |
1,749 |
Hackajob
Limited |
1,000 |
FVRVS Limited
(t/a Fundamental VR) |
537 |
Vivacity Labs
Limited |
493 |
BBC Maestro
Limited |
340 |
Masters of Pie
Limited |
219 |
Glisser
Limited |
200 |
Audioscenic
Limited |
200 |
Rated People
Limited |
200 |
Streethub Limited
(t/a Trouva) |
71 |
Upp Technologies
Group Limited (previously Volo Commerce) |
59 |
Channel Mum
Limited |
20 |
|
5,088 |
|
Cost |
Valuation at
01/04/22 |
Proceeds |
(Loss)/
gainvs.
cost |
Realised
gain/(loss) |
Disposals |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
Ventures
investments |
|
|
|
|
|
Streethub Limited
(t/a Trouva) |
1,350 |
142 |
242 |
(1,108) |
100 |
E-Fundamentals
(Group) Limited |
1,508 |
3,847 |
3,710 |
2,202 |
(137) |
Firefly
Learning |
1,047 |
1,047 |
1,015 |
(32) |
(32) |
Fenkle Street
LLP* |
301 |
405 |
343 |
42 |
(62) |
ADC - deferred
proceeds |
- |
- |
114 |
114 |
114 |
|
|
|
|
|
|
Loan note
conversions |
|
|
|
|
|
Hackajob
Limited |
500 |
500 |
500 |
- |
- |
FVRVS Limited
(t/a Fundamental VR) |
125 |
125 |
125 |
- |
- |
|
|
|
|
|
|
Liquidity investments |
|
|
|
|
|
MI Downing UK
Micro-Cap Growth Fund B Accum* |
123 |
116 |
139 |
16 |
23 |
|
4,954 |
6,182 |
6,188 |
1,234 |
6 |
*non-qualifying investment
Healthcare Share PoolShare Pool
Summary
|
31 March 2023 |
31 March 2022 |
Financial highlights |
Pence |
Pence |
|
|
|
Net Asset Value
per Healthcare Share |
61.60 |
84.40 |
Cumulative
distributions |
8.75 |
5.25 |
Total Return
per Healthcare Share |
70.35 |
89.65 |
Investment Manager’s Report- Healthcare Share
Pool
i. OverviewIntroductionWe present
a review of the investment portfolio and activity for the
Healthcare Share pool over the year ended 31 March 2023.
This Investment Manager’s Report is split into three sections
comprising this overview, a review of the Healthcare Portfolio and
a report on the portfolio of Liquidity Investments.
Net Asset Value and resultsAs at 31 March 2023,
the NAV of a Healthcare share stood at 61.6p, a decrease of 19.3p
(21.5%) over the year after adding back the Healthcare dividend, of
3.50p per share, which was paid on 30 September 2022.
The loss on ordinary activities for the Healthcare Share pool
for the year was £4.3 million (2022: return of £3.7 million), being
a revenue loss of £272,000 (2022: £314,000) and a capital loss of
£4.0 million (2022: £4.0 million gain).
The Total Return to Shareholders as at 31 March 2023, of 70.35p,
continues to be considered an underperformance against our
expectations for the Healthcare Share pool.
A proposed final dividend of 1.25p per share will be paid on 29
September 2023, to Shareholders on the register at 1 September
2023.
Portfolio OverviewAs at 31 March 2023, the
Healthcare Share pool held a portfolio of 15 Healthcare investments
and one Liquidity investment, with a combined value of £12.4
million.
However, there are a number of risks which have continued
through the year, including continued impact of growth of inflation
and interest rates. We will continue to monitor the situation
alongside our investee companies in order to minimise the risk
exposure as much as possible and to provide guidance and support as
necessary. The valuation movements during the period are discussed
in more detail in the following sections of this Investment
Manager’s Report.
Portfolio PerformanceThere were several
valuation movements in the Venture Capital Portfolio during the
year, resulting in a net unrealised loss of £4.1 million, as at 31
March 2023.
The carrying value of the one Liquidity Investment, Downing
Strategic Micro-Cap Investment Trust plc, has been adjusted to
reflect its quoted price as at 31 March 2023, resulting in a
valuation decrease of £30,000 for the year.
ii. Healthcare
PortfolioInvestment
activityDuring the year, a total of £1.6 million was
invested in three businesses, one of which was a new VCT Qualifying
investment.
New Healthcare
investmentsQkine Limited
(£303,000) is a manufacturer of animal-free, highly
bioactive and innovative proteins and growth factors for life
science applications. The products help to tackle fundamental
biological and scale-up challenges for the fast-growing stem cell,
organoid, regenerative medicine, and cellular agriculture
sectors.
Follow-on Healthcare
investmentsA further £824,000 was invested in
FVRVS Limited (trading as Fundamental VR) which
provides surgery simulation software for enterprise clients and
hospitals. A further £427,000 was invested in Invizius
Limited which is developing novel primers with the aim of
reducing adverse inflammatory responses.
Portfolio valuationDuring the period, the
Healthcare portfolio of the Share pool decreased in value by a
total of 4.1 million.
Arecor, which is listed on AIM, has reduced in value by £1.2
million. We continue to believe that the company has a bright
future as its star asset AT247 reads out its Phase 1 in Q4-23 in
addition to its early-stage assets progressing through the clinic.
Arecor also has partnered on-market assets which are expected to
yield positive news flow through to 2025.
A full provision of £1.8 million was made against the investment
in Adaptix Limited, when, after the period end, it
became clear the company would not be able to complete its planned
funding round and the business would need to urgently evaluate its
options.
The valuation of FVRVS Limited (trading as
Fundamental VR) decreased by £373,000 in order to calibrate to the
most recent funding round.
The valuation of Congenica
Limited has been written down by
£350,000 as at 31 March 2023 to reflect trading performance
tracking behind the business plan. Remedial actions have since been
taken, including appointment of a new CEO who has been focused on
commercials: partnering with notable organisations and improving
revenues significantly. His go-to-market strategy with channel
partners and government programs is beginning to deliver, which
gives us more confidence of potential value being
realised.
Destiny Pharma plc, which is listed on AIM, was
reduced in value by £98,000. The company completed a much-awaited
first out-licensing deal with Sebela Pharmaceuticals during the
year and is now seeking partners for its other drug programmes. The
Sebela deal provides a long-term path to value creation.
DiA Imaging Analysis has agreed an offer for
acquisition from a large med-tech company in the space, with final
completion of this transaction anticipated in Q2-23. The valuation
has been increased by £135,000 to reflect the closing share price
for the transaction subject to final working capital adjustments,
which are anticipated to be de minimis.
GENinCode plc (“GENinCode”) which is listed on
AIM, was reduced in value by £573,000. The business has continued
to underperform against its targets; it is yet to make meaningful
progress in the US and the European growth has not gained momentum.
The business recently acquired Abcodia for no upfront cost, but we
are yet to see the benefits of this acquisition. We continue to
wait for meaningful US regulatory and market access
progress.
The valuations of Invisiuz Limited and
Qkine Limited have been increased by £71,000 and
£76,000 respectively in order to calibrate to the most recent
funding rounds.
Open Bionics Limited is an award‐winning
designer, manufacturer and supplier of bionic limbs. The company
uses 3D printing and scanning technology to produce custom‐made
prosthetics at a lower manufacturing cost relative to existing
technologies. The valuation has increased by £49,000 to reflect the
position in the cap table and the shareholders participating
preference terms.
There were no other valuation movements in the Venture Capital
portfolio.
- Liquidity InvestmentsThe value of
the Healthcare Share pool’s holding in Downing Strategic
Micro-Cap Investment Trust plc (“DSM”) decreased in value
by £30,000 during the period. As at 31 March 2023, DSM’s mid-market
share price traded at a discount to NAV of 18.1%, representing
potential unrealised value in the company’s share price.
MI Downing Micro‐Cap Growth Fund (“DMCG”) was exited during the
year for a modest profit over cost of £4,000.
See the Ventures Share pool Investment Managers Report for
further information on the Liquidity Investments.
The Healthcare Share class, and its underlying portfolio of
companies, is exposed to these sector factors and as a result we
are focusing our attention for the coming 12 months on ensuring
that our portfolio companies are adequately financed to enable them
to continue to grow.
OutlookMacroeconomic factors continue to impact
the financial markets with a knock-on impact on the venture capital
funding environment as many venture funds choose to focus on
supporting their existing portfolios rather than looking to add new
positions.
We may start to add new positions towards the end of the year if
conditions turn more favourable.
Despite the sector headwinds, many of the companies in the
portfolio are starting to make real commercial progress and are
becoming attractive targets, as evidenced by the recent agreement
to sell DiA to a large medtech corporate following the year
end. Downing LLP – Healthcare Ventures
Team
Review of Investments – Healthcare Share
PoolThe following investments were held at 31 March
2023:
|
Cost |
Valuation |
Valuationmovementin period |
% ofportfolio |
Portfolio of investments |
£’000 |
£’000 |
£’000 |
|
Healthcare investments |
|
|
|
|
Arecor Therapeutics plc^ |
1,533 |
3,015 |
(1,171) |
22.8% |
Open Bionics Limited |
1,000 |
1,428 |
49 |
10.8% |
FVRVS Limited (t/a Fundamental VR) |
1,324 |
1,169 |
(373) |
8.8% |
GENinCode plc^ |
1,202 |
1,051 |
(573) |
8.0% |
Invizius Limited |
927 |
998 |
71 |
7.6% |
Congenica Limited |
1,184 |
865 |
(350) |
6.5% |
Tidalsense Limited |
800 |
800 |
- |
6.1% |
Closed Loop Medicine Limited |
650 |
650 |
- |
4.9% |
DiA Imaging Analysis Limited |
415 |
564 |
135 |
4.3% |
The Electrospinning Company Limited |
478 |
544 |
- |
4.1% |
Qkine Limited |
303 |
379 |
76 |
2.9% |
MIP Discovery Limited |
300 |
300 |
- |
2.3% |
Destiny Pharma plc^ |
750 |
131 |
(98) |
1.0% |
Live Better With Limited |
1,106 |
- |
- |
- |
Adaptix Limited |
1,056 |
- |
(1,843) |
- |
|
13,028 |
11,894 |
(4,077) |
90.1% |
Liquidity Investments |
|
|
|
|
Downing Strategic Micro-Cap Investment Trust plc*^ |
729 |
461 |
(30) |
3.5% |
|
|
|
|
|
|
13,757 |
12,355 |
(4,107) |
93.6% |
Cash at bank
and in hand |
|
860 |
|
6.4% |
Total
investments |
|
13,215 |
|
100.0% |
*non-qualifying investment^listed and traded on the London Stock
Exchange
Investment movements for the year ended 31
March 2023
|
Cost |
Additions |
£’000 |
Healthcare investments |
|
FVRVS Limited (t/a
Fundamental VR) |
824 |
Invizius
Limited |
427 |
Qkine Limited |
303 |
|
|
|
1,554 |
|
Cost |
Valuation at 01/04/22 |
Proceeds |
Gainvs. cost |
Realised gain |
Disposals |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
Healthcare investments |
|
|
|
|
|
Future Health
Works Limited (t/a MyRecovery) |
528 |
750 |
798 |
270 |
48 |
FVRVS Limited
(t/a Fundamental VR) |
250 |
250 |
250 |
|
|
ADC - deferred
proceeds |
- |
- |
195 |
195 |
195 |
Liquidity investments |
|
|
|
|
|
MI Downing UK
Micro-Cap Growth Fund B Accum* |
40 |
37 |
44 |
4 |
7 |
|
|
|
|
|
|
|
818 |
1,037 |
1,287 |
469 |
250 |
*non-qualifying investment
Review of Investments – AIM Share
PoolShare Pool Summary
|
31 March 2023 |
31 March 2022 |
Financial highlights |
Pence |
Pence |
|
|
|
Net Asset Value
per AIM Share |
101.1 |
99.9 |
Cumulative
distributions |
- |
- |
Total Return
per AIM Share |
101.1 |
99.9 |
Investment Manager’s Report- AIM Share Pool
IntroductionThe fundraising for
the AIM Share Class was launched in August 2021 at a time when
markets were performing well, as the economy started to rebound
from the release of the constraints of the pandemic. At that time,
we were seeing a steady flow of potentially attractive IPOs on AIM
which were eligible for investment by VCTs.
The world has changed dramatically since then with the Ukraine
conflict, recessionary fears, continued high inflation and
increasing interest rates combining to shake investor confidence,
resulting in an extended period when there were no suitable
investment opportunities for the share class.
In view of the lack of AIM-IPOs we invested a proportion of the
funds raised in a cash fund and equity income fund looking to
produce some returns from the uninvested funds.
Net Asset Value and resultsAs at 31 March 2023,
the NAV of an AIM share stood at 101.1p, an increase of 1.2p (1.2%)
over the year.
OutlookDespite the frustrations of not being
able to invest the share pool’s funds as planned, it is pleasing to
be able to report a positive return when, over the same period, the
AIM market in general has suffered substantial losses.
With the challenge of investing the share pool’s funds and the
fact that the pool is very small in size, we are discussing plans
for the future of the pool with the Board and seeking to find a
strategy which is in Shareholders’ best interests.
Downing Fund Managers
Review of Investments – AIM Share PoolThe
following investments were held at 31 March 2023:
|
Cost |
Valuation |
Valuationmovementin period |
% ofportfolio |
Portfolio of investments |
£’000 |
£’000 |
£’000 |
|
Liquidity Investments |
|
|
|
|
BlackRock Cash
Fund Class D Accumulating* |
1,157 |
1,172 |
15 |
42.7% |
Vanguard FTSE
U.K. Equity Income Index Fund GBP Acc* |
643 |
721 |
78 |
26.3% |
|
1,800 |
1,893 |
93 |
69.0% |
|
|
|
|
|
Cash at bank
and in hand |
|
850 |
|
31.0% |
Total
investments |
|
2,743 |
|
100.0% |
*non-qualifying investment
DSO D Share Pool
Share Pool Summary
|
31 March 2023 |
31 March 2022 |
Financial highlights |
Pence |
Pence |
Net Asset
Value per DSO D Share |
2.6 |
2.6 |
Cumulative
distributions |
102.0 |
102.0 |
Adjustment for Performance Incentive estimate |
- |
- |
Total Return per DSO D Share |
104.6 |
104.6 |
Investment Manager’s Report -
DSO D Share Pool
IntroductionThe DSO D Share
pool now has two investments left which we need to exit allow the
share pool to wind up. This process is unfortunately taking some
time to complete.
Net Asset Value and
resultsThe Net Asset Value (“NAV”) per DSO D Share
at 31 March 2023 stood at 2.6p, showing no movement over the year.
A performance incentive fee is not expected to become payable and
so a deduction for this is not applicable. However, should the
performance incentive fee hurdles ultimately be met, a fee could
become due.
Total Return stands at 104.6p per share compared to initial cost
to Shareholders, net of income tax relief, of 70.0p per share. We
consider this to be satisfactory performance when compared to the
initial NAV of 100p.
The loss on ordinary activities after taxation for the year was
£8,000 (2022: £3,000), comprising a revenue profit of £20,000
(2022: loss of £16,000) and a capital loss of £28,000 (2022: gain
of £13,000).
Investments As at 31 March
2023, the DSO D Share pool held two investments with a total value
of £16,000.
Portfolio valuationDuring the year, the
carrying value of the portfolio of investments held by the DSO D
Share pool was reduced by £27,000.
Pearce and Saunders Limited and Pearce and Saunders DevCo
Limited are the only remaining investments in the portfolio. The
final pub was sold some time ago and an Insolvency Practitioner is
being appointed to distribute funds via a liquidation. The
valuation has been reduced by £27,000 as at 31 March 2023 to
reflect expected value of future distributions.
Outlook We are hopeful that the formal process
now being undertaken to wind up the remaining companies will allow
this process to complete in the near future. Once this is done, a
final distribution will be made to DSO D Shareholders.,
Foresight Group LLP
Review of Investments
- DSO D Share PoolThe following
investments were held at 31 March 2023:
|
Cost |
Valuation |
Valuationmovementin year |
% ofPortfolio |
Portfolio
of investments |
£’000 |
£’000 |
£’000 |
|
Pearce and
Saunders DevCo Limited* |
19 |
16 |
- |
8.3% |
Pearce and
Saunders Limited |
255 |
- |
(27) |
- |
|
274 |
16 |
(27) |
8.3% |
Cash at bank
and in hand |
|
176 |
|
91.7% |
Total
investments |
|
192 |
|
100.0% |
* non-qualifying investment
All investments are incorporated in England and Wales.
DP67 Share Pool
Share Pool Summary
|
31 March 2023 |
|
31 March 2022 |
Financial highlights |
Pence |
|
Pence |
Net Asset Value per DP67 Share |
24.8 |
|
26.8 |
Cumulative distributions |
67.8 |
|
67.8 |
Total Return per DP67 Share |
92.6 |
|
94.6 |
Investment Manager’s Report - DP67 Share
Pool
IntroductionThe process of
seeking to realise the remaining investments for optimal proceeds
and returning funds to DP67 Shareholders continues.
Net Asset Value and resultsThe
Net Asset Value (“NAV”) per DP67 Share at 31 March 2023 stood at
24.8p, a decrease of 2.0p or 2.1% in Total Return terms during the
year. Total Return stands at 92.6p per DP67 Share, compared to
initial cost to Shareholders, net of income tax relief, of 70.0p
per share. Compared to the initial NAV of 100p, we consider the
Total Return to be an underperformance against the original
expectations for the DP67 Share pool.
The loss on ordinary activities after taxation for the year was
£221,000 (2022: gain of £934,000), comprising a revenue loss of
£92,000 (2022: gain of £1.2 million) and a capital loss of £129,000
(2022: £247,000).
Investments As at 31 March
2023, the DP67 Share pool held a portfolio of two investments of
value, with that value totalling £1.1 million.
Portfolio activityThere was one realisation
during the year ended 31 March 2023. £644,000 was received in
respect of Fenkle Street LLP, which represents a healthy gain over
cost of £239,000.
Portfolio valuationThe DP67 portfolio showed no
movement in value during the year ended 31 March 2023.
Following a distribution from the underlying business which sold
its hotel asset, in which Gatewales Limited holds an interest, it
is estimated that the DP67 share pool will shortly receive
£344,000. However, a significant provision against loan interest
due from Gatewales Limited has had to be made during the period as
the overall proceeds are expected to fall below previous
estimates.
Attempts by Cadbury House Holdings to sell its conference centre
and hotel property have been ongoing for some months now. During
the year, no offers have been received that match the target
valuation and therefore, the decision was made to continue to
market the property until an buyer is found with an offer at an
appropriate price. The DP67 Share pool’s holding remains held at
the same value as reported at the end of last year and loan
interest continues to be recognised in full, providing the share
pool with £193,000 of income during the year.
OutlookThe challenge now is to achieve an exit
from Cadbury House Holdings Limited at an acceptable valuation. The
market for this type of assets is weak currently but we believe it
is in the best interests of shareholders not to sell at undervalue
even if this means the final exit takes longer. Further dividends
will be paid once the final realisations have taken place.
Foresight Group LLP
Review of Investments – DP67 Share
Pool The following investments were held at 31 March
2023:
|
Cost |
Valuation |
Valuationmovementin year |
% ofportfolio |
Portfolio of investments |
£’000 |
£’000 |
£’000 |
|
Cadbury House
Holdings Limited |
1,409 |
791 |
- |
41.6% |
Gatewales
Limited* |
343 |
344 |
- |
18.1% |
Yamuna
Renewables Limited |
400 |
- |
- |
0.0% |
London City
Shopping Centre Limited** |
99 |
- |
- |
0.0% |
|
2,251 |
1,135 |
- |
59.7% |
Cash at bank
and in hand |
|
766 |
|
40.3% |
Total
investments |
|
1,901 |
|
100.0% |
|
|
|
|
|
* partially qualifying
investment **
non-qualifying investment
All investments are incorporated in England and Wales.
|
Cost |
Valuation at 01/04/22 |
Proceeds |
Gainvs. cost |
Realised gain |
Disposals |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
Fenkle Street
LLP* |
405 |
759 |
644 |
239 |
(115) |
|
|
|
|
|
|
|
405 |
759 |
644 |
239 |
(115) |
*non-qualifying investment
Directors’ responsibilities The Directors are
responsible for preparing the Report of the Directors, the
Directors’ Remuneration Report and the financial statements in
accordance with applicable law and regulations. The Directors 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
applicable UK accounting standards have been followed, subject to
any material departures disclosed and explained in the financial
statements;
- prepare the
financial statements on the going concern basis unless it is
inappropriate to presume that the Company will continue in
business;
- prepare a directors’
report, a strategic report and directors’ remuneration report which
comply with the requirements of the Companies Act 2006; and
- carry out a robust
assessment of the principal risks facing the Company, as set out in
the Strategic Report.The Directors are responsible for keeping
adequate accounting records that are sufficient to show and explain
the Company’s transactions, to disclose with reasonable accuracy at
any time the financial position of the Company and to enable them
to ensure that the financial statements 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 understandable and
provides the information necessary for Shareholders to assess the
Company’s position, performance, business model and strategy.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company’s website. Legislation in the United Kingdom governing the
preparation and dissemination of the financial statements and other
information included in the Annual Reports may differ from
legislation in other jurisdictions.
Audited Income Statement for the year
ended 31 March 2023
|
Year ended 31 March 2023 |
Year ended 31 March 2022 |
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
Income |
284 |
- |
284 |
1,296 |
- |
1,296 |
(Loss)/gain on
investments |
- |
(6,307) |
(6,307) |
- |
6,599 |
6,599 |
Total gain/(loss) from investments |
284 |
(6,307) |
(6,023) |
1,296 |
6,599 |
7,895 |
Investment management fees |
(472) |
(472) |
(944) |
(531) |
(531) |
(1,062) |
Other expenses |
(689) |
- |
(689) |
(409) |
- |
(409) |
(Loss)/return on ordinary activities before
tax |
(877) |
(6,779) |
(7,656) |
356 |
6,068 |
6,424 |
Tax on total
comprehensive income and ordinary activities |
- |
- |
- |
- |
- |
- |
(Loss)/return attributable to equity Shareholders, being
total comprehensive income for the year |
(877) |
(6,779) |
(7,656) |
356 |
6,068 |
6,424 |
|
|
|
|
|
|
|
Basic
and diluted return per share: |
|
|
|
|
|
|
Ventures Share |
(1.0p) |
(5.5p) |
(6.5p) |
(1.0p) |
4.8p |
3.8p |
Healthcare Share |
(1.4p) |
(20.0p) |
(21.4p) |
(1.6p) |
19.9p |
18.3p |
AIM Share |
(4.3p) |
8.2p |
3.9p |
(1.5p) |
(0.9p) |
(2.4p) |
DSO D Share |
0.3p |
(0.4p) |
(0.1p) |
(0.2p) |
0.2p |
0.0p |
DP67 Share |
(0.8p) |
(1.2p) |
(2.0p) |
10.5p |
(2.2p) |
8.3p |
The total column within the Income Statement represents the
Statement of Total Comprehensive Income of the Company prepared in
accordance with Financial Reporting Standard 102 (“FRS 102”). The
supplementary revenue return and capital return columns are
prepared in accordance with the Statement of Recommended Practice
issued in July 2022 by the Association of Investment Companies
(“AIC SORP”).
Income Statement for the year ended 31
March 2023Analysed by Share pool – unaudited and
non-statutorySplit as:
|
Year ended 31 March 2023 |
Year ended 31 March 2022 |
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
Ventures Share pool |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
Income |
64 |
|
64 |
58 |
- |
58 |
Net
(loss)/gain on investments |
- |
(2,401) |
(2,401) |
- |
2,641 |
2,641 |
Total
gain/(loss) from investments |
64 |
(2,401) |
(2,337) |
58 |
2,641 |
2,699 |
Investment
management fees |
(278) |
(278) |
(556) |
(314) |
(314) |
(628) |
Other
expenses |
(280) |
- |
(280) |
(235) |
- |
(235) |
(Loss)/return
on ordinary activities before tax |
(494) |
(2,679) |
(3,173) |
(491) |
2,327 |
1,836 |
Tax on total
comprehensive income and ordinary activities |
- |
- |
- |
- |
- |
- |
(Loss)/return
attributable to equity Shareholders, being total comprehensive
income for the year |
(494) |
(2,679) |
(3,173) |
(491) |
2,327 |
1,836 |
|
Year ended 31 March 2023 |
Year ended 31 March 2022 |
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
Healthcare Share pool |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
Income |
4 |
- |
4 |
21 |
- |
21 |
Net
(loss)/gain on investments |
- |
(3,857) |
(3,857) |
- |
4,172 |
4,172 |
Total
(loss)/gain from investments |
4 |
(3,857) |
(3,853) |
21 |
4,172 |
4,193 |
Investment
management fees |
(161) |
(161) |
(322) |
(195) |
(195) |
(390) |
Other
expenses |
(115) |
- |
(115) |
(140) |
- |
(140) |
(Loss)/return
on ordinary activities before tax |
(272) |
(4,018) |
(4,290) |
(314) |
3,977 |
3,663 |
Tax on total
comprehensive income and ordinary activities |
- |
- |
- |
- |
- |
- |
(Loss)/return
attributable to equity Shareholders, being total comprehensive
income for the year |
(272) |
(4,018) |
(4,290) |
(314) |
3,977 |
3,663 |
|
Year ended 31 March 2023 |
Year ended 31 March 2022 |
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
AIM
Share pool |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
Income |
- |
- |
- |
- |
- |
- |
Net gain on
investments |
- |
93 |
93 |
- |
- |
- |
Total gain
from investments |
- |
93 |
93 |
- |
- |
- |
Investment
management fees |
(18) |
(18) |
(36) |
(2) |
(2) |
(4) |
Other
expenses |
(21) |
- |
(21) |
(2) |
- |
(2) |
(Loss)/gain on
ordinary activities before tax |
(39) |
75 |
36 |
(4) |
(2) |
(6) |
Tax on total
comprehensive income and ordinary activities |
- |
- |
- |
- |
- |
- |
(Loss)/gain
attributable to equity Shareholders, being total comprehensive
income for the year |
(39) |
75 |
36 |
(4) |
(2) |
(6) |
|
Year ended 31 March 2023 |
Year ended 31 March 2022 |
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
DSO D
Share pool |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
Income |
24 |
- |
24 |
- |
- |
- |
(Loss)/gain on
investments |
- |
(27) |
(27) |
- |
19 |
19 |
Total
gain/(loss) from investments |
24 |
(27) |
(3) |
- |
19 |
19 |
Investment
management fees |
(1) |
(1) |
(2) |
(6) |
(6) |
(12) |
Other
expenses |
(3) |
- |
(3) |
(10) |
- |
(10) |
Return/(loss)
on ordinary activities before tax |
20 |
(28) |
(8) |
(16) |
13 |
(3) |
Tax on total
comprehensive income and ordinary activities |
- |
- |
- |
- |
- |
- |
Return/(loss)
attributable to equity Shareholders, being total comprehensive
income for the year |
20 |
(28) |
(8) |
(16) |
13 |
(3) |
|
Year ended 31 March 2023 |
Year ended 31 March 2022 |
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
DP67
Share pool |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
Income |
192 |
- |
192 |
1,217 |
- |
1,217 |
Net loss on
investments |
- |
(115) |
(115) |
- |
(233) |
(233) |
Total
gain/(loss) from investments |
192 |
(115) |
77 |
1,217 |
(233) |
984 |
Investment
management fees |
(14) |
(14) |
(28) |
(14) |
(14) |
(28) |
Other
expenses |
(270) |
- |
(270) |
(22) |
- |
(22) |
(Loss)/return
on ordinary activities before tax |
(92) |
(129) |
(221) |
1,181 |
(247) |
934 |
Tax on total
comprehensive income and ordinary activities |
- |
- |
- |
- |
- |
- |
(Loss)/return
attributable to equity Shareholders, being total comprehensive
income for the year |
(92) |
(129) |
(221) |
1,181 |
(247) |
934 |
Audited Balance Sheet
as at 31 March 2023
|
2023 |
2022 |
|
£’000 |
£’000 |
Fixed assets |
|
|
Investments |
43,157 |
49,141 |
Current assets |
|
|
Debtors |
2,510 |
4,317 |
Cash at bank and in hand |
6,082 |
8,384 |
|
8,592 |
12,701 |
Creditors: amounts falling due within one
year |
(1,214) |
(965) |
Net current assets |
7,378 |
11,736 |
Net assets |
50,535 |
60,877 |
|
|
|
Capital and reserves |
|
|
Called up Share capital |
117 |
113 |
Capital redemption reserve |
4 |
58 |
Special reserve |
50,483 |
24,063 |
Share premium account |
- |
29,284 |
Funds held in respect of shares not yet allotted |
- |
7 |
Revaluation reserve |
93 |
6,995 |
Capital reserve – realised |
4,127 |
3,769 |
Revenue reserve |
(4,289) |
(3,412) |
Total equity Shareholders’ funds |
50,535 |
60,877 |
|
|
|
Basic
and diluted Net Asset Value per share: |
|
|
DSO D
Share |
2.6p |
2.6p |
DP67
Share |
24.8p |
26.8p |
Ventures
Share |
59.4p |
68.2p |
Healthcare Share |
61.6p |
84.4p |
AIM
Share |
101.1p |
99.9p |
|
|
|
Balance Sheet as at 31
March 2023Analysed by Share pool – unaudited and
non-statutory
Split as:
|
2023 |
2022 |
Ventures Share pool |
£’000 |
£’000 |
Fixed assets |
|
|
Investments |
27,758 |
31,259 |
Current assets |
|
|
Debtors |
925 |
1,801 |
Cash at bank and in hand |
3,430 |
4,321 |
|
4,355 |
6,122 |
Creditors: amounts falling due within one
year |
(730) |
(490) |
Net current assets |
3,625 |
5,632 |
Net assets |
31,383 |
36,891 |
Capital and reserves |
|
|
Called up share capital |
67 |
65 |
Capital redemption reserve |
3 |
58 |
Special reserve |
32,039 |
16,290 |
Share premium account |
- |
18,657 |
Funds held in respect of shares not yet allotted |
- |
2 |
Revaluation reserve |
1,170 |
3,548 |
Capital reserve – realised |
1,665 |
1,428 |
Revenue reserve |
(3,561) |
(3,067) |
Total equity Shareholders’ funds |
31,383 |
36,891 |
|
2023 |
2022 |
Healthcare Share pool |
£’000 |
£’000 |
Fixed assets |
|
|
Investments |
12,355 |
15,945 |
Current assets |
|
|
Debtors |
455 |
633 |
Cash at bank and in hand |
860 |
2,483 |
|
1,315 |
3,116 |
Creditors: amounts falling due within one
year |
(221) |
(310) |
Net current assets |
1,094 |
2,806 |
Net assets |
13,449 |
18,751 |
Capital and reserves |
|
|
Called up share capital |
28 |
27 |
Capital redemption reserve |
1 |
- |
Special reserve |
15,395 |
7,752 |
Share premium account |
- |
8,594 |
Funds held in respect of shares not yet allotted |
- |
5 |
Revaluation reserve |
(295) |
4,031 |
Capital reserve – realised |
177 |
(73) |
Revenue reserve |
(1,857) |
(1,585) |
Total equity Shareholders’ funds |
13,449 |
18,751 |
|
2023 |
2022 |
AIM Share pool |
£’000 |
£’000 |
Fixed assets |
|
|
Investments |
1,893 |
- |
Current assets |
|
|
Debtors |
2 |
604 |
Cash at bank and in hand |
850 |
1,446 |
|
852 |
2,050 |
Creditors: amounts falling due within one
year |
(19) |
(21) |
Net current assets |
833 |
2,029 |
Net assets |
2,726 |
2,029 |
Capital and reserves |
|
|
Called up share capital |
3 |
2 |
Special reserve |
2,673 |
(2) |
Share premium account |
- |
2,033 |
Funds held in respect of shares not yet allotted |
- |
- |
Revaluation reserve |
93 |
- |
Capital reserve – realised |
- |
- |
Revenue reserve |
(43) |
(4) |
Total equity Shareholders’ funds |
2,726 |
2,029 |
|
2023 |
2022 |
DSO D Share pool |
£’000 |
£’000 |
Fixed assets |
|
|
Investments |
16 |
43 |
Current assets |
|
|
Debtors |
21 |
61 |
Cash at bank and in hand |
176 |
124 |
|
197 |
185 |
Creditors: amounts falling due within one
year |
(13) |
(20) |
Net current assets |
184 |
165 |
Net assets |
200 |
208 |
Capital and reserves |
|
|
Called up share capital |
8 |
8 |
Special reserve |
422 |
423 |
Revaluation reserve |
(258) |
(231) |
Capital reserve – realised |
22 |
22 |
Revenue reserve |
6 |
(14) |
Total equity Shareholders’ funds |
200 |
208 |
|
|
|
|
2023 |
2022 |
DP67 Share pool |
£’000 |
£’000 |
Fixed assets |
|
|
Investments |
1,135 |
1,894 |
Current assets |
|
|
Debtors |
1,107 |
1,218 |
Cash at bank and in hand |
766 |
10 |
|
1,873 |
1,228 |
Creditors: amounts falling due within one
year |
(231) |
(124) |
Net current assets |
1,642 |
1,104 |
Net assets |
2,777 |
2,998 |
Capital and reserves |
|
|
Called up share capital |
11 |
11 |
Special reserve |
(46) |
(400) |
Revaluation reserve |
(617) |
(263) |
Capital reserve – realised |
2,263 |
2,392 |
Revenue reserve |
1,166 |
1,258 |
Total equity Shareholders’ funds |
2,777 |
2,998 |
Statement of Changes in Equity
for the year ended 31 March 2023
|
CalledupSharecapital |
CapitalRedemptionreserve |
Specialreserve |
Sharepremiumaccount |
Funds held in respect
of shares
not
yetallotted |
RevaluationReserve |
Capitalreserve
-realised |
Revenuereserve |
Total |
|
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
At 31
March 2021 |
102 |
58 |
29,417 |
20,010 |
241 |
(1,143) |
3,132 |
(3,768) |
48,049 |
Total comprehensiveincome |
- |
- |
- |
- |
- |
6,335 |
(267) |
356 |
6,424 |
|
Transfer between
reserves* |
- |
- |
(5,159) |
- |
- |
1,803 |
3,356 |
- |
- |
Unallotted shares |
- |
- |
- |
- |
(234) |
- |
- |
- |
(234) |
Transactions with owners |
|
|
|
|
|
|
|
|
|
|
Dividend paid |
- |
- |
- |
- |
- |
- |
(2,452) |
- |
(2,452) |
Purchase of own
shares |
- |
- |
(195) |
- |
- |
- |
- |
- |
(195) |
Issue of shares |
11 |
- |
- |
9,501 |
- |
- |
- |
- |
9,512 |
Share issue costs |
- |
- |
- |
(227) |
- |
- |
- |
- |
(227) |
At 31 March 2022 |
113 |
58 |
24,063 |
29,284 |
7 |
6,995 |
3,769 |
(3,412) |
60,877 |
Total
comprehensive income |
- |
- |
- |
- |
- |
(6,448) |
(331) |
(877) |
(7,656) |
|
Transfer between
reserves* |
- |
- |
(2,540) |
- |
- |
(454) |
2,994 |
- |
- |
Unallotted shares |
- |
- |
- |
- |
(7) |
- |
- |
- |
(7) |
Transactions with owners |
|
|
|
|
|
|
|
|
|
|
Dividend paid |
- |
- |
- |
- |
- |
- |
(2,305) |
- |
(2,305) |
Cancellation of share premium |
- |
(58) |
31,785 |
(31,727) |
- |
- |
- |
- |
- |
Purchase of own
shares |
(4) |
4 |
(2,825) |
- |
- |
- |
- |
- |
(2,825) |
Issue of shares |
8 |
- |
- |
2,500 |
- |
- |
- |
- |
2,508 |
Share issue costs |
- |
- |
- |
(57) |
- |
- |
- |
- |
(57) |
At 31 March 2023 |
117 |
4 |
50,483 |
- |
- |
93 |
4,127 |
(4,289) |
50,535 |
* A transfer of £454,000 (2022: £1,803,000)
representing previously recognised realised gains and losses on
disposal of investments during the period has been made between the
Revaluation Reserve and the Capital reserve - realised. A transfer
of £2,540,000 (2022: £5,159,000) representing the total of:
realised losses on the disposal of investments, cumulative realised
losses on permanent fair value change, capital expenses and capital
dividends in the period, has been made between the Capital Reserve
- realised and the Special reserve.
Cash Flow Statement for
the year ended 31 March 2023
|
Unaudited non-statutory analysis |
Audited |
VenturesShare pool |
Healthcare Share pool |
AIM Share Pool |
DSO DSharepool |
DP67Sharepool |
Company |
|
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
Cash
flows from operating activities |
|
|
|
|
|
|
(Loss)/return on
ordinary activities before taxation |
(3,173) |
(4,290) |
36 |
(8) |
(221) |
(7,656) |
Losses/(gains) on
investments |
2,401 |
3,857 |
(93) |
27 |
115 |
6,307 |
(Decrease)/increase in creditors |
240 |
(89) |
(2) |
(7) |
107 |
249 |
Decrease in
debtors |
876 |
178 |
602 |
40 |
111 |
1,807 |
Net
cash inflow/(outflow) from
operating activities |
344 |
(344) |
543 |
52 |
112 |
707 |
Cash flow
from investing activities |
|
|
|
|
|
|
Purchase of
investments |
(5,088) |
(1,554) |
(1,800) |
- |
- |
(8,442) |
Proceeds from
disposal of investments |
6,188 |
1,287 |
- |
- |
644 |
8,119 |
Net cash
inflow/(outflow) from investing activities |
1,100 |
(267) |
(1,800) |
- |
644 |
(323) |
Net cash
inflow/(outflow) before financing |
1,444 |
(611) |
(1,257) |
52 |
756 |
384 |
Cash
flows from financing activities |
|
|
|
|
|
|
Repurchase of
shares |
(2,066) |
(759) |
- |
- |
- |
(2,825) |
Issue of share
capital |
1,277 |
553 |
678 |
- |
- |
2,508 |
Cost of issue of
share capital |
(28) |
(12) |
(17) |
|
|
(57) |
Funds held in
respect of shares not yet allotted |
(2) |
(5) |
- |
- |
- |
(7) |
Equity dividends
paid |
(1,516) |
(789) |
- |
- |
- |
(2,305) |
Net cash
(outflow)/inflow from financing activities |
(2,335) |
(1,012) |
661 |
- |
- |
(2,686) |
|
|
|
|
|
|
|
Net
change in cash |
(891) |
(1,623) |
(596) |
52 |
756 |
(2,302) |
Cash and
cash equivalents at start of the year |
4,321 |
2,483 |
1,446 |
124 |
10 |
8,384 |
Cash and
cash equivalents at end of the year |
3,430 |
860 |
850 |
176 |
766 |
6,082 |
|
|
|
|
|
|
|
Cash and
cash equivalents comprise |
|
|
|
|
|
|
Cash at bank and
in hand |
3,430 |
860 |
850 |
176 |
766 |
6,082 |
Total
cash and cash equivalents |
3,430 |
860 |
850 |
176 |
766 |
6,082 |
Cash Flow Statement for
the year ended 31 March 2022
|
Unaudited non-statutory analysis |
Audited |
VenturesShare pool |
Healthcare Share pool |
AIM Share Pool |
DSO DSharepool |
DP67Sharepool |
Company |
|
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
Cash
flows from operating activities |
|
|
|
|
|
|
(Loss)/return on
ordinary activities before taxation |
1,836 |
3,663 |
(6) |
(3) |
934 |
6,424 |
(Gains)/losses on
investments |
(2,641) |
(4,172) |
- |
(19) |
233 |
(6,599) |
Increase in
creditors |
253 |
211 |
21 |
3 |
50 |
538 |
Increase in
debtors |
(1,337) |
(379) |
(604) |
(32) |
(1,217) |
(3,569) |
Net
cash outflow from operating
activities |
(1,889) |
(677) |
(589) |
(51) |
- |
(3,206) |
Cash flow
from investing activities |
|
|
|
|
|
|
Purchase of
investments |
(2,070) |
(4,764) |
- |
- |
- |
(6,834) |
Proceeds from
disposal of investments |
2,085 |
2,529 |
- |
421 |
- |
5,035 |
Net cash
inflow/(outflow) from investing activities |
15 |
(2,235) |
- |
421 |
- |
(1,799) |
Net cash
inflow/(outflow) before financing |
(1,874) |
(2,912) |
(589) |
370 |
- |
(5,005) |
Cash
flows from financing activities |
|
|
|
|
|
|
Repurchase of
shares |
(58) |
(137) |
- |
- |
- |
(195) |
Issue of share
capital |
4,775 |
2,658 |
2,079 |
- |
- |
9,512 |
Cost of issue of
share capital |
(122) |
(61) |
(44) |
- |
- |
(227) |
Funds held in
respect of shares not yet allotted |
(220) |
(14) |
- |
- |
- |
(234) |
Equity dividends
paid |
(1,321) |
(542) |
- |
(590) |
- |
(2,453) |
Net cash
(outflow)/inflow from financing activities |
3,054 |
1,904 |
2,035 |
(590) |
- |
6,403 |
|
|
|
|
|
|
|
Net
change in cash |
1,180 |
(1,008) |
1,446 |
(220) |
- |
1,398 |
Cash and
cash equivalents at start of the year |
3,141 |
3,491 |
- |
344 |
10 |
6,986 |
Cash and
cash equivalents at end of the year |
4,321 |
2,483 |
1,446 |
124 |
10 |
8,384 |
|
|
|
|
|
|
|
Cash and
cash equivalents comprise |
|
|
|
|
|
|
Cash at bank and
in hand |
4,321 |
2,483 |
1,446 |
124 |
10 |
8,384 |
Total
cash and cash equivalents |
4,321 |
2,483 |
1,446 |
124 |
10 |
8,384 |
Notes1. General
informationDowning FOUR 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
policiesBasis of accountingThe 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 and Venture Capital Trusts” revised July
2022 (“SORP”).
The financial statements are presented in pounds sterling and
rounded to thousands. The Company’s functional and presentational
currency is pounds sterling.
Going concernThe Directors have made an
assessment of the company’s ability to continue as a going concern
and are satisfied that the company has the resources to continue in
business for the foreseeable future, being a period of 12 months
from the date these Financial Statements were approved.
Furthermore, the Directors are not aware of any material
uncertainties that may cast significant doubt upon the Company’s
ability to continue as a going concern, having taken into account
the liquidity of the Company’s investment portfolio and the
Company’s financial position in respect of its cash flows and
investment commitments. Therefore, the Financial Statements have
been prepared on the going concern basis.
Presentation of Income StatementIn order to
better reflect the activities of a Venture Capital Trust, and in
accordance with the SORP, supplementary information which analyses
the Income Statement between items of a revenue and capital nature
has been presented alongside the Income Statement. The revenue
return 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.
Reportable segments The Company has one
reportable segment as the sole activity of the Company is to
operate as a VCT and all of the Company’s resources are allocated
to this activity.
InvestmentsAll 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.
It is possible to determine the 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”).
Liquidity investments are measured using bid prices.
For unquoted investments, fair value is established by using the
IPEV guidelines. The valuation methodologies for unquoted entities
used by the IPEV to ascertain the fair value of an investment are
as follows:
- Calibration to price of recent investment;
- Multiples;
- Net assets;
- Discounted cash flows or earnings (of 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.
Gains and losses arising from changes in fair value are included
in the Income Statement for the year as a capital item and
transaction costs on acquisition or disposal of the investment are
expensed. Where an investee company has gone into receivership,
liquidation or administration (where there is little likelihood of
recovery), the loss on the investment, although not physically
disposed of, is treated as being realised.
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 FRS 102 sections 14 and 15 and the SORP, which do not require
portfolio investments to be accounted for using the equity method
of accounting.
Calibration to price of recent investment requires a level of
judgment to be applied in assessing and reviewing any additional
information available since the last investment date. The manager
considers a range of factors in order to determine if there is any
indication of decline in value or evidence of increase in value
since the recent investment date. If no such indications are noted,
the price of the recent investment will be used as the fair value
for the investment.
Examples of signals which could indicate a movement in value
are: -
- Changes in results
against budget or in expectations of achievement of technical
milestones (patents/testing/regulatory approvals);
- Significant changes
in the market of the products or in the economic environment in
which it operates;
- Significant changes
in the performance of comparable companies;
- Internal matters such as fraud,
litigation or management structure.
In respect of disclosures required by the SORP for the ten
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.
Judgements in applying accounting policies and key
sources of estimation uncertaintyThe key estimate in the
financial statements is the determination of the fair value of the
unquoted investments by the Directors as it impacts the valuation
of the unquoted investments at the balance sheet date.
Of the Company’s assets measured at fair value, it is possible
to determine their fair values within a reasonable range of
estimates.
A price sensitivity analysis of the unquoted investments is
provided within the Annual Report, under Investment price risk.
Income Dividend income from investments is
recognised when the Shareholders’ rights to receive payment have
been established, normally the ex-dividend date.
Interest income is accrued on a time apportioned basis, by
reference to the principal sum outstanding and at the effective
rate applicable, and only where there is reasonable certainty of
collection in the foreseeable future.
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 income.
Arrangement fee rebates received from the Investment Manager are
treated as capital income following the date of investment.
Where previously accrued income is considered unrecoverable, a
corresponding bad debt expense is recognised.
ExpensesAll expenses are accounted for on an
accruals basis, and are stated inclusive of any VAT charged. 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.
Expenses and liabilities not specific to a share class are
generally allocated pro rata to the Net Asset Values of each share
class.
TaxationThe 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 which arises.
Deferred taxation, which is not discounted, 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 they crystallise, based on
current tax rates and law. 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.
Other debtors and other creditors Other debtors
(including accrued income) and other creditors are included within
the accounts at amortised cost.
Issue costsIssue costs in relation to the
shares issued for each share class have been deducted from the
share premium account, special reserve or revenue reserve, as
applicable, for the relevant share class.
Performance IncentiveAmounts payable in respect
of Performance Incentive arrangements are recorded at such time
that an obligation has been established. In respect of the DSO D
Share, pool, should a Performance Incentive become payable it will
be recorded as an expense item through the Income Statement.
Performance Incentives in respect of all other Share classes are
paid by way of dividends and will therefore be recognised in
accordance with the dividend accounting policy. There is no
Performance Incentive in place for the AIM Share class.
DividendsDividends payable are recognised as
distributions in the financial statements when the Company’s
liability to make payment has been established, typically once
declared by the Board or approved by Shareholders at the AGM.
Funds held in respect of
shares not yet
allottedCash 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
|
WeightedAveragenumberof
shares
inissue* |
Revenue
return/(loss) |
Capital
(loss)/gain |
TotalComprehensive(loss)/income |
Basic and diluted (loss)/
return per share |
|
|
£’000 |
£’000 |
£’000 |
Pence |
Return per share
is calculated on the following: |
|
|
|
|
|
Year ended
31 March 2023 |
|
|
|
|
|
Ventures Shares |
48,923,338 |
(494) |
(2,679) |
(3,173) |
(6.5p) |
Healthcare Shares |
20,046,893 |
(272) |
(4,018) |
(4,290) |
(21.4p) |
AIM Shares |
916,744 |
(39) |
75 |
36 |
3.9p |
DSO D Shares |
7,867,247 |
20 |
(28) |
(8) |
(0.1p) |
DP67 Shares |
11,192,136 |
(92) |
(129) |
(221) |
(2.0p) |
|
|
|
|
|
|
Year ended
31 March 2022 |
|
|
|
|
|
Ventures Shares |
48,629,971 |
(491) |
2,327 |
1,836 |
3.8p |
Healthcare Shares |
20,007,047 |
(314) |
3,977 |
3,663 |
18.3p |
AIM Shares |
283,425 |
(4) |
(2) |
(6) |
(2.3p) |
DSO D Shares |
7,867,247 |
(16) |
13 |
(3) |
0.0p |
DP67 Shares |
11,192,136 |
1,181 |
(247) |
934 |
8.3p |
*Excluding Management Shares
As the Company has not issued any convertible securities or
share options, there is no dilutive effect on the return per DSO D
Share, DP67 Share, Ventures Share, Healthcare Share or AIM Share.
The return per share disclosed therefore represents both the basic
and diluted return per share for all classes of share.
4. Basic and
diluted Net Asset Value per
share
|
Shares in issue |
|
2023 Net Asset Value |
|
2022 Net Asset Value |
|
2023 |
2022 |
|
Pence pershare |
|
£’000 |
|
Pence pershare |
|
£’000 |
Ventures
Shares |
66,852,564* |
65,328,545* |
|
59.4 |
|
31,383 |
|
68.2 |
|
36,889 |
Healthcare
Shares |
27,544,877* |
26,811,908* |
|
61.6 |
|
13,449 |
|
84.4 |
|
18,746 |
AIM Shares |
2,695,803 |
2,034,990 |
|
101.1 |
|
2,726 |
|
99.9 |
|
2,029 |
DSO D Shares |
7,867,247 |
7,867,247 |
|
2.6 |
|
200 |
|
2.6 |
|
208 |
DP67 Shares |
11,192,136 |
11,192,136 |
|
24.8 |
|
2,777 |
|
26.8 |
|
2,998 |
|
|
|
|
|
|
|
|
|
|
|
Funds held in
respect of shares not yet allotted |
|
|
|
|
|
- |
|
|
|
6 |
|
|
|
|
|
|
|
|
|
|
|
Net assets per
Balance Sheet |
|
|
|
|
|
50,535 |
|
|
|
60,876 |
|
|
|
|
|
|
|
|
|
|
|
* includes 13,976,149 (2022: 11,216,391) Management
Shares and 5,712,064 (2022: 4,605,472) Healthcare Management
Shares, which have not been included in the calculation of Net
Asset Value per share as the right to distributions on the
Management Shares is waived until certain performance hurdles have
been met.
The Directors allocate the assets and liabilities
of the Company between the DSO D Shares, DP67 Shares, Ventures
Shares, Healthcare Shares and AIM Shares such that each share class
has sufficient net assets to represent its dividend and return of
capital rights.
As the Company has not issued any convertible shares or share
options, there is no dilutive effect on the Net Asset Value per DSO
D Share, per DP67 Share, per Ventures Share, per Healthcare Share
or per AIM Share. The Net Asset Value per share disclosed therefore
represents both the basic and diluted Net Asset Value per DSO D
Share, per DP67 Share, per Ventures Share, per Healthcare Share and
per AIM Share.
5. Principal
RisksThe 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:
- Market 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 risksAs 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 market risks is
a fundamental part of investment activities undertaken by the
Investment Manager and is overseen by the Board. The Manager
monitors investments through regular contact with the management of
investee companies, regular review of management accounts and other
financial information and attendance at investee company board
meetings. This enables the Manager 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 market risks to which the Company is exposed are:
- Investment price
risk;
- Foreign exchange
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
riskInvestment 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 market
price movements in respect of quoted investments, and also changes
in the fair value of unquoted investments that it holds.
Foreign exchange riskThe
Company has exposure to fluctuations in the prevailing market rates
of exchange between the US Dollar ("USD") and the British Pound
("GBP"), as a result of holding investments in companies which use
USD as their functional and reporting currency. The valuations of
such investments are first performed in USD and subsequently
converted to the equivalent GBP values at each reporting date. As
at 31 March 2023, cumulative unrealised foreign exchange gains of
£321,000 (2022: cumulative loss £171,000) had been recognised in
the Income Statement, representing the movements in the USD:GBP
exchange rates between the date of each relevant investment and the
reporting date. The Board continues to review the exposure to
fluctuations in foreign currencies but has not sought to mitigate
the exposure at this time. The Company does however have
relationships with foreign exchange service providers and will seek
to reduce the impact of foreign exchange fluctuations on future
cash flows as they arise.
Interest rate riskThe 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 notes attract interest,
predominately at fixed rates. A summary of the interest rate
profile of the Company’s investments is shown below.
There are three categories in respect of interest, which are
attributable to the financial instruments held by the Company as
follows:
- “Fixed rate” assets
represent investments with predetermined yield targets and comprise
certain loan note investments and preference shares;
- “Floating rate”
assets predominantly bear interest at rates linked to Bank of
England base rate or LIBOR and comprise cash at bank; and
- “No interest rate”
assets do not attract interest and comprise equity investments,
certain loan note investments, Liquidity investments, loans and
receivables (excluding cash at bank) and other financial
liabilities.
The Company monitors the level of income received from fixed and
floating rate assets and, if appropriate, may make adjustments to
the allocation between the categories, in particular, if this
should be required to ensure compliance with the VCT
regulations.
During the period the Bank of England base rate has increased
from 0.75% per annum to 4.25% per annum at the period end (from
0.10% to 0.75% in the prior year). Following the period end, in May
2023, the rate increased further, to 5.00% per annum. Any potential
change in the base rate, at the current level, would have an
immaterial impact on the net assets and Total Return of the
Company.
Credit riskCredit risk is the risk
that a 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
notes in investee companies, cash deposits and debtors. Credit risk
relating to holdings of loan notes in investee companies is
considered to be part of market risk.
The Company’s financial assets that are exposed to credit risk
are summarised as follows:
The Manager manages credit risk in respect of loan notes with a
similar approach as described under investment price risk. The
management of credit risk, associated interest, dividends and other
receivables is covered within the investment management
procedures.
Cash is mainly held with Royal Bank of Scotland plc, an A-rated
financial institution. Consequently, the Directors consider that
the credit risk associated with cash deposits is low.
There have been limited changes in fair value during the year
that are directly attributable to changes in credit risk.
Liquidity riskLiquidity 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 at their fair values when required, or from the
inability to generate cash inflows as required.
The Company has a relatively low level of creditors, being £1.2
million (2022: £965,000), all of which are payable within one year.
The Company has no borrowings, and accordingly the Board believes
that the Company’s exposure to liquidity risk is low. Also, the
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 Manager
in line with guidance agreed with the Board and is reviewed by the
Board at regular intervals.
6. Controlling
party and related party transactionsIn the opinion of the
Directors, there is no immediate or ultimate controlling party.
Fees payable during the year to the Directors
and their interest in shares of the Company are disclosed within
the Directors’ Remuneration Report and in the Report of the
Directors. There were no amounts outstanding and due to the
Directors as at 31 March 2023 (2022: nil).
Further related party transactions include
Investment Management and Administration fees payable to Foresight
Group LLP and Downing LLP.
In addition, Downing LLP was also paid promoter
fees in connection with the offers for subscription which were open
during the year. The total paid to Downing LLP during the year
ended 31 March 2023 was £39,000 (2022: £149,000).
The Company also has an agreement to pay an
ongoing trail fee annually to the Investment Manager, in connection
with applicable proceeds raised under previous offers for
subscription, out of which there is an obligation to pay trail
commission to intermediaries. The total trail fee payable in
respect of the year ended 31 March 2023 was £21,000, all of which
was unpaid as at 31 March 2023 (2022; £24,000).
7. Events after
the end of the reporting
periodIn the period between 31 March 2023 and the date of
this report, the Company issued the following shares:
- 360,443 Ventures
Shares, at an average price of 66.00p per share; and
- 1,722,102 Healthcare Shares, at an
average price of 68.27p per share.
At today’s date, there were 67,213,007 Ventures
Shares, 29,266,979 Healthcare Shares and 2,695,803 AIM Shares in
issue, including Management Shares.
ANNOUNCEMENT BASED ON AUDITED
ACCOUNTS 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 2023 but has been extracted from the
statutory financial statements for the year ended 31 March 2023
which were approved by the Board of Directors on 31 July 2023 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 2022 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 2023 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 www.foresightgroup.eu.
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