DO1O Down. 4 Dso Ord

 
TIDMDO1O 
 
Downing Structured Opportunities VCT 1 plc 
FINAL RESULTS for the PERIOD ended 31 March 2010 
 
FINANCIAL HIGHLIGHTS 
                                                 31 March 
                                                     2010 
 
                                                    Pence 
 Ordinary Share pool 
 
 Net asset value per Ordinary Share                 102.8 
 
 Net asset value per 'A' Share                        0.1 
 
 Cumulative distributions                             5.0 
                                               ----------- 
 Total return per Ordinary Share and 'A' Share      107.9 
 
 
 'B' Share pool 
 
 Net asset value per 'B' Share                       94.7 
 
 Net asset value per 'C' Share                        0.1 
 
 Cumulative distributions                               - 
                                               ----------- 
 Total return per 'B' Share and 'C' Share            94.8 
 
 
CHAIRMAN'S STATEMENT 
 
Introduction 
I  am pleased to present  the Company's first Report  and Accounts.  The Company 
has   had  a  very  active  initial  period  in  which  it  has  undertaken  two 
fundraisings,  achieved a good  performance with its  initial structured product 
portfolio  within the Ordinary Share pool and has made good progress in building 
the Ordinary Share pool's venture capital portfolio. 
 
Ordinary Share offer 
The  Company launched its first fundraising in January 2009 and had raised gross 
proceeds  of  GBP10.5 million by the time the offer closed on 2 September 2009. The 
Company   issued  10.4 million  Ordinary  Shares  and  15.6 million  'A'  Shares 
producing net proceeds, after issue costs, of  GBP9.9 million. 
 
As  set out in the prospectus, the  combined subscription price for one Ordinary 
Share  and one A Share was  based on the Company's NAV  at the time of issue and 
varied between 100.0p and 108.3p. 
 
Shareholders  who subscribed under the offer  received equal numbers of Ordinary 
Shares  and 'A' Shares. 'A' Shares were also issued at 0.1p per share to members 
of the management team. The 'A' Shares are designed to facilitate the payment of 
a  performance incentive to management should  any such incentive become payable 
in  the future.   The 'A'  Shares initially  have a  net asset value of 0.1p per 
share  which is only  expected to increase  when and if  a performance incentive 
becomes payable. 
 
'B' Share offer 
In October 2009, the Company launched a 'B' Share offer.  By 31 March 2010  GBP18.5 
million  gross proceeds had been raised. The offer closed on 26 April 2010 being 
fully  subscribed and having raised gross proceeds of  GBP20 million, providing the 
Company  with  GBP18.9  million of  net proceeds.  All Shareholders  who subscribed 
under  the offer  were issued  one 'B'  Share and  one 'C'  Share at  a price of 
100.0p. 'C'  Shares  were  also  issued  at  0.1p per  share  to  members of the 
management team. 
 
As  with  the  'A'  Shares  in  respect  of  the Ordinary Shares, the 'C' Shares 
initially  have a net  asset value of  0.1p per share which  is only expected to 
increase when and if a performance incentive becomes payable. 
 
Ordinary Share pool - Structured products 
In  line with the  Company's strategy, the  majority of the  Ordinary Share pool 
funds  were  used  to  build  a  portfolio  of  structured  products.  The first 
structured  product investments were made in March 2009, which, with the benefit 
of  hindsight, turned out to be a very favourable time to be investing into such 
instruments. 
 
In  the period to 31 March 2010, the Ordinary Share structured product portfolio 
generated realised gains of  GBP464,000 and unrealised gains of  GBP1.0 million. 
 
Further details are included in the Structured Product Manager's report. 
 
Ordinary Share pool - Venture capital investments 
The  task  of  investing  the  Ordinary  Share  pool's funds into VCT-qualifying 
investments  got underway during the period. The pool made seven venture capital 
investments  in  the  period  ended  31 March  2010 with  a  total  cost of  GBP2.6 
million. 
 
Each  of the investments has performed reasonably  to plan to date and they have 
therefore been valued at amounts equal to cost at the period-end. 
 
Full  details of the portfolio activity are included in the Investment Manager's 
report. 
 
'B' Share Pool - Investments 
With  the early  proceeds from  the 'B'  Share fundraising,  the first 'B' Share 
investments  in  structured  products  were  made in February 2010.  By 31 March 
2010, the  portfolio comprised investments with a total cost of  GBP2.5 million and 
showed a small unrealised gain of  GBP81,000. 
 
No  venture capital investments were made by  the 'B' Share pool before 31 March 
2010. 
 
Net Asset Value 
Ordinary Share pool 
The Net Asset Value per Ordinary Share ("NAV") at 31 March 2010 stood at 102.8p 
and  NAV per 'A' Share  at 0.1p. With dividends paid  to date of 5.0p per share, 
Total Return (NAV plus cumulative dividends) stood at 107.9p per share. 
 
 'B' Share pool 
The  Net Asset Value per  'B' Share ("NAV") at  31 March 2010 stood at 94.7p and 
NAV  per 'C' Share at 0.1 p.  No dividends have been paid  in respect of the 'B' 
Share to date. 
 
Results 
The  profit on ordinary activities after  taxation for the period was  GBP1,287,000 
comprising a revenue loss of  GBP196,000 and a capital profit of  GBP1,483,000. 
 
Dividends 
It  is the  Company's intention  to pay  at least  5p per annum  in dividends in 
respect  of the Ordinary  Shares and the  'B' Shares and  that dividends will be 
paid twice each year. 
 
The Company's first and second interim dividends each of 2.5p per Ordinary Share 
were paid on 25 September 2009 and 29 January 2010. 
 
The Board is proposing to pay final dividends in respect of the period ended 31 
March  2010 of 2.5p per  Ordinary Share  and 2.5p per  'B' Share on 30 September 
2010 to Shareholders on the register at the close of business on 27 August 2010. 
 
Share buybacks 
The Company operates a policy, subject to certain restrictions, of buying shares 
that  become available in the market at  a price equivalent to a 10% discount to 
the Company's most recently published NAV. 
 
No shares were purchased in the period for cancellation. 
 
A  special resolution  to continue  this policy  is proposed for the forthcoming 
AGM. 
 
Annual General Meeting 
The  Company's first  Annual General  Meeting ("AGM")  will be  held at 10 Lower 
Grosvenor Place, London SW1W 0EN at 11:15 am on 22 September 2010. 
 
One item of special business, seeking approval for the Company to be able to buy 
its own shares as described above, will be proposed. 
 
Outlook 
It  has  been  a  good  start  for  the Company's Ordinary Share pool, driven by 
excellent  performance  from  the  structured  product investments. The Ordinary 
Share  pool's  exposure  to  structured  products  will  now gradually reduce as 
further venture capital investments are made. 
 
The  'B'  Share  pool  is  currently  building  its  initial  structured product 
portfolio.  The opportunities for generous  returns from structured products are 
less  than they were as  the time when the  Ordinary Share pool was building its 
portfolio  and the increased market volatility  in recent months has resulted in 
falls  in the prices of some of the structured products that have been purchased 
so  far.  However, the Board and Manager are confident that satisfactory returns 
can be achieved over the planned life of the portfolio. 
 
In  respect  of  venture  capital  investments,  I  expect  both  pools  to make 
significant progress in developing their portfolios over the current year. There 
is  no doubt that  conditions remain risky  for investing, however the continued 
cautious  outlook  by  banks  and  general  nervousness  about  the  economy are 
producing attractive investments opportunities for well-placed entrepreneurs. 
 
I  look  forward  to  reporting  further  progress  with  my  statement with the 
half-yearly results to 30 September 2010. 
 
Howard Flight 
Chairman 
 
INVESTMENT MANAGER'S REPORT 
Introduction 
In line with the Company's strategy, the majority of funds raised under the 
offers for subscription are initially used to build the structured products 
portfolio.  The exposure to structured products is then steadily reduced as 
funds are invested in VCT-Qualifying venture capital investments. An overview of 
the Structured Product portfolio by Brewin Dolphin, the Structured Product 
manager, is included below. 
 
Investment activity 
Ordinary Share pool 
The  Ordinary Share pool made its  first venture capital investment in September 
2009 and  continued  to  build  the  portfolio  such  that at the period end the 
Company  held  seven  venture  capital  investments  with  a  total cost of  GBP2.6 
million. 
 
In  the case of a number  of the investments made, we  were able to benefit from 
the  continuing depressed economic conditions and the low levels of funding that 
continues available from the banking sector. 
 
With  Bijou  Wedding  Venues  Limited,  we  backed  an experienced wedding venue 
operator  with an  investment of   GBP1.4 million  to help  fund their  purchase of 
Botleys  Mansion in  Surrey.  The  property is  now undergoing refurbishment and 
will be opened as a dedicated wedding venue in the near future. 
 
We  also  made  three  investments  (East  Dulwich  Tavern Limited, Westow House 
Limited  and  Atlantic  Dogstar  Limited)  totalling   GBP1.1  million,  backing an 
experienced  pub operator  who had  the opportunity  to acquire pub freeholds of 
leasehold  pubs which the  team are already  running The freeholds were acquired 
from a large pub landlord group seeking to realise some of it assets. 
 
The  Company also  made three  smaller investments  totalling  GBP153,000  in three 
companies involved in a new hotel project in Liverpool's city centre. 
 
To date all investments are performing more or less in line with their plans and 

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