TIDMDO1O
Downing Structured Opportunities VCT 1 plc
Half-Yearly Report for the six months ended 30 September 2014
Performance summary
30 Sept 31 Mar 30 Sept
2014 2014 2013
pence pence pence
Ordinary Share pool
Net asset value per Ordinary Share 93.5 92.2 91.3
Net asset value per 'A' Share 0.1 0.1 0.1
Cumulative dividends per Ordinary Share 40.0 37.5 35.0
Total return per Ordinary Share and 'A' Share 133.6 129.8 126.4
'B' Share pool
Net asset value per 'B' Share 74.6 82.3 84.0
Net asset value per 'C' Share 0.1 0.1 0.1
Cumulative dividends per 'B' Share 30.0 20.0 17.5
Total return per 'B' Share and 'C' Share 104.7 102.4 101.6
'D' Share pool
Net asset value per 'D' Share 81.2 83.0 85.3
Cumulative dividends per 'D' Share 12.5 10.0 7.5
Total return per 'D' Share 93.7 93.0 92.8
CHAIRMAN'S STATEMENT
Introduction
I am pleased to present the Company's half-yearly report for the six
months ended 30 September 2014. The Company continues to operate three
share pools each at differing stages in their life. Generally the Board
has remained satisfied with progress, particularly in the Ordinary Share
pool, which is now in the exit phase.
Ordinary Share pool
At 30 September 2014, the combined net asset value ("NAV") of one
Ordinary Share and one 'A' Share stood at 93.6p; an increase of 3.8p
(4.1%) since 31 March 2014 (after the dividend paid during the period
of 2.5p per Ordinary Share). The NAV plus cumulative dividends paid to
date for a combined holding of one Ordinary Share and one 'A' Share now
totals 133.6p.
Exit processes are already underway for many of the Ordinary Share
pool's 18 investments. Realisations will be achieved by a variety of
means including trade sales and refinancing. As a result, the exact
timing of when disposal proceeds will be received is difficult to
forecast precisely, however we anticipate that the Company will be in a
position to declare a substantial dividend, which we expect to be in
excess of 25p per Ordinary Share, early in the New Year. We believe that
a further significant distribution may then be made in the second
quarter of 2015, after which we are hopeful that the majority of the
remaining value will have been returned.
Ordinary Shareholders should note that, assuming exits are achieved in a
timely manner and at current book value, it is likely that the hurdles
for the payment of dividends on the 'A' Shares will be met. It is
estimated that the value of such dividends payable to the Management 'A'
Shares will be equivalent to 7p per Ordinary Share i.e. Total Return to
shareholders who subscribed for one Ordinary Share and one 'A' Share at
the Company's outset would be 126.6p.
'B' Share pool
At 30 September 2014, the combined NAV of one 'B' Share and one 'C'
Share stood at 74.7p; an increase of 2.3p per share (2.8%) since 31
March 2014 (after the 10.0p dividend paid during the period). The NAV
plus cumulative dividends paid to date for a combined holding of one 'B'
Share and one 'C' Share now totals 104.7p.
Plans are also progressing to exit from the 'B' Share pool investments.
The Manager anticipates that the first of these will occur in the first
quarter in 2015. 'B' Shareholders can expect their first return of
capital distribution in the second quarter of 2015.
'D' Share pool
At 30 September 2014, the NAV per 'D' Share stood at 81.2p per share; an
increase of 0.7p per share (0.8%) since 31 March 2014 (after the 2.5p
dividend paid during the period). The NAV plus cumulative dividends paid
to date for one 'D' Share now totals 93.7p.
The process of building the initial 'D' Share Venture Capital portfolio
is now approaching completion. This allows some time for the investments
to grow and develop ahead of the scheduled commencement of the exit
process in 2017.
Dividends
In line with the Company's policies, interim dividends will be paid as
follows:
'B' Shares 2.5p per share
'D' Shares 2.5p per share
Each of the dividends will be paid on 30 January 2015 to Shareholders on
the register at 5 January 2015.
No interim dividend is being declared in respect of the Ordinary Shares
at this time as the Board expects to make an announcement about a
significant distribution returning funds to Ordinary Shareholders early
in the New Year.
Share buybacks
As both the Ordinary Share pool and B Share pool are now in or
approaching their exit phase, the Board does not intend to undertake any
further share buybacks in respect of the Ordinary Shares, 'A' Shares,
'B' Shares and 'C' Shares. The Board intends to preserve cash so that it
can be distributed to all relevant Shareholders in due course.
In respect of the 'D' Shares, The Company operates a share buyback
policy whereby, subject to any liquidity and regulatory restrictions, it
will buy in 'D' Shares that become available in the market for
cancellation at a price equivalent to net asset value i.e. at nil
discount.
Outlook
During the remainder of the financial year, the Board expects the
Company to make a good start in returning funds to Ordinary Shareholders
and for realisation plans for the 'B' Share pool to be significantly
progressed.
The exit for the 'D' Share pool is not scheduled to commence until 2017.
As a result, the Manager's main focus over the remainder of the year
will be on close monitoring of the investments and ensuring that they
are well positioned to take advantage of the improving economic
conditions.
The Board is continuing to explore the possibility of a merger with one
or more other VCTs, which may provide some attractive benefits to
Shareholders. Naturally the Board will be in communication as and when
there is any news to report.
Lord Flight
Chairman
INVESTMENT MANAGER'S REPORT
ORDINARY SHARE POOL
The Ordinary Share pool holds a portfolio of 18 Venture Capital
investments with a value of GBP8.5 million. The majority of the Ordinary
Share pool's investments have continued to perform at least in line with
expectations and plans for the realisations are progressing well.
Portfolio activity
Unquoted portfolio
The significant valuation movements in the period are summarised as
follows:
Atlantic Dogstar Limited, East Dulwich Tavern Limited and Westow House
Limited are three companies that have been valued on the basis of the
sales proceeds expected to be generated from the pubs they operate,
adjusted for an appropriate discount.
Westow House Limited owns the Westow House, a pub in Crystal Palace,
South London. Atlantic Dogstar Limited owns two pubs in London: The
Dogstar in Brixton and The Clapton Hart in Clapton. East Dulwich Tavern
Limited owns a London pub of the same name. Based on estimated market
value, an uplift of GBP225,000 for the three companies over the period
has been recognised.
Structured product portfolio
The Ordinary Share pool no longer holds any structured products.
Net asset value
At 30 September 2014, the Ordinary Share NAV stood at 93.5p and the 'A'
Share NAV at 0.1p, giving a combined NAV of 93.6p. Total return (NAV
plus cumulative dividends to date) was 133.6p for a combined holding of
one Ordinary and one 'A' Share. This represents a net increase of 3.8p
over the period (after adjusting for dividends paid during the period of
2.5p per Ordinary Share), equivalent to an increase of 4.1%.
Results and dividend
The profit on ordinary activities after taxation for the period was
GBP391,000, comprising a revenue profit of GBP188,000 and a capital
profit of GBP203,000.
No interim dividend will be paid this year as any available cash will be
added to the planned return of capital payment early in the New Year.
Outlook
Our focus with the Ordinary Share portfolio has now turned to exits and
a significant number of realisations plans are being progressed. We are
optimistic that investment exits can be achieved in a timely manner and
at values equal to or in excess of current carrying value.
Current plans should result in a number of exits by the end of the year
such that the Company will be in a position to pay a significant
distribution early in 2015.
Downing LLP
SUMMARY OF INVESTMENT PORTFOLIO
ORDINARY SHARE POOL
as at 30 September 2014
Unrealised % of
gain/(loss) portfolio
Cost Valuation in period by value
GBP'000 GBP'000 GBP'000
Qualifying investments
Atlantic Dogstar Limited 585 1,244 229 12.8%
Redmed Limited* 914 1,159 - 11.9%
Future Biogas (SF) Limited* 1,009 1,137 - 11.7%
Domestic Solar Limited 1,000 1,120 - 11.5%
Quadrate Spa Limited* 636 636 - 6.5%
Quadrate Catering Limited 577 629 - 6.5%
East Dulwich Tavern Limited 459 597 51 6.1%
Westow House Limited 405 581 (55) 6.0%
The 3D Pub Co Limited* 627 549 - 5.6%
Ecossol Limited 500 425 - 4.4%
Mosaic Spa and Health Clubs
Limited* 250 211 - 2.2%
Slopingtactic Limited 102 117 15 1.2%
Camandale Limited* 269 24 - 0.2%
Chapel Street Food and
Beverage Limited 75 19 - 0.2%
Chapel Street Services
Limited 75 19 - 0.2%
7,483 8,467 240 87.0%
Non-qualifying investments
Fenkle Street LLP 58 58 - 0.6%
Kilmarnock Monkey Bar
Limited 22 22 - 0.2%
Chapel Street Hotel Limited 3 1 - 0.0%
83 81 - 0.8%
Total 7,566 8,548 240 87.8%
Cash at bank and in hand 1,185 12.2%
Total investments 9,733 100.0%
*partially non-qualifying
There were no additions or disposals during the period.
INVESTMENT MANAGER'S REPORT
'B' SHARE POOL
The 'B' Share pool holds 21 venture capital investments and two
Structured Product investments and is fully invested. Plans for exits
from investments are developing well such that we are targeting a first
significant return of capital to 'B' Shareholders in the second quarter
of 2015.
Portfolio activity
Unquoted portfolio
The significant valuation movements in the period are summarised as
follows:
Alpha Schools Holdings Limited, the independent primary school operator,
has performed to plan and an increase of GBP71,000 has been made to the
valuation.
The valuation of Slopingtactic Limited was increased by GBP43,000. The
company is the owner and operator of the Lamb and Lion freehold public
house in York.
Generally, the solar arrays owned by a number of investments within the
portfolio are producing good yields. Progressive Energies Limited,
which owns a portfolio of PV panels on residential roofs, has supported
an increase in valuation of GBP41,000.
Structured product portfolio
The Structured Product portfolio was valued at GBP2.4 million as at 30
September 2014. During the period, sales and redemptions realised
GBP268,000.
Net asset value
At 30 September 2014, the NAV per 'B' Share stood at 74.6p and the NAV
per 'C' Share stood at 0.1p, producing a combined total of 74.7p. This
is an increase of 2.3p per share (2.8%) since 31 March 2014 (after
taking into account the 10.0p dividend paid during the period). The NAV
plus cumulative dividends paid to date for one 'B' Share and one 'C'
Share amounts to 104.7p.
Results and dividend
The profit on ordinary activities after taxation for the period was
GBP456,000, comprising a revenue profit of GBP311,000 and a capital
profit of GBP145,000.
A 2.5p dividend per 'B' Share will be paid on 23 January 2015 to
Shareholders on the register at 2 January 2015.
Outlook
We remain reasonably satisfied with the 'B' Share portfolio and believe
that there are some prospects for further growth before we start to seek
realisations commencing in 2015 in order to return funds to
Shareholders. A number of investment exit plans are developing well and
we are confident that the Company will be in a position to make the
first capital distribution to 'B' Shareholders soon after the fifth
anniversary of the close of the 'B' Share offer.
Downing LLP
SUMMARY OF INVESTMENT PORTFOLIO
'B' SHARE POOL
as at 30 September 2014
Unrealised % of
gain/(loss) portfolio
Cost Valuation in period by value
GBP'000 GBP'000 GBP'000
Qualifying investments
Future Biogas (Reepham Road)
Limited 1,662 1,662 - 11.1%
Quadrate Spa Limited* 954 985 31 6.5%
Quadrate Catering Limited 850 926 - 6.1%
Kidspace Adventures Holdings
Limited 750 896 - 5.9%
Domestic Solar Limited 800 896 - 5.9%
Antelope Pub Limited 750 885 16 5.8%
Alpha Schools Holdings Limited 733 876 71 5.8%
Liverpool Nurseries (Holdings)
Limited 870 772 - 5.1%
Green Electricity Generation
Limited 500 605 - 4.0%
Westcountry Solar Solutions
Limited 500 500 - 3.3%
West Tower Property Limited 500 500 - 3.3%
Mosaic Spa and Health Clubs
Limited* 600 493 - 3.3%
Ecossol Limited 500 425 - 2.8%
Avon Solar Energy Limited 420 420 - 2.8%
Progressive Energies Limited 340 381 41 2.5%
Slopingtactic Limited 277 320 43 2.1%
Ridgeway Pub Company Limited 137 126 - 0.8%
Camandale Limited* 732 33 (32) 0.2%
11,875 11,701 170 77.3%
Non-qualifying investments
Commercial Street Hotel
Limited 185 185 - 1.2%
Fenkle Street LLP 154 154 - 1.0%
Kilmarnock Monkey Bar Limited 60 60 - 0.4%
399 399 - 2.6%
Structured product investments
Barclays 5Y Synthetic Zero 1,003 1,382 17 9.1%
HSBC 5.67% Defensive Worst of
Auto Call 953 978 16 6.5%
1,956 2,360 33 15.6%
Total 14,230 14,460 203 95.5%
Cash at bank and in hand 674 4.5%
Total investments 15,134 100.0%
* partially non-qualifying
SUMMARY OF INVESTMENT MOVEMENTS
'B' SHARE POOL
as at 30 September 2014
Realised
Valuation at Disposal Total gain against gain in
Disposals Cost 31/03/2014 proceeds cost period
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Structured
Product
investments
UBS 7.3%
Defensive
Worst of Auto
Call 251 265 268 17 3
Total 251 265 268 17 3
INVESTMENT MANAGER'S REPORT
'D' SHARE POOL
At 30 September 2014, the 'D' Share pool held 12 venture capital
investments with a value of GBP3.8 million and five Structured Product
investments with a value of GBP1.7 million.
Portfolio activity
Unquoted portfolio
During the period two new venture capital investments were made
totalling GBP794,000. There were no disposals.
GBP294,000 has been invested in Grasshopper 2007 Limited. The company
owns and operates a pub in Kent which also operates as a restaurant and
wedding venue.
In July 2014, GBP500,000 was invested in Lambridge Solar Limited. The
company is building ground mounted solar panels in Lincolnshire. The
systems will qualify for Renewable Obligations Certificates (ROCs).
Portfolio valuation
There were no changes to valuations of venture capital investments in
the period.
Structured product portfolio
The Structured Product portfolio was valued at GBP1.7 million as at 30
September 2014. During the period sales and redemptions realised
GBP699,000.
Net asset value
At 30 September 2014, the NAV per 'D' Share stood at 81.2p per share; an
increase of 0.7p per share (0.8%) since 31 March 2014 (after taking into
account the 2.5p dividend paid during the period). The NAV plus
cumulative dividends paid to date for one 'D' Share now totals 93.7p.
Results and dividend
The profit on ordinary activities after taxation for the period was
GBP53,000, comprising a revenue profit of GBP28,000 and a capital profit
of GBP25,000.
A 2.5p dividend per 'D' Share will be paid on 23 January 2015 to
Shareholders on the register at 2 January 2015.
Outlook
Over the remainder of the year, we expect to see further uninvested cash
employed in Venture Capital investments and, if suitable opportunities
arise, consideration will be also given to further Structured Product
investments. In the medium term, the Structured Product portfolio will
reduce in size as funds are switched to develop the venture capital
portfolio in order that the pool is at least 70% invested in VCT
qualifying investments and is well placed for its target exit date
commencing in 2017.
Downing LLP
SUMMARY OF INVESTMENT PORTFOLIO
'D' SHARE POOL
as at 30 September 2014
Unrealised % of
gain portfolio
Cost Valuation in period by value
GBP'000 GBP'000 GBP'000
Qualifying investments
Tor Solar PV Limited 640 640 - 9.9%
Vulcan Renewables Limited 588 588 - 9.1%
Goonhilly Earth Station Limited 570 570 - 8.8%
Lambridge Solar Limited 500 500 - 7.8%
Fubar Stirling Limited 358 358 - 5.6%
Grasshopper 2007 Limited 294 294 - 4.6%
Pearce and Saunders Limited* 280 280 - 4.3%
City Falkirk Limited 562 275 - 4.3%
Fresh Green Power Limited 200 200 - 3.1%
Green Energy Production UK Limited 100 100 - 1.6%
Cheers Dumbarton Limited 64 22 - 0.3%
Lochrise Limited 17 - - -
4,173 3,827 - 59.4%
Structured product investments
HSBC 5.4% Dual Index Synthetic
Zero 501 537 12 8.3%
Goldman Sachs 8.5% Defensive Worst
Of Auto Call 351 384 13 6.0%
Credit Suisse 7% Defensive Worst
Of Auto Call 251 268 7 4.2%
HSBC 7.1% Defensive Worst Of Auto
Call 251 262 3 4.1%
HSBC 5.67% Defensive Worst Of Auto
Call 251 257 4 4.0%
1,605 1,708 39 26.6%
Total 5,778 5,535 39 86.0%
Cash at bank and in hand 908 14.0%
Total investments 6,443 100.0%
* partially non-qualifying
SUMMARY OF INVESTMENT MOVEMENTS
'D' SHARE POOL
as at 30 September 2014
Additions
GBP'000
Qualifying investments
Lambridge Solar Limited 500
Grasshopper 2007 Limited 294
794
Realised
Valuation at Disposal Total gain against gain in
Disposals Cost 31/03/2014 proceeds cost period
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Structured
products
UBS 7.3%
Defensive Worst
Of Auto Call 251 265 268 17 3
Barclays 7.75%
Defensive Worst
Of Auto Call 401 424 431 30 7
652 689 699 47 10
UNAUDITED INCOME STATEMENT
for the six months ended 30 September 2014
Year
ended
Six months ended Six months ended 31 Mar
30 Sept 2014 30 Sept 2013 2014
Revenue Capital Total Revenue Capital Total Total
Company Total GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 1,167 - 1,167 843 - 843 1,705
Gains on
investments
- realised - 13 13 - 69 69 65
- unrealised - 482 482 - 128 128 318
1,167 495 1,662 843 197 1,040 2,088
Investment
management
fees (123) (121) (244) (129) (129) (258) (500)
Other
expenses (349) (1) (350) (201) - (201) (368)
Return on
ordinary
activities
before
taxation 695 373 1,068 513 68 581 1,220
Taxation (168) - (168) (101) - (101) (223)
Return
attributable
to equity
shareholders 527 373 900 412 68 480 997
Return per 1.8p 2.0p 3.8p 2.0p (0.5p) 1.5p 4.8p
Ordinary
Share
Return per - - - - - - -
'A' Share
Return per 1.6p 0.7p 2.3p 1.0p 0.6p 1.6p 2.4p
'B' Share
Return per - - - - - - -
'C' Share
Return per 0.4p 0.3p 0.7p 0.0p 0.0p 0.0p 0.3p
'D' Share
A Statement of Total Recognised Gains and Losses has not been prepared
as all gains and losses are recognised in the Income Statement as noted
above.
Year
ended
Six months ended Six months ended 31 Mar
30 Sept 2014 30 Sept 2013 2014
Revenue Capital Total Revenue Capital Total Total
Ordinary Share
pool GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 389 - 389 365 - 365 644
Gains/(losses)
on investments
- realised - - - - 9 9 42
- unrealised - 240 240 - (19) (19) 183
389 240 629 365 (10) 355 869
Investment
management
fees (36) (36) (72) (41) (41) (82) (152)
Other expenses (106) (1) (107) (70) - (70) (128)
Return on
ordinary
activities
before
taxation 247 203 450 254 (51) 203 589
Taxation (59) - (59) (49) - (49) (90)
Return
attributable 188 203 391 205 (51) 154 499
to equity
shareholders
Year
ended
Six months ended Six months ended 31 Mar
30 Sept 2014 30 Sept 2013 2014
Revenue Capital Total Revenue Capital Total Total
'B' Share pool GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 640 - 640 412 - 412 904
Gains/(losses)
on investments
- realised - 3 3 - 45 45 (9)
- unrealised - 203 203 - 137 137 126
640 206 846 412 182 594 1,021
Investment
management
fees (62) (61) (123) (63) (63) (126) (250)
Other expenses (171) - (171) (93) - (93) (171)
Return on
ordinary
activities
before
taxation 407 145 552 256 119 375 600
Taxation (96) - (96) (52) - (52) (128)
Return
attributable 311 145 456 204 119 323 472
to equity
shareholders
Year
ended
Six months ended Six months ended 31 Mar
30 Sept 2014 30 Sept 2013 2014
Revenue Capital Total Revenue Capital Total Total
'D' Share
pool GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 138 - 138 66 - 66 157
Gains on
investments
- realised - 10 10 - 15 15 31
- unrealised - 39 39 - 10 10 10
138 49 187 66 25 91 198
Investment
management
fees (25) (24) (49) (25) (25) (50) (98)
Other
expenses (72) - (72) (38) - (38) (69)
Return on
ordinary
activities
before
taxation 41 25 66 3 - 3 31
Taxation (13) - (13) - - - (5)
Return
attributable
to equity
shareholders 28 25 53 3 - 3 26
UNAUDITED SUMMARISED BALANCE SHEET
as at 30 September 2014
30 Sept 31 Mar
30 Sept 2014 2013 2014
Ordinary 'B' 'D'
Share Share Share
pool pool pool Total Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Fixed assets
Investments 8,548 14,459 5,535 28,542 28,644 28,220
Current assets
Debtors 177 180 58 415 327 598
Cash at bank
and in hand 1,185 674 908 2,767 4,472 4,220
1,362 854 966 3,182 4,799 4,818
Creditors:
amounts
falling due
within one
year (277) (434) (106) (817) (487) (584)
Net current
assets 1,085 420 860 2,365 4,312 4,234
Net assets 9,633 14,879 6,395 30,907 32,956 32,454
Capital and
reserves
Called up
share
capital 26 50 8 84 83 84
Capital
redemption
reserve 5 - - 5 5 5
Share premium 2,794 - - 2,794 10,240 2,794
Special
reserve 3,819 13,488 7,437 24,744 20,044 27,090
Revaluation
reserve 983 230 (241) 972 718 543
Capital
reserve -
realised 1,149 561 (796) 914 1,232 851
Revenue
reserve 857 550 (13) 1,394 634 1,087
Equity
shareholders'
funds 9,633 14,879 6,395 30,907 32,956 32,454
Net asset
value per:
Ordinary Share 93.5p - - 91.3p 92.2p
'A' Share 0.1p - - 0.1p 0.1p
'B' Share - 74.6p - 84.0p 82.3p
'C' Share - 0.1p - 0.1p 0.1p
'D' Share - - 81.2p 85.3p 83.0p
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the six months ended 30 September 2014
30 Sept 31 Mar
30 Sept 2014 2013 2014
Ordinary 'B' 'D'
Share Share Share
pool pool pool Total Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Opening
Shareholders'
funds 9,499 16,415 6,540 32,454 34,756 34,756
Purchase of
own shares - - - - (30) (97)
Dividends (257) (1,992) (198) (2,447) (2,250) (3,202)
Total
recognised
gains for the
period 391 456 53 900 480 997
Closing
Shareholders'
funds 9,633 14,879 6,395 30,907 32,956 32,454
UNAUDITED CASH FLOW STATEMENT
for the six months ended 30 September 2014
30 Sept 31 Mar
30 Sept 2014 2013 2014
'B' 'D'
Ordinary Share Share Share
pool pool pool Total Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cash inflow from operating activities and returns
on investments 1 197 314 14 525 206 771
Taxation
Corporation tax paid - - - - - (112)
Capital expenditure
Purchase of investments - - (794) (794) (2,722) (4,624)
Sale of investments - 268 699 967 4,296 6,807
Movements in deposit held for purchase of investments - - 294 294 - (294)
Net cash inflow from capital expenditure - 268 199 467 1,574 1,889
Equity dividends paid (257) (1,991) (197) (2,445) (2,250) (3,202)
Net cash (outflow) before financing (60) (1,409) 16 (1,453) (470) (654)
Financing
Purchase of own shares - - - - (30) (98)
Net cash (outflow)/inflow from financing - - - - (30) (98)
(Decrease)/increase in cash 2 (60) (1,409) 16 (1,453) (500) (752)
Notes to the cash flow statement:
1 Cash inflow/(outflow) from operating activities
and returns on investments
Return on ordinary activities before taxation 450 552 66 1,068 581 1,220
(Gains) on investments (241) (206) (49) (496) (197) (383)
(Increase) in other debtors (41) (57) (14) (112) (91) (69)
(Decrease)/increase in other creditors 29 25 11 65 (87) 3
Net cash inflow from operating activities 197 314 14 525 206 771
2 Analysis of net funds
Beginning of period 1,245 2,083 892 4,220 4,972 4,972
Net cash (outflow)/inflow (60) (1,409) 16 (1,453) (500) (752)
End of period 1,185 674 908 2,767 4,472 4,220
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
1. Basis of accounting
The unaudited half-yearly results cover the six months to 30 September
2014 and have been prepared in accordance with the accounting policies
set out in the annual accounts for the year ended 31 March 2014 which
were prepared under UK Generally Accepted Accounting Practice ("UK
GAAP") and in accordance with the Statement of Recommended Practice
"Financial Statements of Investment Trust Companies" revised January
2009 ("SORP").
2. All revenue and capital items in the Income Statement derive from
continuing operations.
3. The Company has only one class of business and derives its income
from investments made in shares, securities and bank deposits.
4. Net asset value per share at the period end has been calculated on
10,288,157 Ordinary Shares, 15,506,488 'A' Shares, 19,911,070 'B' Shares,
29,926,070 'C' Shares, and 7,877,527 'D' Shares being the number of
shares in issue at the period end.
5. Return per share for the period has been calculated on 10,288,157
Ordinary Shares, 15,506,488 'A' Shares, 19,911,070 'B' Shares,
29,926,070 'C' Shares, and 7,877,527 'D' Shares being the number of
shares in issue at the period end.
6. Dividends
Six months ended 30 September 2014
Ordinary Shares Revenue Capital Total
GBP'000 GBP'000 GBP'000
Paid in period
Interim - 257 257
'B' Shares Revenue Capital Total
GBP'000 GBP'000 GBP'000
Paid in period
199 1,793 1,992
'D' Shares Revenue Capital Total
GBP'000 GBP'000 GBP'000
Paid in period
20 178 198
7. Reserves
Share Capital Capital
premium reserve redemption
account Special reserve Revaluation reserve - realised Revenue reserve reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 31
March 2014 2,794 27,090 543 851 1,087 5
Purchase of
own shares - - - - - -
Gains on
investments - - 482 13 - -
Expenses
capitalised - - - (123) - -
Dividends - - - (2,226) (221) -
Transfer
between
reserves - (2,346) (53) 2,399 - -
Retained
revenue - - - - 528 -
At 30
September
2014 2,794 24,744 972 914 1,394 5
The Revenue reserve, Special reserve and Capital reserve - realised are
distributable reserves and are reduced by revaluation losses of
GBP1,854,000. Distributable reserves at 30 September 2014 were
GBP25,198,000.
8. The unaudited financial statements set out herein do not constitute
statutory accounts within the meaning of Section 434 of the Companies
Act 2006 and have not been delivered to the Registrar of Companies.
9. Risk and uncertainties
Under the Disclosure and Transparency Directive, the Board is required
in the Company's half-year results to report on the principal risks and
uncertainties facing the Company over the remainder of the financial
year.
The Board has concluded that the key risks facing the Company over the
remainder of the financial period are as follows:
- compliance risk of failure to maintain approval as a VCT;
- market, liquidity and counterparty risk associated with structured
products; and
-investment risk associated with investing in small and immature
businesses.
The Company's compliance with the VCT regulations is continually
monitored by the Manager, who reports regularly to the Board on the
current position. The Company also retains PricewaterhouseCoopers
("PwC") to provide regular reviews and advice in this area. PwC have
confirmed that all relevant tests have been complied with for the period
under review. The Board considers that this approach reduces the risk of
a breach of the VCT regulations.
In investing in structured products, the Company is exposed to market
risk, liquidity risk and counterparty risk. The Company manages these
risks as follows:
- holding a portfolio of structured products;
- limiting exposure to any one counterparty; and
- monitoring credit ratings and other indicators relevant to
counterparties.
With this approach, the Board believes that these risks are reduced.
In order to make VCT qualifying investments, the Company has to invest
in small businesses which are often immature. It also has a limited
period in which it must invest the majority of its funds. The Manager
follows a rigorous process in vetting and careful structuring of new
investments, including taking a charge over the assets of the business
wherever possible and, after an investment is made, closely monitoring
the business. The Board is satisfied that this approach reduces the
investment risk described in (iii) above as far as is reasonably
possible.
10. Going concern
The Directors have reviewed the Company's financial resources at the
period end and conclude that the Company is well placed to manage its
business risks.
The Board confirms that it is satisfied that the Company has adequate
resources to continue in business for the foreseeable future. For this
reason, the Board believes that the Company continues to be a going
concern and that it is appropriate to apply the going concern basis in
preparing the financial statements.
11. Copies of the Half-Yearly Report will be sent to Shareholders
shortly. Further copies can be obtained from the Company's registered
office or can be downloaded from www.downing.co.uk.
This announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the information
contained therein.
Source: Downing Structured Opportunities VCT 1 PLC via Globenewswire
HUG#1874963
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