Final Results
*DOWNING FOUR VCT PLC*
*LEI: 21380035MV1VRYEXPR95*
*Final Results for the year ended 31 March 2022*
*25 July 2022*
* *
*Financial Highlights*
*Audited* Audited *31 March*
*2022* 31 March2021
* * *pence* pence * *
*Ventures Share pool* * *
Net Asset Value (“NAV”) per Ventures Share *68.20* 67.2
Cumulative distributions *5.25* 2.5
Total Return per Ventures Share *73.45* 69.7 * *
*Healthcare Share pool* * *
Net Asset Value (“NAV”) per Healthcare Share *84.40* 68.5
Cumulative distributions *5.25* 2.5
Total Return per Healthcare Share *89.65* 71.0 * *
*AIM Share pool* * *
Net Asset Value (“NAV”) per AIM Share *99.9* n/a
Cumulative distributions *-* n/a
Total Return per AIM Share *99.9* n/a * *
*DSO D Share pool* * *
Net Asset Value (“NAV”) per DSO D Share *2.6* 10.2
Cumulative distributions *102.0* 94.5
Adjusted for Performance Incentive estimate *-* (0.5)
Total Return per DSO D Share *104.6* 104.2 * *
*DP67 Share pool* * *
Net Asset Value (“NAV”) per DP67 Share *26.8* 18.4
Cumulative distributions (since original launch) *67.8* 67.8
Total Return per DP67 Share *94.6* 86.2 * *
Chairman’s Statement
*Introduction*
I present the Company’s Annual Report for the year ended 31 March 2022.
As I reported to you in my half year Statement, this has been a busy year for your Company, with the creation of the new AIM share class and the offer for subscription which launched in September and closed at the end of May. We also had some changes on the Board and have continued to make good progress in investing the evergreen portfolios.
As the pandemic restrictions have gradually been lifted over the course of the year, we have seen an increase in investment activity and improvement in the performance of some investments which had stalled under the impact of Covid.
*Management Arrangements*
As Shareholders may be aware, in June 2022 it was announced that Downing LLP, our investment manager, had agreed to sell its technology ventures division to Foresight Group LLP (“Foresight”). As a result, the main executives from Downing LLP’s technology ventures team will move to Foresight and the Board has consented to the novation of the investment management agreement to Foresight.
The Board had extensive discussions with Downing LLP and Foresight and satisfied itself that the transaction was in the best interests of Shareholders. The Company will benefit in future from the continuity of key investment executives as well as the substantial resources of the Foresight Group. Along with these changes, the Company plans to change its name to:
*Thames Ventures VCT 2 plc*
This is planned to take place on or around 31 August 2022.
Foresight is a quoted fund management business, with £8.7 billion of funds under management and long-standing experience in the VCT sector. We believe the scale of its operation, its resources as a quoted business and its expertise in the VCT market, means it is well placed to support the ongoing development of Downing FOUR VCT plc. Foresight has 12 offices around the UK and should be able to source more new deals than at present and should have greater ability to raise funds in future.
The management of the Healthcare share pool will remain with Downing LLP, as Downing retains a well-resourced healthcare team. Downing LLP will also provide investment management services for the non-ventures investments (primarily those in the planned exit and AIM share pools) and administration services to the Company for at least six months. This will cover the period while the planned exit share pools are wound up.
*Fundraising*
As noted in the half yearly report, a new offer for subscription was launched in September 2021. The offer closed after the year end, on 31 May 2022, having raised £11.6 million split between the Ventures, Healthcare and new AIM Share classes. A proportion of the shares allotted under the offer were issued after the year end.
During the year ended 31 March 2022, the Company issued 6,889,747 Ventures Shares of 0.1p each at an average price of 69.29p per Ordinary Share, 3,136,178 Healthcare Shares of 0.1p each at an average price of 84.74p per Ordinary Share and 2,034,990 AIM Shares of 0.1p each at an average price of 1.0218p per Ordinary Share. No Ventures or Healthcare Management Shares were issued during the year.
*Evergreen Share pool review*
*Ventures Share pool (formerly Generalist)*
The task of building the Ventures Share portfolio continued during the year, with £2.0m invested in ten VCT Qualifying companies, two of which were new additions to the portfolio.
The Ventures Share Total Return stood at 73.45p at the year end, representing an increase of 3.75p per share or 5.6% in NAV over the year. This is inclusive of the dividend of 2.75p per share, which was paid on 24 September 2021.
The NAV increase is largely attributable to a number of valuation increases in the qualifying investments, on the back of improvements in performance as the economy has started to normalise after Covid.
Positive developments include E-Fundamentals
(Group) Limited, Upp Technologies Group Limited, Hackajob Limited, Cambridge Touch Technologies Limited, and Ayar Labs Inc, which were uplifted by a combined £4.0 million over the year.
Arecor Therapeutics plc undertook a successful IPO which is discussed further in the Investment Manager’s Reports for the Ventures and Healthcare pools.
There have, however, also been some valuation reductions, most notably £1.3 million in Trouva (Streethub Limited) which did not recover from the impact of the pandemic and was sold shortly after the year end. Empiribox Holdings Limited reduced in value by £503,000 and Hummingbird Technologies Limited by £405,000 as at 31 March 2022.
There were also four full exits during the period, which are set out below and in the Investment Manager’s Report. Further deferred consideration was received from BridgeU Limited in relation to the exit in 2021. These transactions resulted in a total realised loss of £205,000.
Within the Ventures Liquidity Portfolio, there was a further redemption from MI Downing UK Micro-Cap Growth Fund, which is in the process of winding up. The holding in Downing Strategic Micro-Cap Investment Trust decreased in value £262,000 in line with general stock market movements.
A more detailed review of the Ventures Share pool is included in the Investment Manager’s Report.
*Healthcare Share pool*
The development of the Healthcare Share portfolio continued during the year, with £4.8 million having been invested in seven VCT Qualifying companies, two of which were new investments.
The Healthcare Share Total Return stood at 89.65p at the year end, representing an increase of 18.65p per share or 27.2% in NAV over the year after adjusting for the Healthcare dividend of 2.75p per share, which was paid on 24 September 2021.
The growth in the Healthcare NAV is the result of positive developments in the Venture Capital portfolio, in particular Arecor Therapeutics plc which is showing a significant increase of £2.7million since the company listed on 3 June 2021. There is further information on this investment in the Investment Manager’s Report.
Other significant uplifts in Adaptix Limited, GENinCode plc (which also listed on AIM during the year) and Open Bionics Limited totalled £1.6 million.
As with the Ventures Share pool, the Healthcare Share pool received a further redemption from MIDowning UK Micro-Cap Growth Fund, which is in the process of winding up. Downing Strategic Micro-Cap Investment Trust also suffered a reduction in valuation at the year end of £44,000.
Within the Healthcare qualifying portfolio, the sole valuation reduction to report was Destiny Pharma plc which was down in value by £564,000 as at 31 March 2022, based on the quoted share price at that date.
A more detailed review of the Healthcare Share pool is included in the Investment Manager’s Report.
*AIM Share pool*
The AIM Share class raised a total of £2.8 million under the offer, and whilst this is less than we had hoped for, it should not create any significant issues for Shareholders as the nature of the fund will allow co-investment to ensure that a reasonably diverse portfolio can still be built.
No investments have been made to date so there is no investment Managers Report for the AIM Share Class included, although I look forward to updating you on the pools progress at the half year point.
*Planned Exit Share pools*
*DSO D Share pool*
The DSO D Share portfolio held two remaining investments as at 31 March 2022. As Shareholders will be aware, the ongoing impact of the coronavirus pandemic has continued to cause disruption to the exit processes in respect of these remaining investments.
The two solar businesses, Fresh Green Power Limited and Green Energy Production Limited were sold during the year at a small loss. The funds received were distributed to Shareholders with a dividend of 7.5p per share paid on 7 January 2022.
The realisation of the investments in Pearce and Saunders Limited and Pearce and Saunders DevCo Limited still rests on the sale of the remaining pub site in Eltham. Plans for their exit continue to progress and should conclude before the end of the year.
The DSO D Share NAV stood at 2.6p at the year end, a decrease of 0.1p per share over the year after taking into account the dividend of 7.5p. However, owing to the delays in exiting from the remaining investments, no performance incentive is now expected to be payable, resulting in the Total Return to DSO Shareholders increasing from the level stated at 31 March 2021 by 0.4p per share, or 4.1%. Total Return therefore now stands at 104.6p per share 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 pool*
The remaining value in the DP67 Share portfolio is spread across three investments which operate in the hospitality sector. As the UK economy continues to recover from the impact of the restrictions, the Manager continues to target an exit by the end of the year.
Cadbury House Holdings has seen good performance since reopening in April 2021 and discussions with management are ongoing in order to seek an exit as soon as possible.
As at 31 March 2022, the DP67 Share NAV stood at 26.8p and Total Return stood at 94.6p per share, an increase of 8.4p per share, equivalent to a 45.6% in NAV term since 31 March 2021.
A more detailed review of the DP67 Share pool is included in the Investment Manager’s Report.
* *
*Share buybacks*
The Company operates a policy of buying in its own shares that become available in the market, subject to regulatory and liquidity factors. Any such purchases are undertaken at a price approximately equal to NAV (i.e. at a nil discount).
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.
During the year ended 31 March 2022, the Company repurchased 86,425 Ventures Shares at an average price of 67.49p per Share and 159,833 Healthcare Shares at an average price of 85.28p per Share.
*Dividends*
Downing FOUR 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 proposing to pay final dividends of 2.75p per Ventures Share and 3.5p per Healthcare Share on 30 September 2022, to Shareholders on the register as at 2 September 2022. 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 8.0p per Ventures Share and 8.75p 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 new AIM-Share class in the initial years.
*Responsible investment*
The Board notes the Investment Manager, Downing LLP’s, commitment to being a “Responsible Investor”. Downing LLP places Environmental, Social and Governance (ESG) criteria at the forefront of its business and investment activities, in line with best practice, in order to enhance returns for investors. The Board further notes that the Foresight Group has an equally high commitment to sustainability and is confident that the Company investments will continue to be managed in a responsible manner in future.
*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 27 September 2022.
Shareholders wishing to attend the AGM are requested to please notify Downing LLP via email, to d4agm@downing.co.uk, in case there are changes to arrangements which need to be communicated at short notice.
Four 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;
· two resolutions in respect of authority to allot shares and disapply pre-emptions rights to give the Company flexibility in respect of further fundraising plans; and
· one resolution to cancel the share premium account and capital redemption reserve to give the Company the ability to use the reserve created to acquire shares in the market and, in future, to give flexibility in paying dividends.
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 23 September 2022.
*Board changes*
As set out in the Half Yearly Report, a review of the board composition was undertaken in August 2021 to ensure it was well aligned with the Company’s needs going forward.
Ultimately two candidates from this process were invited to join the board. Steven Clarke and Andrew Mackintosh were appointed as non-executive directors on 8 September 2021. Both have significant experience in the scientific and technology sectors, which is now the main focus of the Company’s investment activity.
In addition to the above, Chris Allner, partner of Downing LLP, also joined the board on 8 September 2021 as a non-executive director. His remuneration will be borne by Downing LLP for the first 2 years of his role.
Alongside the above appointments, Russell Catley stepped down as a non-executive director of the Company on 8 September 2021. Russell joined the Company’s board following the merger with three other VCTs in 2015. We thank Russell for his valuable contributions throughout his tenure and will miss his sage and intelligent advice. We wish him all the very best in his future activities.
Also, Lord Flight will step down at the forthcoming AGM and will not offer himself for re-election. Lord Flight has been a non-executive director of the Company since its inception in 2009 and was its first chairman. My colleagues and I thank Lord Flight for his significant contributions in several roles through the various phases of the Company’s life to date. We wish him every happiness and success in his other ventures.
I believe we now have a board of directors with a broad range of skills and experience that is well suited to oversee the Company during the next years of its life.
*Outlook*
With the new management arrangements, there will clearly be some changes to your Company over the next year. The Board is satisfied that these changes will be positive for all Shareholders with Downing LLP continuing to manage the Healthcare Share pool and providing support for a gradual transition in the management of the non-ventures investments (primarily those in the planned exit and AIM share pools). Foresight is a substantial and well-respected fund manager and the Board believes that its further expansion into the unquoted ventures space will deliver good benefits to our shareholders. The Board looks forward to with working the Foresight Group and continuing to work with the existing ventures team at their new home.
In terms of the planned exit portfolios, we believe the task of exiting from the remaining investments DSO D share class should complete this year. A final exit from the DP67 share class is expected to fall into 2023. The pandemic has caused significant delays because of the type of assets, mainly hospitality, owned by these pools. However, progress is now being made, with exit plans from Cadbury House Holdings now being explored following good post pandemic results.
In respect of the Evergreen share pools, we believe that the Ventures and Healthcare pools now have a solid core of investments that are making progress. Both pools will continue to make new investments with funds that are available and the task of investing the new AIM Share pool will get underway shortly. Foresight is committed to raising new funds for the Ventures Share pool as is Downing in respect of the Healthcare Share pool so we look forward to developing the portfolios with attractive new opportunities.
Although the impact of the Covid pandemic is now reducing, there are new threats of increasing inflation, possible recession and the conflict in Ukraine. As a result, recently we have seen falling stock markets and increasing concern about the short-term outlook. However, while we need to be mindful of the potential impact of the challenges, these conditions can present good opportunities.
I look forward to reporting on what is expected to be a busy period in the half yearly report to 30 September 2022.
*Sir Aubrey Brocklebank Bt.*
Chairman
Ventures Share Pool
*Share Pool Summary*
* * *31 March*
* 2022* 31 March2021
*Financial highlights* *Pence* pence
* * * *
Net Asset Value per Ventures Share *68.20* 67.2
Cumulative distributions *5.25* 2.5
Total Return per Ventures Share *73.45* 69.7
Investment Manager’s Report - Ventures Share Pool
i. Overview
*Introduction*
We present a review of the investment portfolio and activity for the Ventures Share pool for the year ended 31 March 2022.
This Investment Manager’s Report is split into three sections comprising this overview, a review of Venture Capital Portfolio and a report on the portfolio of Liquidity Investments.
*Net Asset Value and results*
As at 31 March 2022, the NAV of a Ventures Share stood at 68.2p, an increase of 3.75p (5.6%) for the year after adding back the Ventures dividend, of 2.75p per share, which was paid on 24 September 2021.
The return on ordinary activities for the Ventures Share pool for the year was £1.8 million (2021: £3.7 million), comprising a revenue loss of £491,000 (2021: £91,000) and a capital gain of £2.3 million (2021: £3.8 million).
Whilst there is still a slow recovery in the NAV since 31 March 2021, the Total Return to Shareholders as at 31 March 2022, of 73.4p, continues to be considered an underperformance against our expectations for the Ventures Share pool.
A final dividend of 2.75p per share is proposed to be paid on 30 September 2022, to Shareholders on the register at 2 September 2022. This is in line with the stated dividend target for the Ventures Share pool, to pay dividends of at least 4% of net assets per annum.
*Portfolio Overview*
As at 31 March 2022, the Ventures Share pool held a portfolio of 34 Venture Capital investments and two Liquidity investments, with a combined value of £31.3 million.
As the restrictions of the pandemic were slowly lifted over the course of the year ended 31 March 2022, it continued to be a period of challenges for businesses in the UK and the rest of the World. We have been pleased to see significant recovery in some of the companies in the portfolio, although others are still struggling in the aftermath.
There are a number of risks emerging including both the situation in Ukraine and the impact of increasing inflation in the UK. We will continue to work closely with portfolio companies to provide guidance and, where appropriate, additional funding in order to deliver support through these turbulent times.
The valuation movements during the period are discussed in more detail in the following sections of this Investment Manager’s Report.
*Portfolio Performance*
Overall, several larger valuation reductions in the Venture Capital Portfolio were more than offset by a number of valuation uplifts during the period, resulting in a net valuation uplift on this portfolio, of £2.4 million.
The carrying values of the Liquidity Investments have been adjusted to reflect their quoted prices as at 31 March 2022. This resulted in a valuation decrease of £238,000 for the period.
ii. Venture Capital Portfolio
*Investment activity*
During the period, a total of £2.1 million was invested in ten businesses, two of which are new VCT Qualifying investments.
*New Venture Capital investments*
A description of each of the new VCT Qualifying investments made during the year is shown below.
*DSTBTD Limited (trading as Distributed Limited) *(£275,000) has built a platform that connects enterprise clients with fully remote developer teams across the globe to address demand for outsourced software development.
*Bulbshare Limited* (£245,000) has developed a SaaS platform which enables brands to build communities from their existing customers/fans both to gather insights from and to create a richer experience for those customers.
*Follow-on Venture Capital investments*
A description of each of the follow-on investments made into existing businesses in the Venture Capital Portfolio is shown below.
*Cambridge Touch Technologies Limited *(£500,000) is developing pressure sensitive multi touch technology that is cheaper and simpler to integrate
in touch screen panels of mobile devices.
On 3 June 2021 *Arecor Therapeutics plc* (“Arecor”) undertook a successful IPO on AIM. As part of the IPO, the Ventures Share pool’s existing loan note holding was converted into ordinary shares.
*E-Fundamentals Group Limited* (£166,000) is a Software as a Service (SaaS) analytics company, which has developed and commercialised a SaaS analytics tool sold directly to companies to enable them to accurately assess the performance of their products when being sold through third party e-commerce sites.
*FVRVS Limited (trading as Fundamental VR)* (£125,000) 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. It is the only global platform to have achieved educational accreditation from leading medical institutions such as the AAOS and Royal College of Surgeons England.
*Rated People Limited* (£100,000) is an online marketplace connecting homeowners with local tradespeople.
*MIP Discovery Limited (previously MIP Diagnostics) *(£100,000) is a technology leader in the field of Molecularly Imprinted Polymers (MIPs) - polymer based synthetic antibodies that provide a viable alternative to antibodies for diagnostic immunoassays which are used across a variety of sectors including diagnostics, sensors, food testing and reagent purification.
£71,000 was invested in* Streethub Limited (trading as Trouva) *in order to support the business towards an exit. After the year end, the Ventures Share Pool exited in full recovering only the value of this latest investment.
*Channel Mum Limited *has been trading well in recent months and a further £62,000 was invested in order to facilitate an exit.
There were two full exits during the year *Xupes Limited, *a pre-owned luxury goods retailer generated proceeds of £675,000 at a profit of £384,000 over the value at 31 March 2021.
*JRNI Limited, *a business to business (B2B) software platform that enables companies to offer online appointments and event bookings for their customers and staff, exited at £23,000 profit over cost.
It is disappointing to report that *Exonar Limited* and *Glownet Limited* both exited in full for nil proceeds during the year, with a combined loss of £379,000 against the value held at 31 March 2021.
Deferred consideration of £301,000 was received in relation to the exit of *BridgeU Limited* which occurred in the year ended 31 March 2021.
*Portfolio valuation*
During the period, the Venture Capital portfolio of the Ventures Share pool was increased in value by a total of £2.7 million. Whilst there have been a number of significant positive developments within the Venture Capital portfolio, this was in part offset by the reduction in value of several companies due to them not progressing as we had hoped.
*Streethub Limited (t/a Trouva)* failed to recover after the impact of the pandemic and is well behind budget. The Ventures Share Pool exited after the year end and the value of the investment has therefore been reduced by £1.27 million to reflect the amount recovered.
*E-Fundamentals Group Limited* continues to progress well both in the UK and in the US, with recurring revenues continuing to grow. This strong performance has resulted in a valuation uplift of £1.27 million as at 31 March 2022.
*Upp Technologies Limited* (previously Volo Commerce) a provider of multichannel e-commerce technology, was increased in value by £835,000 as its performance recovers following a change in strategy and a new product focus.
*Ayar Labs inc*. the developer of components for high performance computing and data centre applications, was uplifted in valuation by £800,000 as at 31 March 2022, including the impact of foreign exchange. This revaluation is the result of a calibration to the price set under a recent funding round.
The valuation of *Arecor *was uplifted by £723,000 as at 31 March 2022.
*Cambridge Touch Technologies Limited* was uplifted by £508,000 to align with the valuation set under the recent round of funding.
*Hummingbird Technologies Limited* the owner of an advanced crop analytics platform that is powered by machine learning and aerial imagery, was reduced in value by £503,000 as at 31 March 2022, on the back of a downgrade in revenue forecasts.
The remaining investments in the Venture Capital Portfolio were adjusted in value by a total net uplift of £314,000 as at 31 March 2022.
*Outlook*
There have been a number of positive developments in the portfolio, as the investments continue to recover in the aftermath of the pandemic and life returns to ‘normal’.
We continue to actively engage with these companies, providing guidance and support to ensure they are well positioned to proceed with their milestones.
Liquidity Investments
The carrying values of the Liquidity Investments have been adjusted to reflect their quoted prices as at 31 March 2022. This resulted in a total reduction of £238,000 for the year.
*Downing Strategic Micro-Cap Investment Trust plc*
The value of the Ventures Share pool’s holding in Downing Strategic Micro-Cap Investment Trust plc (“DSM”) decreased in value by £262,000 during the period. As at 31 March 2022, DSM’s mid-market share price traded at a discount to NAV of 21.36%, representing unrealised value in the company’s share price. The Managers of DSM believe that the trust’s portfolio also has a level of intrinsic value which is yet to be recognised by the market and believe that a return of positive sentiment to value investing could further enhance this.
DSM reported positive results for the full year ended 28 February 2022. The Company reported a 5.3% increase in NAV, and 1% increase in the share price, despite the volatility in markets due to the post-Covid macroeconomic backdrop and the conflict in Ukraine. The managers remain positive on the prospects for the Company’s holdings which are generally cheaper than the wider market, with stronger balance sheets and good growth prospects from the compelling products or services they provide. Typically, these investments have gone through significant catalytic changes over the last few years and are therefore stronger than they were pre this period of economic instability.
*Downing UK Micro-Cap Growth Fund*
Ventures Shareholders will be aware of the small residual investments in Downing Micro‐Cap Growth Fund (“DMCG”). Since 19th February 2021, the ACD (Associated Corporate Director) has been working with the investment manager Downing LLP to dispose of and liquidate all assets of the Fund with the intention of returning monies to investors at the earliest opportunity. The second round of capital distributions were made in June 2021, returning proceeds of £301,000, realising gains of £31,000 over the valuations as at 31 March 2021. More than the price per share at which the fund was suspended has now been returned to shareholders.
As at 31 March 2022, the Ventures Share pool’s residual holding in DMCG increased in value by £24,000.
*Outlook*
The ramifications of the pandemic continued to disrupt throughout the reporting period, and markets have been faced with extreme demand /supply side shocks, labour shortages, energy price crises, and freight and logistical challenges. The macroeconomic backdrop remains concerning and markets are likely to remain volatile in the months ahead as rising inflation, higher interest rates and the situation in Ukraine all cause concern.
The year ahead is likely to be more difficult than last year, where lingering Covid issues were offset by massive stimulus and record household savings feeding a demand spike. Supply chain issues continue to have an impact, Covid is still crippling parts of China where so many goods are manufactured, household savings are being rapidly eroded by the unforeseen cost of living crisis, and expansionary policy has reversed. Confidence is low and uncertainty is high. However, the portfolio contains good companies, with plenty of scope for strong balance sheets, and significant prospects for growth over the long-term.
As you will have seen in the Chairman’s Statement, following the year end, Downing LLP agreed to sell its technology Ventures portfolio business to Foresight Group Holdings Limited. As part of the transaction, the Investment Management agreement was novated from Downing to Foresight on 5 July 2022 and the whole of the Downing Ventures team and key support staff were transferred to Foresight.
We look forward to managing the assets as part of the Foresight Group, our new home, and the next chapter for the Company.
*Downing LLP – Ventures Team*
Review of Investments – Ventures Share Pool
The following investments were held at 31 March 2022:
Cost * *
* *
*Valuation* Valuation
movement
in period
% of
portfolio
Portfolio of investments £’000 * £’000 * £’000
*Venture Capital investments* * *
E-Fundamentals (Group) Limited 1,508 *3,847* 1,273 10.8%
Rated People Limited 1,382 *1,895* 211 5.3%
Virtual Class Limited (Third Space Learning) 1,053 *1,816* (60) 5.1%
Imagen Limited 1,000 *1,763* (65) 5.0%
Ayar Labs, Inc. 764 *1,526* 800 4.3%
Hackajob Limited 784 *1,523* 739 4.3%
Cornelis Networks, Inc. 1,402 *1,370* 63 3.9%
Cambridge Touch Technologies Limited 959 *1,369* 508 3.8%
Ecstase Limited (t/a ADAY) 1,000 *1,257* 257 3.5%
Trinny London Limited 219 *1,240* 283 3.5%
Arecor Therapeutics plc^ 418 *1,141* 723 3.2%
Upp Technologies Group Limited (previously Volo Commerce) 1,077 *1,077* 835 3.0%
Firefly Learning Limited 1,047 *1,047* - 2.9%
Limitless Technology Limited 757 *920* - 2.6%
FundingXchange Limited 1,050 *786* (264) 2.2%
Congenica Limited 734 *746* - 2.1%
Parsable, Inc. 766 *711* 33 2.0%
Masters of Pie Limited 667 *667* - 1.9%
Carbice Corporation 656 *639* 30 1.8%
FVRVS Limited (t/a Fundamental VR) 375 *484* 109 1.4%
Maverick Pubs (Holdings) Limited 1,000 *450* - 1.3%
Fenkle Street LLP* 301 *405* 17 1.1%
MIP Discovery Limited (previously MIP Diagnostics Limited) 300 *300* - 0.8%
Channel Mum Limited 737 *291* (49) 0.8%
DSTBTD Limited (t/a Distributed Limited) 275 *275* - 0.8%
Hummingbird Technologies Limited 750 *250* (503) 0.7%
Bulbshare Limited 249 *249* - 0.7%
Destiny Pharma plc^ 500 *153* (376) 0.4%
Streethub Limited (t/a Trouva) 1,279 *71* (1,273) 0.2%
Empiribox Holdings Limited 1,563 *-* (405) 0.0%
Lineten Limited 400 *-* (209) 0.0%
Lignia Wood Company Limited 1,778 *-* - 0.0%
Live Better With Limited 1,211 *-* - 0.0%
Ormsborough Limited 900 *-* - 0.0%
London City Shopping Centre Limited* 30 *-* - 0.0% 28,891 *28,268* 2,677 79.4%
*Liquidity investments* * *
Downing Strategic Micro-Cap Investment Trust plc*^ 4,269 *2,875* (262) 8.1%
MI Downing UK Micro-Cap Growth Fund* 123 *116* 24 0.3% 4,392 *2,991* (238) 8.4% 33,283 *31,259* 2,439 87.8%
Cash at bank and in hand *4,321* 12.2%
Total investments *35,580* 100.0%
All Venture Capital investments are incorporated in England and Wales.
*non-qualifying investment
^listed and traded on the London Stock Exchange
*Investment movements for the year ended 31 March 2022*
* * *Cost*
*Additions* * £’000 *
*Venture Capital investments* * *
Cambridge Touch Technologies Limited *500*
Arecor Therapeutics plc^ *418*
DSTBTD Limited (t/a Distributed Limited) *275*
Bulbshare Limited *249*
E-Fundamentals (Group) Limited *166*
FVRVS Limited (t/a Fundamental VR) *125*
Rated People Limited *100*
MIP Discovery Limited (previously MIP Diagnostics Limited) *100*
Streethub Limited (t/a Trouva) *71*
Channel Mum Limited *62*
Arecor Limited *4* *2,070*
* * *Cost* *Valuation at*
* 01/04/21** * Proceeds* *(Loss)/*
*Gain*
*vs. cost* * *
*Realised *
*(loss)/gain*
*Disposals* £’000 £’000 £’000 £’000 *£’000*
*Venture Capital investments*
Xupes Limited 933 291 675 (258) 384
JRNI Limited 525 525 548 23 23
Arecor Limited 418 418 418 - -
Glownet Limited 741 - - (741) -
Exonar Limited 550 379 - (550) (379)
BridgeU Limited *** - - 143 143 143
*Liquidity investments*
MI Downing UK Micro-Cap Growth Fund** 369 270 301 (68) 31 2,078 1,067 862 (1,216) (205)
*adjusted for additions in the year as appropriate
**non-qualifying investment
***deferred proceeds not recognised in prior periods
Healthcare Share Pool
*Share Pool Summary*
* * *31 March*
* 2022* 31 March2021
*Financial highlights* *Pence* pence
* * * *
Net Asset Value per Healthcare Share *84.40* 68.5
Cumulative distributions *5.25* 2.5
Total Return per Healthcare Share *89.65* 71.0
Investment Manager’s Report- Healthcare Share Pool
i. Overview
*Introduction*
We present a review of the investment portfolio and activity for the Healthcare Share pool over the year ended 31 March 2022.
This Investment Manager’s Report is split into three sections comprising this overview, a review of Venture Capital Portfolio and a report on the portfolio of Liquidity Investments.
*Net Asset Value and results*
As at 31 March 2022, the NAV of a Healthcare share stood at 84.4p, an increase of 18.6p (27.2%) over the year after adding back the Healthcare dividend, of 2.75p per share, which was paid on 24 September 2021.
The return on ordinary activities for the Healthcare Share pool for the year was £3.7 million (2021: £549,000), being a revenue loss of £314,000 (2021: £113,000) and a capital gain of £3.98 million (2021: £662,000).
There has now been significant recovery in the NAV since 31 March 2021 which we are pleased with, although the Total Return to Shareholders as at 31 March 2022, of 89.7p, continues to be considered an underperformance against our expectations for the Healthcare Share pool.
A proposed final dividend of 3.5p per share will be paid on 30 September 2022, to Shareholders on the register at 2 September 2022. This is in line with the stated dividend target for the Healthcare Share pool, to pay dividends of at least 4% of net assets per annum.
*Portfolio Overview*
As at 31 March 2022, the Healthcare Share pool held a portfolio of 15 Venture Capital investments and two Liquidity investments, with a combined value of £15.9 million.
We have been pleased to see significant recovery across much of the portfolio with many of the established companies increasing in value in the period and two IPOs demonstrating the potential for success in the portfolio.
However, there are a number of risks which have developed over the latter part of the year, including both the situation in Ukraine and the impact of increasing inflation in the UK. We will continue 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 Performance*
There were several valuation movements in the Venture Capital Portfolio during the year, resulting in a net valuation uplift of £4.2 million as at 31 March 2022.
The carrying values of the Liquidity Investments have been adjusted to reflect their quoted prices as at 31 March 2022, resulting in a valuation decrease of £36,000 for the year.
ii. Venture Capital Portfolio
*Investment activity*
During the year, a total of £4.8 million was invested in eight businesses, two of which are new VCT Qualifying investments.
*New Venture Capital investments*
*DIA Imaging Analysis EU (£415,000) *is a leading provider of advanced AI‐based solutions for ultrasound analysis. The additional capital will enable DiA to expand its portfolio of FDA‐cleared
and CE‐marked AI‐based ultrasound solutions that enable clinicians to identify clinical abnormalities with speed and accuracy.
*Closed Loop Medicine Limited (£650,000) *has developed an integrated healthcare technology intended to improve patient outcomes and health system performance by combining drugs/medicines with its digital platform for greater precision in treatment that is personalised to the individual.
*Follow-on Venture Capital investments*
*GENinCode plc* (“GENinCode”) develops products and technology that helps patients and healthcare practitioners to assess and predict the onset of cardiovascular disease, thrombosis, and the diagnosis of Familial Hypercholesterolemia. As part of the Company’s IPO on 22 July 2021, the Healthcare Share pool made a follow‐on investment of £302,000 in the business.
On 3 June 2021 *Arecor Therapeutics plc* (“Arecor”)
undertook a successful IPO on AIM (see portfolio valuation commentary). As part of the IPO, the Healthcare Share pool’s existing loan note holding was converted into ordinary shares.
£400,000 was invested in *Cambridge Respiratory Innovations Limited,* a company that creates innovative respiratory technologies, including its award-winning N-Tidal device which helps medical professionals diagnose respiratory conditions and monitor lung function in patients.
A further £250,000 was invested in *FVRVS Limited* (trading as Fundamental VR) which provides surgery simulation software for enterprise clients and hospitals.
*The Electrospinning Company Limited* is a supplier and manufacturer of clinical‐grade biomaterials, which can be used to act as a synthetic scaffold for implantation within body tissue to promote repair post trauma or surgery. During the period the Healthcare Share pool invested a further £200,000 in the business.
*MIP Discovery Limited (previously MIP Diagnostics Limited)* is a manufacturer of polymer based synthetic antibodies that provide a viable alternative to antibodies for diagnostic immunoassays which are used across a variety of sectors including diagnostics, sensors, food testing and reagent purification. A further £100,000 was invested in the year to 31 March 2022.
*Portfolio valuation*
During the period, the Venture Capital portfolio of the Healthcare Share pool increased in value by a total of £4.2 million.
We are pleased to report that the majority of the businesses in the portfolio have been able to navigate the challenges brought about by the pandemic and were able to continue to progress with their plans over the period.
Since its IPO*, Arecor* has made several positive updates on the progress of its products, which have bolstered its share price. As at 31 March 2022, the market capitalisation of Arecor was £101 million. With the valuation now being based on the quoted bid price, the valuation of the Healthcare Share pool’s investment in the group was uplifted by £2.7 million as at 31 March 2022.
*Adaptix Limited *increased in value by £758,000 as at 31 March 2022, in line with calibrations to the valuations set under their latest funding rounds. The company is developing a flat panel X-ray source which seeks to improve the accuracy and mobility of 3D imaging
*GENinCode plc* successfully admitted its shares to trading on AIM on 22 July 2021, taking the market capitalisation of the company to approximately £42 million at that date. In line with the quoted bid price as at 31 March 2022, the Healthcare Share pool’s holding was increased in value by £422,000.
*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 of the business has been increased in accordance with an external valuation. The resulting uplift for the Healthcare Share pool was £379,000 as at 31 March 2022.
The valuations of* FVRVS Limited* (trading as Fundamental VR) and *Future Health Works Limited *(trading as MyRecovery) have been increased by £218,000 and £194,000 respectively in order to calibrate to the most recent funding rounds.
*The Electrospinning Company Limited* is a supplier and manufacturer of clinical-grade biomaterials, which can be used to act as a synthetic scaffold for implantation within body tissue to promote repair post trauma or surgery. The valuation of the Healthcare Share pool’s investment has been calibrated to the price of the most recent funding round and increased by £124,000 at 31 March 2022 as a result.
*Destiny Pharma plc, *which is listed on AIM, was reduced in value by £564,000. The business continues to progress with its clinical pipeline and trials, however the quoted share price continues to fall on the back of limited trading volumes. We remain confident that there will be long‐term appreciation in the share price, as key milestones continue to be achieved.
There were no other valuation movements in the Venture Capital portfolio.
iii. Liquidity Investments
The carrying values of the Liquidity Investments have been adjusted to reflect their quoted prices as at 31 March 2022, resulting in a total reduction of £36,000 for the year.
*Downing Strategic Micro-Cap Investment Trust plc*
The value of the Healthcare Share pool’s holding in Downing Strategic Micro-Cap Investment Trust plc (“DSM”) decreased in value by £44,000 during the period. As at 31 March 2022, DSM’s mid-market share price traded at a discount to NAV of 21.36%, representing unrealised value in the company’s share price.
*Downing UK Micro-Cap Growth Fund*
There remains a small residual investment in Downing Micro‐Cap Growth Fund. As at 31 March 2022, the Ventures Share pool’s residual holding in DMCG increased in value by £8,000.
*Outlook*
The building of the portfolio of the Healthcare Share pool has progressed well during the period and is now almost fully invested. The focus is on working with the existing portfolio companies to help these businesses achieve their plans, whilst also continuing to add appropriate VCT Qualifying investments to the Healthcare Share pool’s portfolio.
We are pleased that the majority of the Healthcare Venture Capital portfolio has coped well with the repercussions of the pandemic, with some strong results in our more established portfolio. We believe there is much potential still to be realised within a number of these businesses.
As you will have seen in the Chairman’s Statement, following the year end, Downing LLP agreed to sell its technology Ventures portfolio business to Foresight Group Holdings Limited. The management of the Healthcare share pool will remain with Downing and will continue to be managed by Downing’s expanding Healthcare team.
We look forward to continuing to manage the assets alongside Foresight Group where the remainder of the VCT will be settling into its new home.
*Downing LLP – Healthcare Ventures Team*
Review of Investments – Healthcare Share Pool
The following investments were held at 31 March 2022:
* *
Cost * *
* *
*Valuation* Valuation
movement
in period
% of
portfolio
*Portfolio of investments* £’000 * £’000 * £’000
*Venture Capital investments* * *
Arecor Therapeutics plc^ 1,533 *4,186* 2,653 22.7%
Adaptix Limited 1,056 *1,843* 758 10.0%
GENinCode plc^ 1,202 *1,624* 422 8.8%
Open Bionics Limited 1,000 *1,379* 379 7.5%
Congenica Limited 1,184 *1,215* - 6.6%
FVRVS Limited (t/a Fundamental VR) 750 *968* 218 5.3%
Cambridge Respiratory Innovations Limited 800 *800* - 4.3%
Future Health Works Limited (t/a MyRecovery) 528 *750* 194 4.1%
Closed Loop Medicine Limited 650 *650* - 3.5%
The Electrospinning Company Limited 478 *544* 124 3.0%
Invizius Limited 500 *500* - 2.7%
DiA Imaging Analysis EU 415 *429* 14 2.3%
MIP Discovery Limited (previously MIP Diagnostics Limited) 300 *300* - 1.6%
Destiny Pharma plc^ 750 *229* (564) 1.2%
Live Better With Limited 1,106 *-* - 0.0% 12,252 *15,417* 4,198 83.6%
*Liquidity Investments* * *
Downing Strategic Micro-Cap Investment Trust plc*^ 729 *491* (44) 2.7%
MI Downing UK Micro-Cap Growth Fund* 40 *37* 8 0.2% 769 *528* (36) 2.9% 13,021 *15,945* 4,162 86.5%
Cash at bank and in hand *2,483* 13.5%
Total investments *18,428* 100.0%
*non-qualifying investment
^listed and traded on the London Stock Exchange
*Investment movements for the year ended 31 March 2022*
* * *Cost*
*Additions* * £’000 *
*Venture Capital investments* * *
Arecor Therapeutics plc^ *1,533*
GENinCode plc^ *1,202*
Closed Loop Medicine Limited *650*
DiA Imaging Analysis EU *415*
Cambridge Respiratory Innovations Limited *400*
FVRVS Limited (t/a Fundamental VR) *250*
The Electrospinning Company Limited *200*
MIP Discovery Limited (previously MIP Diagnostics Limited) *100*
Arecor Limited *14* *4,764*
* * Cost Valuation at 01/04/21* Proceeds Loss
vs. cost *Realised (loss)/gain*
*Disposals* £’000 £’000 £’000 £’000 *£’000*
*Venture Capital investments*
Arecor Therapeutics plc^ 1,533 1,533 1,533 - -
GENinCode plc^ 900 900 900 - -
*Liquidity investments* * *
MI Downing UK Micro-Cap Growth Fund** 116 86 96 (20) *10* 2,549 2,519 2,529 (20) *10*
*adjusted for additions in the year as appropriate
**non-qualifying investment
DSO D Share Pool
*Share Pool Summary*
* * *31 March*
* 2022* 31 March2021
*Financial highlights* *Pence* Pence
Net Asset Value per DSO D Share *2.6* 10.2
Cumulative distributions *102.0* 94.5
Adjusted for Performance Incentive estimate *-* (0.5)
Total Return per DSO D Share *104.6* 104.2
Investment Manager’s Report - DSO D Share Pool
*Introduction*
The process of realising the investments and returning funds to Shareholders remains the focus of the DSO D Share pool, although this has been subject to significant delays as a result of the continued impact of the coronavirus pandemic.
*Net Asset Value and results*
The Net Asset Value (“NAV”) per DSO D Share at 31 March 2022 stood at 2.6p, an increase of 0.1p or 3.9% over the period. Whilst the reported NAV (prior to the deduction of the performance fee estimate) reduced by 0.1p during the year, the estimated performance incentive fee is no longer expected to become payable and so this deduction is no longer applicable (2021: £0.5p). Should the hurdles ultimately be met, a performance incentive 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 £3,000 (2021: £143,000), comprising a revenue loss of £16,000 (2021: £31,000) and a capital gain of £13,000 (2021: loss of £112,000).
Whilst it is unfortunate to report further delays in the realisation process, the NAV of the DSO D Share pool has not been materially impacted by the coronavirus pandemic. We believe that there continue to be opportunities to exit from the remaining investments, however this will take a little more time to complete.
*Venture Capital investments *
As at 31 March 2022, the DSO D Share pool held two Venture Capital investments with a total value of £43,000.
*Portfolio activity*
Both solar panel companies*, Fresh Green Power Limited *and* Green Energy production Limited* were exited during the year, generating total proceeds of £341,000 at a total of £8,000 below the value shown at 31 March 2021.
A dividend of 7.5p was paid to shareholders to return these realised funds to investors.
*Pearce and Saunders Limited*, the owner of a freehold pub in south east London, repaid loan note principal of £20,000 during the period, along with a redemption premium of £60,000.
*Portfolio valuation*
During the year, the carrying value of the portfolio of Venture Capital investments held by the DSO D Share pool was reduced by £33,000.
*Pearce and Saunders Limited *and* Pearce and Saunders DevCo Limited *are the only remaining investments in the portfolio. The final pub has now been sold. Unfortunately, distributions to investors have been delayed as we await a final sign off from HMRC. The valuation has been reduced by £33,000 as at 31 March 2022 to reflect likely final proceeds.
There were no other valuation movements in the DSO D Share pool portfolio.
*Outlook *
The focus for the DSO D Share pool continues to be on exiting from the remaining investments, however the pandemic has significantly delayed these processes, even more than originally foreseen. We now anticipate that these processes will be completed by the end of 2022. We will continue to monitor the companies and seek to maximise the proceeds for DSO D Shareholders. The final distribution will be once the final realisations have taken place.
*Downing LLP*
Review of investments - DSO D Share Pool
The following investments were held at 31 March 2022:
* *
Cost * *
* *
*Valuation* Valuation
movement
in year
% of
portfolio
*Portfolio of investments* £’000 * £’000 * £’000
*Venture Capital investments* * *
Pearce and Saunders Limited 255 *27* (30) 16.2%
Pearce and Saunders DevCo Limited* 19 *16* (3) 9.6% 274 *43* (33)
Cash at bank and in hand *124*
Total investments *167*
* non-qualifying investment
All Venture Capital investments are incorporated in England and Wales.
*Investment movements for the year ended 31 March 2022*
* * Cost Valuation
At
01/04/21
Proceeds
Gain/(loss)
vs. cost
Realised
Gain/(loss)
*Disposals* £’000 £’000 £’000 £’000 £’000
*Venture Capital investments* * * * *
Fresh Green Power Limited 189 282 278 89 (4)
Green Energy Production UK Limited 100 67 63 (37) (4)
Pearce and Saunders Limited* 20 20 80 60 60 309 369 421 112 52
* non-qualifying investment
DP67 Share Pool
*Share Pool Summary*
* * *31 March*
* 2022* * * 31 March2021
*Financial highlights* *pence* * * pence
Net Asset Value per DP67 Share *26.8* 18.4
Cumulative distributions *67.8* 67.8
Total Return per DP67 Share *94.6* 86.2
Investment Manager’s Report - DP67 Share Pool
*Introduction*
The process of realising the investments and returning funds to DP67 Shareholders remains the focus for this Share pool, although as Shareholders will be aware, this continues to be subject to substantial delays as a result of the coronavirus pandemic.
*Net Asset Value and results*
The Net Asset Value (“NAV”) per DP67 Share at 31 March 2022 stood at 26.8p, an increase of 8.4p or 45.6% during the year. Total Return stands at 94.6p 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 underperformance against the original expectations for the DP67 Share pool.
The gain on ordinary activities after taxation for the year was £934,000 (2021: £31,000), comprising a revenue gain of £1.2 million (2021: £76,000) and a capital loss of £247,000 (2021: gain £45,000).
As DP67 Shareholders will be aware, the remaining DP67 portfolio has a high level of exposure to the leisure and hospitality sector, which was significantly impacted by the restrictions and closures during the pandemic. However, over the past year there has generally been good recovery and we are now making progress with the exit process across the final investments.
*Venture Capital investments *
As at 31 March 2022, the DP67 Share pool held a portfolio of five Venture Capital investments, with a total value of £1.9 million.
*Portfolio activity*
It is disappointing to report that there were no realisations during the year ended 31 March 2022.
*Portfolio valuation*
The DP67 portfolio decreased in value by a total of £233,000 during the year ended 31 March 2022. This movement is attributable to adjustments to the related discounted cash flow assessments conducted in respect of *Fenkle Street LLP* and its subsidiary *Gatewales Limited. *
Significant loan note interest has been recognised in the year, resulting in the revenue gain of £1.2 million for the period. We shortly expect to receive first round offers on the BPRA funded hotel, and now consider the accrued interest on these loans to be fully recoverable.
Cadbury House Holdings has seen good performance since reopening in April 2021 and discussions with management are ongoing in order to seek an exit as soon as possible. The valuation will not be adjusted until we have a clearer picture of how that exit will be achieved.
The valuations of the remaining Venture Capital investments are unchanged from 31 March 2021.
*Outlook*
The focus for the DP67 Share pool continues to be on exiting from the remaining investments. It is frustrating to report that this process has taken so long but hope that it can be complete with an exit from Cadbury House in 2023. During this next period, we will continue to work with the portfolio companies to seek to maximise proceeds for the DP67 Share pool. Further dividends will be paid once the final realisations have taken place.
*Downing LLP*
Review of Investments – DP67 Share Pool
The following investments were held at 31 March 2022:
* *
Cost * *
* *
*Valuation* Valuation
movement
in year
% of
portfolio
*Portfolio of investments* £’000 * £’000 * £’000
*Venture Capital investments* * *
Cadbury House Holdings Limited 1,409 *791* - 41.5%
Fenkle Street LLP** 405 *759* 32 39.9%
Gatewales Limited* 343 *344* (265) 18.1%
Yamuna Renewables Limited 400 *-* - 0.0%
London City Shopping Centre Limited** 99 *-* - 0.0% 2,656 *1,894* (233) 99.5%
Cash at bank and in hand *10* 0.5%
Total investments *1,904* 100.0% * *
* partially qualifying investment
** non-qualifying investment
All Venture Capital investments are incorporated in England and Wales.
There were no investment disposals during the period.
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 2022* *Year ended 31 March 2022* ** ** Year ended 31 March 2021
* * *Revenue* *Capital* *Total* * * Revenue Capital Total
* * *£’000* *£’000* *£’000* * * £’000 £’000 £’000
Income *1,296* *-* *1,296* 266 2 268
Gain on investments *-* *6,599* *6,599* - 4,816 4,816 *1,296* *6,599* *7,895* 266 4,818 5,084
Investment management fees *(531)* *(531)* *(1,062)* (411) (411) (822)
Other expenses *(409)* *-* *(409)* (97) - (97)
*Return/(loss) on ordinary activities before tax* *356* *6,068* *6,424* (242) 4,407 4,165
Tax on total comprehensive income and ordinary activities * *
*-* * *
*-* * *
*-*
(69)
-
(69)
*Return/(loss) attributable to equity Shareholders, being total comprehensive income for the year* * *
*356* * *
*6,068* * *
*6,424*
(311)
4,407
4,096 * * * * * *
*Basic and diluted return per share:* * * * * * *
DSO D Share *(0.2)* *0.2* *0.0* (0.4p) (1.4p) (1.8p)
DP67 Share *10.5* *(2.2)* *8.3* (0.8p) 0.4p (0.4p)
Ventures Share *(1.0)* *4.8* *3.8* (0.2p) 8.2p 8.0p
Healthcare Share *(1.6)* *19.9* *18.3* (0.6p) 3.5p 2.9p
AIM Share *(1.5)* *(0.9)* *(2.3)* n/a n/a n/a
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 April 2021 by the Association of Investment Companies (“AIC SORP”).
*Income Statement for the year ended 31 March 2022*
Analysed by Share pool – unaudited and non-statutory
*Split as:* *Year ended 31 March 2022* ** ** Year ended 31 March 2021
** ** *Revenue* *Capital* *Total* * * Revenue Capital Total
**DSO D Share pool** *£’000* *£’000* *£’000* * * £’000 £’000 £’000
Income *-* *-* *-* - - -
Net gain/(loss) on investments *-* *19* *19* - (106) (106) *-* *19* *19* - (106) (106)
Investment management fees *(6)* *(6)* *(12)* (6) (6) (12)
Other expenses *(10)* *-* *(10)* (25) - (25)
(Loss)/return on ordinary activities before tax *(16)* *13* *(3)* (31) (112) (143)
Tax on total comprehensive income and ordinary activities *-* *-* *-* - - -
(Loss)/return attributable to equity Shareholders, being total comprehensive income for the year *(16)* *13* *(3)* (31) (112) (143) *Year ended 31 March 2022* ** ** Year ended 31 March 2021
** ** *Revenue* *Capital* *Total* * * Revenue Capital Total
**DP67 Share pool** *£’000* *£’000* *£’000* * * £’000 £’000 £’000
Income *1,217* *-* *1,217* - - -
Net (loss)/gain on investments *-* *(233)* *(233)* - 59 59 *1,217* *(233)* *984* - 59 59
Investment management fees *(14)* *(14)* *(28)* (14) (14) (28)
Other expenses *(22)* *-* *(22)* (32) - (32)
Return/(loss) on ordinary activities before tax *1,181* *(247)* *934* (46) 45 (1)
Tax on total comprehensive income and ordinary activities *-* *-* *-* (30) - (30)
Return/(loss) attributable to equity Shareholders, being total comprehensive income for the year *1,181* *(247)* *934* (76) 45 (31)
*Income Statement for the year ended 31 March 2022*
Analysed by Share pool – unaudited and non-statutory *Year ended 31 March 2022* ** ** Year ended 31 March 2021
** ** *Revenue* *Capital* *Total* * * Revenue Capital Total
**Ventures Share pool** *£’000* *£’000* *£’000* * * £’000