Downing ONE VCT plc : Half-yearly report

Downing ONE VCT plc

Half-Yearly Report for the six months ended 30 September 2016

FINANCIAL SUMMARY

	30 Sep	31 Mar	30 Sep	Nov
	2016	2016	2015	2013
				(merger)
	pence	pence	pence	pence
Net asset value per share ("NAV")	93.1	94.1	98.1	100.4
Cumulative dividends paid since 12 November 2013	15.0	12.0	9.0	0.0
Total return	108.1	106.1	107.1	100.4
(net asset value plus cumulative dividends paid per share)

CHAIRMAN'S STATEMENT
I am pleased to present the Company's half-yearly report for the six month period ended 30 September 2016.

The build up to, and repercussions of, the EU Referendum produced volatile markets during the period. However, after the initial surprise of the result, markets have recovered. This was reflected in the performance of the Company which showed a modest improvement over the six months.

Net asset value and results
As at 30 September 2016, the Company's NAV stood at 93.1p an increase of 2.0p (or 2.2%) compared to the 31 March 2016 year-end position, after adding back the 3.0p dividend paid during the period.

The return attributable to equity shareholders for the period was £1.8 million, comprising a revenue loss of £43,000 and a capital return of £1.9 million.

Investment activity and performance
As a result of the successful fundraising, the Company had a significant level of funds to invest and was an active investor over the period.  The Company was able to invest a significant proportion of these funds at the start of the period, before new VCT regulations came into force on 6 April 2016 which have further restricted the types of investments that VCTs can make in future.

There were 15 realisations during the period although a number were redemptions of loan stock. The largest realisation was that of Kidspace Adventure Holdings Limited, where unfortunately this company was unable to gain planning permission for a new project and ultimately decided to return funds to the VCT. Proceeds were £2.8 million compared to an original cost of £2.6 million.

In total the Company generated £5.5 million of disposal proceeds on investments with a carrying value of £5.1 million, giving rise to a net gain of £491,000.

In respect of the existing portfolio, net unrealised gains over the period were £1.7 million.

Further details of the investment activities of the Company are in the Investment Adviser's Report.

Dividends
The Company's stated policy is to seek to pay dividends of at least 4% of net asset value each year.

The Company has again achieved a number of realisations and therefore can pay above this level. An interim dividend of 3.0p will be paid on 24 February 2017 to Shareholders on the register at 3 February 2017, in line with the usual February and August payment dates. 

This will take the total dividends to 18.0p since the merger in November 2013.

Fundraising
The fundraising which launched on 14 December 2015, closed on 30 September 2016 having raised gross proceeds of £19.3 million.  The Board consider this to be a very successful result which has provided the Company with a significant level of additional funds and allows the Company to participate in new investment opportunities.

While these new funds are being employed, the Board is taking a cautious approach to further fundraising.  Currently there are no firm plans for a new fundraising for the 2016/17 tax year but the Board will continue to monitor progress and will, of course, notify shareholders of any developments.

Share buybacks
The Company operates a policy of buying in its own shares that become available in the market at a 5% discount to NAV (subject to liquidity and any regulatory restrictions).

During the period, the Company purchased 1,116,932 shares at an average price of 87.7p per Ordinary Share, being a 5% discount to the latest announced NAV at the time of purchase.

Board
It is now three years since Downing ONE was formed by the merger of six VCTs. Initially the board comprised five directors which ensured that there was representation from each of the VCTs that merged.

Since then the portfolio has undergone a significant degree of rationalisation and all of the Directors have become familiar with the Company's remaining core investments. For this reason, the Directors have concluded that the Company no longer requires such a large Board and that a Board comprising three members, being a more typical size for a VCT, is now more appropriate.

Accordingly, Helen Sinclair and Andrew Griffiths have agreed to resign and will stand down from the Board on 31 December 2016.

I would personally like to thank Helen and Andrew for their valuable contributions since their original appointment and the parts they have played in ensuring that the merger has been a success. It has been a pleasure working with both of them over the last three years and I wish them every success in their other ventures.

Outlook
It is clear that the new VCT regulations which have taken effect over the last year will create new challenges for your Company and, indeed, all VCTs. There currently appears to be some uncertainty on the interpretation and application of some of the new regulations and, in some cases, this is resulting in delays in finalising new investments. We believe this is a temporary situation while the new rules become more established. The Investment Adviser, along with most of the VCT industry, is working with its trade bodies and HMRC to try to address issues that arise and smooth the transition to the new regulations.

Over the remainder of the year, we expect to see a lower level of new investment activity, although the Investment Adviser will be committing significant resources to recent investments made, as those companies develop their businesses.

Although it is possible that some businesses could be negatively impacted by developments associated with Brexit over the coming years, the Board is of the opinion that any effect on our investee companies should be small. We believe that the portfolio remains in reasonably good shape and can continue to make steady progress. I look forward to reporting developments to Shareholders in the Annual Report.

Chris Kay
Chairman

INVESTMENT ADVISER'S REPORT

Introduction
At 30 September 2016, the Company held a portfolio of 93 investments, valued in total at £87.6 million.

Performance over the portfolio has been mixed, however overall there has been a steady rise in value, in particular for the quoted investments.

Unquoted portfolio
Investment activity
At 30 September 2016 the unquoted portfolio was valued at £62.8 million comprising 64 investments, spread across a number of sectors.

Twelve new qualifying investments were made during the last six months as follows: -

£2.5 million was invested in Vectis Alpha Limited which is seeking to build and develop renewable energy plants.

£700,000 was invested in AVID Technologies Group Limited a manufacturer of electrified ancillaries for internal combustion engines.

Brownfields Trading Limited is seeking to develop small scale waste disposal projects and £2.5 million has been invested in this company.

£2.5 million was invested in Yamuna Renewables Limited which is seeking investment opportunities in the wood refinery sector.

Jito Trading Limited, Morova Limited and Rhodes Solutions Limited are all exploring opportunities in the wood refinery sector.  £2.5 million was invested into each company.

£1.5 million was invested into Pantheon Trading Limited which is seeking to develop and operate roof mounted PV systems in Cyprus.

£920,050 was invested into both Ironhide Generation Limited and Indigo Generation Limited.  £738,000 was invested in Rockhopper Renewables and £422,000 in SF Renewables (Solar) Limited which are in the process of acquiring land in India to build and operate 15MW ground mounted solar arrays.

One non-qualifying investment of £5 million was made into DoneLoans Limited, an investment company which makes secured loans.

Portfolio valuation
A number of adjustments to carrying values have been made at the period end, the most significant of which are summarised below.

Leytonstone Pub Limited which owns and operates The Red Lion pub in Leytonstone has been uplifted in value by £225,000 to reflect continued strong performance of the pub.

Cadbury House Holdings owns a DoubleTree by Hilton conference centre near Bristol.  Trading performance has continued to strengthen and the investment has been further uplifted by £200,000.

Fenkle Street LLP is a property development company that purchased a building in Newcastle and converted it into a hotel.  The hotel continues to trade well and a further uplift of £141,000 has been included to reflect this. 

Kimbolton Lodge Limited which operates a care home for the elderly in Bedford was uplifted by £140,000 following an independent valuation of the business.

Mosaic Spa and Health Clubs was reduced by £260,000 in the period, reflecting continued performance issues at the Shrewsbury site.

Oak Grove Renewables, an anaerobic digestion plant in Norfolk has been reduced in value by a further £142,000 due to continued ongoing issues at the facility.

Unquoted investments
Portfolio valuation (continued)
The overall movement on the unquoted portfolio was a gain of £394,000.

Quoted investments
Investment activity
At 30 September 2016 the quoted portfolio was valued at £24.8 million comprising 31 investments. No new investments were made in the period.

Disposals generated total proceeds of £656,000 across three holdings, realising a gain of £128,000.  These disposals were made to reduce fund exposure to specific shareholdings.

Portfolio valuation
The most notable movements in the portfolio over the period were;

Craneware plc, the provider of billing software solutions in the US healthcare market, saw earnings progress along with forward order book.  Given the confidence in future earnings the company experienced a re-rating in the period resulting in an increase in value of £950,000.

Science in Sport plc, the manufacturer and distributor of nutritional sports products, also saw its share price appreciate in the period, providing an unrealised gain of £394,000.  The positive share price movement was a result of continued growth in turnover, up 24% at the interim stage, alongside news that the company is now supplier of nutritional products to USA Cycling.

Pittards plc, the manufacturer and distributor of speciality leathers, delivered an unrealised gain of £236,000 to the Company as the share price appreciated on the back of broadly positive interim results and the potential positive currency tailwinds.

Meanwhile, on the negative side, Sprue Aegis, the manufacturer of smoke and carbon monoxide alarms experienced further share price malaise following a recall of some of its smoke alarms after a non-critical battery problem in some of its products.  The effect on the portfolio was a reduction in value of £315,000.  Since the period end the company has announced that the battery issue has been resolved and it has recommenced product shipment into its key German market.  We continue to believe in the longer term opportunity for Sprue Aegis with regulatory influences likely to provide opportunity for earnings progression.

Inland Homes experienced the largest fall in the portfolio of £527,000 on the back of post Brexit property concerns which affected the housing sector.  We feel that these fears have been overdone given the nature of land portfolio and housing demand that Inland has.

Overall the quoted portfolio produced unrealised gains of £1.3 million and realised gains of £128,000 over the six months.

Outlook
We remain satisfied with the state of the portfolios. The unquoted portfolio now comprises a number of investments which are in the process of commencing new businesses which potentially increases the risk profile.  However, it is the nature of VCTs that they support young businesses and we believe the Company is well placed to continue producing a steady return for investors.

Downing LLP

UNAUDITED BALANCE SHEET
as at 30 September 2016

	30 Sep 2016		30 Sep 2015		31 Mar 2016
	£'000		£'000		£'000
Fixed assets
Investments	87,644		63,931		65,445
Current assets
Debtors	248		867		292
Cash at bank and in hand	8,118		18,118		26,713
	8,366		18,985		27,005
Creditors: amounts falling due within one year	(239)		(308)		(342)
Net current assets	8,127		18,677		26,663
Net assets	95,771		82,608		92,108
Capital and reserves
Called up share capital	1,014		839		932
Capital redemption reserve	1,536		1,517		1,525
Share premium	11,624		75,226		2,792
Share capital to be issued	1,353		271		4,423
Special reserve	81,704		5,702		86,483
Capital reserve - unrealised	(2,050)		(1,520)		(4,680)-
Revenue reserve	590		573		633
Equity shareholders' funds	95,771		82,608		92,108
Basic and diluted net asset value per share	93.1p		98.1p		94.1p

UNAUDITED INCOME STATEMENT
for the six months ended 30 September 2016

		Six months ended 30 September 2016				Six months ended  30 September 2015			Year ended 31 March 2016
		Revenue	Capital	Total		Revenue	Capital	Total		Total
		£'000	£'000	£'000		£'000	£'000	£'000		£'000
Income		859	-	859		1,658	-	1,658		2,790
Gains/(losses) on investments
- realised		-	491	491		-	1,329	1,329		3,339
- unrealised		-	1,681	1,681		-	1,705	1,705		(1,097)
		859	2,172	3,031		1,658	3,034	4,692		5,032
Investment management fees		(439)	(439)	(878)		(378)	(378)	(756)		(1,512)
Other expenses		(331)	-	(331)		(342)	-	(342)		(928)
Return on ordinary activities before tax		89	1,733	1,822		938	2,656	3,594		2,592
Tax on total comprehensive income and ordinary activities		(132)	132	-		(119)	119	-		-
(Loss)/return attributable to equity shareholders		(43)	1,865	1,822		819	2,775	3,594		2,592
Basic and diluted return per share		0.0p	1.9p	1.9p		1.0p	3.3p	4.3p		3.0p

The total column within the Income Statement represents the Statement of Total Comprehensive Income of the Company prepared in accordance with Financial Reporting Standards ("FRS102"). There are no other items of comprehensive income. The supplementary revenue and capital return columns are prepared in accordance with the Statement of Recommended Practice issued in November 2014 by the Association of Investment Companies ("AIC SORP").

STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 September 2016

	Share  Capital				Capital redemption reserve		Share premium account	Funds held in respect of shares not yet allotted	Special reserve	Capital reserve -realised	Revaluation reserve	Revenue reserve	Total
	£'000				£'000		£'000	£'000	£'000	£'000	£'000	£'000	£'000
For the six months ended 30 September 2016
At 1 April 2016	932				1,525		2,792	4,423	86,483	-	(4,680)	633	92,108
Total comprehensive income		-			-		-	-	-	184	1,681	(43)	1,822
Realisation of revaluations from previous years*	-				-		-	-	-	(949)	949	-	-
Transfer between reserves**	-				-		-	-	(3,592)	3,592	-	-	-
Transactions with owners
Dividends paid	-				-		-	-	-	(2,827)	-	-	(2,827)
Unallotted shares	-				-		-	1,353	-	-	-	-	1,353
Issue of new shares			93			-	8,832	(4,423)	(202)	-	-	-	4,300
Share issue costs				-	-		-	-	-	-	-	-	-
Purchase of own shares	(11)				11		-	-	(985)	-	-	-	(985)
At 30 September 2016
	1,014				1,536		11,624	1,353	81,704	-	(2,050)	590	95,771

*   A transfer of £949,000 representing previously recognised unrealised gains on disposal of investments during the period ended 30 September 2016 (year ended 31 March 2016: £779,000) has been made from the Capital Reserve realised to the Special reserve. 
**A transfer of £3.6 million representing realised gains on disposal of investments, less capital expenses and capital dividends in the year (year ended 31 March 2016: £1.6 million) has been made from Capital Reserves - realised to Special reserve.

STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2016

Share  Capital				Capital redemption reserve	Share premium account	Funds  held in respect of shares not yet allotted	Special reserve	Capital reserve -realised	Revaluation reserve	Revenue reserve	Total
		£'000		£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
For the year ended 31 March 2016
At 1 April 2015		798		1,500	69,714	2,593	7,523	-	(2,805)	594	79,917
Total comprehensive income			-	-	-	-	-	2,809	(1,096)	879	2,592
Cancellation of Share Premium account		-		-	(82,321)	-	82,321	-	-	-	-
Realisation of revaluations from previous years		-		-	-	-	-	779	(779)	-	-
Transfer between reserves		-		-	-	-	(803)	803	-	-	-
Transactions with owners
Dividends paid		-		-	-	-	-	(4,391)	-	(840)	(5,231)
Unallotted shares			-	-	-	4,423	-	-	-	-	4,423
Issue of new shares	159			-	15,399	(2,593)	-	-	-	-	12,965
Share issue costs			-	-	-	-	(296)	-	-	-	(296)
Purchase of own shares		(25)		25	-	-	(2,262)	-	-	-	(2,262)
At 31 March 2016		932		1,525	2,792	4,423	86,483	-	(4,680)	633	92,108

UNAUDITED CASH FLOW STATEMENT
for the six months ended 30 September 2016

		30 Sep 2016		30 Sep 2015		31 Mar 2016
		£'000		£'000		£'000
Cash flow from operating activities
Profit on ordinary activities before taxation		1,822		3,594		2,592
Gains on investments		(2,172)		(3,034)		(2,242)
Decrease/(Increase) in debtors		44		(363)		300
Decrease in creditors		(102)		(419)		(385)
Cash from operations
Corporation tax paid		-		-		-
Net cash (utilised)/generated from operating activities		(408)		(222)		265
Cash flow from investing activities
Purchase of investments		(25,577)		(8,180)		(21,456)
Proceeds from disposal of investments		5,549		16,567		27,448
Net cash (utilised)/generated from investing activities		(20,028)		8,387		5,992
Cash flows from financing activities
Proceeds from share issue		8,925		5,570		15,352
Funds held in respect of shares not yet allotted		(3,070)		(2,321)		1,831
Share issue costs		(202)		(116)		(296)
Purchase of own shares		(985)		(1,517)		(2,262)
Equity dividends paid		(2,827)		(2,520)		(5,026)
Net cash generated/(utilised) from financing activities		1,841		(904)		9,599
(Decrease)/increase in cash		(18,595)		7,261		15,856
Net increase in cash
Beginning of year		26,713		10,857		10,857
Net cash (outflow)/inflow		(18,595)		7,261		15,856
End of year		8,118		18,118		26,713

SUMMARY OF INVESTMENT PORTFOLIO
as at 30 September 2016

	Cost	Valuation	Valuation movement in period	% of portfolio by value
	£'000	£'000	£'000
Top ten venture capital investments (by value)
Vulcan Renewables Limited	5,030	5,548	-	5.8%
DoneLoans Limited	5,000	5,000	-	5.2%
Downing Care Homes Holdings Limited	3,880	4,250	-	4.4%
Tracsis plc*	1,443	3,969	116	4.1%
Cadbury House Holdings Limited	3,082	3,075	200	3.2%
Baron House Developments LLP	2,695	2,695	-	2.8%
Universe Group plc*	1,506	2,561	-	2.7%
Brownfields Trading Limited	2,500	2,500	-	2.6%
Jito Trading Limited	2,500	2,500	-	2.6%
Morova Limited	2,500	2,500	-	2.6%
	30,136	34,598	316	36.0%
Other venture capital investments	60,333	53,046	1,365	55.4%
	90,469	87,644	1,681	91.4%
Cash at bank and in hand		8,118		8.6%
Total investments		95,762		100.0%

All venture capital investments are unquoted unless otherwise stated.

*quoted on AIM

SUMMARY OF INVESTMENT MOVEMENTS
for the six months ended 30 September 2016

Additions

	£'000
Quoted
SysGroup plc	377
	377
Unquoted
DoneLoans Limited	5,000
Brownfields Trading Limited	2,500
Yamuna Renewables Limited	2,500
Vectis Alpha Limited	2,500
Morova Limited	2,500
Jito Trading Limited	2,500
Rhodes Solutions Limited	2,500
Pantheon Trading Limited	1,500
Ironhide Generation Limited	1,500
Indigo Generation Limited	920
Rockhopper Renewables Limited	920
Avid Technologies Group Limited	738
SF Renewables (Solar) Limited	700
	422
	25,200
Total additions	25,577

Disposals

	Cost	Value at 31/03/16	Disposal  Proceeds	Gain/(loss) against cost	Realised gain/(loss) in period
	£'000	£'000	£'000	£'000	£'000
Quoted
Market sales
Science in Sport plc	447	385	515	68	130
Avacta plc	79	101	85	6	(16)
PHSC plc	52	42	56	4	14
	578	528	656	78	128
Unquoted
Including loan note redemptions
Kidspace (Holdings) Limited	2,577	2,773	2,787	210	14
Hobblers Heath Limited	912	912	912	-	-
Kidspace Adventures Limited	261	261	261	-	-
Tramps Nightclub Limited	170	102	200	30	98
Quadrate Catering Limited	35	35	195	160	160
Future Biogas (Reepham Road) Limited	174	130	174	-	44
Aminghurst Limited	166	166	166	-	-
Future Biogas (SF) Limited	131	131	131	-	-
Redmed Limited	62	20	22	(40)	2
Kilmarnock Monkey Bar Limited	-	-	16	16	16
Camandale Limited	-	-	15	15	15
Liverpool Nurseries (Holdings) Limited	-	-	14	14	14
Rostima Holdings Limited	1,042	-	-	(1,042)	-
	5,530	4,530	4,893	(637)	363
	6,108	5,058	5,549	(559)	491

* adjusted for purchases in the period

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
for the six months ended 30 September 2016

1.General Information
Downing ONE VCT plc ("the Company") is a Venture Capital Trust established under the legislation introduced in the Finance Act 1995 and is domiciled in the United Kingdom and incorporated in England and Wales.

2.Basis of accounting
The unaudited half-yearly financial results cover the six months to 30 September 2016 and have been prepared in accordance with the accounting policies set out in the statutory accounts for the year ended 31 March 2016, which were prepared in accordance with the Financial Reporting Standard 102 ("FRS102") and in accordance with the Statement of Recommended Practice "Financial Statements of Investment Trust Companies" revised November 2014 ("SORP").

3.The Company has only one class of business and derives its income from investments made in shares, securities and bank deposits.

4.The comparative figures were in respect of the six months ended 30 September 2015 and the year ended 31 March 2016 respectively.

5.Return per share

Weighted average number of shares in issue			Revenue (loss)/return		Capital Gain
			£'000		£'000
Period ended 30 September 2016	99,896,761		(43)		1,865
Period ended 30 September 2015	83,951,159		819		2,775
Year ended 31 March 2016	85,175,415		879		1,713

6.Dividends paid in the period

		Six months ended 30 September 2016				Year ended 31 March 2016
		Revenue	Capital	Total		Total
	Date paid	£'000	£'000	£'000		£'000
2016 Final	12 August 2016: 3.0p	-	2,827	2,827		-
2016 Interim	26 February 2016: 3.0p	-	-	-		2,711
2015 Final	7 August 2015: 3.0p	-	-	-		2,520
		-	2,827	2,827		5,231

7.Basic and diluted net asset value per share

	Shares in issue		Net assets		NAV per share
			£'000		pence
Period ended 30 September 2016	101,392,582		95,771		93.1
Period ended 30 September 2015	83,896,034		82,608		98.1
Year ended 31 March 2016	93,220,222		92,108		94.1

8.Called up share capital

			Shares in issue		£'000
Period ended 30 September 2016			101,392,582		1,014
Period ended 30 September 2015			83,896,034		839
Year ended 31 March 2016			93,220,222		932

9.Reserves
The Special reserve is available to the Company to enable the purchase of its own shares in the market without affecting its ability to pay dividends/capital distributions.

	30 Sep 2016		30 Sep  2015		31 Mar 2016
	£'000		£'000		£'000
Capital redemption reserve	1,536		1,517		1,525
Share premium account	11,624		75,226		2,792
Funds held in respect of shares not yet allotted	1,353		271		4,423
Special reserve	81,704		5,702		86,483
Revaluation reserve	(2,050)		(1,520)		(4,680)
Revenue reserve	590		573		633
Total reserves	94,757		81,769		91,176

Distributable reserves are calculated as follows:

	30 Sep 2016		30 Sep  2015		31 Mar 2016
	£'000		£'000		£'000
Special reserve	81,704		5,702		86,483
Revenue reserve	590		573		633
Unrealised losses (excluding unrealised unquoted gains)	(10,567)		(4,208)		(7,214)
	71,727		2,067		79,902

10. Investments
The fair value of investments is determined using the detailed accounting policy as shown in the audited financial statements for the year ended 31 March 2016.  The Company has categorised its financial instruments using the fair value hierarchy as follows:

The Company has categorised its financial instruments using the fair value hierarchy as follows:

Level a Reflects financial instruments quoted in an active market (quoted companies and fixed interest bonds);
Level b Reflects financial instruments that have prices that are observable either directly or indirectly; and
Level c i)   Reflects financial instruments that use valuation techniques that are based on observable market data.
ii) Reflects financial instruments that use valuation techniques that are not based on observable market data (investments in unquoted shares and loan note investments).

	Level a		Level b	Level c (ii)	30 Sep 2016		Level a	Level b	Level c (ii)	31 Mar 2016
	£'000		£'000	£'000	£'000		£'000	£'000	£'000	£'000
Quoted on AIM	24,857		-	-	24,857		23,721	-	-	23,721
Quoted on ISDX	30		-	-	30		30	-	-	30
Unquoted loan notes		-	-	26,841	26,841		-	-	24,489	24,489
Unquoted equity	-		-	35,916	35,916		-	-	17,205	17,205
	24,887		-	62,757	87,644		23,751	-	41,694	65,445

11.          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. The figures for the year ended 31 March 2016 have been extracted from the financial statements for that year, which have been delivered to the Registrar of Companies; the Auditor's report on those financial statements was unqualified.

12. Going concern
The Directors have reviewed the Company's financial resources at the period end and concluded that the Company is well placed to manage its business risks.

The Directors confirm that they are satisfied that the Company has adequate resources to continue to operate for the foreseeable future. For this reason, the Directors believe 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.

13. Risks and uncertainties
Under the Disclosure and Transparency Rules, the Board is required, in the Company's half-year results, to report on principal risks and uncertainties facing the Company over the remainder of the financial year.

The Board has concluded that the key risks are:
(i) compliance risk of failure to maintain approval as a VCT; and
(ii) investment risk associated with investing in small and immature businesses.

The Company's compliance with the VCT regulations is continually monitored by the Adviser, who regularly reports to the Board on the current position. The Company also retains Philip Hare & Associates LLP to provide regular reviews and advice in this area.

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 into VCT qualifying investments. The Adviser 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 these approaches provide satisfactory management of the key risks.

14.The Directors confirm that, to the best of their knowledge, the half yearly financial report has been prepared in accordance with the "Statement: Half-Yearly Financial Reports" issued by the UK Accounting Standards Board and the half-yearly financial report includes a fair review of the information required by:

(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the year; and

(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place during the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period, and any changes in the related party transactions described in the last annual report that could do so.

15. Copies of the unaudited half-yearly financial results will be sent to Shareholders shortly. Further copies can be obtained from the Company's Registered Office and will be available for download from www.downing.co.uk

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Source: Downing ONE VCT plc via Globenewswire