Downing FOUR VCT plc: Final Results

Downing FOUR VCT plc
LEI: 21380035MV1VRYEXPR95
Final Results for the year ended 31 March 2018

19 July 2018

FINANCIAL HIGHLIGHTS

	31 March 2018			31 March 2017
	pence			pence
DSO B Share pool
Net Asset Value per DSO B Share	-			20.7
Net Asset Value per DSO C Share	-			0.1
Cumulative distributions	106.883			91.5
Adjusted for Performance Incentive estimate	-			(5.5	)
Total Return per DSO B Share and DSO C Share	106.883			106.8
DSO D Share pool
Net Asset Value per DSO D Share	54.4			76.1
Cumulative distributions	52.5			25.0
Adjusted for Performance Incentive estimate	(4.4	)		-
Total Return per DSO D Share	102.5		1	101.1
DP67 Share pool
Net Asset Value per DP67 Share	50.0			66.1
Cumulative distributions (since original launch)	49.8			27.8
Total Return per DP67 Share	99.8			93.9
DP2011 General Share pool
Net Asset Value per DP2011 General Ordinary Share	-			15.0
Net Asset Value per DP2011 General A Share	20.3			31.2
Cumulative distributions (since original launch)	85.0			55.0
Total Return per DP2011 General Ordinary Share and DP2011 General A Share	105.3		2	101.2
DP2011 Structured Share pool
Net Asset Value per DP2011 Structured Ordinary Share	-			4.8
Net Asset Value per DP2011 Structured A Share	15.0			31.9
Cumulative distributions (since original launch)	90.0			65.0
Total Return per DP2011 Structured Ordinary Share and DP2011 Structured A Share	105.0		3	101.7
DP2011 Low Carbon Share pool
Net Asset Value per DP2011 Low Carbon Share	-			43.0
Cumulative distributions (since original launch)	107.3			73.9
Adjusted for Performance Incentive estimate	-			(2.5	)
Total Return per DP2011 Low Carbon Share	107.3			114.4
Generalist Share pool
Net Asset Value and Total Return per Generalist Share	95.5			99.9
Healthcare Share pool
Net Asset Value and Total Return per Healthcare Share	94.6			99.7

1 Based on Total Return levels at 31 March 2018, a Performance Incentive is expected to become due to management. The Performance Incentive has been estimated at 4.4p per DSO D Share.
2 The Total Return to Shareholders at 31 March 2018 is shown net of the Performance Incentive due to management. By virtue of the A Share dividends paid during the year, a Performance Incentive of 2.2p per DP2011 General Ordinary Share has been paid to management. The remaining Performance Incentive, expected to become payable to management, has been estimated at 3.6p per DP2011 General Ordinary Share.
3 The Total Return to Shareholders at 31 March 2018 is shown net of the Performance Incentive due to management. By virtue of the A Share dividends paid during the year, a Performance Incentive of 3.0p per DP2011 Structured Ordinary Share has been paid to management. The remaining Performance Incentive, expected to become payable to management, has been estimated at 2.7p per DP2011 Structured Ordinary Share.

CHAIRMAN’S STATEMENT

Introduction
I am pleased to present the Company’s Annual Report for the year ended 31 March 2018.

It has been another busy year for your Company as a number of the planned exit Share pools continue to make progress in returning funds to investors, whilst two Share pools made their closing distributions to Shareholders. At the same time, the Company has continued to invest proceeds from the Generalist and Healthcare fundraisings, in order to build the “evergreen” portfolios.

Share pool review
As at 31 March 2018 the Company had six active Share pools, being four planned exit pools and two evergreen pools. Brief reviews of the Share pools which were active during the year are given below.

DSO B Share pool
The final distribution to B Shareholders was made in January 2018. Shareholders have received a total of 106.883p for a combined holding of one DSO B Share and one DSO C Share. The Board is satisfied with the performance of the B Share pool and feels that initial investors achieved a good return on their net investment of 70.0p.

DSO D Share pool
The DSO D Shares were originally issued in 2012. As the fifth anniversary of the close of the offer fell during August 2017, the task of unwinding the investment portfolio is underway. We expect that this process will be completed within the next year.

The DSO D Share NAV stood at 54.4p at the year end, an increase of 5.8p per Share or 7.6% over the year after adjusting for the dividends of 27.5p per hare paid in the year. Total Return now stands at 102.5p per Share, compared to the cost for Shareholders who invested in the DSO D Share offer of 100.0p or 70.0p 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 DP67 Shares were originally issued in 2007, although many Shareholders took advantage of the opportunity to participate in a Share Realisation and Reinvestment Scheme in 2013, which started a new five-year holding period for those investors. This new five-year holding period passed in January 2018, therefore the task of seeking to realise the DP67 Share pool investments has commenced, and we anticipate that this process will be completed within the next year.

The DP67 Share NAV stood at 50.0p at the year end, an increase of 5.9p per Share or 8.9% over the year after adjusting for the dividends of 22.0p per Share paid in the year.
Total Return now stands at 99.8p per Share, compared to the original cost for Shareholders who invested in 2007 of 100.0p or 70.0p net of income tax relief.

A more detailed review of the DP67 Share pool is included in the Investment Manager’s report.

DP2011 General Share pool
The process of seeking to exit from the remaining investments is continuing, after the majority of the investment portfolio was realised during the year.

The NAV of a combined holding of one DP2011 General Ordinary Share and one DP2011 General A Share stood at 20.3p at the year end, an increase of 4.1p or 8.9% for the year, after adjusting for the dividends paid during the year, of 30.0p per combined holding. Total Return now stands at 105.3p per Share, compared to the cost for Shareholders of 100.0p or 70.0p net of income tax relief.

The Share pool has a small number of remaining investments, all with a path to exit. We anticipate that the task of realising the remaining investments will be completed within the next year.

A more detailed review of the DP2011 General Share pool is presented in the Investment Manager’s report.

DP2011 Structured Share pool
The process of seeking to exit from the remaining investments is continuing, after the majority of the investment portfolio was realised during the year.

The NAV of a combined holding of one DP2011 Structured Ordinary Share and one DP2011 Structured A Share stood at 15.0p at the year end, an increase of 3.3p or 9.0% for the year, after adjusting for the dividends paid during the year, of 25.0p per combined holding. Total Return now stands at 105.0p per Share, compared to the cost for Shareholders of 100.0p or 70.0p net of income tax relief.

As with the DP2011 General Share pool, the DP2011 Structured Share pool has a small number of remaining investments, all with a path to exit. We anticipate that the Share pool will realise its remaining investments within the next year.

A more detailed review of the DP2011 Structured Share pool is presented in the Investment Manager’s Report.

DP2011 Low Carbon pool
The final distribution to DP2011 Low Carbon Shareholders was made in March 2018. Total Return (NAV plus cumulative dividends) to Shareholders who invested under the initial offer was 107.3p per Share. The Board is satisfied with the performance of the DP2011 Low Carbon Share pool and feels that initial investors achieved a good return on their net investment of 70.0p.

Generalist Share pool
The Generalist Share pool launched in 2017 and the main offer closed during the year, having raised £31.1 million.   The Company will continue to allot a small number of monthly subscription Shares under a Top-up document. 

The Manager has built a pipeline of suitable investment opportunities, and made initial investments into a number of VCT Qualifying entities during the year.

The Generalist Share NAV/Total Return stood at 95.5p at the year end, a decrease of 4.4p per Share or 4.4% over the year.  This is a result of the initial “cash drag” of uninvested funds, as well as adverse market conditions which have impacted the prices of the quoted investments. The cost for Shareholders who invested under the initial offer was 100.0p or 70.0p net of income tax relief.

A more detailed review of the Generalist Share pool is included in the Investment Manager’s Report.

Healthcare Share pool
The Healthcare Share pool launched in 2017 and the main offer closed during the year, having raised £11.9 million.  The Company will continue to allot a small number of monthly subscription Shares under a Top-up document. 

The Manager has been working on sourcing investment opportunities, and made initial investments into two VCT Qualifying entities during the year.

The Healthcare Share NAV/Total Return stood at 94.6p at the year end, a decrease of 5.1p per Share or 5.1% over the year. This is a result of the initial “cash drag” of uninvested funds, as well as adverse market conditions which have impacted the prices of the quoted investments. The cost for Shareholders who invested under the initial offer was 100.0p or 70.0p net of income tax relief.

A more detailed review of the Healthcare Share pool is included in the Investment Manager’s Report.

Dividends
The DSO D, DP2011 General and DP2011 Structured Share pools made good progress with realisations from their respective portfolios during the year, and declare the following interim dividends payable on 13 August 2018, to Shareholders on the register at 20 July 2018:

DSO D Share - 24.0p
DP2011 General A Shares - 7.0p
DP2011 Structured A Shares - 5.0p

Additional dividends from the planned exit Share pools will be declared as and when further realisations have been completed.

Share buybacks
In the initial five-year period of each Share class, the Company operates a policy of buying in its own Shares that become available in the market, subject to regulatory restrictions and other factors such as availability of liquid funds. Any such purchases are undertaken at a price approximately equal to NAV (i.e. at a nil discount). 

47,649 DP67 Ordinary Shares were purchased during the year ended 31 March 2018.

As the planned exit Share pools have all initiated the process of returning funds to Shareholders, the Company no longer undertakes any further Share buybacks in respect of the DSO D, DP67 Ordinary Shares, DP2011 General Ordinary Shares, DP2011 General A Shares, DP2011 Structured Ordinary Shares and DP2011 Structured A Shares. The Board believes it is fairer to all Shareholders to distribute the remaining NAV by way of tax-free dividends, rather than setting aside sums to fund Share buybacks.

The policy for buying in Shares is still in operation for the Generalist and Healthcare Shares.

Annual General Meeting (“AGM”)
The Company’s eighth AGM will be held at 6th Floor, St. Magnus House, 3 Lower Thames Street, London, EC3R 6HD at 11:30 a.m. on 4 September 2018.

Resolution 6 is a special resolution seeking to cancel the Share Premium balances in respect of the Generalist and Healthcare Shares in issue, as well as the capital redemption reserve.

Resolution 8 is a special resolution seeking to renew the authority to allow the Company to make market purchases of its Shares.

Outlook
The remaining planned exit Share pools are expected to complete the return of funds to investors within the next year.

The focus of the Manager will also be on further building the Generalist and Healthcare investment portfolios. We expect to see a significant level of new and follow on investments made in the coming months.

Over the course of the year as the planned exits complete, we will be left with an evergreen fund with two Share pools. I look forward to reporting developments in the Half-Yearly Report to 30 September 2018.

Lord Flight
Chairman

INVESTMENT MANAGER’S REPORT- DSO B SHARE POOL

Introduction
The process of realising the DSO B Share pool investments was completed at the end of 2017, and the final distributions of 4.444p per DSO B Share and 10.939p per DSO C Share were paid on 26 January 2018.

Realisations
During the year, the remaining six investments with a carrying value were sold from the DSO B Share pool, generating total proceeds of £1.9 million and a gain over opening value of £120,000.

Final results
Over the life of the DSO B Share pool, Shareholders who invested under the original offer received 95.944p per DSO B Share and 10.939p per DSO C Share, equating to a Total Return of 106.883p for an original investment of 70.0p, net of income tax relief.

Following the final distributions, in accordance with the Articles of the Company, the DSO B Shares and DSO C Shares were converted into worthless deferred Shares and were duly cancelled on 10 April 2018.

Downing LLP

Investment movements for the year ended 31 March 2018

DISPOSALS

	Cost	Valuation at 01/04/17	Proceeds	Profit vs. cost		Realised gain
	£’000	£’000	£’000	£’000		£’000
Venture Capital investments
Avon Solar Energy Limited	420	515	528	108		13
Mosaic Spa and Health Clubs Limited*	692	441	422	(317	)	(19	)
Westcountry Solar Solutions Limited	500	434	445	(55	)	11
Fenkle Street LLP**	154	362	361	207		(1	)
Future Biogas (Reepham Road) Limited	632	-	-	(632	)	-
Quadrate Spa Limited	460	-	-	(460	)	-
	2,858	1,752	1,756	(1,149	)	4
Deferred consideration
London City Shopping Centre Limited	-	-	86	86		86
Snow Hill Developments LLP	-	-	30	30		30
	2,858	1,752	1,872	(1,033	)	120

*partially qualifying investment
**non-qualifying investment

DSO D SHARE POOL SUMMARY

INVESTMENT MANAGER’S REPORT- DSO D SHARE POOL
Introduction

The five-year anniversary of the DSO D Share pool has passed, and the process of realising the investments and returning funds to Shareholders is underway.

Net Asset Value and results
The Net Asset Value (“NAV”) per DSO D Share at 31 March 2018 stood at 54.4p, an increase of 5.8p or 7.6% over the year after adjusting for dividends paid. Total Return stands at 102.5p per share compared to initial cost to Shareholders, net of income tax relief, of 70.0p per Share.

The profit on ordinary activities after taxation for the year was £453,000 (2017: £437,000), comprising a revenue profit of £57,000 (2017: £49,000) and a capital gain of £396,000 (2017: £388,000).

Venture Capital investments
As at 31 March 2018, the DSO D Share Pool held ten Venture Capital investments with a total value of £3.7 million.

Portfolio activity
Four investments were fully exited and two investments were partially exited during the year, generating total proceeds of £1.5 million and a gain over opening value of £245,000.

The largest realisation was the sale of Vulcan Renewables Limited, the operator of a biogas plant near Doncaster, to John Laing Environmental Assets Group. The sale generated proceeds of £903,000 for the DSO D Share pool, resulting in a gain over opening value of £124,000.

The other substantial exits, as a result of the refinancing of the Castle Leisure Group, were from City Falkirk Limited, Cheers Dumbarton Limited and Lochrise Limited, and partially from Fubar Stirling Limited. The refinancing generated proceeds of £587,000, representing a gain over opening value of £121,000.

Portfolio valuation
During the year, the portfolio valuation was uplifted by a total of £187,000, principally due to an increase of £144,000 in relation to Merlin Renewables Limited. The company owns an Anaerobic Digestion plant in Doncaster that receives payments for injecting gas into the National Grid. Performance has been on budget, and we are hopeful that an exit will be achieved in the coming months.

Good performance in the year was also seen on two of the Share Pool’s solar investments, Fresh Green Power Limited and Lambridge Solar Limited. The valuations were increased by £42,000 and £31,000 respectively.

These gains were partially offset by small write downs on Green Energy Production UK Limited and Fubar Stirling Limited, totalling £30,000.

Structured Product investments
The remaining Structured Product matured during the year, generating proceeds of £608,000 and realising a gain over opening value of £10,000 (£107,000 over original cost).

Outlook
Shortly after the year end, the investment in Goonhilly Earth Station Limited was sold, generating capital proceeds of £878,000 for the D Share pool.

The focus for the DSO D Share pool is now on realising the remaining investments, and good progress is being made. We hope to be in a position to announce a final return of capital to Shareholders within the next year.

Downing LLP

Portfolio of investments
The following investments were held at 31 March 2018:

	Cost	Valuation	Valuation movement in year		% of portfolio
	£’000	£’000	£’000
Venture Capital investments
Merlin Renewables Limited	500	719	144		16.8	%
Goonhilly Earth Station Limited	715	715	-		16.7	%
Lambridge Solar Limited	500	626	31		14.6	%
Nightjar Sustainable Power Limited	485	600	-		14.0	%
Apex Energy Limited	400	400	-		9.3	%
Pearce and Saunders Limited	300	300	-		7.0	%
Fresh Green Power Limited	189	231	42		5.4	%
Green Energy Production UK Limited	100	80	(20	)	1.9	%
Pearce and Saunders DevCo Limited*	20	20	-		0.5	%
Fubar Stirling Limited	126	8	(10	)	0.2	%
	3,335	3,699	187		86.4	%
Cash at bank and in hand		582			13.6	%
Total investments		4,281			100.0	%

* non-qualifying investment

All Venture Capital investments are incorporated in England and Wales.

Investment movements for the year ended 31 March 2018

DISPOSALS

	Cost	Valuation at 01/04/17	Proceeds	Profit vs. cost		Realised gain
	£’000	£’000	£’000	£’000		£’000
Venture Capital investments
Vulcan Renewables Limited	653	779	903	250		124
City Falkirk Limited	562	236	324	(238	)	88
Fubar Stirling Limited	231	208	217	(14	)	9
Cheers Dumbarton Limited	64	22	36	(28	)	14
Lochrise Limited	17	-	10	(7	)	10
Fresh Green Power Limited	11	11	11	-		-
	1,538	1,256	1,501	(37	)	245
Structured Product investments
HSBC 5.4% Dual Index Synthetic Zero	501	598	608	107		10
	2,039	1,854	2,109	70		255

INVESTMENT MANAGER’S REPORT - DP67 SHARE POOL

Introduction
The DP67 Share pool has now passed the five-year anniversary for those investors who took advantage of the Share Realisation and Reinvestment Scheme in 2013.  Accordingly, the process of realising the investment portfolio and returning funds to investors is now underway.

Net Asset Value and results
The Net Asset Value (“NAV”) per DP67 Share at 31 March 2018 stood at 50.0p, an increase of 5.9p or 8.9% over the year after adjusting for dividends paid. Total Return stands at 99.8p per share compared to initial cost to Shareholders, net of income tax relief, of 70.0p per Share.

The profit on ordinary activities after taxation for the year was £652,000 (2017: £1,090,000), comprising a revenue profit of £20,000 (2017: £79,000) and a capital gain of £632,000 (2017: £1,011,000).

Venture Capital investments
As at 31 March 2018, the DP67 Share pool held a portfolio of seven Venture Capital investments, with a total value of £4.6 million.

Portfolio activity
One full and two partial divestments took place during the year, resulting in proceeds of £1.1 milllion and a total gain over opening value of £393,000.

This included loan repayments of £450,000 from Snow Hill Developments LLP and £340,000 from Gatewales Limited, and £300,000 being the full repayment of the initial capital provided to Brownfields Trading Limited.

Portfolio valuation
The portfolio continues to perform well, and valuations were increased by a total of £290,000. The majority of this was generated by Gatewales Limited, which earns a profit share from Fenkle Street LLP, the developer of a Hotel Indigo in Newcastle. The value of the future cash flows has been used to determine the current value of the profit share, resulting in a £184,000 uplift during the year.

Valuation uplifts of £65,000 and £41,000 were also recognised in respect of Snow Hill Developments LLP and Oak Grove Renewables Limited. There were no valuation reductions in the year.

Outlook
We are pleased with the overall performance of the DP67 Share pool portfolio, as is reflected by the gradual growth in Total Return. The focus is now on exiting from the remaining investments at sensible valuations. We hope to be in a position to announce a final return of capital to Shareholders within the next year.

Downing LLP

Portfolio of investments

The following investments were held at 31 March 2018:

		Cost	Valuation	Valuation movement in period	% of portfolio
		£’000	£’000	£’000
Venture Capital investments
Cadbury House Holdings Limited		1,409	1,613	-	31.3	%
Snow Hill Developments LLP**		584	830	65	16.1	%
Fenkle Street LLP**		405	678	-	13.1	%
Gatewales Limited*		343	527	184	10.2	%
Oak Grove Renewables Limited		820	492	41	9.5	%
Yamuna Energy Limited		400	400	-	7.8	%
London City Shopping Centre Limited**		99	99	-	1.9	%
		4,060	4,639	290	89.9	%
Cash at bank and in hand			519		10.1	%
Total investments			5,158		100.0	%

*partially qualifying investment
**non-qualifying investment

All Venture Capital investments are incorporated in England and Wales.

Investment movements for the year ended 31 March 2018
DISPOSALS

	Cost	Valuation at 01/04/17	Proceeds	Profit/ vs. cost	Realised gain
	£’000	£’000	£’000	£’000	£’000
Snow Hill Developments LLP**	225	295	450	225	155
Gatewales Limited*	65	102	340	275	238
Brownfields Trading Limited	300	300	300	-	-
	590	697	1,090	500	393

*partially qualifying investment
** non-qualifying investment

INVESTMENT MANAGER’S REPORT - DP2011 GENERAL SHARE POOL

Introduction
The DP2011 General Share pool has made good progress in realising investments, with nine full and three partial exits completed during the year. 

Net Asset Value and results
The combined Net Asset Value (“NAV”) of one DP2011 General Ordinary Share and one DP2011 General A Share at 31 March 2018 stood at 20.3p, an increase of 4.1p or 8.9% over the year after adjusting for dividends paid. Total Return stands at 105.3p per share compared to an initial cost to Shareholders, net of income tax relief, of 70.0p per Share.

The profit on ordinary activities after taxation for the year was £760,000 (2017: £347,000) comprising a revenue loss of £112,000 (2017: profit of £280,000) and a capital gain of £872,000 (2017: 67,000).

Venture Capital investments
The DP2011 General Share pool began the year with £7.4 million of investments and ended with £2.2 million spread across a portfolio of seven Venture Capital investments.

Investment activity
The process of exiting investments in the portfolio is underway. Nine full and three partial exits occurred during the year, generating proceeds of £6.1 million and a gain over opening value of £679,000.

The largest realisation was the sale of Vulcan Renewables Limited, the operator of a biogas plant near Doncaster, to John Laing Environmental Assets Group. The sale achieved proceeds of £2.5 million, at a gain over opening value of £334,000.

There was an exit from Odysian (Holdings) Limited, the operator of a nightclub in Chester, which generated proceeds of £825,000, and realised a gain over opening value of £234,000. However, as outstanding loan interest of £139,000 was written off on exit, the impact on the NAV is reduced to £95,000. The DP2011 General Share pool has a residual equity holding in the investment, however no value is attributable to this holding.

Full exits from Avon Solar Energy Limited and Westcountry Solar Solutions Limited, owners of rooftop solar assets, achieved combined proceeds of £1.2 million and total gains over opening value of £29,000.

Portfoliovaluation
Valuation movements in the year resulted in a total uplift of £268,000. The largest increase was in relation to Snow Hill Developments LLP, where an uplift of £195,000 was recognised. The business developed a hotel in Birmingham and receives payments based on the hotel’s profits. The hotel is performing well and it is our expectation that this will continue.

Wickham Solar Limited owns a portfolio of ground mounted solar panels in Lincolnshire. The company is performing to budget and an uplift of £50,000 was recognised in the year as a result.

Other small valuation movements were recognised during the year, resulting in a net uplift of £23,000.

Outlook

The focus for the Share pool is on realising the remaining investments at sensible valuations. We hope to be in a position to announce a final return of capital to Shareholders within the next year.

Downing LLP

Portfolio of investments

The following investments were held at 31 March 2018:

		Cost	Valuation	Valuation movement in period		% of portfolio
		£’000	£’000	£’000
Venture Capital investments
Snow Hill Developments LLP**		750	1,178	195		30.9	%
Wickham Solar Limited		550	650	50		17.1	%
Oak Grove Renewable Limited		400	254	21		6.7	%
London City Shopping Centre Limited**		88	88	-		2.3	%
Mosaic Spa and Health Clubs Limited*		96	64	14		1.7	%
Fubar Stirling Limited		133	9	(12	)	0.2	%
Odysian (Holdings) Limited		233	-	-		0.0	%
		2,250	2,243	268		58.9	%
Cash at bank and in hand			1,569			41.1	%
Total investments			3,812			100.0	%

*partially qualifying investment
**non-qualifying investment

All Venture Capital investments are incorporated in England and Wales.

Investment movements for the year ended 31 March 2018

DISPOSALS

	Cost	Valuation at 01/04/17	Proceeds	Profit vs. cost		Realised gain
	£’000	£’000	£’000	£’000		£’000
Vulcan Renewables Limited	2,199	2,199	2,533	334		334
Odysian (Holdings) Limited	640	591	825	185		234
Mosaic Spa and Health Clubs Limited*	1,051	775	733	(318	)	(42	)
Avon Solar Energy Limited	505	618	633	128		15
Westcountry Solar Solutions Limited	600	521	535	(65	)	14
City Falkirk Limited	330	283	389	59		106
Fubar Stirling Limited	277	249	260	(17	)	11
Clean Electricity Limited	70	70	70	-		-
UK Renewable Power Limited	55	55	55	-		-
Cheers Dumbarton Limited	27	27	22	(5	)	(5	)
21st Century Energy Limited	22	22	22	-		-
Lochrise Limited	-	-	12	12		12
	5,776	5,410	6,089	313		679

*partially qualifying investment

INVESTMENT MANAGER’S REPORT- DP2011 STRUCTURED SHARE POOL

Introduction
The DP2011 Structured Share pool has made good progress during the year in realising investments, with six full and three partial exits completed. 

As at 31 March 2018 the DP2011 Structured Share pool held a portfolio of five Venture Capital investments, with a total value of £1.0 million.

Net Asset Value and results
The Net Asset Value (“NAV”) of a combined holding of one DP2011 Structured Ordinary Share and one DP2011 Structured A Share at 31 March 2018 stood at 15.0p, an increase of 3.3p or 9.0% over the year after adjusting for dividends paid. Total Return stands at 105.0p per share compared to an initial cost to Shareholders, net of income tax relief, of 70.0p per Share.

The profit on ordinary activities after taxation for the year was £405,000 (2017: £72,000), comprising a revenue loss of £91,000 (2017: profit of £192,000) and a capital gain of £496,000 (2017: loss of £120,000).

Venture Capital investments
Investment activity
The DP2011 Structured Share pool began the year with £4.2 million of investments and ended the year with £1.0 million spread across a portfolio of five Venture Capital investments.

Six full and three partial disposals were made during the year, generating total proceeds of £3.7 million and a total realised gain of £455,000.

The largest realisation was the sale of Vulcan Renewables Limited, the operator of a biogas plant near Doncaster, to John Laing Environmental Assets Group. The sale achieved proceeds of £1.5 million, resulting in a gain over opening value of £225,000.

There was an exit from Odysian (Holdings) Limited, the operator of a nightclub in Chester, which generated proceeds of £550,000 and realised a gain over opening value of £156,000. However, as outstanding loan interest of £93,000 was written off on exit, the impact on the NAV is reduced to £63,000.   The DP2011 Structured Share pool has a residual equity holding in this company, however no value is attributable to this holding.

Full exits from Avon Solar Energy Limited and Westcountry Solar Solutions Limited, owners of rooftop solar assets, achieved combined proceeds of £778,000 and total gains over opening value of £19,000.

Portfolio valuation
Valuation movements in the year resulted in a total uplift of £80,000. The largest increase was in relation to Wickham Solar Limited, which owns a portfolio of ground mounted solar panels in Lincolnshire. The company is performing to budget and an uplift of £50,000 was recognised during the year as a result.

Other small valuation movements were recognised during the year, resulting in a net uplift of £30,000.

Outlook

The focus for the Share pool is on realising the remaining investments at values which maximise returns for Shareholders. We hope to be in a position to announce a final return of capital to Shareholders within the next year.

Downing LLP

Portfolio of investments

The following investments were held at 31 March 2018:

		Cost	Valuation	Valuation movement in period		% of portfolio
		£’000	£’000	£’000
Venture Capital investments
Wickham Solar Limited		550	650	50		33.8	%
Oak Grove Renewables Limited		545	347	29		18.1	%
Mosaic Spa and Health Clubs Limited*		64	42	9		2.2	%
Fubar Stirling Limited		90	6	(8	)	0.3	%
Odysian (Holdings) Limited		155	-	-		0.0	%
		1,404	1,045	80		54.4	%
Cash at bank and in hand			877			45.6	%
Total investments			1,922			100.0	%

*partially qualifying investment

All Venture Capital investments are incorporated in England and Wales.

Investment movements for the year ended 31 March 2018

DISPOSALS

	Cost	Valuation at 01/04/17	Proceeds	Profit vs. cost		Realised gain
	£’000	£’000	£’000	£’000		£’000
Venture Capital investments
Vulcan Renewables Limited	1,305	1,305	1,530	225		225
Odysian (Holdings) Limited	427	394	550	123		156
Avon Solar Energy Limited	336	412	422	86		10
Westcountry Solar Solutions Limited	400	347	356	(44	)	9
Mosaic Spa and Health Clubs Limited*	621	437	409	(212	)	(28	)
City Falkirk Limited	220	189	259	39		70
Fubar Stirling Limited	185	166	174	(11	)	8
Cheers Dumbarton Limited	17	18	15	(2	)	(3	)
Lochrise Limited	-	-	8	8		8
	3,511	3,268	3,723	212		455

*              partially qualifying investment

INVESTMENT MANAGER’S REPORT- DP2011 LOW CARBON SHARE POOL

Introduction
The process of realising the remaining investments held by the DP2011 Low Carbon Share pool was completed during February 2018, and the final distribution of 33.4p per DP2011 Low Carbon Ordinary Share was paid on 16 March.

Realisations
During the year, the remaining four investments were sold from the DP2011 Low Carbon Share pool, generating total proceeds of £2.8 million at a loss over opening value of £252,000.

Final results
Over the life of the DP2011 Low Carbon Share pool, Shareholders who invested under the original offer achieved a Total Return of 107.3p for an investment of 70.0p, net of income tax relief.

Following the final distributions, in accordance with the Articles of the Company, the DP2011 Low Carbon Shares were converted into worthless deferred Shares and were duly cancelled on 10 April 2018.

Downing LLP

Investment movements for the year ended 31 March 2018

DISPOSALS

	Cost	Valuation at 01/04/17	Proceeds	Profit vs. cost		Realised gain
	£’000	£’000	£’000	£’000		£’000
Venture Capital investments
Progressive Power Generation Limited	800	800	641	(159	)	(159	)
UK Renewable Power Limited	780	780	679	(101	)	(101	)
21st Century Energy Limited	708	775	794	86		19
Clean Electricity Limited	710	710	699	(11	)	(11	)
	2,998	3,065	2,813	(185	)	(252	)

INVESTMENT MANAGER’S REPORT - GENERALIST SHARE POOL

Introduction
As at 31 March 2018, the Generalist Share Pool held a portfolio of 14 Venture Capital investments and four Liquidity investments, with a combined value of £19.1 million.

Investment activity
During the year a total of £19.5 million was invested in 18 companies, as the portfolio begins to be established.

Venture Capital investments
Of the £19.5 million invested during the year, £5.7 million was invested in Venture Capital investments. A description of each is provided below.

£1 million was invested in Maverick Pubs (Holdings) Limited, a newly-established company seeking to build an estate of high-quality freehold pubs in and around London.

£900,000 was invested in Ormsborough Limited, a pub operator focusing on acquiring and substantially renovating properties in northern towns.

£750,000 was invested in Empiribox Holdings Limited, a company which provides equipment, lesson plans and CPD-accredited support for teachers to deliver engaging and practical science lessons to UK primary school children.

A further £400,000 was invested in Xupes Limited, bringing the total investment to £600,000. Xupes is an online retailer of pre-owned luxury goods including designer watches, handbags, jewellery and antiques.

£567,000 was invested in Volo Commerce Limited, a leading provider of multichannel e-commerce technology.

£500,000 was invested in Destiny Pharma plc, an innovative biotech company developing treatments for antibiotic-resistant bacteria (also known as superbugs).

£394,000 was invested in BridgeU Corporation, which provides a comprehensive, end-to-end guidance system to help students, teachers and senior leadership manage the complex process of preparing for and completing global university applications.

£278,000 was invested in E Fundamentals (Group) Limited, a company which provides a data analytics service that helps traditional brands improve their online revenues.

£220,000 was invested in Live Better With Limited, the developer of a healthcare platform aiming to help people with long-term medical conditions, focusing on non-medical products that make day-to-day life better for patients. 

£173,000 was invested in Limitless Technology Limited, the developer of an innovative Crowd Service platform, which allows businesses to turn loyal customers into Brand Ambassadors, who are then rewarded for providing on-demand customer service.

There was also an opportunity to acquire £514,000 of loan investments from the B Share pool. These assets will provide further income and growth opportunities to the Generalist portfolio.

Liquidity Investments
In order to utilise fundraising proceeds in the short term, £4.1 million was invested in Downing Strategic Micro-Cap Investment Trust plc, £4 million was invested in each of MI Downing UK Micro-Cap Growth Fund and MI Downing Monthly Income Fund, and £1.8 million was invested in MI Downing Diversified Global Managers Fund.

Portfolio valuation
The carrying values of the liquidity investments have been adjusted to reflect their quoted prices as at 31 March 2018. With the exception of Destiny Pharma plc, which has been revalued to the prevailing bid price as at 31 March 2018, the Venture Capital portfolio continues to be held at cost, as reviewed for impairment or fair value uplift, due to these investments being in an early stage.

Net Asset Value and results
At 31 March 2018, the NAV of a Generalist share stood at 95.5p, a decrease of 4.4p during the year, resulting from the “cash drag” of holding uninvested funds, as well as poor market conditions which have adversely impacted the prices of quoted investments.

The return on ordinary activities for the Generalist Share pool for the year was a loss of £1.3 million (2017: £11,000), comprising a revenue loss of £381,000 (2017: £6,000) and a capital loss of £953,000 (2017: £5,000).

Outlook
The process of building the Generalist investment portfolio is ongoing, following a number of investments being made during the year. During the forthcoming year, we expect to see a similar level of new investment activity, coupled with follow on investments into companies which received initial funding during the current year.

Downing LLP

Portfolio of investments

The following investments were held at 31 March 2018:

		Cost	Valuation	Valuation movement in period		% of portfolio
		£’000	£’000	£’000
Venture Capital investments
Maverick Pubs (Holdings) Limited		1,000	1,000	-		3.4	%
Ormsborough Limited		900	900	-		3.1	%
Empiribox Holdings Limited		750	750	-		2.6	%
Xupes Limited		600	600	-		2.0	%
Volo Commerce Limited		567	567	-		1.9	%
BridgeU Corporation		394	394	-		1.3	%
Destiny Pharma plc^		500	363	(137	)	1.2	%
Fenkle Street LLP*		361	361	-		1.2	%
E Fundamentals (Group) Limited		278	278	-		1.0	%
Live Better With Limited		220	220	-		0.7	%
Limitless Technology Limited		173	173	-		0.6	%
Snow Hill Developments LLP*		86	92	6		0.3	%
Mosaic Spa and Health Clubs Limited*		37	37	-		0.1	%
London City Shopping Centre Limited*		30	30	-		0.1	%
		5,896	5,765	(131	)	19.5	%
Liquidity investments
MI Downing UK Micro-Cap Growth Fund*		4,025	3,861	(164	)	13.0	%
MI Downing Monthly Income Fund*		3,950	3,822	(128	)	12.9	%
Downing Strategic Micro-Cap Investment Trust plc*^		4,100	3,772	(328	)	12.7	%
MI Downing Diversified Global Managers Fund*		1,800	1,833	33		6.2	%
		13,875	13,288	(587	)	44.8	%
		19,771	19,053	(718	)	64.3	%
Cash at bank and in hand			10,563			35.7	%
Total investments			29,616			100.0	%

All VCT Qualifying 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 2018

ADDITIONS

	Cost
	£’000
Venture Capital investments
Maverick Pubs (Holdings) Limited	1,000
Ormsborough Limited	900
Empiribox Holdings Limited	750
Volo Commerce Limited	567
Destiny Pharma plc^	500
Xupes Limited	400
BridgeU Corporation	394
Fenkle Street LLP*	361
E Fundamentals (Group) Limited	278
Live Better With Limited	220
Limitless Technology Limited	173
Snow Hill Developments LLP*	86
Mosaic Spa and Health Clubs Limited*	37
London City Shopping Centre Limited*	30
	5,696
Liquidity Investments
Downing Strategic Micro-Cap Investment Trust plc^	4,100
MI Downing UK Micro-Cap Growth Fund	4,000
MI Downing Monthly Income Fund	3,950
MI Downing Diversified Global Managers Fund	1,800
	13,850
	19,546

*non-qualifying investment
^listed and traded on the London Stock Exchange

INVESTMENT MANAGER’S REPORT- HEALTHCARE SHARE POOL

Introduction
As at 31 March 2018, the Healthcare Share pool held two Venture Capital investments and four Liquidity investments, with a combined value of £4.5 million.

Venture Capital investments
Investment activity
£750,000 was invested in Destiny Pharma plc, an innovative biotech company developing treatments for antibiotic-resistant bacteria (also known as superbugs). The investment was made in collaboration with BioScience Managers, a global leader in healthcare and life sciences and investment partner to the Healthcare Share Class.

£220,000 was also invested in Live Better With Limited, the developer of a healthcare platform aiming to help people with long-term medical conditions, focusing on non-medical products that make day-to-day life better for patients. The company launched in the UK and the US, with offices based in London and New York.

Liquidity Investments
In order to utilise fundraising proceeds in the short term, £1.1 million was invested in each of MI Downing UK Micro-Cap Growth Fund and MI Downing Monthly Income Fund, £950,000 was invested in MI Downing Diversified Global Managers Fund and £700,000 was invested in Downing Strategic Micro-Cap Investment Trust plc.

Portfolio valuation
The carrying values of the liquidity investments have been adjusted to reflect their quoted prices as at 31 March 2018. Destiny Pharma plc has also been revalued to reflect the prevailing bid price as at 31 March 2018, while the investment in Live Better With Limited continues to be held at cost, as reviewed for impairment or fair value uplift, due to this investment being in an early stage.

Net Asset Value and results
At 31 March 2018, the NAV of a Healthcare share stood at 94.6p, a decrease of 5.1p during the year, resulting from the “cash drag” of holding uninvested funds, as well as poor market conditions which adversely impacted the prices of quoted investments.

The return on ordinary activities for the Healthcare Share pool for the year was a loss of £589,000 (2017: £6,000), being a revenue loss of £160,000 (2017: £3,000) and a capital loss of £429,000 (2017: £3,000).

Outlook
For the year to 31 March 2018, the focus has been on building a pipeline of appropriate investment opportunities, alongside BioScience Managers, and we have seen good progress in this regard. As a result, during the forthcoming year we anticipate an increased level of investment activity, which will largely focus on VCT Qualifying Investments.

Downing LLP

REVIEW OF INVESTMENTS – HEALTHCARE SHARE POOL

Portfolio of investments

The following investments were held at 31 March 2018:

		Cost	Valuation	Valuation movement in period		% of portfolio
		£’000	£’000	£’000
Venture Capital investments
Destiny Pharma plc^		750	545	(205	)	4.8	%
Live Better With Limited		220	220	-		1.9	%
		970	765	(205	)	6.7	%
Liquidity Investments
MI Downing UK Micro-Cap Growth Fund*		1,125	1,075	(50	)	9.4	%
MI Downing Monthly Income Fund*		1,100	1,067	(33	)	9.3	%
MI Downing Diversified Global Managers Fund*		950	962	12		8.4	%
Downing Strategic Micro-Cap Investment Trust plc*^		700	644	(56	)	5.6	%
		3,875	3,748	(127	)	32.7	%
		4,845	4,513	(332	)	39.4	%
Cash at bank and in hand			6,953			60.6	%
Total investments			11,466			100.0	%

*non-qualifying investment
^listed and traded on the London Stock Exchange

Investment movements for the year ended 31 March 2018

ADDITIONS

	Cost
	£’000
Venture Capital investments
Destiny Pharma plc^	750
Live Better With Limited	220
	970
Liquidity Investments
MI Downing UK Micro-Cap Growth Fund	1,100
MI Downing Monthly Income Fund	1,100
MI Downing Diversified Global Managers Fund	950
Downing Strategic Micro-Cap Investment Trust plc^	700
	3,850
	4,820

^listed and traded on the London Stock Exchange

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. They 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; 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.

Directors’ statement pursuant to the Disclosure Guidance and Transparency Rules
Each of the Directors, whose names and functions are listed on page 3 of the Annual Report, confirms that, to the best of each person’s knowledge:

-the financial statements, which have been prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and

-the management report included within the Report of the Directors, Strategic report, Chairman’s Statement, Investment Manager’s Report, and Review of Investments includes a fair review of the development and performance of the business and the position of the company, together with a robust assessment of the principal risks and uncertainties that it faces.
             

By order of the Board

Grant Whitehouse
Secretary of Downing FOUR VCT plc

INCOME STATEMENT
for the year ended 31 March 2018

			Year ended 31 March 2018							Year ended 31 March 2017
			Revenue		Capital		Total			Revenue		Capital		Total
			£’000		£’000		£’000			£’000		£’000		£’000
Income
- continuing			765		-		765			1,731		268		1,999
Net gain/(loss) on investments			-		1,425		1,425			-		1,980		1,980
			765		1,425		2,190			1,731		2,248		3,979
Investment management fees			(596	)	(596	)	(1,192	)		(328	)	(328	)	(656	)
Other expenses			(805	)	(409	)	(1,214	)		(515	)	-		(515	)
(Loss)/return on ordinary activities before tax			(636	)	420		(216	)		888		1,920		2,808
Tax on total comprehensive income and ordinary activities			(160	)	-		(160	)		(151	)	-		(151	)
(Loss)/return attributable to equity Shareholders, being total comprehensive income for the year			(796	)	420		(376	)		737		1,920		2,657
Basic and diluted return per share:
DSO B Share			(0.2p)		0.2p		-			0.3p		2.8p		3.1p
DSO C Share			(0.2p)		0.2p		-			-		-		-
DSO D Share			0.7p		5.1p		5.8p			0.6p		4.9p		5.6p
DP67 Share			0.2p		5.7p		5.9p			0.7p		9.0p		9.7p
DP2011 General Share			-		-		-			1.8p		0.4p		2.2p
DP2011 General A Share			(0.6p)		4.7p		4.1p
DP2011 Structured Share			-		-		-			1.8p		(1.1p)		0.7p
DP2011 Structured A Share			(0.6p)		4.0p		3.4p
DP2011 Low Carbon Share			(0.6p)		(9.1p)		(9.7p)			1.1p		0.3p		1.4p
Generalist Share			(1.7p)		(4.5p)		(6.2p)			(1.0p)		(1.0p)		(2.0p)
Healthcare Share			(2.5p)		(6.9p)		(9.4p)			(1.3p)		(1.2p)		(2.5p)

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 Recommenced Practice issued in February 2018 by the Association of Investment Companies (“AIC SORP”).

INCOME STATEMENT (analysed by Share pool)
for the year ended 31 March 2018

Split as:

DSO B Share pool

	Year ended 31 March 2018							Year ended 31 March 2017
	Revenue		Capital		Total			Revenue		Capital		Total
	£’000		£’000		£’000			£’000		£’000		£’000
Income	30		-		30			177		93		270
Net gain on investments	-		120		120			-		494		494
	30		120		150			177		587		764
Investment management fees	(26	)	(26	)	(52	)		(27	)	(27	)	(54	)
Other expenses	(55	)	-		(55	)		(55	)	-		(55	)
(Loss)/return on ordinary activities before tax	(51	)	94		43			95		560		655
Tax on total comprehensive income and ordinary activities	(34	)	-		(34	)		(36	)	-		(36	)
(Loss)/return attributable to equity Shareholders, being total comprehensive income for the year	(85	)	94		9			59		560		619

DSO D Share pool

	Year ended 31 March 2018							Year ended 31 March 2017
	Revenue		Capital		Total			Revenue		Capital		Total
	£’000		£’000		£’000			£’000		£’000		£’000
Income	166		-		166			174		-		174
Net gain on investments	-		442		442			-		431		431
	166		442		608			174		431		605
Investment management fees	(46	)	(46	)	(92	)		(43	)	(43	)	(86	)
Other expenses	(53	)	-		(53	)		(80	)	-		(80	)
Return on ordinary activities before tax	67		396		463			51		388		439
Tax on total comprehensive income and ordinary activities	(10	)	-		(10	)		(2	)	-		(2	)
Return attributable to equity Shareholders, being total comprehensive income for the year	57		396		453			49		388		437

DP67 Share pool

	Year ended 31 March 2018							Year ended 31 March 2017
	Revenue		Capital		Total			Revenue		Capital		Total
	£’000		£’000		£’000			£’000		£’000		£’000
Income	247		-		247			325		175		500
Net gain on investments	-		683		683			-		883		883
	247		683		930			325		1,058		1,383
Investment management fees	(51	)	(51	)	(102	)		(47	)	(47	)	(94	)
Other expenses	(62	)	-		(62	)		(70	)	-		(70	)
Return on ordinary activities before tax	134		632		766			208		1,011		1,219
Tax on total comprehensive income and ordinary activities	(114	)	-		(114	)		(129	)	-		(129	)
Return attributable to equity Shareholders, being total comprehensive income for the year	20		632		652			79		1,011		1,090

DP2011 General Share pool

	Year ended 31 March 2018							Year ended 31 March 2017
	Revenue		Capital		Total			Revenue		Capital		Total
	£’000		£’000		£’000			£’000		£’000		£’000
Income	160		-		160			521		-		521
Net gain on investments	-		947		947			-		164		164
	160		947		1,107			521		164		685
Investment management fees	(75	)	(75	)	(150	)		(97	)	(97	)	(194	)
Other expenses	(196	)	-		(196	)		(145	)	-		(145	)
(Loss)/return on ordinary activities before tax	(111	)	872		761			279		67		346
Tax on total comprehensive income and ordinary activities	(1	)	-		(1	)		1		-		1
(Loss)/return attributable to equity Shareholders, being total comprehensive income for the year	(112	)	872		760			280		67		347

DP2011 Structured Share pool

	Year ended 31 March 2018							Year ended 31 March 2017
	Revenue		Capital		Total			Revenue		Capital		Total
	£’000		£’000		£’000			£’000		£’000		£’000
Income	75		-		75			354		-		354
Net gain/(loss) on investments	-		535		535			-		(57	)	(57	)
	75		535		610			354		(57	)	297
Investment management fees	(39	)	(39	)	(78	)		(63	)	(63	)	(126	)
Other expenses	(126	)	-		(126	)		(100	)	-		(100	)
(Loss)/return on ordinary activities before tax	(90	)	496		406			191		(120	)	71
Tax on total comprehensive income and ordinary activities	(1	)	-		(1	)		1		-		1
(Loss)/return attributable to equity Shareholders, being total comprehensive income for the year	(91	)	496		405			192		(120	)	72

DP2011 Low Carbon Share pool

	Year ended 31 March 2018							Year ended 31 March 2017
	Revenue		Capital		Total			Revenue		Capital		Total
	£’000		£’000		£’000			£’000		£’000		£’000
Income	16		-		16			179		-		179
Net (loss)/gain on investments	-		(252	)	(252	)		-		67		67
	16		(252	)	(236	)		179		67		246
Investment management fees	(27	)	(27	)	(54	)		(43	)	(43	)	(86	)
Other expenses	(33	)	(409	)	(442	)		(65	)	-		(65	)
(Loss)/return on ordinary activities before tax	(44	)	(688	)	(732	)		71		24		95
Tax on total comprehensive income and ordinary activities	-		-		-			12		-		12
(Loss)/return attributable to equity Shareholders, being total comprehensive income for the year	(44	)	(688	)	(732	)		83		24		107

Generalist Share pool

	Year ended 31 March 2018							Year ended 31 March 2017
	Revenue		Capital		Total			Revenue		Capital		Total
	£’000		£’000		£’000			£’000		£’000		£’000
Income	62		-		62			-		-		-
Net loss on investments	-		(718	)	(718	)		-		-		-
	62		(718	)	(656	)		-		-		-
Investment management fees	(235	)	(235	)	(470	)		(5	)	(5	)	(10	)
Other expenses	(208	)	-		(208	)		(1	)	-		(1	)
Loss on ordinary activities before tax	(381	)	(953	)	(1,334	)		(6	)	(5	)	(11	)
Tax on total comprehensive income and ordinary activities	-		-		-			-		-		-
Loss attributable to equity Shareholders, being total comprehensive income for the year	(381	)	(953	)	(1,334	)		(6	)	(5	)	(11	)

Healthcare Share pool

	Year ended 31 March 2018							Year ended 31 March 2017
	Revenue		Capital		Total			Revenue		Capital		Total
	£’000		£’000		£’000			£’000		£’000		£’000
Income	9		-		9			-		-		-
Net loss on investments	-		(332	)	(332	)		-		-		-
	9		(332	)	(323	)		-		-		-
Investment management fees	(97	)	(97	)	(194	)		(3	)	(3	)	(6	)
Other expenses	(72	)	-		(72	)		-		-		-
Loss on ordinary activities before tax	(160	)	(429	)	(589	)		(3	)	(3	)	(6	)
Tax on total comprehensive income and ordinary activities	-		-		-			-		-		-
Loss attributable to equity Shareholders, being total comprehensive income for the year	(160	)	(429	)	(589	)		(3	)	(3	)	(6	)

BALANCE SHEET
as at 31 March 2018

		2018			2017
		£’000			£’000
Fixed assets
Investments		35,192			27,095
Current assets
Debtors		695			1,709
Cash at bank and in hand		21,063			31,441
		21,758			33,150
Creditors: amounts falling due within one year		(615	)		(833	)
Net current assets		21,143			32,317
Net assets		56,335			59,412
8BCapital and reserves
Called up Share capital		188			144
Capital redemption reserve		31			31
Special reserve		8,021			30,620
Share premium account		43,904			10,074
Funds held in respect of Shares not yet allotted		420			16,137
Revaluation reserve		234			(1,980	)
Capital reserve – realised		4,641			3,331
Revenue reserve		(1,104	)		1,055
Total equity Shareholders’ funds		56,335			59,412
Basic and diluted Net Asset Value per Share:
DSO B Share		-			20.7p
DSO C Share		-			0.1p
DSO D Share		54.4p			76.1p
DP67 Share		50.0p			66.1p
DP2011 General Ordinary Share		-			15.0p
DP2011 General A Share		20.3p			31.2p
DP2011 Structured Ordinary Share		-			4.8p
DP2011 Structured A Share		15.0p			31.9p
DP2011 Low Carbon Share		-			43.0p
Generalist Share		95.5p			99.9p
Healthcare Share		94.6p			99.7p

BALANCE SHEET (analysed by Share pool)
as at 31 March 2018

DSO B Shares

		2018			2017
		£’000			£’000
Fixed assets
Investments		-			1,752
Current assets
Debtors		-			74
Cash at bank and in hand		-			2,475
		-			2,549
Creditors: amounts falling due within one year		-			(151	)
Net current assets		-			2,398
Net assets		-			4,150
Capital and reserves
Called up share capital – B Shares		20			20
Called up share capital – C Shares		30			30
Capital redemption reserve		-			31
Special reserve		(50	)		3,186
Revaluation reserve		-			(1,108	)
Capital reserve – realised		-			1,705
Revenue reserve		-			286
Total equity Shareholders’ funds		-			4,150

DSO D Shares

		2018			2017
		£’000			£’000
Fixed assets
Investments		3,699			5,365
Current assets
Debtors		66			254
Cash at bank and in hand		582			435
		648			689
Creditors: amounts falling due within one year		(67	)		(62	)
Net current assets		581			627
Net assets		4,280			5,992
Capital and reserves
Called up share capital		8			8
Special reserve		4,201			6,598
Revaluation reserve		471			(9	)
Capital reserve – realised		(362	)		(510	)
Revenue reserve		(38	)		(95	)
Total equity Shareholders’ funds		4,280			5,992

DP67 Shares

		2018			2017
		£’000			£’000
Fixed assets
Investments		4,639			5,047
Current assets
Debtors		552			392
Cash at bank and in hand		519			2,396
		1,071			2,788
Creditors: amounts falling due within one year		(116	)		(404	)
Net current assets		955			2,384
Net assets		5,594			7,431
Capital and reserves
Called up share capital		11			11
Capital redemption reserve		31			-
Special reserve		805			5,836
Revaluation reserve		579			396
Capital reserve – realised		3,581			1,070
Revenue reserve		587			118
Total equity Shareholders’ funds		5,594			7,431

DP2011 General Shares

		2018			2017
		£’000			£’000
Fixed assets
Investments		2,243			7,385
Current assets
Debtors		-			585
Cash at bank and in hand		1,569			266
		1,569			851
Creditors: amounts falling due within one year		(68	)		(143	)
Net current assets		1,501			708
Net assets		3,744			8,093
Capital and reserves
Called up share capital – Ordinary Shares		16			16
Called up share capital – A Shares		18			18
Special reserve		2,209			7,805
Revaluation reserve		353			(641	)
Capital reserve – realised		831			466
Revenue reserve		317			429
Total equity Shareholders’ funds		3,744			8,093

DP2011 Structured Shares

		2018			2017
		£’000			£’000
Fixed assets
Investments		1,045			4,233
Current assets
Debtors		3			365
Cash at bank and in hand		877			28
		880			393
Creditors: amounts falling due within one year		(37	)		(94	)
Net current assets		843			299
Net assets		1,888			4,532
Capital and reserves
Called up share capital – Ordinary Shares		11			11
Called up share capital – A Shares		13			13
Special reserve		1,204			4,565
Revaluation reserve		(119	)		(682	)
Capital reserve – realised		591			346
Revenue reserve		188			279
Total equity Shareholders’ funds		1,888			4,532

DP2011 Low Carbon Shares

		2018			2017
		£’000			£’000
Fixed assets
Investments		-			3,065
Current assets
Debtors		-			140
Cash at bank and in hand		-			116
		-			256
Creditors: amounts falling due within one year		-			(59	)
Net current assets		-			197
Net assets		-			3,262
Capital and reserves
Called up share capital		8			8
Special reserve		(8	)		2,639
Revaluation reserve		-			67
Capital reserve – realised		-			253
Revenue reserve		-			295
Total equity Shareholders’ funds		-			3,262

Generalist

		2018			2017
		£’000			£’000
Fixed assets
Investments		19,053			225
Current assets
Debtors		73			-
Cash at bank and in hand		10,563			21,225
		10,636			21,225
Creditors: amounts falling due within one year		(215	)		(10	)
Net current assets		10,421			21,215
Net assets		29,474			21,440
Capital and reserves
Called up share capital		38			7
Special reserve		(240	)		(5	)
Share premium reserve		31,508			7,633
Revaluation reserve		(718	)		-
Funds held in respect of Shares not yet allotted		398			14,012
Revenue reserve		(1,512	)		(207	)
Total equity Shareholders’ funds		29,474			21,440

Healthcare

		2018			2017
		£’000			£’000
Fixed assets
Investments		4,513			25
Current assets
Debtors		1			-
Cash at bank and in hand		6,953			4,500
		6,954			4,500
Creditors: amounts falling due within one year		(112	)		(7	)
Net current assets		6,842			4,493
Net assets		11,355			4,518
Capital and reserves
Called up share capital		15			2
Special reserve		(100	)		(3	)
Share premium reserve		12,396			2,441
Revaluation reserve		(332	)		-
Funds held in respect of Shares not yet allotted		22			2,125
Revenue reserve		(646	)		(47	)
Total equity Shareholders’ funds		11,355			4,518

STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2018

	Called up Share capital	Capital Redemp-tion reserve	Special reserve	Share premium account	Funds held in respect of Shares not yet allotted	Revalua-tion Reserve	Capita reserve -realised	Revenue reserve	Total
	£’000	£’000	£’000	£’000	£’000	£’000	£’000	£’000	£’000
At 31 March 2016	161	5	44,441	-	-	(2,645)	1,949	1,171	45,082
Total comprehensive income	-	-	-	-	-	599	1,321	737	2,657
Transfer between reserves*	-	-	(13,772)	-	-	66	13,706	-	-
Unallotted Shares	-	-	-	-	16,137	-	-	-	16,137
Transactions with owners
Dividend paid	-	-	-	-	-	-	(13,645)	(608)	(14,253)
Cancellation of Shares	(26)	26	-	-	-	-	-	-	-
Purchase of own Shares	-	-	(49)	-	-	-	-	-	(49)
Issue of Shares	9	-	-	10,074	-	-	-	-	10,083
Share issue costs	-	-	-	-	-	-	-	(245)	(245)
At 31 March 2017	144	31	30,620	10,074	16,137	(1,980)	3,331	1,055	59,412
Total comprehensive income	-	-	-	-	-	(225)	645	(796)	(376)
Transfer between reserves*	-	-	(22,576)	-	-	2,439	19,548	589	-
Unallotted Shares	-	-	-	-	420	-	-	-	420
Transactions with owners
Dividend paid	-	-	-	-	-	-	(18,883)	(589)	(19,472)
Purchase of own Shares	-	-	(23)	-	-	-	-	-	(23)
Issue of Shares	44	-	-	33,830	(16,137)	-	-	-	17,737
Share issue costs	-	-	-	-	-	-	-	(1,363)	(1,363)
At 31 March 2018	188	31	8,021	43,904	420	234	4,641	(1,104)	56,335

* A transfer of £2.4 million (2017: £66,000), representing previously recognised unrealised gains on disposal of investments during the year ended 31 March 2018, has been made from the Revaluation Reserve to the Capital Reserve realised.  A transfer of £19.5 million (2017: £13.7 million) representing realised gains on disposal of investments, less capital expenses and capital dividends in the year was made from Capital Reserve – realised to Special reserve.  

STATEMENT OF CASH FLOWS
for the year ended 31 March 2018

			Year ended 31 March 2018
			DSO B Share pool		DSO D Share pool		DP67 Share pool		DP2011 Gen Share pool		DP2011 Struc Share pool		DP2011 LC Share pool		Generalist Share pool		Health-care Share pool		Total
			£’000		£’000		£’000		£’000		£’000		£’000		£’000		£’000		£’000
Cash flows from operating activities
Return on ordinary activities before taxation			43		463		766		761		406		(732	)	(1,334	)	(589	)	(216	)
(Gains)/losses on investments			(120	)	(442	)	(683	)	(947	)	(535	)	252		718		332		(1,425	)
Decrease/(increase) in debtors			39		188		(40	)	585		362		140		(29	)	(1	)	1,244
(Decrease)/increase in creditors			(111	)	(18	)	10		(60	)	(50	)	(54	)	205		106		28
Net cash (outflow)/inflow from operating activities			(149	)	191		53		339		183		(394	)	(440	)	(152	)	(369	)
Corporation tax paid			(40	)	10		(534	)	(16	)	(8	)	(5	)	(44	)	-		(637	)
New cash generated from operating activities			(189	)	201		(481	)	323		175		(399	)	(484	)	(152	)	(1,006	)
Cash flow from investing activities
Purchase of investments			-		-		-		-		-		-		(19,546	)	(4,820	)	(24,366	)
Proceeds from disposal of investments			1,872		2,109		1,090		6,089		3,723		2,813		-		-		17,696
Net cash inflow/(outflow) from investing activities			1,872		2,109		1,090		6,089		3,723		2,813		(19,546	)	(4,820	)	(6,670	)
Net cash inflow/(outflow) before financing			1,683		2,310		609		6,412		3,898		2,414		(20,030	)	(4,972	)	(7,676	)
Cash flows from financing activities
Repurchase of Shares			-		-		(23	)	-		-		-		-		-		(23	)
Issue of share capital			-		-		-		-		-		-		9,368		7,425		16,793
Equity dividends paid			(4,158	)	(2,163	)	(2,463	)	(5,109	)	(3,049	)	(2,530	)	-		-		(19,472	)
Net cash (outflow)/inflow from financing activities			(4,158	)	(2,163	)	(2,486	)	(5,109	)	(3,049	)	(2,530	)	9,368		7,425		(2,702	)
Net change in cash			(2,475	)	147		(1,877	)	1,303		849		(116	)	(10,662	)	2,453		(10,378	)
Cash and cash equivalents at start of year			2,475		435		2,396		266		28		116		21,225		4,500		31,441
Cash and cash equivalents at end of year			-		582		519		1,569		877		-		10,563		6,953		21,063
Cash and cash equivalents comprise
Cash at bank and in hand			-		582		519		1,569		877		-		10,563		6,953		21,063
Total cash and cash equivalents			-		582		519		1,569		877		-		10,563		6,953		21,063

STATEMENT OF CASH FLOWS
for the year ended 31 March 2017

			Year ended 31 March 2017
			DSO B Share pool		DSO D Share pool		DP67 Share pool		DP2011 Gen Share pool		DP2011 Struc Share pool		DP2011 LC Share pool		Generalist Share pool		Health-care Share pool		Total
			£’000		£’000		£’000		£’000		£’000		£’000		£’000		£’000		£’000
Cash flows from operating activities
Return on ordinary activities before taxation			655		439		1,219		346		71		95		(11	)	(6	)	2,808
Losses/(gains) on investments			(494	)	(431	)	(883	)	(164	)	57		(67	)	-		-		(1,980	)
Decrease/(increase) in debtors			13		(91	)	174		(193	)	(136	)	(92	)	-		-		(325	)
(Decrease)/increase in creditors			(75	)	13		21		(18	)	(21	)	(29	)	11		6		(92	)
Net cash inflow from operating activities			99		(70	)	531		(29	)	(29	)	(93	)	-		-		406
Corporation tax paid			(110	)	(15	)	(211	)	(32	)	(26	)	(14	)	-		-		(408	)
New cash generated from operating activities			(11	)	(85	)	320		(61	)	(55	)	(107	)	-		-		(2	)
Cash flow from investing activities
Purchase of investments			-		(145	)	(700	)	-		-		-		(225	)	(25	)	(1,095	)
Proceeds from disposal of investments			1,776		900		2,364		3,226		3,066		-		-		-		11,332
Net cash inflow/(outflow) from investing activities			1,776		755		1,664		3,226		3,066		-		(225	)	(25	)	10,237
Net cash inflow/(outflow) before financing			1,765		670		1,984		3,165		3,011		(107	)	(225	)	(25	)	10,235
Cash flows from financing activities
Repurchase of Shares			-		-		(49	)	-		-		-		-		-		(49	)
Issue of share capital			-		-		-		-		-		-		7,438		2,400		9,838
Unallotted Shares			-		-		-		-		-		-		14,012		2,125		16,137
Equity dividends paid			-		(394	)	(450	)	(5,085	)	(4,539	)	(3,788	)	-		-		(14,253	)
Net cash (outflow)/inflow from financing activities			-		(394	)	(499	)	(5,085	)	(4,539	)	(3,788	)	21,450		4,525		11,673
Net increase in cash			1,765		276		1,485		(1,920	)	(1,528	)	(3,895	)	21,225		4,500		21,908
Cash and cash equivalents at start of year			710		159		911		2,186		1,556		4,011		-		-		9,533
Cash and cash equivalents at end of year			2,475		435		2,396		266		28		116		21,225		4,500		31,441
Cash and cash equivalents comprise
Cash at bank and in hand			2,475		435		2,396		266		28		116		21,225		4,500		31,441
Total cash and cash equivalents			2,475		435		2,396		266		28		116		21,225		4,500		31,441

NOTES TO THE ACCOUNTS
for the year ended 31 March 2018

1.Accounting policies

Basis of accounting
The Company has prepared its financial statements in accordance with the Financial Reporting Standard 102 (“FRS 102”) and in accordance with the Statement of Recommended Practice “Financial Statements of Investment Trust Companies and Venture Capital Trusts” revised February 2018 (“SORP”).

The Company implements new Financial Reporting Standards (“FRS”) issued by the Financial Reporting Council when required.

The financial statements are presented in pounds sterling and rounded to thousands.  The Company’s functional and presentational currency is pounds sterling.

Presentation of Income Statement
In order to better reflect the activities of a Venture Capital Trust, and in accordance with the SORP, supplementary information which analyses the Income Statement between items of a revenue and capital nature has been presented alongside the Income Statement. The revenue return is the measure the Directors believe appropriate in assessing the Company’s compliance with certain requirements set out in Part 6 of the Income Tax Act 2007.

Judgements in applying accounting policies and key sources of estimation uncertainty
Investments
All investments are designated as “fair value through profit or loss” assets due to investments being managed and performance evaluated on a fair value basis, in accordance with Section 9.9B(a) of FRS 102. A financial asset is designated within this category if it is both acquired and managed on a fair value basis, with a view to selling after a period of time, in accordance with the Company’s documented investment policy.

It is possible to determine the fair values within a reasonable range of estimates.  The fair value of an investment upon acquisition is deemed to be cost. Thereafter investments are measured at fair value in accordance with FRS 102 sections 11 and 12, together with the International Private Equity and Venture Capital Valuation Guidelines (“IPEV”).

Liquidity investments are measured using bid prices.

For unquoted investments, fair value is established by using the IPEV guidelines. The valuation methodologies for unquoted entities used by the IPEV to ascertain the fair value of an investment are as follows:

-Price of recent investment;
-Multiples;
-Net assets;
-Discounted cash flows or earnings (of underlying business);
-Discounted cash flows (from the investment); and
-Industry valuation benchmarks.

The methodology applied takes account of the nature, facts and circumstances of the individual investment and uses reasonable data, market inputs, assumptions and estimates in order to ascertain fair value. The valuation of investments is detailed in Note 9 of the Annual Report.

Gains and losses arising from changes in fair value are included in the Income Statement for the year as a capital item and transaction costs on acquisition or disposal of the investment are expensed. Where an investee company has gone into receivership or liquidation, or administration (where there is little likelihood of recovery), the loss on the investment, although not physically disposed of, is treated as being realised.

It is not the Company’s policy to exercise significant influence or joint control over investee companies. Therefore, the results of these companies are not incorporated into the Income Statement except to the extent of any income accrued. This is in accordance with FRS 102 sections 14 and 15 and the SORP, which do not require portfolio investments to be accounted for using the equity method of accounting.

Income
Dividend income from investments is recognised when the Shareholders’ rights to receive payment have been established, normally the ex-dividend date.

Interest income is accrued on a time apportioned basis, by reference to the principal sum outstanding and at the effective rate applicable, and only where there is reasonable certainty of collection in the foreseeable future.

Distributions from investments in limited liability partnerships (“LLPs”) are recognised as they are paid to the Company. Where such items are considered capital in nature they are recognised as capital profits.

Expenses
All expenses are accounted for on an accruals basis, and are stated inclusive of any VAT charged. In respect of the analysis between revenue and capital items presented within the Income Statement, all expenses have been presented as revenue items except as follows:

-Expenses which are incidental to the disposal of an investment are deducted from the disposal proceeds of the investment; or
-Expenses are split and presented partly as capital items where a connection with the maintenance or enhancement of the value of the investments held can be demonstrated. The Company has adopted a policy of charging 50% of the investment management fees to the revenue account and 50% to the capital account, to reflect the Board’s estimated split of investment returns which will be achieved by the company over the long term.

Expenses and liabilities not specific to a share class are generally allocated pro rata to the Net Asset Values of each share class.

Taxation
The tax effects on different items in the Income Statement are allocated between capital and revenue on the same basis as the particular item to which they relate, using the Company’s effective rate of tax for the accounting period.

Due to the Company’s status as a Venture Capital Trust, and the continued intention to meet the conditions required to comply with Part 6 of the Income Tax Act 2007, no provision for taxation is required in respect of any realised or unrealised appreciation of the Company’s investments which arises.

Deferred taxation, which is not discounted, is provided in full on timing differences that result in an obligation at the balance sheet date to pay more tax, or a right to pay less tax, at a future date, at rates expected to apply when they crystallise based on current tax rates and law. Timing differences arise from the inclusion of items of income and expenditure in taxation computations in periods different from those in which they are included in the accounts.

Other debtors and other creditors
Other debtors (including accrued income) and other creditors are included within the accounts at amortised cost.

Issue costs
Issue costs in relation to the Shares issued for each share class have been deducted from the share premium account, special reserve or revenue reserve, as applicable, for the relevant share class.

Funds held in respect of Shares not yet allotted
Cash received in respect of applications for new Shares that have not yet been allotted is shown as “Funds held in respect of Shares not yet allotted” and recorded on the Balance Sheet.

Acquisitions

Acquisitions made during the year are accounted for using the acquisition method.  The purchase consideration is measured at the fair value of equity issued, compared to the fair value of the assets and liabilities acquired.

Operating segments

The Company has one operating segment.

2.Basic and diluted return per share

						Weighted average number of Shares in issue	Revenue Return		Capital gain/(loss)		Total comprehensive income
Return per share is calculated on the following:							£’000		£’000		£’000
Year ended 31 March 2018					DSO B Shares	19,911,070	(42	)	47		5
				DSO C Shares		29,926,070	(43	)	47		4
				DSO D Shares		7,867,247	57		396		453
				DP67 Shares		11,229,211	20		632		652
	DP2011 General Shares					15,644,066	-		-		-
	DP2011 General A Shares					18,418,614	(112	)	872		760
	DP2011 Structured  Shares					10,678,725	-		-		-
	DP2011 Structured A Shares					12,572,817	(91	)	496		405
	DP2011 Low Carbon Shares					7,575,419	(44	)	(688	)	(732	)
	Generalist Shares					21,421,985	(381	)	(953	)	(1,334	)
	Healthcare Shares					6,267,690	(160	)	(429	)	(589	)
Year ended 31 March 2017					DSO B Shares	19,911,070	59		560		619
				DSO C Shares		29,926,070	-		-		-
				DSO D Shares		7,867,247	49		388		437
				DP67 Shares		11,239,785	79		1,011		1,090
			DP2011 General Shares			15,644,066	280		67		347
			DP2011 General A Shares			18,418,614	-		-		-
			DP2011 Structured  Shares			10,678,725	192		(120	)	72
		DP2011 Structured A Shares				12,572,817	-		-		-
		DP2011 Low Carbon Shares				7,575,419	83		24		107
		Generalist Shares				537,081	(6	)	(5	)	(11	)
		Healthcare Shares				234,044	(3	)	(3	)	(6	)

As the Company has not issued any convertible securities or share options, there is no dilutive effect on the return per DSO B Share, DSO C Share, DSO D Share, DP67 Share, DP2011 General Share, DP2011 General A Share, DP2011 Structured Ordinary Share, DP2011 Structured A Share, DP2011 Low Carbon Share, Generalist Shares or Healthcare Share.  The return per share disclosed therefore represents both the basic and diluted return per Share for all classes of Share.

3.Basic and diluted Net Asset Value per share

			2018 Net Asset Value				2017 Net Asset Value
	Shares in issue		Pence per share		£’000		Pence per share		£’000
	2018	2017
DSO B Shares	19,911,070	19,911,070	-		-		20.7		4,119
DSO C Shares	29,926,070	29,926,070	-		-		0.1		31
DSO D Shares	7,867,247	7,867,247	54.4		4,280		76.1		5,992
DP67 Shares	11,192,136	11,239,785	50.0		5,594		66.1		7,431
DP2011 General Ordinary Shares	15,644,066	15,644,066	-		-		15.0		2,347
DP2011 General A Shares	18,418,614	18,418,614	20.3		3,744		31.2		5,746
DP2011 Structured Ordinary Shares	10,678,725	10,678,725	-		-		4.8		515
DP2011 Structured A Shares	12,572,817	12,572,817	15.0		1,888		31.9		4,017
DP2011 Low Carbon Shares	7,575,419	7,575,419	-		-		43.0		3,262
Generalist Shares	30,450,040	7,438,093	95.5		29,076		99.9		7,427
Generalist Management Shares	7,487,874	-	-		-		-		-
Healthcare Shares	11,974,285	2,400,195	94.6		11,333		99.7		2,394
Healthcare Management Shares	2,993,571	-	-		-		-		-
Funds held in respect of shares not yet allotted					420				16,137
Net assets per Balance Sheet					56,335				59,412

The Directors allocate the assets and liabilities of the Company between the DSO B Shares, DSO C Shares, DSO D Shares, DP67 Shares, DP2011 General Ordinary Shares, DP2011 General A Shares, DP2011 Structured Shares, DP2011 Structured A Shares, DP2011 Low Carbon Shares, Generalist Shares and Healthcare Shares such that each Share class has sufficient net assets to represent its dividend and return of capital rights as described in note 12 of the Annual Report.

As the Company has not issued any convertible shares or share options, there is no dilutive effect on the Net Asset Value per DSO B Share, per DSO C Share, per DSO D Share, per DP67 Share, per DP2011 General Ordinary Share, per DP2011 General A Share, per DP2011 Structured Ordinary Share, per DP2011 Structured A Share, per DP2011 Low Carbon Share, per Generalist Share or per Healthcare Share. The Net Asset Value per share disclosed therefore represents both the basic and diluted Net Asset Value per DSO B Share, per DSO C Share, per DSO D Share, per DP67 Share, per DP2011 General Ordinary Share, per DP2011 General A Share, per DP2011 Structured Ordinary Share, per DP2011 Structured A Share, per DP2011 Low Carbon Share, per Generalist Share, and per Healthcare Share.

4.Principal risks
The Company’s investment activities expose the Company to a number of risks associated with financial instruments and the sectors in which the Company invests. The principal financial risks arising from the Company’s operations are:

-Market risks;
-Credit risk; and
-Liquidity risk.

The risk management policies used by the Company in respect of the principal financial risks and a review of the financial instruments held at the year end are provided below:

Market risks

As a VCT, the Company is exposed to investment risks in the form of potential losses and gains that may arise on the investments it holds, in accordance with its investment policy. The management of these market risks is a fundamental part of investment activities undertaken by the Investment Manager and is overseen by the Board. The Manager monitors investments through regular contact with management of investee companies, regular review of management accounts and other financial information and attendance at investee company board meetings. This enables the Manager to manage the investment risk in respect of individual investments. Investment risk is also mitigated by holding a diversified portfolio spread across various business sectors and asset classes.

The key market risks to which the Company is exposed are:
-Investment price risk; and
-Interest rate risk.

Investment price risk

Investment price risk arises from uncertainty about the future prices and valuations of financial instruments held in accordance with the Company’s investment objectives. It represents the potential loss that the Company might suffer through market price movements in respect of quoted investments, and also changes in the fair value of unquoted investments that it holds.

Interest rate risk

The Company accepts exposure to interest rate risk on floating-rate financial assets through the effect of changes in prevailing interest rates. The Company receives interest on its cash deposits at a rate agreed with its bankers. Investments in loan stock attract interest predominately at fixed rates. A summary of the interest rate profile of the Company’s investments is shown below.

Credit risk

Credit risk is the risk that a counterparty to a financial instrument is unable to discharge a commitment to the Company made under that instrument. The Company is exposed to credit risk through its holdings of loan stock in investee companies, cash deposits and debtors. Credit risk relating to holdings of loan stock in investee companies is considered to be part of market risk.

Liquidity risk

Liquidity risk is the risk that the Company encounters difficulties in meeting obligations associated with its financial liabilities. Liquidity risk may also arise from either the inability to sell financial instruments at their fair values when required, or from the inability to generate cash inflows as required.

ANNOUNCEMENT BASED ON AUDITED ACCOUNTS
The financial information set out in this announcement does not constitute the Company's statutory financial statements in accordance with section 434 Companies Act 2006 for the year ended 31 March 2018, but has been extracted from the statutory financial statements for the year ended 31 March 2018 which were approved by the Board of Directors on 19 July 2018 and will be delivered to the Registrar of Companies. The Independent Auditor's Report on those financial statements was unqualified and did not contain any emphasis of matter nor statements under s 498(2) and (3) of the Companies Act 2006.

The statutory accounts for the year ended 31 March 2017 have been delivered to the Registrar of Companies and received an Independent Auditors report which was unqualified and did not contain any emphasis of matter nor statements under s 498(2) and (3) of the Companies Act 2006.