Downing FOUR VCT plc : Half-year Report

Downing FOUR VCT plc

LEI: 21380035MV1VRYEXPR95
Half-Yearly Report for the six months ended 30 September 2017

FINANCIAL HIGHLIGHTS

	30 Sept 2017		31 March 2017		30 Sept 2016
	pence		pence		pence
DSO B Share pool
Net asset value per DSO B Share	4.444		20.7		20.0
Net asset value per DSO C Share	10.939		0.1		0.1
Cumulative dividends per DSO B Share	91.500		91.5		91.5
Estimated performance incentive * (1)	-		(5.5)		(5.3)
Total return per DSO B Share and DSO C Share	106.883		106.8		106.3
DSO D Share pool
Net asset value per DSO D Share	78.5		76.1		75.5
Cumulative dividends per DSO D Share	27.5		25.0		22.5
Estimated performance incentive *	(4.2)		-		-
Total return per DSO D Share	101.8		101.1		98.0
DP67 Share pool
Net asset value per DP67 Share	68.7		66.1		63.9
Cumulative dividends per DP67 Share	29.8		27.8		25.8
Total return per DP67 Share	98.5		93.9		89.7
DP2011 General Share pool
Net asset value per DP2011 Gen Ord Share	15.0		15.0		25.0
Net asset value per DP2011 Gen A Share	34.4		31.2		30.3
Cumulative dividends per DP2011 Gen Ord Share	55.0		55.0		45.0
Total return per DP2011 Gen Ord Share and Gen A Share	104.4*		101.2		100.3
Estimated Performance incentive (already included above) *	5.2
DP2011 Structured Share pool
Net asset value per DP2011 Struc Ord Share	5.0		4.8		14.9
Net asset value per DP2011 Struc A Share	34.5		31.9		31.8
Cumulative dividends per DP2011 Struc Share	65.0		65.0		55.0
Total return per DP2011 Struc Ord Share and Struc A Share	104.5*		101.7		101.7
Estimated Performance incentive (already included above) *	5.2
DP2011 Low Carbon Share pool
Net asset value per DP2011 Low Carbon Share	39.1		43.0		41.7
Cumulative dividends per DP2011 Low Carbon Share	73.9		73.9		73.9
Estimated performance incentive *	(5.5)		(2.5)		(6.8)
Total return per DP2011 Low Carbon Share	107.5		114.4		108.8
Generalist Share pool
Net asset value and Total return per Generalist Share	98.7		99.9		N/A
Healthcare Share pool
Net asset value and Total return per Healthcare Share	98.6		99.7		N/A

*A full explanation of the performance incentive arrangements for each share pool will be shown in the half-yearly report.
(1)As at 30 September 2017, the performance incentive has been provided for by virtue of the allocation of proceeds to the DSO C Share class.  The estimated performance incentive is equivalent to 5.5p per DSO B Share.

CHAIRMAN'S STATEMENT

Introduction
I am pleased to present the Company's Half Yearly Report for the six months ended 30 September 2017. It has been a productive start to the year for your Company with good progress made on share pools working towards exits and the completion of a successful fundraising for the Generalist and Healthcare Share pools.

Share pools
The Company now has eight active share pools, each with a different profile. This report includes sections covering the individual share pools and I will give a brief overview of each.

DSO B Share Pool
The combined NAV of one DSO B Share and one DSO C Share stood at 15.383p at 30 September 2017, an increase of 0.1p from 31 March 2017. Total Return now stands at 106.883p per share, compared to the cost for Shareholders who invested in the B Share offer, net of income tax relief, of 70.0p.  A performance fee equivalent to 5.5p per B Share will be paid to members of the management team when the task of returning funds to Shareholders is complete. This performance incentive fee has already been deducted in arriving at the Total Return of 106.883p.

Since the period end, I am pleased to report that the final investments have been realised at values equal to the carrying value at 30 September 2017. This has allowed the Board to declare final dividends as follows:

DSO B Shares	4.444p	per share
DSO C Shares	10.939p	per share

Both dividends will be paid on 26 January 2018 to Shareholders on the register as at 5 January 2018. 

The payment of these final distributions will bring this Share Pool to a close and in due course, the share classes will be cancelled. These distributions will bring Total Return to Shareholders who invested at the launch of the share pools in 2010 to 106.883p for a combined holding of one DSO B Share and one DSO C Share compared to the original cost of 70p net of tax relief. The Board considers this to be a satisfactory outcome for investors.

DSO D Share Pool
The DSO D Share NAV stood at 78.5p at 30 September 2017, an increase of 4.9p per share or 6.4% over the period, after adjusting for the dividends paid in the period of 2.5p. Total Return now stands at 101.8p per share, compared to the cost for Shareholders who invested in the D Share offer, net of income tax relief, of 70.0p. Based on the current performance it is estimated that a performance fee equivalent to 4.2p per D Share may become payable to the Manager. This has been reflected in the Total Return figure shown above.

Following a number of disposals from the D Share Pool, the first major distribution of 25.0p per DSO D Share was paid on 2 November 2017. Plans are progressing in respect of realising the remaining investments, although Shareholders should note that it is expected that it will take some time to complete this process in full.

DP67 Share Pool
As at 30 September 2017, the NAV of the DP67 Shares stood at 68.7p per share. This represents an increase of 4.6p (7.0%), after adjusting for dividends paid in the period of 2.0p. Total Return for DP67 shareholders now stands at 98.5p per share.

The fifth anniversary of the last allotment of DP67 Shares occurs early next year and so the process of preparing to return funds to Shareholders is now underway. We anticipate that the first significant distribution will be paid early in 2018.

DP2011 General Share Pool
The DP2011 General Share Pool is now in the process of returning funds to Shareholders. After providing for an estimated performance incentive of 5.2p per DP2011 General Ordinary Share, as at 30 September 2017, the NAV of a combined holding of one DP2011 General Ordinary Share and one DP2011 General A Share stood at 49.4p per share. This represents an increase of 3.2p or 6.9% after adjusting for dividends paid during the period, as well as the performance incentive estimate.

Total Return for DP2011 General Shareholders now stands at 104.4p compared to the cost for Shareholders who invested in the original offer, net of income tax relief, of 70.0p.

On 2 November 2017 dividends of 15.0p per DP2011 General Ordinary Share and 15.0p per DP2011 General A Share were paid, bringing total dividends paid to Shareholders to 85.0p for a combined holding. Further distributions will be made to Shareholders as the remaining investments are realised.
DP2011 Structured Share Pool
The DP2011 General pool is at a similar stage to the DP2011 General Shares. After providing for an estimated performance incentive of 5.2p per DP2011 Structured Ordinary Share, as at 30 September 2017, the NAV of a combined holding of one DP2011 Structured Ordinary Share and one DP2011 Structured A Share stood at 39.5p per share. This represents an increase of 2.8p or 7.6% after adjusting for dividends paid during the period, as well as the performance incentive estimate.

Total Return for DP2011 Structured Shareholders now stands at 104.5p compared to the cost for Shareholders who invested in the original offer, net of income tax relief, of 70.0p.

On 2 November 2017 dividends of 5.0p per DP2011 Structured Ordinary Share and 20.0p per DP2011 Structured A Share were paid, bringing total dividends paid to Shareholders to 90.0p for a combined holding. Further distributions will be made to Shareholders as the remaining investments are realised.

DP2011 Low Carbon Share Pool
The NAV of the DP2011 Low Carbon Shares as at 30 September 2017 was 39.1p per share, a decrease of 3.9p (9.0%) for the period as a result of reductions in investment values.  Total Return for DP2011 Low Carbon Shareholders now stands at 107.5p compared to the equivalent cost for Shareholders who invested in the original offer, net of income tax relief, of 70.0p. The Total Return figure reflects the estimated performance incentive fee of 5.5p, which is expected to become payable to the manager, Downing LLP, and the adviser, Low Carbon Investors.

As with the other DP2011 share pools, the process of returning funds to investors commenced in 2016. In respect of the Low Carbon pool, the Manager is working on transactions to realise the remaining investments and we believe that a final distribution should be made to Shareholders in early 2018.

Generalist Share pool
The Generalist Share was launched in late 2016. As at 30 September 2017, NAV and Total Return stood at 98.7p, a decrease of 1.2p per share or 1.2% over the period. This fall has arisen as the majority of fundraising proceeds are yet to be invested, meaning that the portfolio is generating little income to offset against running costs.

As detailed in the Investment Manager's Report, the process of building the Generalist portfolio is underway, with £2.0m having been invested in VCT Qualifying investments during the six months to 30 September 2017. The Manager has a good pipeline of investment opportunities from which the portfolio will be built over the next 18 months.

Healthcare Share pool
The Healthcare Share pool was also launched in late 2016. As at 30 September 2017, the Healthcare Share NAV and Total Return stood at 98.6p at 30 September 2017. Similarly, the fall is as a result of the pool being in an early stage, having no income to offset against running costs.

There is strong competition for deals in the healthcare sector, which tends to inflate the valuations of investee companies. However, the manager has been working to develop a pipeline of opportunities, in order to grow the portfolio.

Dividends
In line with the dividend policy on the DSO D and DP67 Share Pools, interim dividends were paid as follows:

DSO D Shares	2.5p
DP67 Shares	2.5p

The interim dividends were paid on 29 September 2017 to Shareholders on the register at 1 September 2017.

As mentioned above, a number of other dividends in respect of other Share classes were paid on 2 November and some have been declared for payment on 26 January 2018.

No dividends have been declared in the Generalist and Healthcare Share pools as they are still in the early stage of building their initial portfolios.

Share buybacks
The Company has a policy of buying in any Generalist and Healthcare Shares that become available in the market and will usually expect to do so at a price approximately equal to the latest NAV of the shares, subject to regulatory restrictions and other factors such as availability of liquid funds.

In respect of the other share pools that are in the process of returning, or preparing to commence returning, funds to Shareholders, the Board does not intend to buy in any of those shares as it is envisaged that the exit for these Shareholders will be facilitated by way of distributions

No shares were purchased during the period ended 30 September 2017.

Fundraising
The Generalist Share offer launched in December 2016 and closed having reached full subscription of £30 million in August 2017. The Healthcare offer closed on 30 November 2017, having raised a total of £12.32m.

A small top-up offer for the Generalist Share class was subsequently launched under which regular monthly subscriptions have been allotted.

The Boards congratulates Downing, the promoter, on the successful fundraising, which provides the Company with a substantial asset base in "evergreen" share classes for the future.

VCT regulations
The Government's recent Budget outlined further changes to the VCT regulations resulting from the "Patient Capital Review", which has sought to strengthen the availability of capital for innovative growth businesses in the UK. The Board welcomes the Government's ongoing support of Venture Capital Trusts and believe that the new regulations will ensure that VCTs continue provide well targeted capital in the future.

The most significant amendment to the regulations impacting the Company is the requirement for VCTs to hold at least 80% of their investments in qualifying companies, an increase on the 70% previously in place. For the Company, this increase will be effective from 1 April 2020.

Although final details of all the changes are not yet available the Board and Manager consider that the new regulations will not have a major impact on the Company's investment strategy or risk profile, although the we will continue to monitor developments as further guidance is published.

Outlook
A significant proportion of the Manager's resources over the remainder of the year will be focused on realising investments from the share pools that are now in the process of returning, or starting to return, funds to Shareholders. We also expect the remainder of the year to be busy in terms of new investment activity in both the Generalist and Healthcare Share Pools as their initial portfolios are built.

Generally, the Board is satisfied with the performance of the portfolio companies, which the Manager will continue to closely monitor.

I look forward to reporting developments in my statement with the Annual Report to 31 March 2018 as the Company steadily transitions from being a planned exit vehicle to an evergreen VCT.

Lord Flight
Chairman

INVESTMENT MANAGER'S REPORT
DSO B SHARE POOL

Portfolio Activity
The DSO B Share pool continued to make good progress during the six month period, with one partial and two full realisations having taken place, generating total proceeds of £1.4m.

Portfolio valuation
The remaining investments have been revalued as at 30 September 2017, resulting in an overall uplift of £76,000. This increase predominantly relates to deferred consideration due from Snow Hill Developments LLP and London City Shopping Centre Limited, as a result of the DSO B Share pool having an historic interest in these companies.

Net asset value and results
The NAV at 30 September was 4.444p per DSO B Share and 10.939p per DSO C Share, for a combined holding of one DSO B Share and one DSO C Share. Total Return (combined NAV plus cumulative dividends) stood at 106.883p for a combined holding, after taking into account the estimated performance incentive fee of 5.5p.

The profit on ordinary activities after taxation for the period was £9,000, comprising a revenue loss of £86,000 and a capital return of £95,000.

Outlook
Following 30 September 2017, the remaining investments in the DSO B Share pool were transferred to the Generalist Share pool at a price equal to their carrying value as at 30 September 2017. This transfer has allowed the manager to progress with returning funds to shareholders, whilst also allowing the Generalist Share pool to add further investments to its growing portfolio.

The final distributions to Shareholders, of 4.444p per B share and 10.939p per C share, will be paid on 26 January 2017, to Shareholders on the register as at 5 January 2018.

Downing LLP

SUMMARY OF INVESTMENT PORTFOLIO
DSO B SHARE POOL
as at 30 September 2017

	Cost	Valuation	Unrealised gain/(loss) in period	% of portfolio by value
	£000	£000	£000
Venture Capital investments
Fenkle Street LLP*	154	361	(1)	8.5%
Snow Hill Developments LLP*	-	86	86	2.0%
Mosaic Spa & Health Clubs Limited	282	37	(39)	0.9%
London City Shopping Centre Limited*	-	30	30	0.7%
Future Biogas (Reepham Road) Limited*	632	-	-	0.0%
Quadrate Spa Limited	276	-	-	0.0%
	1,344	514	76	12.1%
Cash at bank and in hand		3,717		87.9%
Total investments		4,231		100.0%

*non-qualifying investment

SUMMARY OF INVESTMENT MOVEMENTS
DSO B SHARE POOL
for the period ended 30 September 2017

Disposals	Cost	Valuation at 31/03/2017	Disposal  proceeds	Total gain/(loss) against cost	Realised gain in period
	£000	£000	£000	£000	£000
Avon Solar Energy Limited	420	515	528	108	13
Westcountry Solar Solutions Limited	500	434	445	(55)	11
Mosaic Spa & Health Clubs Limited	480	411	385	(95)	(26)
Total	1,400	1,360	1,358	(42)	(2)

INVESTMENT MANAGER'S REPORT
DSO D SHARE POOL

Venture Capital portfolio
One partial and four full realisations took place during the period, generating proceeds of £1.5m. As at 30 September 2017, the D Share Pool had a portfolio of ten investments with a value of £3.6m.

Structured Product portfolio
The one remaining Structured Product investment was sold during April, generating proceeds of £608,000, resulting in a gain over cost of £106,000.

Portfolio valuation
Two small uplifts in value were recognised in the period, for Merlin Renewables Limited and Fresh Green Power Limited, totalling £106,000.

Results and net asset value
The net asset value ("NAV") per DSO D Share at 30 September 2017 stood at 78.5p, an increase of 4.9p or 6.4% over the period, after adjusting for dividends paid. Total Return stands at 101.8p 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 period was £384,000, comprising a revenue gain of £45,000 and a capital gain of £339,000.

Dividends
In light of the recent realisations from the D Share Pool, the first return of capital, being 25.0p per DSO D Share, was paid on 2 November 2017 to shareholders on the register as at 13 October 2017.

This is in addition to the interim dividend of 2.5p, which was paid in line with the annual dividend policy, on 29 September 2017 to shareholders on the register at 1 September 2017.

Outlook
Plans are progressing in respect of realising the remaining investments, however due to the number of investments held this process may take some time to complete.

Downing LLP

SUMMARY OF INVESTMENT PORTFOLIO
DSO D SHARE POOL
as at 30 September 2017

	Cost	Valuation	Unrealised gain  in period	% of portfolio by value
	£000	£000	£000
Venture Capital investments
Goonhilly Earth Station Limited	715	715	-	11.7%
Merlin Renewables Limited	500	642	67	10.5%
Nightjar Sustainable Power Limited	485	600	-	9.8%
Lambridge Solar Limited	500	595	-	9.7%
Apex Energy Limited	400	400	-	6.5%
Pearce and Saunders Limited*	300	300	-	4.9%
Fresh Green Power Limited	200	239	39	3.9%
Green Energy Production UK Limited	100	100	-	1.6%
Fubar Stirling Limited	135	25	-	0.4%
Pearce and Saunders DevCo Limited**	20	20	-	0.3%
	3,355	3,636	106	59.3%
Cash at bank and in hand		2,479		40.7%
Total investments		6,115		100.0%

*partially qualifying
**non-qualifying investment            

SUMMARY OF INVESTMENT MOVEMENTS
DSO D SHARE POOL
for the period ended 30 September 2017

Disposals	Cost	Valuation at 31/03/2017	Disposal proceeds	Total gain/(loss) against cost	Realised gain in period
	£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	223	201	209	(14)	8
Cheers Dumbarton	64	22	37	(27)	15
Lochrise Limited	17	-	10	(7)	10
	1,519	1,238	1,483	(36)	245
Structured Product investments
HSBC 5.4% Dual Index Synthetic Zero	501	598	608	107	10
	2,020	1,836	2,091	71	255

INVESTMENT MANAGER'S REPORT
DP67 SHARE POOL

Portfolio activity
One partial and one full realisation occurred during the period. As at 30 September 2017, the DP67 Share Pool had a portfolio of 7 investments with a value of £4.9m.

Results and net asset value
The net asset value ("NAV") per DSO DP67 Share at 30 September 2017 stood at 68.7p, an increase of 4.6p (7.0%) over the period, after adjusting for dividends paid. Total Return stands at 98.5p 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 period was £514,000, comprising a revenue gain of £57,000 and a capital gain of £457,000.

Portfolio valuation
The DP67 portfolio continues to perform well, with two uplifts during the period, totalling £244,000, and all other investment valuations remaining unchanged from the year end.

Dividends
The fifth anniversary of the close of the offer will fall during January 2018 and the first return of capital is expected to be announced shortly thereafter.

Outlook
The focus for the Share pool is on realisations and monitoring performance in order to maximise growth opportunities. Several companies are currently in exit processes and we hope to see further progress in this regard over the next six months.

Downing LLP

SUMMARY OF INVESTMENT PORTFOLIO
DP67 SHARE POOL
as at 30 September 2017

	Cost	Valuation	Unrealised gain  in period	% of portfolio by value
	£000	£000	£000
Venture Capital investments
Cadbury House Holdings Limited	1,409	1,613	-	22.5%
Snow Hill Developments LLP*	809	1,203	143	16.8%
Fenkle Street LLP*	405	678	-	9.5%
Oak Grove Renewables Limited	820	451	-	6.3%
Gatewales Limited*	344	446	101	6.2%
Yamuna Energy Limited	400	400	-	5.6%
London City Shopping Centre Limited*	99	99	-	1.4%
	4,286	4,890	244	68.3%
Cash at bank and in hand		2,264		31.7%
Total investments		7,154		100.0%

*non-qualifying investment

SUMMARY OF INVESTMENT MOVEMENTS
DP67 SHARE POOL
for the period ended 30 September 2017

Disposals	Cost	Valuation at 31/03/2017	Disposal proceeds	Total gain against cost	Realised gain in period
	£000	£000	£000	£000	£000
Brownfields Trading Limited	300	300	300	-	-
Gatewales Limited	65	102	340	275	238
	365	402	640	275	238

INVESTMENT MANAGER'S REPORT
DP2011 GENERAL SHARE POOL

Portfolio activity
During the period, six full exits and two partial disposals completed, generating proceeds of £5.1m. The largest of these, Vulcan Renewables Limited, generated proceeds of £2.5m and a profit over cost of £333,000. As at 30 September 2017, the DP2011 General Share Pool had a portfolio of ten investments with a value of £2.9m.

Net asset value and results
The combined net asset value ("NAV") of one DP2011 General Ordinary Share and one DP2011 General A Share at 30 September 2017 stood at 49.4p, a decrease of 3.2p or 6.9% over the period. Total Return stands at 104.4p 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 period was £593,000, comprising a revenue profit of £56,000 and a capital gain of £537,000.

Portfolio valuation
One small uplift and one small reduction in value were recognised in the period, generating a net uplift of £88,000. The valuations of the remaining investments are unchanged from the year end.

Dividends
The Share pool started the task of realising its investments earlier this year. As a result, a further return of capital, being 15.0p per DP2011 General Ordinary Share and 15.0p per DP2011 General A Share was paid on 2 November 2017 to shareholders on the register as at 13 October 2017. Further distributions will be made to shareholders as the remaining investments are realised.

Outlook
The focus for the pool is now on realising investments, in order to return funds to Shareholders. Shareholders will be provided with a further update in the annual report to 31 March 2018, which will be published in June 2018.

Downing LLP

SUMMARY OF INVESTMENT PORTFOLIO
DP2011 GENERAL SHARE POOL
as at 30 September 2017

		Cost	Valuation	Unrealised gain/(loss)  in period	% of portfolio by value
		£000	£000	£000
Venture Capital investments
Snow Hill Developments LLP*		750	1,095	113	12.8%
Wickham Solar Limited		550	600	-	7.0%
Odysian Holdings Limited		873	591	-	6.9%
Oak Grove Renewables Limited		400	233	-	2.7%
Mosaic Spa and Health Clubs Limited		212	101	(25)	1.2%
London City Shopping Centre Limited*		88	88	-	1.0%
Clean Electricity Limited*		70	70	-	0.8%
UK Renewable Power Limited*		55	55	-	0.6%
Fubar Stirling Limited		142	29	-	0.3%
21st Century Energy Limited*		22	22	-	0.3%
		3,162	2,884	88	33.6%
Cash at bank and in hand			5,675		66.4%
Total investments			8,559		100.0%

*non-qualifying investment

SUMMARY OF INVESTMENT MOVEMENTS
DP2011 GENERAL SHARE POOL
for the period ended 30 September 2017    

Disposals	Cost	Valuation at 31/03/2017	Disposal proceeds	Total gain/(loss) against cost	Realised gain in period
	£000	£000	£000	£000	£000
Vulcan Renewables Limited	2,199	2,199	2,532	333	333
Avon Solar Energy Limited	505	618	633	128	15
Mosaic Spa & Health Clubs Limited	935	699	699	(236)	-
Westcountry Solar Solutions Limited	600	521	535	(65)	14
City Falkirk Limited	330	283	389	59	106
Fubar Stirling Limited	268	241	251	(17)	10
Cheers Dumbarton Limited	27	27	22	(5)	(5)
Lochrise Limited	-	-	12	12	12
	4,864	4,588	5,073	209	485

INVESTMENT MANAGER'S REPORT
DP2011 STRUCTURED SHARE POOL

Portfolio activity
Six full and two partial realisations occurred during the period, generating proceeds of £3.1m. The largest of these, Vulcan Renewables Limited, generated proceeds of £1.5m and a profit over cost of £225,000 As at 30 September 2017, the DP2011 Structure Share Pool had a portfolio of five investments with a value of £1.4m.

Net asset value and results
The combined net asset value ("NAV") of one DP2011 Structured Ordinary Share and one DP2011 Structured A Share at 30 September 2017 stood at 39.5p, a decrease of 2.8p or 7.6% over the period. Total Return stands at 104.5p 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 period was £332,000 comprising a revenue profit of £43,000 and a capital gain of £289,000.

Portfolio valuation
One small reduction in value of £16,000 was recognised in the period. The valuations of the remaining investments are unchanged from the year end.

Dividends
The Share pool started the task of realising its investments earlier this year. As a result, a further return of capital, being 5.0p per DP2011 Structured Ordinary Share and 20.0p per DP2011 Structured A Share was paid on 2 November 2017 to shareholders on the register as at 13 October 2017. Further distributions will be made to shareholders as the remaining investments are realised.

Outlook
The focus for the pool is now on realising investments, in order to return funds to Shareholders. Shareholders will be provided with a further update in the annual report to 31 March 2018, which will be published in June 2018.

Downing LLP

SUMMARY OF INVESTMENT PORTFOLIO
DP2011 STRUCTURED SHARE POOL
as at 30 September 2017

		Cost	Valuation	Unrealised loss  in period	% of portfolio by value
		£000	£000	£000
Venture Capital investments
Wickham Solar Limited		550	600	-	12.5%
Odysian (Holdings) Limited		582	394	-	8.2%
Oak Grove Renewables Limited		545	317	-	6.6%
Mosaic Spa and Health Clubs Limited		142	67	(16)	1.4%
Fubar Stirling Limited		95	20	-	0.4%
		1,914	1,398	(16)	29.1%
Cash at bank and in hand			3,390		70.9%
Total investments			4,788		100.0%

SUMMARY OF INVESTMENT MOVEMENTS
DP2011 STRUCTURED SHARE POOL
for the period ended 30 September 2017

Disposals	Cost	Valuation at 31/03/2017	Disposal proceeds	Total gain/(loss) against cost	Realised gain/(loss) in period
	£000	£000	£000	£000	£000
Vulcan Renewables Limited	1,305	1,305	1,530	225	225
Avon Solar Energy Limited	336	412	422	86	10
Westcountry Solar Solutions Limited	400	347	356	(44)	9
Mosaic Spa & Health Clubs Limited	543	386	386	(157)	-
City Falkirk Limited	220	189	259	39	70
Fubar Stirling Limited	178	161	167	(11)	6
Cheers Dumbarton Limited	18	18	15	(3)	(3)
Lochrise Limited	-	-	8	8	8
	3,000	2,818	3,143	143	325

INVESTMENT MANAGER'S REPORT
DP2011 LOW CARBON SHARE POOL
Portfolio activity
As at 30 September 2017, the DP2011 Low Carbon Share Pool had a portfolio of four investments with a value of £2.9m.

Net asset value and results
The net asset value ("NAV") per DP2011 Low Carbon Ordinary Share at 30 September 2017 stood at 39.1p, a decrease of 3.9p over the period. Total Return stands at 107.5p per share compared to an initial cost to Shareholders, net of income tax relief, of 70.0p per share. The Total Return figure is stated net of the estimated performance fee.

We have reviewed and recalculated the estimated performance fee that we expect to become payable to Low Carbon Investors Limited and Downing LLP should the remaining investments be exited at their current valuations. This now stands at 5.5p per share. (We identified a computation error in the calculation at the previous year end when the estimate was stated as 2.5p per share.)

The loss on ordinary activities after taxation for the period was £303,000 comprising a revenue profit of £82,000 and a capital loss of £385,000.

Portfolio valuation
One uplift and three reductions in value were recognised in the period, generating a net value reduction of £303,000. The valuation changes have been processed in order to bring the portfolio valuations in line with the proceeds the Manager expects to realise on exit.

Dividends
As with the other DP2011 share pools, the process of returning funds to investors commenced in 2016. In respect of the Low Carbon pool, the Manager is working on transactions to realise the remaining investments and we believe that a final distribution should be made to Shareholders in early 2018.

Outlook
The focus for the pool is now on realising investments, in order to return funds to Shareholders. We anticipate that there will be an update for Shareholders early in the new year, once the remaining investments have been realised.

Downing LLP

SUMMARY OF INVESTMENT PORTFOLIO
DP2011 LOW CARBON SHARE POOL
as at 30 September 2017

		Cost	Valuation	Unrealised gain/(loss)  in period	% of portfolio by value
		£000	£000	£000
Venture Capital investments
21st Century Energy Limited		708	762	54	27.8%
UK Renewable Power Limited		780	686	(94)	25.0%
Clean Electricity Limited		710	686	(23)	25.0%
Progressive Power Generation Limited		800	560	(240)	20.4%
Total		2,998	2,694	(303)	98.2%
Cash at bank and in hand			45		1.8%
Total investments			2,739		100.0%

There were no disposals or additions during the period.

INVESTMENT MANAGER'S REPORT - GENERALIST SHARE POOL

Portfolio activity
Seven new and two follow on investments totalling £13.1m were made during the year, as we start to build the portfolio of the Generalist Share pool.

VCT Qualifying Investments
A further £250,000 was invested in Xupes Limited, an online retailer of pre-owned luxury goods including designer watches, handbags, jewellery and antiques. The management team has built a profitable business with a strong brand selling high-quality products, centred on exceptional customer service.

£250,000 was invested in Empiribox 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. The company has seen strong growth and now supplies to more than 20,000 pupils across 150 schools in the UK. 

£394,000 was invested in BridgeU, a company founded in 2014 to provide schools with a smart, modern university and careers guidance service. The platform provides intelligent university and course matching tailored to each student, helps teachers to support and manage the creation of compelling applications and provides senior leaders in schools with powerful analytics and reporting tools.

£500,000 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.

£567,000 was invested in Volo Commerce Limited, a leading provider of multichannel e-commerce technology. The company enables brands and retailers to efficiently and rapidly grow their e-commerce businesses by automating the sales process and providing valuable analytics to improve profitability and growth.

Non-Qualifying Investments
In order to utilise fundraising proceeds in the short term, £4.1m was invested in Downing Strategic Micro-Cap Investment Trust PLC and a follow on investment of £3m was made in the MI Downing UK Micro-cap Growth Fund. Both companies hold concentrated portfolios of UK listed companies, predominantly with market capitalisations of below £150m at the time of investment.

Further to this, £1.5m was invested in the MI Downing Monthly Income Fund, which targets a premium yield to the UK equity income sector.

£1.8m was also invested in the MI Downing Diversified Global Managers Fund, which invests in a global portfolio of specialised funds to provide access to a variety of asset classes and fund strategies.

Net asset value and results
At 30 September 2017, the NAV of a Generalist share stood at 98.7p, a decrease of 1.2p for the period, resulting from the initial "cash drag" of holding uninvested funds.

The loss on ordinary activities after taxation for the period was £340,000 comprising a revenue loss of £181,000 and a capital loss of £159,000.

Portfolio valuation
The carrying values of the liquidity investments have been adjusted to reflect their quoted prices as at 30 September 2017. With the exception of Destiny Pharma plc, which has been revalued to the prevailing bid price as at 30 September 2017, the venture capital portfolio continues to be held at cost, due to these investments being in an early stage.

Outlook
The task of building the Generalist Share portfolio is underway and we will continue to seek investment opportunities as we develop the investment portfolio.

Downing LLP

SUMMARY OF INVESTMENT PORTFOLIO
GENERALIST SHARE POOL
as at 30 September 2017

The following investments were held at 30 September 2017:

		Cost	Valuation	Unrealised (loss)/gain in period	% of portfolio
		£'000	£'000	£'000
Venture Capital investments
Volo Commerce Limited		567	567	-	1.9%
Destiny Pharma plc**		500	494	(6)	1.6%
Xupes Limited		450	450	-	1.5%
BridgeU Corporation		394	394	-	1.3%
Empiribox Limited		250	250	-	0.8%
		2,161	2,155	(6)	7.1%
Liquidity investments
Downing Strategic Micro-Cap Investment Trust plc*		4,100	4,059	(41)	13.4%
MI Downing UK Micro-Cap Growth Fund*		3,025	3,011	(14)	9.9%
MI Downing Diversified Global Managers Fund*		1,800	1,779	(21)	5.9%
MI Downing Monthly Income Fund*		1,500	1,558	58	5.1%
		10,425	10,407	(18)	34.3%
Total		12,586	12,562	(24)	41.4%
Cash at bank and in hand			17,732		58.6%
Total investments			30,294		100.0%

*non-qualifying investment
**listed and traded on the Main Market of the London Stock Exchange
All VCT Qualifying Investments are incorporated in England and Wales.

INVESTMENT MANAGER'S REPORT - HEALTHCARE SHARE POOL

Portfolio activity

One follow on and four new investments totalling £2.7m were made during the period, as we start to build the portfolio of the Healthcare Share pool.

VCT Qualifying Investments
£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.

Non-Qualifying Investments
In order to utilise fundraising proceeds in the short term, £700,000 was invested in Downing Strategic Micro-Cap Investment Trust PLC and a further £800,000 was invested in the MI Downing UK Micro-Cap Growth Fund. Both companies hold concentrated portfolios of UK listed companies, predominantly with market capitalisations of below £150m at the time of investment.

Further to this, £600,000 was invested in the MI Downing Monthly Income Fund, which targets a premium yield to the UK equity income sector.

£500,000 was also invested in the MI Downing Diversified Global Managers Fund, which invests in a global portfolio of specialised funds to provide access to a variety of asset classes and fund strategies.

Net asset value and results
At 30 September 2017, the NAV of a Healthcare share stood at 98.6p, a decrease of 1.1p for the period, resulting from the initial "cash drag" of holding uninvested funds.

The loss on ordinary activities after taxation for the period was £100,000, comprising a revenue loss of £49,000 and a capital loss of £51,000.

Portfolio valuation
The carrying values of all investments have been adjusted to reflect their quoted prices as at 30 September 2017.

Outlook
The task of building the Healthcare Share portfolio is underway and we will continue to seek investment opportunities as we develop the investment portfolio.

Downing LLP

SUMMARY OF INVESTMENT PORTFOLIO
HEALTHCARE SHARE POOL
as at 30 September 2017
The following investments were held at 30 September 2017:

		Cost	Valuation	Unrealised  (loss)/gain  in period	% of portfolio
		£'000	£'000	£'000
Venture Capital investments
Destiny Pharma plc**		750	740	(10)	8.2%
		750	740	(10)	8.2%
Liquidity investments
MI Downing UK Micro-Cap Growth Fund*		825	816	(9)	9.1%
Downing Strategic Micro-Cap Investment Trust plc*		700	693	(7)	7.7%
MI Downing Diversified Global Managers Fund*		600	593	19	6.6%
MI Downing Monthly Income Fund*		500	519	(7)	5.8%
		2,625	2,621	(4)	29.2%
Total		3,375	3,361	(14)	37.4%
Cash at bank and in hand			5,629		62.6%
Total investments			8,990		100.0%

* non-qualifying investment
**listed and traded on the Main Market of the London Stock Exchange
All VCT Qualifying Investments are incorporated in England and Wales.

UNAUDITED INCOME STATEMENT
for the six months ended 30 September 2017

	Six months ended 30 Sep 2017				Six months ended 30 Sep 2016			Year ended 31 Mar 2017
	Revenue	Capital	Total		Revenue	Capital	Total		Total
Company Total	£000	£000	£000		£000	£000	£000		£000
Income	545	-	545		978	-	978		1,999
Net gains on investments	-	1,440	1,440		-	1,165	1,165		1,980
	545	1,440	1,985		978	1,165	2,143		3,979
Investment management fees	(317)	(317)	(634)		(183)	(184)	(367)		(656)
Other expenses	(246)	-	(246)		(252)	-	(252)		(515)
Return on ordinary activities before tax	(18)	1,123	1,105		543	981	1,524		2,808
Tax on total comprehensive income and ordinary activities	(14)	-	(14)		18	-	18		(151)
Return attributable to equity shareholders, being total comprehensive income for the year	(32)	1,123	1,091		561	981	1,542		2,657
Return per DSO B Share	(0.4p)	0.5p	0.1p		0.3p	2.2p	2.5p		3.1p
Return per DSO C Share	-	-	-		-	-	-		-
Return per DSO D Share	0.6p	4.3p	4.9p		0.4p	2.0p	2.4p		5.6p
Return per DP67 Share	0.5p	4.1p	4.6p		1.2p	4.2p	5.4p		9.7p
Return per DP2011 Gen Ordinary Share	0.4p	3.4p	3.8p		1.1p	0.1p	1.2p		2.2p
Return per DP2011 Gen A Share	-	-	-		-	-	-		-
Return per DP2011 Struc Ordinary Share	0.4p	2.7p	3.1p		1.3p	(0.7p)	0.6p		0.7p
Return per DP2011 Struc A Share	-	-	-		-	-	-		-
Return per DP2011 Low Carbon Share	1.1p	(5.0p)	(3.9p)		0.4p	(0.4p)	0.0p		1.4p
Return per Generalist Share	(0.9p)	(0.7p)	(1.6p)		-	-	-		(2.0p)
Return per Healthcare Share	(1.3p)	(1.4p)	(2.7p)		-	-	-		(2.5p)

UNAUDITED INCOME STATEMENT (ANALYSED BY SHARE POOL)

	Six months ended 30 Sep 2017				Six months ended 30 Sep 2016				Year ended 31 Mar 2017
	Revenue	Capital	Total		Revenue	Capital	Total			Total
B Share pool	£000	£000	£000		£000	£000	£000			£000
Income	15	-	15		98	-	98			270
Gains on investments	-	121	121		-	458	458			494
	15	121	136		98	458	556			764
Investment management fees	(26)	(26)	(52)		(19)	(19)	(38)			(54)
Other expenses	(61)	-	(61)		(21)	-	(21)			(55)
Return on ordinary activities before taxation	(72)	95	23		58	439	497			655
Taxation	(14)	-	(14)		(7)	-	(7)			(36)
Return attributable to equity shareholders	(86)	95	9		51	439	490			619
	Revenue	Capital	Total		Revenue	Capital	Total			Total
D Share pool	£000	£000	£000		£000	£000	£000			£000
Income	96	-	96		91	-	91			174
Gains on investments	-	361	361		-	177	177			431
	96	361	457		91	177	268			605
Investment management fees	(22)	(22)	(44)		(20)	(21)	(41)			(86)
Other expenses	(29)	-	(29)		(37)	-	(37)			(80)
Return/(losses) on ordinary activities before taxation	45	339	384		34	156	190			439
Taxation	-	-	-		(3)	-	(3)			(2)
Return/(losses) attributable to equity shareholders	45	339	384		31	156	187			437

	Six months ended 30 Sep 2017				Six months ended 30 Sep 2016				Year ended 31 Mar 2017
	Revenue	Capital	Total		Revenue		Capital	Total		Total
DP67 Share pool	£000	£000	£000		£000		£000	£000		£000
Income	119	-	119		211		-	211		500
Gains on investments	-	482	482		-		503	503		883
	119	482	601		211		503	714		1,383
Investment management fees	(25)	(25)	(50)		(23)		(23)	(46)		(94)
Other expenses	(37)	-	(37)		(36)		-	(36)		(70)
Return on ordinary activities before taxation	57	457	514		152		480	632		1,219
Taxation	-	-	-		(15)		-	(15)		(129)
Return attributable to equity shareholders	57	457	514		137		480	617		1,090
	Revenue	Capital	Total		Revenue	Capital		Total		Total
DP2011 General Share pool	£000	£000	£000		£000	£000		£000		£000
Income	132	-	132		283	-		283		521
Gains on investments	-	573	573		-	64		64		164
	132	573	705		283	64		347		685
Investment management fees	(36)	(36)	(72)		(54)	(54)		(108)		(194)
Other expenses	(40)	-	(40)		(68)	-		(68)		(145)
Return/(losses) on ordinary activities before taxation	56	537	593		161	10		171		346
Taxation	-	-	-		17	-		17		1
Return/(losses) attributable to equity shareholders	56	537	593		178	10		188		347

		Six months ended 30 Sep 2017				Six months ended 30 Sep 2016			Year ended 31 Mar 2017
		Revenue	Capital	Total		Revenue	Capital	Total		Total
DP2011 Structured Share pool		£000	£000	£000		£000	£000	£000		£000
Income		86	-	86		218	-	218		354
Gains/(losses) on investments		-	309	309		-	(37)	(37)		(57)
		86	309	395		218	(37)	181		297
Investment management fees		(20)	(20)	(40)		(38)	(38)	(76)		(126)
Other expenses		(23)	-	(23)		(53)	-	(53)		(100)
Return/(losses) on ordinary activities before taxation		43	289	332		127	(75)	52		71
Taxation		-	-	-		9	-	9		1
Return/(losses) attributable to equity shareholders		43	289	332		136	(75)	61		72
		Revenue	Capital	Total		Revenue	Capital	Total		Total
DP2011 Low Carbon Share pool		£000	£000	£000		£000	£000	£000		£000
Income		112	-	112		77	-	77		179
(Losses)/gains on investments		-	(370)	(370)		77	-	77		67
		112	(370)	(258)		77	-	77		246
Investment management fees		(15)	(15)	(30)		(29)	(29)	(58)		(86)
Other expenses		(15)	-	(15)		(31)	-	(31)		(65)
Return/(losses) on ordinary activities before taxation		82	(385)	(303)		17	(29)	(12)		95
Taxation		-	-	-		17	-	17		12
Return/(losses) attributable to equity shareholders		82	(385)	(303)		34	(29)	5		107

		Six months ended 30 Sep 2017				Six months ended 30 Sep 2016			Year ended 31 Mar 2017
		Revenue	Capital	Total		Revenue	Capital	Total		Total
Generalist Share pool		£000	£000	£000		£000	£000	£000		£000
Income		10	-	10		-	-	-		-
Losses on investments		-	(24)	(24)		-	-	-		-
		10	(24)	(14)		-	-	-		-
Investment management fees		(135)	(135)	(270)		-	-	-		(10)
Other expenses		(56)	-	(56)		-	-	-		(1)
Return/(losses) on ordinary activities before taxation		(181)	(159)	(340)		-	-	-		(11)
Taxation		-	-	-		-	-	-		-
Return/(losses) attributable to equity shareholders		(181)	(159)	(340)		-	-	-		(11)
		Revenue	Capital	Total		Revenue	Capital	Total		Total
Healthcare Share pool		£000	£000	£000		£000	£000	£000		£000
Income		1	-	1		-	-	-		-
Losses on investments		-	(13)	(13)		-	-	-		-
		1	(13)	(12)		-	-	-		-
Investment management fees		(38)	(38)	(76)		-	-	-		(6)
Other expenses		(12)	-	(12)		-	-	-		-
Return/(losses) on ordinary activities before taxation		(49)	(51)	(100)		-	-	-		(6)
Taxation		-	-	-		-	-	-		-
Return/(losses) attributable to equity shareholders		(49)	(51)	(100)		-	-	-		(6)

UNAUDITED BALANCE SHEET
as at 30 September 2017

			As at 30 September 2017		As at 30 September 2016		As at 31 March 2017
			£'000		£'000		£'000
Fixed assets
Investments			31,939		26,760		27,095
Current assets
Debtors			1,180		1,114		1,709
Cash at bank and in hand			40,931		8,236		31,441
			42,111		9,350		33,150
Creditors: amounts falling due within one year			(338)		(731)		(833)
Net current assets			41,773		8,619		32,317
Net assets			73,712		35,379		59,412
8BCapital and reserves
Called up Share capital			180		135		144
Capital redemption reserve			31		31		31
Special reserve			29,203		33,272		30,620
Share premium account			39,846		-		10,074
Funds held in respect of shares not yet allotted			1,127		-		16,137
Revaluation reserve			(1,198)		(2,412)		(1,980)
Capital reserve - realised			4,668		2,621		3,331
Revenue reserve			(145)		1,732		1,055
Total equity shareholders' funds			73,712		35,379		59,412
Basic and diluted net asset value per Share:
DSO B Share			4.4p		20.0p		20.7p
DSO C Share			16.5p		0.1p		0.1p
DSO D Share			78.5p		75.5p		76.1p
DP67 Share			68.7p		63.9p		66.1p
DP2011 General Ordinary Share			15.0p		25.0p		15.0p
DP2011 General A Share			34.4p		30.3p		31.2p
DP2011 Structured Ordinary Share			5.0p		14.9p		4.8p
DP2011 Structured A Share			34.5p		31.8p		31.9p
DP2011 Low Carbon Share			39.1p		41.7p		43.0p
Generalist Share			98.7p		N/A*		99.9p
Healthcare Share			98.6p		N/A*		99.7p

*The comparative balance sheet as at 30 September 2016 includes only the Share Pools in existence at that date.

UNAUDITED BALANCE SHEET (ANALYSED BY SHARE POOL)
as at 30 September 2017
DSO B Shares

			As at 30 September 2017		As at 30 September 2016		As at 31 March  2017
			£'000		£'000		£'000
Fixed assets
Investments			514		1,743		1,752
Current assets
Debtors			1		18		74
Cash at bank and in hand			3,717		2,379		2,475
			3,718		2,397		2,549
Creditors: amounts falling due within one year			(72)		(126)		(151)
Net current assets			3,646		2,271		2,398
Net assets			4,160		4,014		4,150
Capital and reserves
Called up share capital - B Shares			20		20		20
Called up share capital - C Shares			30		30		30
Capital redemption reserve			31		31		31
Special reserve			3,095		3,693		3,186
Share premium reserve			-		-		-
Revaluation reserve			(945)		(1,742)		(1,108)
Capital reserve - realised			1,729		1,711		1,705
Revenue reserve			200		271		286
Total equity shareholders' funds			4,160		4,014		4,150

DSO D Shares

			As at 30 September 2017		As at 30 September 2016		As at 31 March  2017
			£'000		£'000		£'000
Fixed assets
Investments			3,636		4,966		5,365
Current assets
Debtors			113		185		254
Cash at bank and in hand			2,479		860		435
			2,592		1,045		689
Creditors: amounts falling due within one year			(51)		(75)		(62)
Net current assets			2,541		970		627
Net assets			6,177		5,936		5,992
Capital and reserves
Called up share capital			8		8		8
Capital redemption reserve			-		-		-
Special reserve			6,205		6,659		6,598
Share premium reserve			-		(263)		-
Revaluation reserve			281		-		(9)
Capital reserve - realised			(266)		(510)		(510)
Revenue reserve			(51)		42		(95)
Total equity shareholders' funds			6.177		5,936		5,992

DP67 Shares

		As at 30 September 2017		As at 30 September 2016		As at 31 March  2017
		£'000		£'000		£'000
Fixed assets
Investments		4,890		5,515		5,047
Current assets
Debtors		621		3		392
Cash at bank and in hand		2,264		1,775		2,396
		2,885		1,778		2,788
Creditors: amounts falling due within one year		(55)		(112)		(404)
Net current assets		2,830		1,666		2,384
Net assets		7,720		7,181		7,431
Capital and reserves
Called up share capital		11		11		11
Capital redemption reserve		-		-		-
Special reserve		5,623		5,592		5,836
Share premium reserve		-		-		-
Revaluation reserve		603		993		396
Capital reserve - realised		1,308		355		1,070
Revenue reserve		175		230		118
Total equity shareholders' funds		7,720		7,181		7,431

DP2011 General Shares

		As at 30 September 2017		As at 30 September 2016		As at 31 March  2017
		£'000		£'000		£'000
Fixed assets
Investments		2,884		7,284		7,385
Current assets
Debtors		205		479		585
Cash at bank and in hand		5,675		1,925		266
		5,880		2,404		851
Creditors: amounts falling due within one year		(76)		(190)		(143)
Net current assets		5,804		2,214		708
Net assets		8,688		9,498		8,093
Capital and reserves
Called up share capital		16		34		16
Capital redemption reserve		18		-		18
Special reserve		-		9,177		-
Share premium reserve		7,489		-		7,805
Revaluation reserve		(278)		(740)		(641)
Capital reserve - realised		956		466		466
Revenue reserve		487		561		429
Total equity shareholders' funds		8,688		9,498		8,093

DP2011 Structured Shares

		As at 30 September 2017		As at 30 September 2016		As at 31 March  2017
		£'000		£'000		£'000
Fixed assets
Investments		1,398		4,254		4,233
Current assets
Debtors		120		321		365
Cash at bank and in hand		3,390		1,155		28
		3,510		1,476		393
Creditors: amounts falling due within one year		(44)		(139)		(94)
Net current assets		3,466		1,337		299
Net assets		4,864		5,591		4,532
Capital and reserves
Called up share capital - Ordinary Shares		11		11		11
Called up share capital - A Shares		13		13		13
Capital redemption reserve		-		-		-
Special reserve		4,348		5,498		4,565
Share premium reserve		-				-
Revaluation reserve		(514)		(660)		(682)
Capital reserve - realised		685		346		346
Revenue reserve		321		383		279
Total equity shareholders' funds		4,864		5,591		4,532

DP2011 Low Carbon Shares

		As at 30 September 2017		As at 30 September 2016		As at 31 March  2017
		£'000		£'000		£'000
Fixed assets
Investments		2,694		2,998		3,065
Current assets
Debtors		248		108		140
Cash at bank and in hand		45		142		116
		293		250		256
Creditors: amounts falling due within one year		(28)		(89)		(59)
Net current assets		265		161		197
Net assets		2,959		3,159		3,262
Capital and reserves
Called up share capital		8		8		8
Capital redemption reserve		-		-		-
Special reserve		2,624		2,653		2,639
Share premium reserve		-		-		-
Revaluation reserve		(303)		-		67
Capital reserve - realised		253		253		253
Revenue reserve		377		245		295
Total equity shareholders' funds		2,959		3,159		3,262

Generalist Shares

		As at 30 September 2017		As at 30 September 2016		As at 31 March  2017
		£'000		£'000		£'000
Fixed assets
Investments		12,562		-		225
Current assets
Debtors		77		-		-
Cash at bank and in hand		17,732		-		21,225
		17,809		-		21,225
Creditors: amounts falling due within one year		(164)		-		(10)
Net current assets		17,645		-		21,215
Net assets		30,207		-		21,440
Capital and reserves
Called up share capital		38		-		7
Special reserve		(140)		-		(5)
Share premium reserve		31,063		-		7,633
Revaluation reserve		(24)		-		-
Funds held in respect of shares not yet allotted		566		-		14,012
Revenue reserve		(1,296)		-		(207)
Total equity shareholders' funds		30,207		-		21,440

Healthcare Shares

		As at 30 September 2017		As at 30 September 2016		As at 31 March  2017
		£'000		£'000		£'000
Fixed assets
Investments		3,361		-		25
Current assets
Debtors		-		-		-
Cash at bank and in hand		5,629		-		4,500
		5,629		-		4,500
Creditors: amounts falling due within one year		(46)		-		(7)
Net current assets		5,583		-		4,493
Net assets		8,944		-		4,518
Capital and reserves
Called up share capital		9		-		2
Special reserve		(41)		-		(3)
Share premium reserve		8,782		-		2,441
Revaluation reserve		(13)		-		-
Funds held in respect of shares not yet allotted		561		-		2,125
Revenue reserve		(354)		-		(47)
Total equity shareholders' funds		8,944		-		4,518

STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 September 2017

	Called up Share capital	Capital Redempt-ion reserve	Special reserve	Share premium account	Funds held in respect of shares not yet allotted	Revaluat-ion Reserve	Capital 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	-	-	-	-	-	137	986	(32)	1,091
Transfer between reserves*	-	-	(1,417)	-	-	645	772	-	-
Unallotted shares	-	-	-	-	14,798	-	-	-	14,798
Transactions with owners
Dividend paid	-	-	-	-	-	-	(421)	-	(421)
Cancellation of shares	-	-	-	-	-	-	-	-	-
Purchase of own shares	-	-	-	-	-	-	-	-	-
Issue of shares	36	-	-	29,772	(29,808)	-	-	-	-
Share issue costs	-	-	-	-	-	-	-	(1,168)	(1,168)
At 30 September 2017	180	31	29,203	39,846	1,127	(1,198)	4,668	(145)	73,712

*A transfer of £645,000 (31 March 2017: £66,000) representing previously recognised realised gains on disposal of investments during the period has been made from the Revaluation Reserve to the Capital reserve-realised.  A transfer of £1.4 million (31 March 2017: £13.8 million) representing realised gains on disposal of investments, less capital expenses and capital dividends in the period was made from Capital Reserve - realised to Special reserve. 

UNAUDITED STATEMENT OF CASH FLOWS

			Six months ended 30 September 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			23	384	514	593	332	(303)	(340)	(100)	1,105
(Gains)/losses on investments			(121)	(361)	(482)	(573)	(309)	370	24	13	(1,440)
Decrease/(increase) in debtors			35	141	(24)	380	244	(108)	(77)	-	591
Increase/(decrease) in creditors			5	(24)	(50)	(48)	(41)	(24)	154	41	16
Net cash inflow from operating activities			(58)	140	(42)	352	226	(65)	(239)	(46)	268
Corporation tax			(58)	10	(505)	(16)	(7)	(6)	-	-	(582)
New cash generated from operating activities			(116)	150	(547)	336	219	(71)	(239)	(46)	(314)
Cash flow from investing activities
Purchase of investments			-	-	-	-	-	-	(12,360)	(3,350)	(15,710)
Proceeds from disposal of investments			1,358	2,091	640	5,073	3,143	-	-	-	12,305
Net cash inflow/(outflow) from investing activities			1,358	2,091	640	5,073	3,143	-	(12,360)	(3,350)	(3,405)
Net cash inflow/(outflow) before financing			1,242	2,241	93	5,409	3,362	(71)	(12,599)	(3,396)	(3,719)
Cash flows from financing activities
Repurchase of shares			-	-	-	-	-	-	-	-	-
Issue of share capital			-	-	-	-	-	-	22,552	6,089	28,641
Unallotted shares			-	-	-	-	-	-	(13,446)	(1,564)	(15,010)
Equity dividends paid			-	(197)	(225)	-	-	-	-	-	(422)
Net cash (outflow)/inflow from financing activities			-	(197)	(225)	-	-	-	9,106	4,525	13,209
Net movement in  cash			1,242	2,044	(132)	5,409	3,362	(71)	(3,493)	1,129	9,490
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			3,717	2,479	2,264	5,675	3,390	45	17,732	5,629	40,931
Cash and cash equivalents comprise
Cash at bank and in hand			3,717	2,479	2,264	5,675	3,390	45	17,732	5,629	40,931
Total cash and cash equivalents			3,717	2,479	2,264	5,675	3,390	45	17,732	5,629	40,931

UNAUDITED STATEMENT OF CASH FLOWS

			Six months ended 30 September 2016							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	Total
			£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Cash flows from operating activities
Return on ordinary activities before taxation			491	190	632	171	52	(12)	1,524	2,808
Losses/(gains) on investments			(458)	(177)	(503)	(64)	37	-	(1,165)	(1,980)
Decrease/(increase) in debtors			33	(22)	196	(87)	(92)	(63)	(35)	(325)
(Decrease)/increase in creditors			(66)	19	4	24	15	7	3	(92)
Net cash inflow from operating activities			-	10	329	44	12	(68)	327	406
Corporation tax paid			(80)	(13)	(7)	(12)	(8)	(14)	(134)	(408)
New cash generated from operating activities			(80)	(3)	322	32	4	(82)	193	(2)
Cash flow from investing activities
Purchase of investments			-	-	(700)	-	-	-	(700)	(1,095)
Proceeds from disposal of investments			1,749	900	1,515	3,226	3,065	-	10,455	11,332
Net cash inflow/(outflow) from investing activities			1,749	900	815	3,226	3,065	-	9,755	10,237
Net cash inflow/(outflow) before financing			1,669	897	1,137	3,258	3,069	(82)	9,948	10,235
Cash flows from financing activities
Repurchase of shares			-	-	(49)	-	-	-	(49)	(49)
Issue of share capital			-	-	-	-	-	-	-	9,838
Unallotted shares			-	-	-	-	-	-	-	16,137
Equity dividends paid			-	(196)	(224)	(3,519)	(3,470)	(3,787)	(11,196)	(14,253)
Net cash (outflow)/inflow from financing activities			1,669	(196)	(273)	(3,519)	(3,470)	(3,787)	(11,245)	11,673
Net increase/(decrease) in cash			1,669	701	864	(261)	(401)	(3,869)	(1,297)	21,908
Cash and cash equivalents at start of year			710	159	911	2,186	1,556	4,011	9,533	9,533
Cash and cash equivalents at end of year			2,379	860	1,775	1,925	1,155	142	8,236	31,441
Cash and cash equivalents comprise
Cash at bank and in hand			2,379	860	1,775	1,925	1,155	142	8,236	31,441
Total cash and cash equivalents			2,379	860	1,775	1,925	1,155	142	8,236	31,441

*Comparative cash flows include only the DSO Share Pools in existence at those dates.

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS

General Information
Downing FOUR 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.

Basis of accounting
The unaudited half-yearly financial results cover the six months to 30 September 2017 and have been prepared in accordance with the accounting policies set out in the statutory accounts for the year ended 31 March 2017, which were prepared 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" revised November 2014 ("SORP").

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

The comparative figures are in respect of the six months ended 30 September 2016 and the year ended 31 March 2017 respectively.

Net asset value per share at the period end has been calculated on the number of shares in issue at the period end as follows:

DSO B Shares	19,911,070		DP2011 Structured Shares	10,678,725
DSO C Shares	29,926,070		DP2011 Structured A Shares	12,572,817
DSO D Shares	7,867,247		DP2011 Low Carbon Shares	7,575,419
DP67 Shares	11,239,785		Generalist Shares	37,504,899
DP2011 General Shares	15,644,066		Healthcare Shares	8,506,813
DP2011 General A Shares	18,418,614

Return per share for the period has been calculated on the average number of shares in issue in the period as follows:

DSO B Shares	19,911,070		DP2011 Structured Shares	10,678,725
DSO C Shares	29,926,070		DP2011 Structured A Shares	12,572,817
DSO D Shares	7,867,247		DP2011 Low Carbon Shares	7,575,419
DP67 Shares	11,239,785		Generalist Shares	21,210,366
DP2011 General Shares	15,644,066		Healthcare Shares	3,637,092
DP2011 General A Shares	18,418,614

Dividends

	Six months ended 30 September 2017
	Revenue		Capital		Total
	£000		£000		£000
Paid in period
DSO D Shares	-		197		197
DP67 Shares	-		225		225

Reserves

	30 Sep 2017		30 Sep  2016		31 Mar 2017
	£'000		£'000		£'000
Capital redemption reserve	31		31		31
Special reserve	29,203		33,272		30,620
Share premium account	39,846		-		10,074
Funds held in respect of shares not yet allotted	1,127		-		16,137
Capital reserve - realised	(1,198)		(2,412)		(1,980)
Revaluation reserve	4,668		2,621		3,331
Revenue reserve	(145)		1,732		1,055
Total reserves	73,532		35,244		59,268

The Revenue reserve, Special reserve and Capital reserve - realised are distributable reserves and are reduced by revaluation losses of £3.3 million. Distributable reserves at 30 September 2017 were £32.5 million.

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:

Level a   Reflects financial instruments quoted in an active market (quoted companies, investment funds 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 2017		Level a	Level b	Level c (ii)	31 Mar 2017
	£000	£000	£000	£000		£000	£000	£000	£000
Structured Products	-	-	-	-		598	-	-	598
Quoted equity	1,234	-	-	1,234		-	-	-	-
Liquidity Investments	13,029	-	-	13,029		-	-	-	-
Unquoted loan notes	-	-	7,432	7,432		-	-	12,781	12,781
Unquoted equity	-	-	10,244	10,244		-	-	13,716	13,716
	14,263	-	17,676	31,939		598	-	26,497	27,095

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

The Board has concluded that the key risks facing the Company over the remainder of the financial period are as follows:

- compliance risk of failure to maintain approval as a VCT;
- market, liquidity and counterparty risk associated with Liquidity Investments; and
- investment risk associated with investing in small and immature businesses.

The Company's compliance with the VCT regulations is continually monitored by the Manager, who reports regularly to the Board on the current position. The Company also retains Phillip Hare & Associates LLP ("Phillip Hare") to provide regular reviews and advice in this area. Philip Hare have confirmed that all relevant tests have been complied with for the period under review. The Board considers that this approach reduces the risk of a breach of the VCT regulations.

With this approach, the Board believes that these risks are reduced.

In order to make VCT qualifying investments, the Company has to invest in small businesses which are often immature. In addition, funds invested under the new VCT regulations in force from November 2015 provide greater restriction on, amongst other things, the age of the investments.  It also has a limited period in which it must invest the majority of its funds. The Manager follows a rigorous process in vetting and careful structuring of new investments, including taking a charge over the assets of the business wherever possible and, after an investment is made, closely monitoring thebusiness. The Board is satisfied that this approach reduces the investment risk described in (iii) above as far as is reasonably possible.

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

The Board confirms that it is satisfied that the Company has adequate resources to continue in business for the foreseeable future. For this reason, the Board believes that the Company continues to be a going concern and that it is appropriate to apply the going concern basis in preparing the financial statements.

Statutory accounts
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 Directors confirm that, to the best of their knowledge, the half-yearly financial statements have 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:

- 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

- DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in 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.

Copies of the Half-Yearly Report will be sent to Shareholders shortly. Further copies can be obtained from the Company's registered office or can be downloaded from www.downing.co.uk.

PERFORMANCE INCENTIVE ARRANGEMENTS
Performance incentive arrangements are in place for the each share pool except the DP67 pool.  The various schemes are summarised as follows:

DSO B Shares
The performance incentive in respect of the DSO B Shares is facilitated by holdings of DSO C Shares that are held by members of the management team (who subscribed for A Shares at 0.1p per share). An incentive is due to management when the hurdle is met as follows:
- Shareholders receive total proceeds of at least 100p per DSO B Share/DSO C Share (excluding income tax relief); and
- Shareholders achieve a tax-free compound return of at least 7% per annum (after allowing for income tax relief on investment).

After the above hurdle is met, management receive 3% of the proceeds on the first 100p of distributions and 20% thereafter.  This is paid by dividends by virtue of the shareholdings of C Shares held by the management team.

The maximum performance incentive is limited to an amount equivalent to 1.25% of Net Assets attributable to DSO B Shares per annum. With a lower than usual ongoing management fee of 1.5%, the maximum management fees (including performance incentive) borne by investors is 2.75% of net assets per annum.

As at 30 September 2017, the estimated performance fee is 5.5p per DSO B Share.

DSO D Shares
The Performance Incentive in respect of the DSO D Shares is structured as a simple fee when the hurdle is met. A fee is payable when:
- Shareholders receive total proceeds of at least 100p per DSO D Share (excluding income tax relief); and
- Shareholders achieve a tax-free compound return of at least 7% per annum (after allowing for income tax relief on investment).

If the hurdle is met, the fee will be 3p per DSO D Share plus 20% of shareholder proceeds above 100p per D Share. The maximum performance fee is limited to 7p per D Share.

As at 30 September 2017, the estimated performance fee is 4.2p per DSO B Share.

DP2011 General Shares/ DP2011 Structured Shares
The performance incentive arrangements in respect of the DP2011 General and DP2011 Structured pools enable payments, by way of distributions of income, to members of the management team who subscribed for 15% of the DP2011 General A Shares and DP2011 Structured A Shares at 6.5p per share.

Once proceeds to Shareholders exceeds 70p per DP2011 General Ordinary Share/DP2011 Structured Ordinary Share a performance incentive of 15% becomes due to members of the management team.  No further incentive is paid to management once Shareholder proceeds exceed 120p per DP2011 General Ordinary Share/DP2011 Structured Ordinary Share.

As at 30 September 2017, it been estimated that a performance incentive due to management in respect of the DP2011 General and Structured Share pools will be approximately 5.2p per DP2011 General Ordinary Share and 5.2p per DP2011 Structured Ordinary Share.

DP2011 Low Carbon Shares
As no A Shares were issued in connection with the DP2011 Low Carbon Share pool, the performance incentive takes the form of an incentive fee payable to Downing LLP.

A fee will become payable equal to 15% of shareholder proceeds in excess of 70p per share. No further fees accrue after shareholder proceeds exceed 120p per share.

As at 30 September 2017, it been estimated that a performance incentive fee due in respect of the DP2011 Low Carbon Pool will be approximately equivalent to 5.5p per DP2011 Low Carbon Shares.

Generalist and Healthcare Share pools
A performance incentive scheme is in place in respect of the Generalist and Healthcare Management Shares, which will represent 20% of the total number of Generalist and Healthcare Shares in issue. As part of the arrangement,  in order to prevent dilution to the shareholders of the Generalist and Healthcare Shares,  the  management  team  will  waive  their  voting  rights  granted  by  these  Management  Shares  at  any  general  meeting  of  the  Company  and  income  or  capital  distributions  otherwise payable on these Management Shares will be waived unless the share class  has achieved a Total Return (based on audited year end results) in excess of £1 per share for the years ended 31 March 2018, 31 March 2019 and 31 March 2020. For subsequent years, the Total Return hurdle increases by 3p per annum such that for the year ended 31 March 2021 the hurdle is £1.03, and for the year ended 31 March 2022 the hurdle is £1.06.

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Source: Downing FOUR VCT plc via Globenewswire