Half Yearly Results
21/12/2023 15:34
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Thames Ventures VCT 2 plc
LEI: 21380035MV1VRYEXPR95
Half Yearly Results
21 December 2023
Financial Highlights
Unaudited 30 September 2023 pence Unaudited 30 September 2022 pence Audited 31 March 2023 pence
Ventures Share pool
Net Asset Value per Ventures Share 50.1 68.5 59.4
Cumulative distributions 9.25 8.0 8.0
Total Return per Ventures Share 59.35 76.5 67.4
Healthcare Share pool
Net Asset Value per Healthcare Share 52.3 71.7 61.6
Cumulative distributions 10.0 8.75 8.75
Total Return per Healthcare Share 62.3 80.45 70.35
AIM Share pool
Net Asset Value per AIM Share 100.7 99.0 101.1
Cumulative distributions - - -
Total Return per AIM Share 100.7 99.0 101.1
DSO D Share pool
Net Asset Value per DSO D Share 2.7 2.6 2.6
Cumulative distributions 102.0 102.0 102.0
Adjusted for Performance Incentive estimate (1) - - -
Total Return per DSO D Share 104.7 104.6 104.6
DP67 Share pool
Net Asset Value per DP67 Share 25.4 24.4 24.8
Cumulative distributions (since original launch) 67.8 67.8 67.8
Total Return per DP67 Share 93.2 92.2 92.6
1. Based on Total Return to Shareholders at 30 September 2023, no Performance
Incentive is expected to become due to management.
Chairman’s Statement
Introduction
I present the Company’s unaudited Half-Yearly Financial Report for the six
months ended 30 September 2023.
Following an eventful year ended 31 March 2023, with the main Investment
Manager changing from Downing LLP to Foresight Group LLP, the six-month period
ended 30 September 2023 has been more settled from a management perspective.
However, performance during the period has been disappointing, with the UK
investment environment continuing to remain challenging.
Although the UK has managed to avoid a recession so far, real GDP growth has
been sluggish. Inflation has remained stubbornly high, which has led to a
series of interest rate increases, albeit a recent sharp decline in UK
inflation rates might provide a glimpse of hope. However, heightened
nervousness in the financial markets and recent changes to banks’ capital
adequacy rules are beginning to reduce the level of funding available for
smaller businesses. Understandably, consumer and business confidence in the UK
remains fragile, and this has been reflected in some of the portfolio
performance for the six-month period ended 30 September 2023.
Evergreen Share pool review
Ventures Share pool
During the period, the Ventures Share pool made one follow-on investment of
£0.2 million and received total exit proceeds of £2.2 million. This is
against a backdrop of continuing challenges in the UK economy. The Ventures
Share class Total Return stood at 59.35p as at 30 September 2023. This is a
decrease of 8.05p or 11.9% in Total Return over the period, after adjusting
for the dividend of 1.25p per Ventures Share, paid on 29 September 2023.
The NAV decrease over the period is predominantly driven by regulatory
factors, with the VCT unable to participate in the recent funding round for
Cornelis Networks Inc. due to restrictions resulting from the VCT rules around
the gross assets test of the portfolio company. Limitless Limited also
suffered due to the lead investor remaining on the UK sanctions list. As a
result, both companies experienced valuation reductions in the period.
In June, we exited Imagen returning £1.7 million, with a further distribution
of £138k received post period end. There was also a distribution of capital
reserves following the sale of Maverick Pubs (Holdings) Limited real estate
development company. The investment in Downing Strategic Micro-Cap Investment
Trust plc fell in value during the period, broadly in line with the trend for
small cap stocks.
A more detailed review of the Ventures Share pool is included in the Ventures
Investment Manager’s Report on pages 5 to 8.
Healthcare Share pool
The Healthcare Share pool continues to be managed by Downing LLP, although we
hope to move the management to Foresight in due course to align with the
Ventures share pool. During the period, the Healthcare Share pool made one
follow-on investment of £0.25 million in Cambridge Respiratory Innovations
Limited (now trading as Tidal Sense). Proceeds of £0.4 million were generated
from two exits completed in the period, DiA Imaging Analysis Limited and an
immaterial partial sale of shares in listed company, GENinCode plc.
As at 30 September 2023, the Healthcare Share pool Total Return stood at
62.3p. This is a decrease of 8.05p or 11.4% in Total Return over the period,
after adjusting for the dividend of 1.25p per Healthcare Share, paid on 29
September 2023.
The NAV decrease over the period is largely attributable to the fall in the
valuation of the two companies which are marked to market: Arecor Therapeutics
plc and GENinCode plc. Based on their quoted share prices as at 30 September
2023, Arecor and GENinCode showed unrealised valuation losses totalling £1.2
million for the period. Share market liquidity for both businesses is limited,
amplifying the AIM market share price falls and volatility as the general
economic climate deteriorates. Additionally, Congenica Limited has been
written down to nil resulting in an unrealised valuation loss of £865,000.
This is again driven by regulatory factors, with the VCT unable to participate
in a funding round which closed following the period-end, materially impacting
the Company’s position. The remaining investments in the Healthcare
portfolio showed a net increase in valuation of £0.2 million for the period.
A more detailed review of the Healthcare Share pool is included in the
Investment Manager’s Report on pages 9 to 10.
AIM Share pool
Downing continues to provide management services in respect of the AIM Share
pool for an interim period.
At the period end, NAV stood at 100.7p. Total Return at 30 September 2023
stood at 100.7p per Share, a 0.4p or 0.4% decrease from 101.1p as at 31 March
2023.
The deal flow for VCT qualifying AIM raises has been disappointing as IPOs
have dried up and market sentiment has not supported new fundraises, against a
backdrop of deteriorating general economic conditions. However, the Manager
continues to see all new qualifying secondary and imminent IPOs and is using
this time to conduct enhanced due diligence on potential investments. There
were no additions or disposals in the period.
Planned Exit Share pools
As with the AIM Share pool, Downing LLP continues to provide investment
management services in respect of the investments held by the planned exit
share pools.
DSO D Share pool
The exit from the two final assets in this Share pool completed during the
period with £39,000 of liquidation proceeds received.
At the period end, NAV stood at 2.7p. Total Return at 30 September 2023 stood
at 104.7p per Share, an increase of 0.1p or 0.1% from 104.6p as at 31 March
2023.
A more detailed review of the DSO D Share pool is included in the Investment
Manager’s Report on pages 13 to 14.
DP67 Share pool
The DP67 Share pool holds two remaining investments of value. At the period
end, NAV stood at 25.4p. Total Return at 30 September 2023 stood at 93.2p per
Share, an increase of 0.6p or 0.6% from 92.6p as at 31 March 2023.
The DP67 Share pool has significant exposure to the hospitality sector and
progress towards achieving an exit continues to be slow in the aftermath of
the pandemic and a particularly challenging economic backdrop. Having said
this, the portfolio is performing well and, for this reason, the Manager is
hopeful that it will be able to secure exits in 2024, giving the market a
chance to recover.
A more detailed review of the DP67 Share pool is included in the Investment
Manager’s Report on pages 15 to 16.
Dividends
On 29 September 2023, the Company paid dividends in respect of the year ended
31 March 2023 of 1.25p per Ventures Share and 1.25p per Healthcare Share. This
brings the total dividends paid to date on each of the Ventures and Healthcare
Share pools, to 9.25p and 10.0p respectively.
Dividends in respect of the Ventures and Healthcare Share classes are paid
once a year, typically in September. Both share classes target a dividend
level of at least 4% of NAV per annum, but as I reported in the 31 March 2023
annual report, the final dividends paid in September 2023 were reduced from
their normal levels, following a lower than expected fund raise last year. The
Board continues to take a prudent view and be cautious with the Company’s
uninvested funds.
For the DSO D Share pool, a final dividend will be declared shortly to return
funds to Shareholders and the share pool will then be wound up in the coming
months. For the DP67 Share pool, the next and final dividends will be declared
once further realisations have taken place.
The AIM Share class has no target dividend and is unlikely to pay any dividend
in these early years of its life.
Special Administration of the Company’s Custodian of Quoted Assets
Since March 2022, the Company has used IBP Markets Limited ("IBP") as
custodian for its quoted investments, with exposure across the Ventures,
Healthcare and AIM Share classes. Appointing a custodian is a requirement of
the FCA, and IBP is an FCA authorised and regulated wholesale broker,
providing custody services and access to equity and fixed income securities
for non-retail clients (which includes the Company). On 13 October 2023, the
FCA published a supervisory notice under section 55L(3)(a) of the Financial
Services and Markets Act 2000, imposing certain restrictions on IBP. On the
same date, IBP applied to the High Court and special administrators were
appointed. The special administrators have yet to publish an estimated outcome
statement and therefore the full impact is currently unknown. The Manager is
actively collaborating with the special administrators to reach a resolution
and will communicate with Shareholders when further information becomes
available. Whilst this is being resolved, the Company is unable to trade on
the quoted market.
The Manager is in regular dialogue with the special administrators. The
outcome remains subject to change particularly as additional claims may be
made on custody assets and client money and there remains a risk to the
positions. However, considering the information made available to the Company
at the date of this report, there is currently little indication that there
will be a materially adverse impact to Shareholders with respect to the
custody assets. The position with respect to client money remains to be
determined, but total cash at IBP relates to the Healthcare Share pool and
represented 0.2% of NAV as at 30 September.
Share buybacks
As noted in the most recent annual report, the Board does not expect to
undertake share buybacks in the Ventures, Healthcare and AIM share pools for a
period while discussions continue with the Manager as to how the Company can
best achieve its objectives for Shareholders. We hope to be in a position to
notify Shareholders of future plans shortly, once clarity is obtained on the
IBP situation noted above.
As the focus for the two remaining Planned Exit Share pools is on returning
funds to Shareholders via distributions, the Company will not undertake any
further buybacks in respect of those share classes.
Fundraising
With the uncertainty brought about by the special administration of the
custodian of the Company’s quoted stocks, we have not been in a position to
launch a fundraise so far this year. Once clarity is achieved on the IBP
situation (hopefully in the coming weeks), the Board will be able to consider
options for fundraising and will communicate this with Shareholders.
Sunset clause
A “sunset clause” applies to the current approved scheme for EIS and VCT
tax reliefs. This clause provides that income tax relief will expire on
subscriptions made for VCT shares on or after 6 April 2025, unless the
legislation is amended to make the scheme permanent, or the “sunset
clause” is extended.
The Chancellor confirmed in the autumn statement that the government remains
committed to ensuring early-stage, innovative companies have access to the
investment they need to grow and develop. As a result it was announced on 22
November 2023 that the government will legislate to extend the Enterprise
Investment Scheme (‘EIS’) and Venture Capital Trusts (‘VCT’) to 2035.
Change of Company Secretary and Registered Office
I am pleased to announce that Foresight Group LLP was appointed as Company
Secretary effective from 12 September 2023, succeeding Grant Whitehouse. I
would like to take this opportunity to thank Grant for his many years of
dedication and service to the Company.
Outlook
Although there are now significant challenges for businesses in most sectors,
the Board believes that young growth companies still have the ability to offer
attractive rewards to investors. The Board hopes to see the Ventures
investment team continue to leverage the full benefits of the regional office
network and other resources of Foresight Group and to identify suitable new
potential investments to further diversify the portfolios, while also closely
monitoring and supporting the existing investments.
I look forward to updating all Shareholders in my statement with the Annual
Report, which we expect to publish in July 2024.
Sir Aubrey Brocklebank Bt.
Chairman
21 December 2023
Investment Manager’s Report - Ventures Share Pool
Introduction
We present our review of the investment portfolio for the Ventures Share pool
for the six months to 30 September 2023.
This Investment Manager’s Report is split into two sections comprising this
overview and a review of the portfolio. Overview of Liquidity Investments
within the Ventures Share class is detailed on page 6.
Where the Ventures Share pool has invested alongside the Healthcare Share
pool, further valuation commentary can be found within the Investment
Manager’s Report for the Healthcare Share pool, on page 9.
Net Asset Value and results
As at 30 September 2023, the NAV of a Ventures Share stood at 50.1p, a
decrease of 8.05p from 31 March 2023, after adding back the dividend of 1.25p
which was paid during the period.
The return on ordinary activities for the Ventures Share pool for the period
was a loss of £4.3 million, comprising a revenue loss of £0.3 million and a
capital loss of £4.0 million.
The Total Return to Shareholders as at 30 September 2023 was 59.35p.
Portfolio Overview
As at 30 September 2023, the Ventures Share pool held a portfolio of 34
ventures investments and one liquidity investment, with a total carrying value
of £21.7 million.
Portfolio Performance
Overall, several larger valuation uplifts in the Ventures Share pool were
outweighed by a number of valuation decreases during the period, resulting in
a net valuation decrease of £4.1 million across the portfolio.
The carrying value of the liquidity investment has been adjusted to reflect
its quoted price as at 30 September 2023. This resulted in a valuation
decrease of £131,000 for the half-year period.
Investment activity
There was one investment made during the period. £0.2 million was invested
into an existing portfolio company, Cambridge Touch Technologies Limited, a
company developing pressure sensitive multi touch technology.
There were no investments made into new companies during the period, however,
shortly after the period-end, £0.1 million was invested in a new company,
Inoviv Limited. Inoviv has a long-term data play in drug discovery and trials,
having developed novel precision biomarker technology which helps
pharmaceutical customers run drug trials more efficiently. This investment
will enable Inoviv to further accelerate their commercial plans, including
facilitating the development of tests across more diseases.
Exits
There were three full exits in the period, being Imagen Limited, a Software as
a Service (“SaaS”) video management platform which holds both current and
archive footage for major sporting organisations and news outlets. The company
was sold for initial cash consideration of £1.7 million at a gain over cost
of £0.7 million. There is also £0.2 million of deferred consideration taking
total proceeds to £1.9 million and a total gain over cost of £0.9 million.
There was also £450,000 received in relation to the exit of Maverick Pubs
(Holdings) Limited. This was a distribution of capital reserves following the
sale of this real estate development company. Maverick Pubs (Holdings) was
seeking to build quality freehold pubs in and around London, however it was
adversely impacted by the COVID pandemic, being forced to shut sites, and the
subsequent impact of the UK economic downturn. Costs invested were £1.0
million, therefore losses realised were £550,000.
Finally, Live Better With Limited was formally dissolved on 25 July 2023.
Portfolio valuation
During the period, the portfolio of the Ventures Share pool decreased in value
by a net movement of £3.8 million. Nine companies in the portfolio recorded a
combined valuation gain of £1.0 million in the period. However this was
offset by a number of companies reporting combined valuation losses totalling
£4.8 million. This is driven by regulatory reasons in relation to Cornelis
and Limitless (further detail below) and by the ongoing challenges for
businesses operating in the UK with associated restriction on access to
capital. The £1.0 million of uplift in valuation over the period is driven by
the following investments.
Carbice Limited (£354,000), the developer of a suite of products based on its
carbon material called Carbice Carbon which is primarily used as thermal
management solutions to enable greater thermal conductivity, has continued to
progress well during the period, with recurring revenues continuing to grow
and continued progress on fundraising.
FundingXchange Limited (£353,000), an SME funding platform and B2B technology
provider which enables online lending. After a challenging twelve months, this
company has negotiated additional funding to deliver its growth plan. The
valuation of this investment has therefore been uplifted to reflect this.
Cambridge Touch Technologies Limited (£116,000), a company developing
pressure sensitive multi touch technology. The value of this investment was
uplifted to reflect the valuation of the round which completed during the
period.
Offsetting these valuation uplifts, are a number of valuation decreases across
the portfolio.
Cornelis Networks, Inc. (£2.8 million) is a technology provider delivering
purpose-built high-performance fabrics for High Performance Computing,
Analytics and Artificial Intelligence to leading commercial, scientific,
academic, and government organizations. The valuation decreased to reflect a
funding round which closed in the period in which Thames Ventures VCT 2 Plc
was unable to participate due to the company not meeting the gross assets test
to be VCT-qualifying. Not participating led to a significant dilution of the
Company’s stake which has been reflected in the movement in valuation.
Limitless Limited (£625,000), the developer of a crowdsourced customer
service platform, was subject to a valuation reduction as a result of one of
the co-investors being on the UK Sanctions List giving rise to a funding risk.
Congenica Limited (£605,000), has developed a genomics-based diagnostic
decision support platform which helps doctors identify rare diseases in
patients. This company is co-invested by the Ventures and Healthcare Share
class. Further valuation commentary can be found within the Investment
Manager’s Report for the Healthcare Share pool, on page 9.
CommerceIQ Inc. (£394,000), the pioneer in helping brands win on retail
ecommerce channels. Their unified platform applies machine learning and
automation across marketing, supply chain, and sales operations to help brands
gain market share profitably. This valuation movement is simply a reflection
of current market conditions. The company continues to perform well growing
revenues during the period and supported by a very strong balance sheet.
There are a number of smaller valuation movements which partially offset one
another for the half-year period, ultimately resulting in an additional net
decrease in value of £243,000.
Liquidity investments
The Ventures Share pool holds one non-qualifying investment in Downing
Strategic Micro-Cap Investment Trust plc (“DSM”). This decreased in value
by £131,000 over the period. Whilst this is disappointing, it is broadly in
line with market conditions, and the valuation decrease continues to narrow
over the prior period.
Outlook
The six months to 30 September 2023 has experienced challenging market
conditions, with inflation and global interest rates still high, which has had
an inevitable impact on the portfolio.
Further to this, there have been a number of events impacting the valuation of
investments in the Ventures portfolio which have been unavoidable, as noted
with Cornelis Networks and Limitless above.
Despite this, we continue to see improved performance from certain more
resilient portfolio companies and anticipate this will continue. Further to
this, the economic situation has recently seen its first glimpse of hope with
the UK’s annual inflation rate falling sharply in October, its lowest level
for two years. This being said, we are cognisant that the market has been, and
will continue to be, challenging for younger companies to use capital
efficiently in order to generate growth. The portfolio companies that survive
this economic turbulence may be better placed than beforehand, due to tighter
cost and cash management.
We continue to add the skills and experience to our team that is suited to
these ongoing market conditions in terms of supporting portfolio companies as
well as converting new investment opportunities.
Thames Ventures VCT Team
Foresight Group LLP
21 December 2023
Review of Investments – Ventures Share Pool
The following investments were held at 30 September 2023:
Cost as at 30 September 2023 Valuation as at 30 September 2023 Additions / (disposals) in period Valuation movement in period % of portfolio
Portfolio of investments £’000 £’000 £’000s £’000
Virtual Class Limited (Third Space Learning) 1,053 2,088 - (111) 8.1%
Ayar Labs Inc 764 1,867 - 27 7.2%
Rated People Limited 1,582 1,743 - (78) 6.8%
Hackajob Limited 1,284 1,654 - (11) 6.4%
CommerceIQ Inc 1,749 1,337 - (394) 5.2%
Ecstase Limited (t/a ADAY) 1,000 1,000 - - 3.9%
Masters of Pie Limited 886 928 - 52 3.6%
Cambridge Touch Technologies Limited 1,159 921 200 116 3.6%
Trinny London Limited 219 897 - (37) 3.5%
Parsable Inc 766 764 - 11 3.0%
Carbice Corporation Inc 656 760 - 354 2.9%
Upp Technologies Group Limited 1,136 756 - (167) 2.9%
FVRVS Limited (t/a Fundamental VR) 787 678 - - 2.6%
FundingXchange Limited 1,050 629 - 353 2.4%
Arecor Therapeutics plc^ 418 625 - (197) 2.4%
Vivacity Labs Limited 493 490 - - 1.9%
Bulbshare Limited 249 449 - 22 1.7%
Maestro Media Limited 340 419 - - 1.6%
MIP Discovery Limited 300 300 - - 1.2%
DSTBTD Limited (Trading as Distributed) 275 275 - - 1.1%
Audioscenic Limited 200 200 - - 0.8%
Destiny Pharma plc^ 500 159 - 71 0.6%
Cornelis Networks Inc 1,402 115 - (2,759) 0.4%
Limitless Technology Limited 757 78 - (625) 0.3%
London City Shopping Centre Limited* 118 - - - 0.0%
Glisser Limited 200 - - - 0.0%
Odysian (Holdings) Limited 387 - - - 0.0%
Lineten Limited 400 - - - 0.0%
Congenica Limited 734 - - (605) 0.0%
Hummingbird Technologies Limited 750 - - - 0.0%
Channel Mum Limited 757 - - - 0.0%
Ormsborough Limited 900 - - - 0.0%
Empiribox Limited 1,563 - - - 0.0%
Lignia Wood Company Limited 1,778 - - - 0.0%
Imagen Limited - - (1,746) 43 0.0%
Maverick Pubs (Holdings) Limited - - (450) 6 0.0%
Live Better With Limited - - - - 0.0%
26,612 19,132 (1,996) (3,929) 74.1%
Liquidity investment
Downing Strategic Micro-Cap Investment Trust plc*^ 4,269 2,570 - (131) 10.0%
30,881 21,702 (1,996) (4,060) 84.1%
Cash at bank and in hand 4,105 15.9%
Total investments 25,807 100.0%
*non-qualifying investment
^listed and traded on the London Stock Exchange
Investment movements for the period ended 30 September 2023
Cost
Additions £’000
Cambridge Touch Technologies Limited 200
200
Cost Valuation at 31 March 2023 Proceeds Valuation movement in period Realised gain/(loss)
Disposals £’000 £’000 £’000 £’000 £’000
Imagen Limited 1,000 1,703 1,746 43 746
Maverick Pubs (Holdings) Limited 1,000 444 450 6 (550)
Live Better With Limited 1,211 - - - (1,211)
3,211 2,147 2,196 49 (1,015)
Investment Manager’s Report – Healthcare Share Pool
1.
Introduction
We present a review of the investment portfolio and activity for the
Healthcare Share pool over the six-month period to 30 September 2023. As noted
earlier in this report, although Foresight Group is now the primary Investment
Manager for the Company, Downing LLP continues to be the Investment Manager of
the Healthcare Share pool.
Net Asset Value and results
As at 30 September 2023, the NAV of the Healthcare Shares stood at 52.3p per
Share, a decrease of 8.05p per Share from 31 March 2023 after adding back the
dividend of 1.25p which was paid during the period. The majority of the fall
was from the decrease in the value of Congenica Limited and quoted investments
in the portfolio.
The loss on ordinary activities for the Healthcare Share pool for the period
was £2.0 million, comprising a revenue loss of £150,000 and a capital loss
of £1.9 million. The Total Return to Healthcare Shareholders, as at 30
September 2023, was 62.3p per Share.
Portfolio Overview
As at 30 September 2023, the Healthcare Share pool held a portfolio of 13
ventures investments and one liquidity investment, with a combined value of
£10.3 million.
The valuation movements during the period are discussed in more detail in the
following sections of this Investment Manager’s Report.
Portfolio Performance
There were a number of valuation movements in the Healthcare ventures
portfolio during the period, resulting in a net valuation decrease of £1.9
million.
The carrying value of the liquidity investment has been adjusted to reflect
the quoted prices as at 30 September 2023. This resulted in a valuation
decrease of £22,000 for the period.
Investment activity
During the period, £250,000 was invested in Cambridge Respiratory Innovations
Limited, an existing portfolio company which provides AI-driven respiratory
diagnostic and monitoring technologies.
Exits
DiA Imaging Analysis Limited was exited during the period returning £393,000
to the Company and we continue to recognise £103,000 of deferred
consideration related to the exit.
A total of 234,676 GENinCode plc shares have been sold during the period,
leaving 6,132,642 remaining at 30 September 2023. The remaining shares have
experienced a decrease in value from £0.17 per share to £0.10 per share. The
combined result is a fall in net valuation of £438,000. This is 75% off its
2021 high and representative of the malaise within small-cap healthcare stocks
since 2021.
Portfolio valuation
There were a number of valuation movements within the portfolio over the
period.
Congenica Limited is behind plan as a result of the slower than expected
uptake of genomic sequencing and analysis as a routine part of healthcare.
Post period-end, Congenica Limited secured funding which resulted in the
Company’s position being materially impacted. The Company was unable to
participate as Congenica Limited is no longer VCT-qualifying. As a result, the
valuation of the holding has been written down to £nil, a reduction of
£865,000 in the period.
Arecor Therapeutics plc is quoted on AIM and valued at £1.90 per share at 30
September 2023. This is a decrease of £0.60 per share over the period causing
a fall in valuation of £724,000. The stock is 50% lower than its post-IPO
highs in 2021. Despite this, we remain impressed by progress and expect
upcoming clinical data to provide a platform for a substantial rerating.
Following the completion of the sale of Adaptix Limited to Avingtrans Plc, the
VCT has now become a holder of Avingtrans Plc shares. The Avingtrans Plc
shares are quoted on the AIM market and valued at £4.10 per share providing
an uplift in valuation of £237,000 in the period.
Destiny Pharma Plc, which is listed on the AIM market, is valued at £0.50 per
share at 30 September 2023. This is an increase of £0.23 per share over the
period, which results in an uplift in valuation of £108,000. During the
period both the chair and CEO were changed, and markets appear to have viewed
this positively.
Liquidity investments
The Healthcare Share pool holds a non-qualifying investment in Downing
Strategic Micro-Cap Investment Trust plc (“DSM”). This decreased in value
by £22,000 over the period.
Outlook
The market environment for the small companies that make up the Healthcare
portfolio continues to be challenging, putting pressure on both the ability to
build investment rounds and the valuation of those rounds that do come
together. There is no evidence of this changing as we enter 2024 and as a
result, we are working closely with management teams and existing co-investors
in the portfolio companies to ensure that sufficient capital is available to
allow these companies to continue to grow.
Downing LLP
21 December 2023
Review of Investments – Healthcare Share Pool
The following investments were held at 30 September 2023:
Cost as at 30 September 2023 Valuation as at 30 September 2023 Additions / (disposals) Valuation Movement in period % of portfolio
Portfolio of investments £’000 £’000 £’000 £’000
Arecor Therapeutics plc^ 1,533 2,291 - (724) 18.4%
Open Bionics Limited 1,000 1,428 - - 11.4%
FVRVS Limited (t/a Fundamental VR) 1,324 1,169 - - 9.4%
Cambridge Respiratory Innovations Limited 1,050 1,050 250 - 8.4%
Invizius Limited 927 998 - - 8.0%
Closed Loop Medicine Limited 650 650 - - 5.2%
GENinCode plc^ 1,158 583 (30) (438) 4.7%
The Electrospinning Company Limited 478 544 - - 4.4%
Qkine Limited 303 379 - - 3.0%
MIP Discovery Limited 300 300 - - 2.4%
Destiny Pharma plc^ 750 239 - 108 1.9%
Adaptix Limited 1,056 237 - 237 1.9%
Congenica Limited 1,184 - - (865) 0.0%
DiA Imaging Analysis Limited - - (393) (171) 0.0%
Live Better With Limited - - - - 0.0%
11,713 9,868 (173) (1,853) 79.1%
Liquidity Investments
Downing Strategic Micro-Cap Investment Trust plc*^ 729 439 - (22) 3.5%
12,442 10,307 (173) (1,875) 82.6%
Cash at bank and in hand 2,172 17.4%
Total investments 12,479 100.0%
*non-qualifying investment
^listed and traded on the London Stock Exchange
Investment movements for the period ended 30 September 2023
Cost
Additions £’000
Cambridge Respiratory Innovations Limited 250
250
Cost Valuation at 31 March 2023 Proceeds Valuation movement in period Realised gain/(loss)
Disposals £’000 £’000 £’000 £’000 £’000
DiA Imaging Analysis 415 564 393 (171) (22)
GENinCode plc^ 44 39 30 (9) (14)
Live Better With Limited 1,106 - - - (1,106)
1,565 603 423 (180) (1,142)
^listed and traded on the London Stock Exchange
Investment Manager’s Report - AIM Share Pool
Introduction
Further to our report included in the Annual Report, there has been no new
activity during the six -month period ended 30 September 2023. The AIM Share
pool holds two investments in a money market and income fund, which were made
to generate some yield on the Share pool’s assets while options on the
longer-term deployment of the funds is being considered.
Net Asset Value
As at 30 September 2023, the NAV of an AIM Share stood at 100.7p, a small
decrease of 0.4p as running costs slightly outweighed the yield on the
investments over the period.
Outlook
As mentioned in the Chairman’s Statement, the AIM Share Class holds its two
investments with the Company’s main custodian, IBP Markets Limited, where a
special administrator has been appointed by the FCA to review the business and
restrictions have been put in place on investment transactions. While this is
ongoing, any Board decisions about the future strategy of the Share class have
been put on hold. Currently VCT-qualifying opportunities in the AIM market
remain limited and the share pool is very small. No new investments are being
sought while the situation with the custodian persists and before conclusions
on the future strategy have been reached.
Downing LLP
21 December 2023
Review of Investments – AIM Share PoolDP67
The following investments were held at 30 September 2023:
Cost as at 30 September 2023 Valuation as at 30 September 2023 Additions / (disposals) Valuation movement in period % of portfolio
Portfolio of investments £’000 £’000 £’000 £’000
BlackRock Cash D Acc* 1,157 1,199 - 27 43.7%
Vanguard FTSE U.K. Equity Income Index Fund* 643 721 - - 26.3%
1,800 1,920 - 27 70.0%
Cash at bank and in hand 826 30.0%
Total investments 2,746 100.0%
*non qualifying investment
Investment movements for the period ended 30 September 2023
There were no additions or disposals during the period.
Investment Manager’s Report – DSO D Share Pool
Introduction
Proceeds from the two remaining investments in this Share Pool were received
in the six-month period ended 30 September 2023. The focus is now on returning
funds to DSO D Shareholders ahead of formally winding up the Share pool.
Net Asset Value and results
The Net Asset Value (“NAV”) per DSO D Share at 30 September 2023, stood at
2.7p, an increase from 2.6p at 31 March 2023.
Total Return stands at 104.7p per Share compared to initial cost to
Shareholders, net of income tax relief, of 70.0p per Share.
The gain on ordinary activities after taxation for the period was £15,000,
comprising a revenue loss of £7,000 and a capital gain of £22,000.
Ventures investments
As at 31 March 2023, the DSO D Share pool held two investments, Pearce and
Saunders Limited and Pearce and Saunders DevCo Limited, with a total value of
£16,000. The final pub was sold some time ago and an Insolvency Practitioner
was appointed to distribute funds via a liquidation.
During the six-month period ended 30 September 2023, final distributions were
made returning £39,000 in liquidation proceeds from Pearce & Saunders
Limited. There were no further distributions from Pearce and Saunders DevCo
Limited. Both investments have been treated as disposed at the period end.
Outlook
Having now realised the remaining investments in the DSO D Share pool, the
focus is on returning funds to Shareholders ahead of formally winding up the
Share pool. The process of completing this is underway and a final
distribution will be paid to Shareholders in early 2024.
Foresight Group LLP
21 December 2023
Review of investments - DSO D Share Pool
The following investments were held at 30 September 2023:
Cost as at 30 September 2023 Valuation as at 30 September 2023 Additions / (disposals) Valuation movement in period % of portfolio
Portfolio of investments £’000 £’000 £’000 £’000
Pearce and Saunders Limited - - (39) 39 0.0%
Pearce and Saunders DevCo Limited* - - - (16) 0.0%
- - (39) 23 0.0%
Cash at bank and in hand 167 100.0%
Total investments 167 100.0%
* non-qualifying investment
Investment movements for the period ended 30 September 2023
There were no additions during the period.
Cost Valuation at 31 March 2023 Proceeds Valuation movement in period Realised gain/(loss)
Disposals £’000 £’000 £’000 £’000 £’000
Pearce & Saunders Ltd 255 - 39 39 (216)
Pearce and Saunders Devco Limited* 19 16 - (16) (19)
274 16 39 23 (235)
* non-qualifying investment
Investment Manager’s Report - DP67 Share Pool
Introduction
The process of realising the investments and returning funds to DP67
Shareholders continues. The market remains challenging and therefore the
process continues to be slow, especially with the remaining assets all in the
hospitality sector.
Net Asset Value and results
The Net Asset Value (“NAV”) per DP67 Share at 30 September 2023 stood at
25.4p, an increase of 0.6p over the period. Total Return stands at 93.2p per
DP67 Share, compared to initial cost to Shareholders, net of income tax
relief, of 70.0p per Share.
The gain on ordinary activities after taxation for the period was £68,000,
comprising a revenue gain of £77,000 and a capital loss of £9,000.
We continue to try to work towards achieving optimal returns for Shareholders
from the remaining investments in the DP67 Share pool.
Ventures investments
As at 30 September 2023, the DP67 Share pool held a portfolio of two active
investments, with a total value of £1.1 million.
Portfolio activity
During the six-month period ended 30 September 2023, Yamuna Renewables Limited
was formally removed from the Share pool following the dissolution of the
Company. This investment was held at £nil value.
There were no realisations during the period.
Portfolio valuation
The DP67 portfolio valuation was unchanged during the period.
Cadbury House Holdings is performing well but the current market for hotel and
conference centre assets is subdued. Therefore, the Manager recognises that it
is best to be patient in pursuit of a good valuation and cash realisation. The
DP67 Share pool’s holding value of this investment as at 30 September 2023
is £0.8 million, in line with 31 March 2023 valuation, with interest accrued
of £1.1 million, which is recognised in full. This has provided the Share
pool with £97,000 of income during the six-month period ended 30 September
2023.
Outlook
The challenge continues to be achieving an exit from Cadbury House Holdings
Limited at an acceptable valuation. We strongly believe it is in the best
interests of Shareholders not to sell at undervalue even if this means the
final exit takes longer, which is proving to be the case.
The process of placing Gatewales Limited into liquidation has begun and
liquidation proceeds, equal to the holding value, are anticipated to be
received once this is complete.
Final dividends will be paid once the remaining realisations have taken place.
Foresight Group LLP
21 December 2023
Review of Investments – DP67 Share PoolDP67
The following investments were held at 30 September 2023:
Cost as at 30 September 2023 Valuation as at 30 September 2023 Additions / (disposals) Valuation movement in period % of portfolio
Portfolio of investments £’000 £’000 £’000 £’000
Cadbury House Holdings Ltd 1,409 791 - - 42.0%
Gatewales Limited* 344 344 - - 18.3%
London City Shopping Centre Limited^ 99 - - - 0.0%
Yamuna Renewables Limited - - - - 0.0%
1,852 1,135 - - 60.3%
Cash at bank and in hand 748 39.7%
Total investments 1,883 100.0%
*partially qualifying investment
^non qualifying investment
Investment movements for the period ended 30 September 2023
There were no additions during the period.
Cost Valuation at 31 March 2023 Proceeds Valuation movement in period Realised gain/(loss)
Disposals £’000 £’000 £’000 £’000 £’000
Yamuna Renewables Limited 400 - - - (400)
400 - - - (400)
Unaudited Income Statement
for the six months ended 30 September 2023
Six months ended 30 Sep 2023 Six months ended 30 Sep 2022 Year ended 31 Mar 2023
Revenue Capital Total Revenue Capital Total Total
Company £’000 £’000 £’000 £’000 £’000 £’000 £’000
Income 120 - 120 158 - 158 284
Losses on investments - (5,621) (5,621) - (17) (17) (6,307)
120 (5,621) (5,501) 158 (17) 141 (6,023)
Investment management fees (262) (262) (524) (168) (168) (336) (944)
Other expenses (218) - (218) (512) - (512) (689)
Loss on ordinary activities before tax (360) (5,883) (6,243) (522) (185) (707) (7,656)
Tax on total comprehensive income and ordinary activities - - - - - - -
Loss attributable to equity Shareholders, being total comprehensive income for the period (360) (5,883) (6,243) (522) (185) (707) (7,656)
Basic and diluted return/(loss) per Share:
Ventures Share (0.5)p (7.6)p (8.1)p (0.5)p 3.9p 3.4p (6.5)p
Healthcare Share (0.7)p (7.9)p (8.6)p (0.7)p (9.1)p (9.8)p (21.4)p
AIM Share (0.9)p 0.5p (0.4)p (0.5)p (0.2)p (0.7)p 3.9p
DSO D Share (0.1)p 0.3p 0.2p 0.3p (0.3)p - (0.1)p
DP67 Share 0.7p (0.1)p 0.6p (1.4)p (1.0)p (2.4)p (2.0)p
A Statement of Total Recognised Gains and Losses has not been prepared as all
gains and losses are recognised in the Income Statement as noted above.
Unaudited Income Statement
Analysed by Share pool
for the six months ended 30 September 2023
Six months ended 30 Sep 2023 Six months ended 30 Sep 2022 Year ended 31 Mar 2023
Revenue Capital Total Revenue Capital Total Total
Ventures Share pool £’000 £’000 £’000 £’000 £’000 £’000 £’000
Income 23 - 23 27 - 27 64
(Losses)/gains on investments - (3,899) (3,899) - 1,993 1,993 (2,401)
23 (3,899) (3,876) 27 1,993 2,020 (2,337)
Investment management fees (151) (151) (302) (95) (95) (190) (556)
Other expenses (127) - (127) (160) - (160) (280)
(Loss)/profit on ordinary activities before tax (255) (4,050) (4,305) (228) 1,898 1,670 (3,173)
Tax on total comprehensive income and ordinary activities - - - - - - -
(Loss)/profit attributable to equity Shareholders, being total comprehensive income for the period (255) (4,050) (4,305) (228) 1,898 1,670 (3,173)
Six months ended 30 Sep 2023 Six months ended 30 Sep 2022 Year ended 31 Mar 2023
Revenue Capital Total Revenue Capital Total Total
Healthcare Share pool £’000 £’000 £’000 £’000 £’000 £’000 £’000
Income - - - - - - 4
Losses on investments - (1,772) (1,772) - (1,876) (1,876) (3,857)
- (1,772) (1,772) - (1,876) (1,876) (3,853)
Investment management fees (89) (89) (178) (62) (62) (124) (322)
Other expenses (61) - (61) (85) - (85) (115)
Loss on ordinary activities before tax (150) (1,861) (2,011) (147) (1,938) (2,085) (4,290)
Tax on total comprehensive income and ordinary activities - - - - - - -
Loss attributable to equity Shareholders, being total comprehensive income for the period (150) (1,861) (2,011) (147) (1,938) (2,085) (4,290)
Six months ended 30 Sep 2023 Six months ended 30 Sep 2022 Year ended 31 Mar 2023
Revenue Capital Total Revenue Capital Total Total
AIM Share pool £’000 £’000 £’000 £’000 £’000 £’000 £’000
Income - - - - - - -
Gains on investments - 27 27 - - - 93
- 27 27 - - - 93
Investment management fees (12) (12) (24) (6) (6) (12) (36)
Other expenses (13) - (13) (8) - (8) (21)
Loss/(profit) on ordinary activities before tax (25) 15 (10) (14) (6) (20) 36
Tax on total comprehensive income and ordinary activities - - - - - - -
Loss/(profit) attributable to equity Shareholders, being total comprehensive income for the period (25) 15 (10) (14) (6) (20) 36
Six months ended 30 Sep 2023 Six months ended 30 Sep 2022 Year ended 31 Mar 2023
Revenue Capital Total Revenue Capital Total Total
DSO D Share pool £’000 £’000 £’000 £’000 £’000 £’000 £’000
Income - - - 24 - 24 24
Gains/(losses) on investments - 23 23 - (27) (27) (27)
- 23 23 24 (27) (3) (3)
Investment management fees (1) (1) (2) - - - (2)
Other expenses (6) - (6) (1) - (1) (3)
(Loss)/profit on ordinary activities before tax (7) 22 15 23 (27) (4) (8)
Tax on total comprehensive income and ordinary activities - - - - - - -
(Loss)/profit attributable to equity Shareholders, being total comprehensive income for the period (7) 22 15 23 (27) (4) (8)
Six months ended 30 Sep 2023 Six months ended 30 Sep 2022 Year ended 31 Mar 2023
Revenue Capital Total Revenue Capital Total Total
DP67 Share pool £’000 £’000 £’000 £’000 £’000 £’000 £’000
Income 97 - 97 107 - 107 192
Losses on investments - - - - (107) (107) (115)
97 - 97 107 (107) - 77
Investment management fees (9) (9) (18) (5) (5) (10) (28)
Other expenses (11) - (11) (258) - (258) (270)
Profit/(loss) on ordinary activities before tax 77 (9) 68 (156) (112) (268) (221)
Tax on total comprehensive income and ordinary activities - - - - - - -
Profit/(loss) attributable to equity Shareholders, being total comprehensive income for the period 77 (9) 68 (156) (112) (268) (221)
Unaudited Balance Sheet
as at 30 September 2023
Company number: 06789187
As at 30 September 2023 As at 30 September 2022 As at 31 March 2023
Company Note £’000 £’000 £’000
Fixed assets
Investments 10 35,064 48,181 43,157
Current assets
Debtors 2,270 1,729 2,510
Cash at bank and in hand 8,018 10,290 6,082
10,288 12,019 8,592
Creditors: amounts falling due within one year (621) (679) (1,214)
Net current assets 9,667 11,340 7,378
Net assets 44,731 59,521 50,535
Capital and reserves
Called up share capital 118 120 117
Capital redemption reserve 4 58 4
Special reserve 49,523 21,904 50,483
Share premium account 1,398 31,726 -
Funds held in respect of shares not yet allotted - 8 -
Revaluation reserve (3,045) 5,696 93
Capital reserve – realised 1,382 3,943 4,127
Revenue reserve (4,649) (3,934) (4,289)
Total equity Shareholders’ funds 44,731 59,521 50,535
Basic and diluted Net Asset Value per Share:
Ventures Share 50.1p 68.5p 59.4p
Healthcare Share 52.3p 71.7p 61.6p
AIM Share 100.7p 99.0p 101.1p
DSO D Share 2.7p 2.6p 2.6p
DP67 Share 25.4p 24.4p 24.8p
At 30 September 2023, there was an inter-share debtor/creditor of £313,000,
which has been eliminated on aggregation.
Unaudited Balance Sheet
Analysed by Share pool
as at 30 September 2023
As at 30 September 2023 As at 30 September 2022 As at 31 March 2023
Ventures Share pool £’000 £’000 £’000
Fixed assets
Investments 21,702 32,596 27,758
Current assets
Debtors 1,205 523 925
Cash at bank and in hand 4,105 4,910 3,430
5,310 5,433 4,355
Creditors: amounts falling due within one year (365) (288) (730)
Net current assets 4,945 5,145 3,625
Net assets 26,647 37,741 31,383
Capital and reserves
Called up share capital 67 69 67
Capital redemption reserve 3 58 3
Special reserve 31,373 15,012 32,039
Share premium account 237 19,901 -
Funds held in respect of shares not yet allotted - 1 -
Revaluation reserve (1,830) 4,443 1,170
Capital reserve – realised 613 1,552 1,665
Revenue reserve (3,816) (3,295) (3,561)
Total equity Shareholders’ funds 26,647 37,741 31,383
As at 30 September 2023 As at 30 September 2022 As at 31 March 2023
Healthcare Share pool £’000 £’000 £’000
Fixed assets
Investments 10,307 13,782 12,355
Current assets
Debtors 109 10 455
Cash at bank and in hand 2,172 2,596 860
2,281 2,606 1,315
Creditors: amounts falling due within one year (280) (212) (221)
Net current assets 2,001 2,394 1,094
Net assets 12,308 16,176 13,449
Capital and reserves
Called up share capital 29 29 28
Capital redemption reserve 1 - 1
Special reserve 15,101 6,877 15,395
Share premium account 1,161 9,132 -
Funds held in respect of shares not yet allotted - 7 -
Revaluation reserve (1,118) 1,881 (295)
Capital reserve – realised (859) (18) 177
Revenue reserve (2,007) (1,732) (1,857)
Total equity Shareholders’ funds 12,308 16,176 13,449
AIM Share pool
Fixed assets
Investments 1,920 - 1,893
Current assets
Debtors 1 2 2
Cash at bank and in hand 826 2,689 850
827 2,691 852
Creditors: amounts falling due within one year (31) (21) (19)
Net current assets 796 2,670 833
Net assets 2,716 2,670 2,726
Capital and reserves
Called up share capital 3 3 3
Special reserve 2,673 - 2,673
Share premium account - (8) -
Funds held in respect of shares not yet allotted - 2,693 -
Revaluation reserve 120 - 93
Capital reserve – realised (12) - -
Revenue reserve (68) (18) (43)
Total equity Shareholders’ funds 2,716 2,670 2,726
As at 30 September 2023 As at 30 September 2022 As at 31 March 2023
DSO D Share pool £’000 £’000 £’000
Fixed assets
Investments - 16 16
Current assets
Debtors 64 112 21
Cash at bank and in hand 167 87 176
231 199 197
Creditors: amounts falling due within one year (16) (11) (13)
Net current assets 215 188 184
Net assets 215 204 200
Capital and reserves
Called up share capital 8 8 8
Special reserve 422 423 422
Revaluation reserve - (258) (258)
Capital reserve – realised (214) 22 22
Revenue reserve (1) 9 6
Total equity Shareholders’ funds 215 204 200
DP67 Share pool
Fixed assets
Investments 1,135 1,787 1,135
Current assets
Debtors 1,204 1,082 1,107
Cash at bank and in hand 748 8 766
1,952 1,090 1,873
Creditors: amounts falling due within one year (242) (147) (231)
Net current assets 1,710 943 1,642
Net assets 2,845 2,730 2,777
Capital and reserves
Called up share capital 11 11 11
Special reserve (46) (400) (46)
Revaluation reserve (217) (370) (617)
Capital reserve – realised 1,854 2,387 2,263
Revenue reserve 1,243 1,102 1,166
Total equity Shareholders’ funds 2,845 2,730 2,777
Statement of Changes in Equity
for the six months ended 30 September 2023
Called up share capital Capital redemption reserve Special reserve Share premium account Funds held in respect of shares not yet allotted Revaluation reserve Capital reserve - realised Revenue reserve Total
Company £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
At 31 March 2022 113 58 24,063 29,284 7 6,995 3,769 (3,412) 60,877
Total comprehensive income - - - - - (6,448) (331) (877) (7,656)
Transfer between reserves* - - (2,540) - - (454) 2,994 - -
Unallotted shares - - - - (7) - - - (7)
Transactions with owners
Dividend paid - - - - - - (2,305) - (2,305)
Cancellation of share premium - (58) 31,785 (31,727) - - - - -
Purchase of own shares (4) 4 (2,825) - - - - - (2,825)
Issue of shares 8 - - 2,500 - - - - 2,508
Share issue costs - - - (57) - - - - (57)
At 31 March 2023 117 4 50,483 - - 93 4,127 (4,289) 50,535
Total comprehensive income - - - - - (3,138) (2,745) (360) (6,243)
Transactions with owners
Dividend paid - - (960) - - - - - (960)
Issue of shares 1 - - 1,412 - - - - 1,413
Share issue costs - - - (14) - - - - (14)
At 30 September 2023 118 4 49,523 1,398 - (3,045) 1,382 (4,649) 44,731
* A transfer of £nil (year ended 31 March 2023: £454,000) representing
previously recognised realised gains and losses on disposal of investments
during the period has been made between the Revaluation Reserve and the
Capital reserve - realised. A transfer of £nil (year ended 31 March 2023:
£2,540,000) representing the total of: realised losses on the disposal of
investments, cumulative impairment losses, capital expenses and capital
dividends in the period, has been made between the Capital Reserve - realised
and the Special reserve.
Unaudited Statement of Cash Flows
for the six months ended 30 September 2023
Ventures Share pool Healthcare Share pool AIM Share pool DSO D Share pool DP67 Share pool Total
£’000 £’000 £’000 £’000 £’000 £’000
Cash flow from operating activities
(Loss)/return on ordinary activities before taxation (4,305) (2,011) (10) 15 68 (5,631)
Losses/(gains) on investments 3,899 1,772 (27) (23) - 5,009
(Decrease)/increase in creditors (365) 59 12 3 11 (280)
(Increase)/decrease in debtors (235) 6 1 (43) (97) (368)
Net cash outflow from operating activities (1,006) (174) (24) (48) (18) (1,270)
Corporation tax paid - - - - - -
Net cash outflow generated from operating activities (1,006) (174) (24) (48) (18) (1,270)
Cash flow from investing activities
Purchase of investments (200) - - - - (200)
Proceeds from disposal of investments 2,196 423 - 39 - 2,658
Proceeds from deferred consideration 114 195 - - - 309
Net cash inflow from investing activities 2,110 618 - 39 - 2,767
Net cash inflow/(outflow) before financing 1,104 444 (24) (9) (18) 1,497
Cash flows from financing activities
Issue of share capital 237 1,176 - - - 1,413
Cost of issue of share capital - (14) - - - (14)
Equity dividends paid (666) (294) - - - (960)
Net cash (outflow)/inflow from financing activities (429) 868 - - - 439
Net change in cash 675 1,312 (24) (9) (18) 1,936
Cash and cash equivalents at start of the year 3,430 860 850 176 766 6,082
Cash and cash equivalents at end of the year 4,105 2,172 826 167 748 8,018
Cash and cash equivalents comprise
Cash at bank and in hand 4,105 2,172 826 167 748 8,018
Total cash and cash equivalents 4,105 2,172 826 167 748 8,018
Unaudited Statement of Cash Flows
for the six months ended 30 September 2022
Ventures Share pool Healthcare Share pool AIM Share pool DSO D Share pool DP67 Share pool Total
£’000 £’000 £’000 £’000 £’000 £’000
Cash flows from operating activities
Return/(loss) on ordinary activities before taxation 1,670 (2,085) (20) (4) (268) (707)
(Gains)/losses on investments (1,993) 1,876 - 27 107 17
(Decrease)/increase in creditors (202) (98) - (9) 23 (286)
Decrease/(increase) in debtors 1,278 623 602 (51) 136 2,588
Net cash inflow/(outflow) from operating activities 753 316 582 (37) (2) 1,612
Corporation tax paid - - - - - -
Net cash inflow/(outflow) from operating activities 753 316 582 (37) (2) 1,612
Cash flow from investing activities
Purchase of investments (3,457) (805) - - - (4,262)
Proceeds from disposal of investments 4,113 1,092 - - - 5,205
Net cash inflow from investing activities 656 287 - - - 943
Net cash inflow/(outflow) before financing 1,409 603 582 (37) (2) 2,555
Cash flows from financing activities
Repurchase of shares (551) (243) - - - (794)
Issue of share capital 1,276 552 678 - - 2,506
Cost of issue of share capital (28) (12) (17) - - (57)
Funds held in respect of shares not yet allotted (1) 2 - - - 1
Equity dividends paid (1,516) (789) - - - (2,305)
Net cash (outflow)/inflow from financing activities (820) (490) 661 - - (649)
Net change in cash 589 113 1,243 (37) (2) 1,906
Cash and cash equivalents at start of the year 4,321 2,483 1,446 124 10 8,384
Cash and cash equivalents at end of the year 4,910 2,596 2,689 87 8 10,290
Cash and cash equivalents comprise
Cash at bank and in hand 4,910 2,596 2,689 87 8 10,290
Total cash and cash equivalents 4,910 2,596 2,689 87 8 10,290
Notes to the Unaudited Financial Statements
1. General Information
Thames Ventures VCT 2 plc (“the Company”) is a Venture Capital Trust
established under the legislation introduced in the Finance Act 1995 and is
domiciled in the United Kingdom and incorporated in England and Wales.
2. Basis of accounting
The unaudited half-yearly financial results cover the six months to 30
September 2023 and have been prepared in accordance with the accounting
policies set out in the statutory accounts for the year ended 31 March 2023,
which were prepared in accordance with the Financial Reporting Standard 102
(“FRS 102”) and the Statement of Recommended Practice “Financial
Statements of Investment Trust Companies” issued in July 2022 (“SORP”).
3. The Company has only one class of business and derives its income from
investments made in shares, securities and bank deposits.
4. The comparative figures are in respect of the six months ended 30
September 2022 and the year ended 31 March 2023 respectively.
5. 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:
Ventures Shares* 53,236,858
Healthcare Shares* 23,555,015
AIM Shares 2,695,803
DSO D Shares 7,867,247
DP67 Shares 11,192,136
*Excludes Management Shares
6. Return per share for the period has been calculated on the weighted
average number of shares in issue in the period as follows:
Ventures Shares* 53,223,619
Healthcare Shares* 23,479,184
AIM Shares 2,695,803
DSO D Shares 7,867,247
DP67 Shares 11,192,136
*Excludes Management Shares
7. 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.
8. Dividends
Six months ended 30 September 2023
Pence per Share Revenue £’000 Capital £’000 Total £’000
Ventures Shares
Paid - 666 666
Final (year ended 31 March 2023) 1.25 - 666 666
Healthcare Shares
Paid - 294 294
Final (year ended 31 March 2023) 1.25 - 294 294
9. Reserves
30 Sep 2023 30 Sep 2022 31 Mar 2023
£’000 £’000 £’000
Capital redemption reserve 4 58 4
Special reserve 49,523 21,904 50,483
Share premium account 1,398 31,726 -
Funds held in respect of shares not yet allotted - 8 -
Revaluation reserve (3,045) 5,696 93
Capital reserve – realised 1,382 3,943 4,127
Revenue reserve (4,649) (3,934) (4,289)
44,613 59,401 50,418
The Revenue reserve, Special reserve and Capital reserve - realised are
distributable reserves and are reduced by revaluation losses of £17.4
million. Distributable reserves at 30 September 2023 were £28.8 million.
10. Fixed assets – investments
Liquidity investments Quoted VC investments Unquoted VC investments Total
£’000 £’000 £’000 £’000
Opening cost at 1 April 2023 6,798 4,403 40,774 51,975
Unrealised (losses)/gains at 1 April 2023 (1,743) 704 906 (133)
Unrealised foreign exchange gains at 1 April 2023 - - 226 226
Realised losses arising on permanent fair value change at 1 April 2023 - - (8,911) (8,911)
Opening fair value at 1 April 2023 5,055 5,107 32,995 43,157
Movements in the period:
Purchased at cost - - 450 450
Disposals – proceeds - (30) (2,628) (2,658)
– realised losses on disposals (*) - (14) (2,778) (2,792)
Unrealised foreign exchange gains - - 59 59
Unrealised losses (*) (126) (1,166) (1,860) (3,152)
Closing value at 30 Sept 2023 4,929 3,897 26,238 35,064
Closing cost at 30 Sept 2023 6,798 4,359 35,818 46,975
Unrealised losses at 30 Sept 2023 (1,869) (462) (3,672) (6,003)
Unrealised foreign exchange gains at 30 Sept 2023 - - 285 285
Realised losses arising on permanent fair value change at 30 Sept 2023 - - (6,193) (6,193)
Closing value at 30 Sept 2023 4,929 3,897 26,238 35,064
*Losses on investments in the Income Statement include realised gains relating
to the deferred consideration receipt from ADC Biotechnology Limited
(£309,000).
*Losses on investments in the Income Statement also include unrealised gains
which are a result of the deferred consideration debtor decrease of £45,000.
The debtor movement reflects the recognition of amounts receivable in respect
of DIA Imaging Analysis Limited (£103,000) and Imagen Limited (£156,000),
offset by receipts in respect of ADC Biotechnology Limited (£309,000) and an
FX uplift made against balances in respect of Efundamentals Group Limited
(£5,000).
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 2023. The Company has categorised its financial instruments using the
fair value hierarchy as follows:
Level 1 Reflects financial instruments quoted in an active
market (quoted companies, investment funds and fixed interest bonds);
Level 2 Reflects financial instruments that have prices that
are observable either directly or indirectly; and
Level 3 Reflects financial instruments that use valuation
techniques that are not based on observable market data (investments in
unquoted shares and loan note investments).
30 September 2023 31 March 2023
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Liquidity investments 4,929 - - 4,929 5,055 - - 5,055
Quoted equity 3,897 - - 3,897 5,107 - - 5,107
Unquoted loan notes - - 2,013 2,013 - - 2,013 2,013
Unquoted equity - - 24,225 24,225 - - 30,982 30,982
8,826 - 26,238 35,064 10,162 - 32,995 43,157
11. 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:
(i) compliance risk of failure to maintain approval as a VCT;
(ii) market, liquidity and counterparty risk associated with
Private Equity investments; and
(iii) 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 Philip Hare & Associates LLP (“Philip Hare”) to
provide regular reviews and advice in this area. The Board considers that this
approach reduces the risk of a breach of the VCT regulations.
In order to make VCT qualifying investments, the Company has to invest in
small businesses which are often immature. It also has a limited period in
which it must invest the majority of its funds into VCT qualifying
investments. The Manager follows a rigorous process in vetting and carefully
structuring new investments, including taking a charge over the assets of the
business wherever possible and, after an investment is made, closely
monitoring the business.
12. 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.
13. Contingent liability
As outlined in the Chairman’s Statement, since March 2022, the Company has
used IBP Markets Limited ("IBP") as custodian for its quoted investments, with
exposure across the Ventures, Healthcare and AIM Share classes. IBP is an FCA
authorised and regulated wholesale broker, providing custody services and
access to equity and fixed income securities for non-retail clients (which
includes the Company). On 13 October 2023, the FCA published a supervisory
notice under section 55L(3)(a) of the Financial Services and Markets Act 2000,
imposing certain restrictions on IBP. On the same date, IBP applied to the
High Court and special administrators were appointed. The special
administrators have yet to publish an estimated outcome statement and
therefore the full impact is currently unknown. The Manager is actively
collaborating with the special administrators to reach a resolution and will
communicate with Shareholders when further information becomes available.
The Manager is in regular dialogue with the special
administrators. The outcome remains subject to change particularly as
additional claims may be made on custody assets and client money and there
remains a risk to the positions. However, considering the information made
available to the Company at the date of this report, there is currently little
indication that there will be a materially adverse impact to Shareholders with
respect to the custody assets. The position with respect to client money
remains to be determined, but total cash at IBP relates to the Healthcare
Share pool and represented 0.2% of NAV as at 30 September.
14. The Directors confirm that, to the best of their knowledge, the
Half-Yearly Report has been prepared in accordance with the “Statement:
Half-Yearly Financial Reports” issued by the UK Accounting Standards Board
as well as in accordance with FRS 104 Interim Financial Reporting, and the
half-yearly financial report includes a fair review of the information
required by:
1. 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
2. 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.
15. Copies of the Half-Yearly Report will be sent to Shareholders shortly.
Further copies can be obtained from the Company’s registered office or
downloaded from
www.foresightgroup.eu/products/thames-ventures-vct-2-plc
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