Downing One VCT : Half Yearly Report for the six months ended 30 September 2021

DOWNING ONE VCT PLC

Half Yearly Report for the six months ended

30 September 2021

Shareholder Information

Financial Summary

	30 Nov	30 Sep	31 Mar	30 Sep	Nov
	2021	2021	2021	2020	2013
	pence	pence	pence	pence	pence
	Unaudited	Unaudited	Audited	Unaudited	Unaudited
Net Asset Value per share ("NAV")	62.2	61.3	58.20	56.3	100.4
Cumulative dividends paid since Nov 2013	40.0	40.0	38.75	37.5	‐
Total Return	102.2	101.3	96.95	93.8	100.4

(NAV plus cumulative dividends paid per share)

Dividend Policy

The Company has a stated target of paying a dividend of at least 4% of net assets per annum.

Forthcoming Dividends

	Date payable	Pence per share
Interim dividend	25 February 2021	1.25p

Dividends will be paid by the Company's registrar, The City Partnership, on behalf of the Company. Shareholders who wish to have dividends paid directly into their bank account, rather than by cheque to their registered address, can update their instructions at the Downing VCT Investor Hub:

downing‐vct.cityhub.uk.com

A Dividend Mandate Form is also available from this site that can be completed and emailed to [e-mail] or sent to The City Partnership (UK) Limited, The Mending Room, Park Valley Mills, Meltham Road, Huddersfield HD4 7BH. If you have any queries, The City Partnership can be contacted by the email address above or on 01484 240910

The Company operates a Dividend Reinvestment Scheme to allow Shareholders to reinvest their dividends in new shares and obtain income tax relief on that new investment. Shareholders can opt‐in to the Dividend Reinvestment Scheme through the Downing VCT Investor Hub using the details shown above.

Share Scam Warning

We are aware that a significant number of shareholders of VCTs managed by both Downing and other VCT managers continue to receive unsolicited telephone calls from a company purporting to be acting on behalf of a client who is looking to acquire their VCT shares at an attractive price. We believe these calls to be a "Boiler Room Scam". Shareholders are warned to

be very suspicious if they receive any similar type of telephone call.

Some further details are available on Downing's website: www.downing.co.uk/vctboilerroomscam

The FCA has published information about such scams at www.fca.org.uk/scamsmart

If you have any concerns, please contact Downing at [e-mail] on 020 7416 7780.

Chairman's Statement

I present the Company's half‐yearly report for the six‐month period ended 30 September 2021 and am pleased to report an encouraging increase in net asset value per share ("NAV"), driven by some of the growth investments made in recent years.

Net asset value and results

As at 30 September 2021, the Company's NAV stood at 61.30p, an increase of 4.35p (or 7.5%) compared to the 31 March 2021 year‐end position, after adding back the 1.25p dividend paid during the period.

The return attributable to equity shareholders for the period was a gain of £7.7 million, comprising a revenue loss of £299,000 and a capital gain of £8.0 million.

Investment activity and performance

Over the last six months the main focus of the Investment Adviser has been on supporting portfolio companies as they continue to recover from the impact of the coronavirus pandemic, however, there have also been a small number of realisations generating proceeds of £3.3 million and some new investments totalling £0.7 million.

Following a review of valuations by the Board, net unrealised gains across the whole portfolio over the period were £7.2 million. In addition, the realisations noted above, resulted in a net realised gain of £0.8 million.

At the period end, the Company held a portfolio of 81 active investments, with 32% (by value) held in quoted growth, 27% in unquoted yield focused and 41% in unquoted growth. 32 investments are held in the quoted growth category which are either quoted on AIM or the AQSE Growth Market and have a value of £29.9 million. The 49 unquoted investments have a value of £65.0 million.

The proportion of the portfolio held in unquoted growth companies is expected to grow as exits from the more mature yield focused investments arise and funds are then redeployed into younger growth businesses in line with the current VCT regulations.

Further details of the investment activities of the Company are included in the Investment Adviser's Report on pages 4 to 12.

Dividends

The Company has a stated policy of seeking to pay dividends equivalent to at least 4% of NAV (61.3p at the period end) each year. Consistent with this policy, the Board has declared an interim dividend of 1.25p (equivalent to 2.0% of NAV) which will be paid on 25 February 2022 to Shareholders on the register as at 4 February 2022.

This will take the total dividends paid since the merger in November 2013 to 41.25p.

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Chairman's Statement (continued)

Annual running costs cap

Shareholders are reminded that the Company benefits from a running cost cap provided by the Investment Adviser. Any annual running costs above 2.6% of net assets per annum are met by the Adviser by way of a reduction in their fees. This cap has been in effect over this period.

Fundraising

The Company launched an offer for subscription in September 2020, seeking to raise up to £15 million (plus an over‐ allotment facility). The offer closed at the end of August 2021 having raised £15.6 million. Funds raised under the offer allow the Company to take advantage of new investment opportunities that arise as well as being available to support existing portfolio companies.

At the end of November 2021, the Company launched a new non‐prospectus top‐up offer, seeking to raise up to £6.7 million. This will provide additional funds for further investment activity.

Shareholders that may be interested in topping up their investment can find an investment memorandum for the offer on the Downing website:

www.downing.co.uk/d1

Investors are recommended to consult their financial adviser before making any investments.

Share buybacks

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

During the period, the Company purchased 2,626,746 shares (equal to 1.6% of the opening number of shares in issue) at an average price of 56.9p per share.

VCT Qualification

VCT qualifying investments now represent 85.1% of total investments as defined by the VCT regulations. The minimum VCT qualification level of 80% is expected to continue to be comfortably exceeded for the foreseeable future.

Registrars

In July, the Company appointed The City Partnership as its new registrar. Shareholders are reminded that they can now update their information and access details of their shareholding, dividends paid and other details via the Downing Investor Hub at:

downing‐vct.cityhub.uk.com

Outlook

It is pleasing to see some progress being made by the portfolio after the significant setbacks suffered with the coronavirus pandemic. Improving trading performance, trade buyer activity, and, in the case of GENinCode, an IPO, have all contributed to some healthy valuation uplifts across the portfolio.

In late November, we were pleased to note that Universe Group plc announced a recommended offer for the company to be acquired at a significant premium to its previous share price. The increase in the share price of Universe, along with other quoted investments, has resulted in the NAV increasing by a further 0.9p per share. The unaudited NAV at 30 November 2021 stood at 62.2p per share.

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Chairman's Statement (continued)

Outlook (continued)

The Board believes the above developments are a good indication that the Company's earlier growth investments are now starting to mature and can drive performance going forward. However, Shareholders should be mindful that it is still relatively early days for many of the Company's investments and ultimate success will be determined by realisations rather than unrealised valuation uplifts driven by, what some commentators consider to be, very buoyant market conditions.

Very recently, we have seen the rapid onset of the Omicron Covid variant. It is unclear at the time of writing how great the impact on the economy will be, but there are a number of worrying signs which could present further challenges to portfolio companies. The Board will closely monitor developments.

I look forward to updating Shareholders on developments in the Annual Report to 31 March 2022 which is expected to be published in June/July 2022.

Chris Kay

Chairman

17 December 2021

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