Downing Plan VCT 6 Downing Planned Exit VCT 6 PLC : Half-yearly report
28 Septembre 2012 - 12:02PM
UK Regulatory
TIDMDPV6
Downing Planned Exit VCT 6 plc
Half-Yearly Report for the six months ended 31 July 2012
PERFORMANCE SUMMARY
31 Jul 31 Jan 31 Jul
2012 2012 2011
pence pence pence
Net asset value per Ordinary Share 70.20 76.30 82.30
Net asset value per 'A' Share 0.10 0.10 0.10
Cumulative distributions per Ordinary Share 9.75 7.75 7.75
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Total return per Ordinary Share and 'A' Share 80.05 84.15 90.15
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CHAIRMAN'S STATEMENT
I present the Company's Half-Yearly Report for the six month period ended 31
July 2012. It is disappointing to report a further deterioration in the
Company's net asset value ("NAV"). This has arisen from a further significant
write down of one of the Company's investments.
Venture capital investments
There was a very limited level of investment activity during the period. One
small follow-on non-qualifying investment was made of GBP25,000 in The Thames Club
Limited to provide additional working capital to the business. Also, three
investee companies redeemed loan stock, either fully or in part, generating
proceeds of GBP486,000.
In reviewing the investment valuations at the period end, the Board concluded
that the investment in Coast Constructors required a significant downwards
adjustment. Coast is building the Gara Rock hotel and apartment complex near
Salcombe in South Devon. It has become clear that, in the current economic
climate, the original plan is not viable. The investment partner and management
team have been removed from the project and some significant revisions have now
been made to the plans in an attempt to maximise the recovery of value.
In order to complete the Gara Rock project, a significant level of new funding
has been needed. Your Company has not been in a position to consider
participating in the further funding and, accordingly, our investment now ranks
behind the new funds. Although the project still has a fairly wide range of
possible outcomes, the Board considers it appropriate to write the investment
down to a value of GBP125,000. This is a reduction in value of GBP514,000.
There were two other minor changes to the investment valuations at the period
end which together showed a small net gain.
Net asset value and results
At 31 July 2012, the net asset value ("NAV") per Ordinary Share stood at 70.2p
and the NAV per 'A' Share at 0.1p, giving a combined total of 70.3p. This is a
decrease of 4.1p per share (5.4%) since the year end of 31 January 2012 (after
adjusting for the 2.0p dividend paid during the period).
Total Return (NAV plus dividends paid to date) is 80.05p at 31 July 2012
compared to the original cost, net of income tax relief, of 70p per share.
The loss on ordinary activities after taxation for the period, as set out in the
Income Statement, was GBP361,000, comprising a revenue profit of GBP145,000 and a
capital loss of GBP506,000. In line with the Company's policy, no interim dividend
will be paid.
Share Realisation and Reinvestment Programme
In my statement with the Annual Report, I warned Shareholders that, with the
continuing lack of bank finance, the realisation of the investment portfolio
would be likely to take much longer than originally envisaged. I also mentioned
that the Board was considering plans to offer Shareholders the chance to obtain
a further 30% income tax relief on the current value of their investment by
holding their shares for a further five years.
The Company will shortly launch the Share Realisation and Reinvestment Programme
("SRRP"). Full details will be sent to Shareholders with the Half-Yearly Report.
The Board believes that the SRRP brings benefits to both those Shareholders who
wish to obtain further income tax relief on their investment and commit to
holding their investment for a further five years and those Shareholders who
wish to exit at the earliest opportunity.
Once it is clear what proportion of Shareholders wish to participate in the
SRRP, the Manager and the Board will seek to devise a realisation strategy which
can meet the objectives of those wishing to exit while continuing to hold a
suitable portfolio which has reasonable prospects for growth over the next five
years.
Share buybacks
In view of the plans to seek to return funds to those Shareholders that do not
participate in the SRRP, the Company is unlikely to make any market purchases of
shares now or in the near future. Proceeds from the realisations of investments
are likely to be used to return funds to Shareholders by way of one or more
tender offers.
Outlook
With most of the Company's funds initially being invested during 2007 and 2008,
it is clear that the timing in the economic cycle has been poor. A number of
investments were made at, what we now know to be, the top of the market and the
Company's exit strategy has been severely hampered by the fact that, in 2012,
there is still no sign of the return of readily available bank finance.
The Board believes that there are prospects for growth from the current position
within the portfolio over the next five years and that, with the chance to
obtain further income tax relief, participating in the SRRP may be an attractive
option for many Shareholders.
For those Shareholders who do not wish to participate in the SRRP, we hope to
see some realisations over the remainder of the year which will allow the
Company to make its first significant distribution.
Hugh Gillespie
Chairman
UNAUDITED SUMMARISED BALANCE SHEET
as at 31 July 2012
31 Jul 31 Jul 31 Jan
2012 2011 2012
GBP'000 GBP'000 GBP'000
Fixed assets
Investments 5,418 6,964 6,385
Current assets
Debtors 326 494 226
Cash at bank and in hand 529 31 244
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855 525 470
Creditors: amounts falling due within one year (104) (159) (80)
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Net current assets 751 366 390
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Net assets 6,169 7,330 6,775
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Capital and reserves
Called up share capital 22 22 22
Deferred shares 3 3 3
Capital redemption reserve 1 1 1
Share premium - - -
Special reserve 8,063 8,406 8,308
Revenue reserve 220 195 75
Revaluation reserve (2,290) (1,297) (1,784)
Capital reserve - realised 150 - 150
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Equity shareholders' funds 6,169 7,330 6,775
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Net asset value per Ordinary Share 70.2p 82.3p 76.3p
Net asset value per 'A' Share 0.1p 0.1p 0.1p
UNAUDITED INCOME STATEMENT
for the six months ended 31 July 2012
Year
ended
Six months ended Six months ended 31 Jan
31 Jul 2012 31 Jul 2011 2012
Revenue Capital Total Revenue Capital Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 289 - 289 273 - 273 305
Gains/(losses) on investments
- realised - - - - 35 35 -
- unrealised - (506) (506) - 11 11 (375)
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289 (506) (217) 273 46 319 (70)
Investment management fees
(26) - (26) (38) - (38) (78)
Other expenses (72) - (72) (69) - (69) (219)
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Return on ordinary activities
before taxation
191 (506) (315) 166 46 212 (367)
Taxation (46) - (46) (43) - (43) (5)
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Return/(loss) attributable
to equity Shareholders
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