TIDMDPV6
DOWNING PLANNED EXIT VCT 6 PLC
FINAL RESULTS FOR THE YEAR ENDED 31 JANUARY 2013
FINANCIAL SUMMARY
31 Jan 2013 31 Jan 2012
Pence Pence
Net asset value per Ordinary Share 68.20 76.30
Net asset value per 'A' Share n/a 0.10
Cumulative distributions per Ordinary Share 9.75 7.75
Total return per Ordinary Share and 'A' Share 77.95 84.15
CHAIRMAN'S STATEMENT
Introduction
I present the Company's Annual Report and Accounts for the year ended 31
January 2013. The Company suffered a further fall in net asset value
over the year as several investments continued to struggle to make
satisfactory progress. As Shareholders will be aware, the Company
undertook a Share Realisation and Reinvestment Programme ("SRRP") during
the year which has provided more flexibility in the Company's exit
strategy.
Portfolio activity
With the Company effectively fully invested, there was a low level of
investment activity during the year, mostly limited to some loan stock
redemptions and a reorganisation of one investment (West Tower Holdings
which was merged into Gatewales Limited).
One small follow-on investment was made in The Thames Club Limited,
where further working capital was required. Full details of the
portfolio activity are included in the Investment Manager's Report.
Investment valuations
There were three adjustments to the investment valuations during the
year.
Coast Constructors is building the Gara Rock hotel and apartment complex
near Salcombe in South Devon. Sometime after the original investment was
made in 2008, it became clear that the original plan was not viable in
the prevailing economic conditions. Since then, the project has been
revised and the original investment partner and management team removed.
The project recently secured further third party funding to enable it to
complete the main parts of the development, but the new funding ranks
ahead of the Company's investment. This has had a negative impact on the
likely return from the investment and, consequently, the Board has
revalued the investment downwards by GBP514,000.
The Thames Club Limited has also proved to be a disappointing
investment. The company was originally backed in 2008 to acquire a
health club in Staines and to undertake some extensive improvements to
the property. Since completing the work, the club has struggled to build
its membership to the anticipated levels. Although the club is making
some headway, the Board considers a reduction in valuation of GBP155,000
to be appropriate.
On a positive note, Crossco (1135) Limited, which operates children's
nurseries and trades as Kingsclere Nurseries, has continued to make
progress, justifying an uplift of GBP33,000.
All other investments have been held at their previous carrying values.
Net unrealised losses for the year were GBP636,000.
Further details on the portfolio and investment activity are included in
the Investment Manager's Report and Review of Investments.
Net asset value
The net asset value per Ordinary Share ("NAV") at 31 January 2013 stood
at 68.2p. This represents a decrease of 6.2p (7.4%) over the year (after
adjusting for the dividends of 2.0p per share paid during the year).
Results
The loss on activities after taxation for the year was GBP610,000 (2012:
GBP372,000) comprising a revenue profit of GBP21,000 (2012: GBP3,000)
and a capital loss of GBP631,000 (2012: GBP375,000).
Dividends
In line with the intention set out in the documentation issued with the
Share Realisation and Reinvestment Programme, the Board intends to
target annual dividends of 4p per Ordinary Share. A final dividend of 4p
per Ordinary Share is proposed to be paid on 28 June 2013 to
Shareholders on the register at the close of business on 31 May 2013.
Share Reinvestment and Realisation Programme
Shareholders will be aware of the Share Reinvestment and Realisation
Programme ("SRRP") which the Company undertook in the latter part of
year (approximately 42% of the shares in issue took part in the SRRP).
Participating Shareholders sold 3,816,366 existing Ordinary Shares back
to the Company at a price of 70.3p per share and were issued with
3,701,798 new Ordinary Shares at a price of 72.5p per Ordinary Share.
Alongside the SRRP, the Company also launched a small top-up share offer
which raised gross proceeds of GBP25,000. 34,495 new Ordinary Shares
were issued at a price of approximately 72.5p per share. Income tax
relief at the rate of 30% was available to Shareholders in respect of
the new shares issued under both the SRRP and the top-up offer.
Realisations plans
As a result of the SRRP, the Manager now has a target to realise
approximately 60% of the existing investment portfolio in order to
return funds to Shareholders, who did not participate in the SRRP.
The Manager has identified several investments which may allow a full or
partial exit over the next 12 months. Once a reasonable level of
realisations has been achieved, it is expected that funds will be
returned by way of one or more tender offers. Shareholders will be
notified of the tender offer plans as soon as they are finalised. The
Board is targeting the first tender offer for towards the end of this
year.
Share buybacks
During the year, the Company made market purchases of 98,000 Ordinary
Shares at a price of 68.0p per share. These shares were subsequently
cancelled.
In view of the fact that the Company is now seeking to return funds to
Shareholders, the Company is unlikely to make further market purchases
of its own shares for the time being. Investment realisation proceeds
will instead be used to fund the annual dividend and tender offers.
To give the Company some flexibility, a special resolution to renew the
Directors' authority to buy in the Company's shares is proposed for the
forthcoming Annual General Meeting as Resolution 9.
'A' Share Conversion
The Company's 'A' Shares were originally set up as a mechanism to
facilitate the payment of performance incentive fees, should they become
due. As it has become clear that the performance of the Company will not
meet the performance hurdles, proposals were put to Shareholders to
eliminate the 'A' Shares by converting them into Ordinary Shares, thus
simplifying the Company's capital structure. The conversion took place
in December 2012, with each 'A' Share converting into 0.001001 Ordinary
Shares.
Annual General Meeting
The Company's sixth Annual General Meeting ("AGM") will be held at 10
Lower Grosvenor Place, London SW1W 0EN at 10.30 a.m. on 19 June 2013.
One item of special business is proposed at the AGM in respect of the
authority to buy in shares as noted above.
Outlook
As I have noted in previous statements, the timing of the launch of the
Company in 2007 has had a highly negative impact on the performance of
the Company. Five of the Company's 12 investments have suffered falls in
value since they were first made, each of which can be attributed, to a
significant extent, to the deterioration in the economy, the banking
crisis and general falls in asset values.
The Manager's task over the next year is to seek exits at full current
value from up to 60% of the existing portfolio so that the Company can
make its first tender offer to return capital to Shareholders who did
not participate in the SRRP. At the same time, the Manager will continue
to work closely with all portfolio companies to ensure that those that
are held in the longer term can fulfil their potential and, in time,
deliver capital growth.
Hugh Gillespie
Chairman
INVESTMENT MANAGER'S REPORT
Introduction
The Company is now fully invested, with further investment activity
limited to reinvesting proceeds from divestments when short term
investment opportunities arise. Whilst many of the Company's investments
are performing well, the ongoing challenging economic environment is
continuing to impact several companies in the portfolio and has resulted
in a disappointing reduction in valuations at the year end.
Investment activity
The Company began the year with GBP6.4m of investments and ended the
year with GBP5.3m spread across a portfolio of 12 investments. During
the year, the Company made a follow on investment totalling GBP50,000,
divestments of GBP1,294,000. One investment also underwent a
reorganisation with Gatewales Limited effectively taking over the
activities of West Tower Holdings Limited.
The GBP50,000 follow on investment was made into The Thames Club Limited
to provide the business with additional working capital.
The portfolio returned income of GBP265,000 (2012: GBP305,000) in the
year and a net revenue return of GBP21,000 (2012: GBP3,000) after
expenses and tax; or 0.2p return per share. This profit was reduced by a
GBP631,000 (2012: GBP375,000) capital loss (or 7.1p per share) owing to
the decrease in value of two investments whose performance was below
expectations. The resulting total loss of 6.9p per year (2012: 4.2p) in
the year is disappointing, but we are now seeing improvements in many of
the portfolio companies which, if sustained, should start to be
reflected in the Company's results.
The Company expects the current portfolio to provide the core of its
income and growth in the medium term and will therefore focus on
managing its existing investments before seeking to return funds to
Shareholders over the next two years.
Portfolio valuation
Whilst the majority of the portfolio performed in line with expectations,
the net GBP636,000 valuation reduction in the year arose on two
investments: GBP514,000 in Coast Constructors Limited and GBP155,000 in
The Thames Club Limited. These reductions were partially offset by a
GBP33,000 uplift in the value of Crossco (1135) Limited (trading as
Kingsclere Nurseries).
A GBP514,000 decrease in the value of Coast Constructors Limited was
made during the year. Coast Constructors is nearing the end of building
a hotel and apartment complex near Salcombe in South Devon. The
construction has been plagued by delays and significant cost over runs,
resulting in the original management team being removed from the project
and replaced with a more experienced developer. A local agent provided
an indicative valuation of the completed development which resulted in a
value below the original expectations. As a result of the fall in
expected value and the further funding required to complete the
development, a valuation reduction was recognised during the year.
The investment in Thames Club Limited was written down by GBP155,000 at
the Company year end following disappointing 2012 trading results which
were significantly behind budget. A new management team has been
appointed who are working hard to increase membership numbers at the
club whilst keeping a tight control on costs. The business is now two
years behind plan, however, we are confident that over the course of the
next year the new management team will begin rebuilding the business and
deliver improving results.
The investment in Crossco (1135) Limited was made four years ago, the
business is performing well and we are working closely with the
Investment Partner to secure an exit for the Company over the course of
the next year. The GBP33,000 increase in value recognises part of the
anticipated uplift that will be due to the Company on exit.
Outlook
The uncertain economic environment is expected to continue throughout
2013 with consumer confidence unlikely to improve in the short term.
This, together with the continued lack of available funding from
traditional sources, has made it more difficult to achieve timely exits
and it is likely to take longer than originally envisaged to realise
many of the investments. Despite these challenges, the Company is
focused on securing exits at satisfactory values in order to return
funds to Shareholders.
Downing Managers 6 Limited
REVIEW OF INVESTMENTS
Portfolio of investments
The following investments, all of which are incorporated in England and
Wales, were held at 31 January 2013:
Valuation
movement % of
Cost Valuation in year portfolio
GBP'000 GBP'000 GBP'000
Cadbury House Holdings Limited 1,300 1,417 24.1%
Hoole Hall Country Club Holdings
Limited 750 818 14.0%
Crossco (1135) Ltd - Kingsclere
Nurseries 665 753 33 12.9%
Gatewales Limited 750 750 12.7%
Hoole Hall Spa and Leisure Club
Limited 563 613 10.4%
The Thames Club Limited* 1,125 350 (155) 5.9%
Snow Hill Developments LLP* 250 250 4.2%
Coast Constructors Limited 933 125 (514) 2.1%
The Meredith Pub Group Limited* 120 120 2.0%
Fenkle Street LLP* 38 39 0.6%
Vermont Developments Limited* 451 25 0.4%
Aminghurst Limited* 207 - 0.0%
7,152 5,260 (636) 89.3%
Cash at bank and in hand 633 10.7%
Total investments 5,893 100.0%
*non-qualifying investment
Investment movements for the year ended 31 January 2013
ADDITIONS
GBP'000
The Thames Club Limited 50
Gatewales Limited *** 750
800
DISPOSALS
Valuation at Profit/(loss) Realised
Cost 01/02/12** Proceeds vs. cost gain
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
West Tower Holdings
Limited *** 1,150 750 750 (400)
Kings Gap Group
Limited* 400 400 400 - -
Future Film
Production Services
Limited 128 - 5 (123) -
The Meredith Pub
Group Limited* 81 81 81 - -
Sanguine Hospitality
Limited* 50 50 50 - -
Fenkle Street LLP* 8 8 8 - -
1,817 1,289 1,294 (523) -
*non-qualifying investment
**adjusted for purchases in the year
***Company reorganisation whereby Gatewales took over the interests of
West Tower Holdings
Directors' responsibilities statement
The Directors are responsible for preparing the Report of the Directors,
the Directors' Remuneration Report and the financial statements in
accordance with applicable law and regulations. They are also
responsible for ensuring that the Annual Report includes information
required by the Listing Rules of the Financial Conduct Authority.
Company law requires the Directors to prepare financial statements for
each financial year. Under that law, the Directors have elected to
prepare the financial statements in accordance with United Kingdom
Generally Accepted Accounting Practice (United Kingdom accounting
standards and applicable law). Under company law, the Directors must not
approve the financial statements unless they are satisfied that they
give a true and fair view of the state of affairs of the Company and of
the profit or loss of the Company for that period.
In preparing these financial statements the Directors are required to:
*select suitable accounting policies and then apply them consistently;
*make judgments and accounting estimates that are reasonable and
prudent;
*state whether applicable UK accounting standards have been followed,
subject to any material departures disclosed and explained in the
financial statements; and
*prepare the financial statements on the going concern basis unless it
is inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records
that are sufficient to show and explain the Company's transactions, to
disclose with reasonable accuracy at any time the financial position of
the Company and to enable them to ensure that the financial statements
comply with the Companies Act 2006. They are also responsible for
safeguarding the assets of the Company and hence for taking reasonable
steps for the prevention and detection of fraud and other
irregularities.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Manager's website.
Legislation in the United Kingdom governing the preparation and
dissemination of the financial statements and other information included
in annual reports may differ from legislation in other jurisdictions.
Statement as to disclosure of information to the Auditor
The Directors in office at the date of this report have confirmed, as
far as they are aware, that there is no relevant audit information of
which the Auditor is unaware. Each of the Directors has confirmed that
they have taken all the steps that they ought to have taken as Directors
in order to make themselves aware of any relevant audit information and
to establish that it has been communicated to the Auditor.
INCOME STATEMENT
for the year ended 31 January 2013
2013 2012
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 265 - 265 305 - 305
Net loss on
investments - (631) (631) - (375) (375)
265 (631) (366) 305 (375) (70)
Investment management
fees (64) - (64) (78) - (78)
Other expenses (164) - (164) (219) - (219)
Return/(loss) on
ordinary activities
before tax 37 (631) (594) 8 (375) (367)
Tax on ordinary
activities (16) - (16) (5) - (5)
Return/(loss)
attributable to
equity shareholders 21 (631) (610) 3 (375) (372)
Basic and diluted
(loss)/return per
Ordinary Share 0.2p (7.1p) (6.9p) - (4.2p) (4.2p)
Basic and diluted - n/a n/a - - -
return per 'A' Share
All Revenue and Capital items in the above statement derive from
continuing operations. No operations were acquired or discontinued
during the year. The total column within the Income Statement represents
the profit and loss account of the Company.
A Statement of Total Recognised Gains and Losses has not been prepared
as all gains and losses are recognised in the Income Statement noted
above.
Other than revaluation movements arising on investments held at fair
value through profit and loss, there were no differences between the
return/loss as stated above and at historical cost.
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
2013 2012
GBP'000 GBP'000
Opening Shareholders' funds 6,775 7,406
Purchase of own shares (2,763) (81)
Proceeds from share issue 2,708
Total recognised losses for the year (610) (372)
Dividends paid (175) (178)
Closing Shareholders' funds 5,935 6,775
BALANCE SHEET
as at 31 January 2013
2013 2012
GBP'000 GBP'000 GBP'000 GBP'000
Fixed assets
Investments 5,260 6,385
Current assets
Debtors 196 226
Cash at bank and in hand 633 244
829 470
Creditors: amounts falling due within one
year (154) (80)
Net current assets 675 390
Net assets 5,935 6,775
Capital and reserves
Called up Ordinary Share capital 9 9
Called up 'A' Share capital - 13
Deferred Share capital 16 3
Capital redemption reserve 5 1
Share premium account 2,704
Special reserve 5,247 8,308
Revaluation reserve (2,292) (1,784)
Capital reserve - realised 150 150
Revenue reserve 96 75
Total equity shareholders' funds 5,935 6,775
Basic and diluted net asset value per 68.2p 76.3p
Ordinary Share
Basic and diluted net asset value per 'A' n/a 0.1p
Share
CASH FLOW STATEMENT
for the year ended 31 January 2013
2013 2012
GBP'000 GBP'000
Net cash inflow from operating activities 106 153
Taxation
Corporation tax paid (5) (53)
Capital expenditure
Purchase of investments (50) (587)
Proceeds from disposal of investments 544 852
Net cash inflow from capital expenditure 494 265
Equity dividends paid (175) (178)
Net cash inflow before financing 420 187
Financing
Purchase of own shares (2,763) (81)
Proceeds from share issue 2,732 -
Net cash outflow from financing (31) (81)
Increase in cash 389 106
NOTES TO THE ACCOUNTS
for the year ended 31 January 2013
1. Accounting policies
Basis of accounting
The Company has prepared its financial statements under UK Generally
Accepted Accounting Practice and in accordance with the Statement of
Recommended Practice "Financial Statements of Investment Trust Companies
and Venture Capital Trusts" revised January 2009 ("SORP").
The financial statements are prepared under the historical cost
convention except for certain financial instruments measured at fair
value and on the basis that it is not necessary to prepare consolidated
accounts.
The Company implements new Financial Reporting Standards issued by the
Financial Reporting Council when required.
Presentation of Income Statement
In order to better reflect the activities of a venture capital trust,
and in accordance with the SORP, supplementary information which
analyses the Income Statement between items of a revenue and capital
nature has been presented alongside the Income Statement. The net
revenue is the measure the Directors believe appropriate in assessing
the Company's compliance with certain requirements set out in Part 6 of
the Income Tax Act 2007.
Investments
All investments are designated as "fair value through profit or loss"
assets due to investments being managed and performance evaluated on a
fair value basis. A financial asset is designated within this category
if it is both acquired and managed on a fair value basis, with a view to
selling after a period of time, in accordance with the Company's
documented investment policy. The fair value of an investment upon
acquisition is deemed to be cost. Thereafter, investments are measured
at fair value in accordance with the International Private Equity and
Venture Capital Valuation Guidelines ("IPEV") together with FRS 26.
For unquoted investments, fair value is established using the IPEV
guidelines. The valuation methodologies for unquoted entities used by
the IPEV to ascertain the fair value of an investment are as follows:
* Price of recent investment;
* Multiples;
* Net assets;
* Discounted cash flows or earnings (of underlying business);
* Discounted cash flows (from the investment); and
* Industry valuation benchmarks.
The methodology applied takes account of the nature, facts and
circumstances of the individual investment and uses reasonable data,
market inputs, assumptions and estimates in order to ascertain fair
value.
Gains and losses arising from changes in fair value are included in the
Income Statement for the year as a capital item and transaction costs on
acquisition or disposal of the investment are expensed.
Where an investee company has gone into receivership, liquidation or
administration (where there is little likelihood of recovery), the loss
on the investment, although not physically disposed of, is treated as
being realised.
It is not the Company's policy to exercise significant influence over
investee companies. Therefore, the results of these companies are not
incorporated into the Income Statement except to the extent of any
income accrued. This is in accordance with the SORP, which does not
require portfolio investments to be accounted for using the equity
method of accounting.
Income
Dividend income from investments is recognised when the Shareholders'
rights to receive payment has been established, normally the ex-dividend
date. Interest income is accrued on a time apportionment basis, by
reference to the principal sum outstanding and at the effective interest
rate applicable and only where there is reasonable certainty of
collection.
Expenses
All expenses are accounted for on an accruals basis. In respect of the
analysis between revenue and capital items presented within the Income
Statement, all expenses have been presented as revenue items except as
follows:
* Expenses which are incidental to the disposal of an investment
are deducted from the disposal proceeds of the investment.
* Expenses are split and presented partly as capital items where
a connection with the maintenance or enhancement of the value of the
investments held can be demonstrated. The Company has adopted a policy
of charging 100% of the investment manager's fees to the revenue
account.
Taxation
The tax effects on different items in the Income Statement are allocated
between capital and revenue on the same basis as the particular item to
which they relate, using the Company's effective rate of tax for the
accounting period.
Due to the Company's status as a Venture Capital Trust and the continued
intention to meet the conditions required to comply with Part 6 of the
Income Tax Act 2007, no provision for taxation is required in respect of
any realised or unrealised appreciation of the Company's investments
which arises.
Deferred taxation, which is not discounted, is provided in full on
timing differences that result in an obligation at the balance sheet
date to pay more tax, or a right to pay less tax, at a future date, at
rates expected to apply when they crystallise based on current tax rates
and law. Timing differences arise from the inclusion of items of income
and expenditure in taxation computations in periods different from those
in which they are included in the accounts.
Other debtors, other creditors and loan notes
Other debtors (including accrued income), other creditors and loan notes
(other than those held as part of the investment portfolio) are included
within the accounts at amortised cost.
2. Basic and diluted return per share
Weighted average Revenue Capital
number of shares in issue return loss
Return per share is calculated on the following: GBP'000 GBP'000
Year ended 31 January 2013 Ordinary Shares 8,801,809 21 (631)
'A' Shares n/a n/a n/a
Year ended 31 January 2012 Ordinary Shares 8,915,679 3 (370)
'A' Shares 13,475,112 - (5)
As the Company has not issued any convertible securities or share
options, there is no dilutive effect on the return per Ordinary. The
return per share disclosed therefore represents both basic and diluted
return per Ordinary Share.
3. Basic and diluted net asset value per share
2013 2012
Shares in issue Net asset value Net asset value
Pence per Pence per
2013 2012 share GBP'000 share GBP'000
Ordinary Shares 8,704,741 8,869,450 68.2 5,935 76.3p 6,765
'A' Shares - 13,442,867 - - 0.1p 10
68.2 5,935 76.4p 6,775
As the Company has not issued any convertible shares or share options,
there is no dilutive net asset value per Ordinary Share. The net asset
value per share disclosed therefore represents both the basic and
diluted return per Ordinary Share.
4. Principal risks
The Company's investment activities expose the Company to a number of
risks associated with financial instruments and the sectors in which the
Company invests. The principal financial risks arising from the
Company's operations are:
* Investment risks
* Credit risk
* Liquidity risk
The Board regularly reviews these risks and the policies in place for
managing them. There have been no significant changes to the nature of
the risks that the Company is exposed to over the year and there have
also been no significant changes to the policies for managing those
risks during the year.
The risk management policies used by the Company in respect of the
principal financial risks and a review of the financial instruments held
at the year end are provided below:
Investment risks
As a VCT, the Company is exposed to investment risks in the form of
potential losses and gains that may arise on the investments it holds in
accordance with its investment policy. The management of these market
risks is a fundamental part of investment activities undertaken by the
Investment Manager and overseen by the Board. The Manager monitors
investments through regular contact with management of investee
companies, regular review of management accounts and other financial
information and attendance at investee company board meetings. This
enables the Manager to manage the investment risk in respect of
individual investments. Investment risk is also mitigated by holding a
diversified portfolio spread across various business sectors and asset
classes.
The key market risks to which the Company is exposed are:
* Investment price risk
* Interest rate risk
Investment price risk
Investment price risk arises from uncertainty about the future prices
and valuations of financial instruments held in accordance with the
Company's investment objectives. It represents the potential loss that
the Company might suffer through changes in the fair value of unquoted
investments that it holds.
Interest rate risk
The Company accepts exposure to interest rate risk on floating-rate
financial assets through the effect of changes in prevailing interest
rates. The Company receives interest on its cash deposits at a rate
agreed with its bankers. Investments in loan stock attract interest
predominately at fixed rates. A summary of the interest rate profile of
the Company's investments is shown below.
There are three categories in respect of interest which are attributable
to the financial instruments held by the Company as follows:
* "Fixed rate" assets represent investments with predetermined
yield targets and comprise certain loan note investments and
Preference Shares;
* "Floating rate" assets predominantly bear interest at rates
linked to Bank of England base rate or LIBOR and comprise cash
at bank and liquidity fund investments and certain loan note
investments; and
* "No interest rate" assets do not attract interest and comprise
equity investments, certain loan note investments, loans and receivables
(excluding cash at bank) and other financial liabilities.
The Company monitors the level of income received from fixed and
floating rate assets and, if appropriate, may make adjustments to the
allocation between the categories, in particular, should this be
required to ensure compliance with the VCT regulations.
It is estimated that an increase of 1% in interest rates would have
increased total return before taxation for the year by GBP2,000. As the
Bank of England base rate stood at 0.5% per annum throughout the year,
it is not believed that a reduction from this level is likely.
Credit risk
Credit risk is the risk that the counterparty to a financial instrument
is unable to discharge a commitment to the Company made under that
instrument. The Company is exposed to credit risk through its holdings
of loan stock in investee companies, investments in liquidity funds,
cash deposits and debtors.
The Manager manages credit risk in respect of loan stock with a similar
approach as described under "Investment risks" above. In addition the
credit risk is partially mitigated by registering floating charges over
the assets of certain investee companies. The strength of this security
in each case is dependent on the nature of the investee company's
business and its identifiable assets. The management of credit risk
associated interest, dividends and other receivables is covered within
the investment management procedures. The level of security is a key
means of managing credit risk.
Cash is held by Bank of Scotland plc and Royal Bank of Scotland plc,
both of which are A-rated financial institutions and both also
ultimately part-owned by the UK Government. Consequently, the Directors
consider that the credit risk associated with cash deposits is low.
There have been no changes in fair value during the year that are
directly attributable to changes in credit risk.
Liquidity risk
Liquidity risk is the risk that the Company encounters difficulties in
meeting obligations associated with its financial liabilities. Liquidity
risk may also arise from either the inability to sell financial
instruments when required at their fair values or from the inability to
generate cash inflows as required. As the Company has a relatively low
level of creditors, being GBP154,000 (2012: GBP80,000) and has no
borrowings, the Board believes that the Company's exposure to liquidity
risk is low. The Company always holds sufficient levels of funds as cash
in order to meet expenses and other cash outflows as they arise. For
these reasons the Board believes that the Company's exposure to
liquidity risk is minimal.
The Company's liquidity risk is managed by the Investment Manager in
line with guidance agreed with the Board and is reviewed by the Board at
regular intervals.
5. Related party transactions
Downing Managers 6 Limited ("DM6"), a wholly owned subsidiary, is the
Company's Investment Manager. During the year ended 31 January 2013,
GBP64,000 (2012: GBP78,000), was payable to DM6. Additionally, DM6
provides accounting, secretarial and administrative services for an
annual fee of GBP40,000 (plus RPI) per annum. During the year ended 31
January 2013, GBP47,000 (2012: GBP45,000), was due in respect of
administration fees. At the year end a balance of GBP38,000 (2012:
GBP30,000) was due to DM6.
ANNOUNCEMENT BASED ON AUDITED ACCOUNTS
The financial information set out in this announcement does not
constitute the Company's statutory financial statements in accordance
with section 434 Companies Act 2006 for the year ended 31 January 2013,
but has been extracted from the statutory financial statements for the
year ended 31 January 2013, which were approved by the Board of
Directors on 2 May 2013 and will be delivered to the Registrar of
Companies following the Company's Annual General Meeting. The
Independent Auditor's Report on those financial statements was
unqualified and did not contain any emphasis of matter nor statements
under s498(2) and (3) of the Companies Act 2006.
The statutory accounts for the year ended 31 January 2012 have been
delivered to the Registrar of Companies and received an Independent
Auditor's Report which was unqualified and did not contain any emphasis
of matter nor statements under s498(2) and (3) of the Companies Act
2006.
A copy of the full annual report and financial statements for the year
ended 31 January 2013 will be printed and posted to shareholders
shortly. Copies will also be available to the public at the registered
office of the Company at 10 Lower Grosvenor Place, London, SW1W 0EN and
will be available for download from www.downing.co.uk.
This announcement is distributed by Thomson Reuters on behalf of Thomson
Reuters clients.
The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other
applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the
information contained therein.
Source: Downing Planned Exit VCT 6 PLC via Thomson Reuters ONE
HUG#1698819
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