TIDMCR5
Core VCT V PLC
From: Core VCT V PLC
Date: 15 March 2013
Yearly Financial Report for the year ended 31 December 2012
Performance Summary
Ordinary Shares 31 December 2012 31 December 2011
Net asset value per share 49.51 pence 61.14 pence
Total return to date per share(1) 67.01 pence 78.64 pence
Share price (mid-market) 20.50 pence 45.00 pence
Cumulative dividends per share since inception 17.50 pence 17.50 pence
Ongoing charges ratio(2) 2.28 % 1.86 %
1. Total return per share comprises closing net asset value per share plus
cumulative dividends per share paid to date.
2. Ongoing charges ratio is calculated by taking the operating costs of the
Group (excluding trail commission, third party transaction costs and costs
associated with corporate transactions) divided by the average NAV for the
year.
Chairman's Statement
Results
The Net Asset Value ("NAV") Total Return of the Ordinary Shares was 67.01p as at
31 December 2012, comprising a NAV of 49.51p and cumulative dividend paid of
17.50p per Ordinary Share. This is a decrease from the NAV Total Return to 31
December 2011 of 14.8%. A net loss of GBP1,282,489 (decrease of 11.63p per share)
was recorded in the Statement of Comprehensive Income for the year ended 31
December 2012 (2011: net loss of GBP2,003,078).
The decrease of 11.63p per share is accounted for by:
* Decrease of 11.68p per share due to movement in the unquoted portfolio; and
* 0.05p income generated during the year.
Investments
The main contributor to the fall in NAV was Allied International Holdings
Limited ("Allied"), an investment directly held by Core VCT V plc. In my interim
review I reported that Allied required further funding to progress with its
turnaround plan. Due to cash constraints within Core VCT V plc and Core VCT IV
plc a further GBP600,000 was provided by Core VCT plc, by way of a loan with
capital priority, bringing Core VCT plc's total investment to GBP950,000 for the
year. As a result, the valuation reduced a further GBP0.7 million to GBP1.3 million
(12.31p per Ordinary Share) due to a slower than anticipated improvement in
trading, particularly in the European destinations and the additional priority
funding. During the year, the CEO was replaced and the senior management team
strengthened. There has also been a re-organisation within the global sales team
to drive the business forward. The order book for 2013 is ahead of last year
with several offices in Europe and the USA already on course to outperform their
budget. Progress has been slower than originally anticipated, however, Allied's
aim remains to grow, organically and potentially by further acquisitions, into a
major global destination management operation over the medium term.
Core Capital I LP ("CCILP")
We reported in the Circular dated 9 June 2011, that GBP27.3 million of growth
capital would be provided to Abriand Limited, Ark Home Healthcare Limited,
Colway Limited, Kelway Limited and SPL Services Limited. Whilst this capital is
being deployed we expect that the valuations of these investments will remain
fairly flat. We do not expect major changes to the valuations until we are much
closer to achieving exits, which we target within a 2-3 year timescale. During
the year, the valuation of CCILP increased slightly by GBP33,000 (0.30p per
share).
During the year, a further GBP6.3 million was drawn down from the Institutional
investors in CCILP. The main recipient of these funds was Abriand Limited, in
which a further GBP3.5 million was invested and which completes the total GBP15.0
million growth capital commitment from CCILP for this investment. This has been
utilised to fund capital expenditure on new sites, and the acquisition and
conversion of the Chez Gerard sites from the administrator of Paramount
Restaurants. During the course of the year, all of the acquired sites have been
fully converted, mostly into the Brasserie Blanc format, with one unit trading
as a re-launched Chez Gerard site. The total commitment to Abriand Limited from
CCILP was GBP20.2 million with GBP5.2 million being provided, predominantly during
2011, to acquire additional shares in the company.
During the year, GBP1.2 million was invested in SPL Services Limited to fund
working capital requirements. Ark Home Healthcare Limited received GBP0.8 million
of funding to design, trial and implement a new business operating model. The
remaining GBP0.8 million drawn down relates to the General Partner Fee for the
year to June 2013.
The remaining GBP7.8 million to be called (net of General Partner Fee) is intended
to be deployed in Ark Home Healthcare Limited, Colway Limited and SPL Services
Limited.
Dividends
The income generated from the underlying portfolio along with the retained cash
balance at the year-end totalling GBP0.4 million, provides a sufficient level of
headroom for the operations of the Company, and accordingly the Board is not
recommending a final dividend to shareholders at this stage. Future dividends
will only be paid to shareholders following the successful exit of investments
within the portfolio, when we plan to distribute all of the realised proceeds
available, subject to working capital and VCT requirements.
Share Price and Share Buy Backs
As shareholders are aware, the Board views the NAV Total Return, rather than the
share price, as the preferred measure of performance, as it encompasses the
value of the current portfolio and the amount of cash distributed to
shareholders over the life of their investment. It is disappointing to report
that the NAV Total Return has fallen by 14.8% over the year. However, we believe
that the underlying portfolio performance will improve as we start to see the
benefits from deploying the substantial capital raised last year from CCILP, and
as one of our directly held investments, Allied, makes the progress we expect.
We are conscious that the mid price of the shares continues to be at a
significant discount to the NAV (59% at 31 December 2012). Whilst the Company
has the ability to buy back its own shares, the Boards' view is that any cash
realised from disposal of investments should be returned to all shareholders by
way of a distribution. The Ordinary Shares (CR5) are fully listed shares. Prices
are available on www.londonstockexchange.com.
Annual General Meeting
The Company's Annual General Meeting will be held at 10.30 am on 2 May 2013 at
19 Cavendish Square, London, W1A 2AW. This is a good opportunity for
shareholders to meet the Directors and the Manager and I would encourage you to
attend.
The Notice of the Annual General Meeting is contained on pages 39 to 40 of the
Annual Report and Accounts and a Form of Proxy is enclosed. Shareholders who are
unable to attend the Meeting are encouraged to complete and return the Form of
Proxy to the Company's registrars so as to ensure that their votes are
represented at the Meeting.
Outlook
The outlook for the UK economy remains subdued and uncertain. Against this
backdrop, it is encouraging that the vast majority of our investments are funded
through their next growth phases, the level of debt in our underlying portfolio
is relatively low and that management teams have been strengthened where
required. Together with the further capital that has either recently been
invested or remains available, our largest investee companies in particular are
well placed to deliver growth. Your Board and Manager are now focused on
operating improvements in our investments with the intention of seeking
realisations for our shareholders over the medium term.
Greg Aldridge
Chairman
14 March 2013
Principal Risks and Uncertainties
The Company's assets consist mainly of unquoted investments. These investments
are not publicly traded and there is not a liquid market for them, and therefore
these investments may be difficult to realise. More detailed explanation of
these risks and the way which they are managed are contained in note 2.
Other risks faced by the Company include the following:
* Economic risk - events such as economic recession, movements in interest
rates and the availability of debt finance could affect the valuation of
small companies.
* Loss of approval as a Venture Capital Trust - the Company must comply with
Section 274 of the Income Tax Act 2007 which allows it to be exempt from
capital gains tax on investment gains. Any breach of these rules may lead to
the Company losing its approval as a VCT.
* Investment and strategic - incorrect strategy, asset allocation, and stock
selection could all lead to poor returns for shareholders. The underlying
investments may also need significant funding which is not in accordance
with VCT legislation.
* Regulatory - breach of regulatory rules could lead to the suspension of the
Company Stock Exchange Listing, financial penalties or a qualified audit
report.
* Operational - Failure of the Manager's accounting systems or disruption to
the Manager's business could lead to an inability to provide accurate
reporting and monitoring, leading to a loss of shareholders' confidence.
* Financial - inadequate controls by the Manager could lead to
misappropriation of assets. Inappropriate accounting policies may lead to
misreporting or breaches of regulations.
The Board seeks to mitigate and manage these risks through continual review,
policy setting, shareholder communication and enforcement of contractual
obligations and monitoring progress and compliance.
Statement of Directors' Responsibilities in Respect of the Annual Financial
Report
The Directors are responsible for preparing the Annual Report and the Group and
Company financial statements in accordance with applicable United Kingdom law
and those International Financial Reporting Standards ("IFRS") as adopted by the
European Union.
Under company law the Directors must not approve the Group and Company financial
statements unless they are satisfied that they present fairly the financial
position, the financial performance and cash flows of the Group and Company for
that period. In preparing the Group and Company financial statements the
Directors are required to:
* select suitable accounting policies in accordance with IAS 8: Accounting
Policies, Changes in Accounting Estimates and Errors and then apply them
consistently;
* present information, including accounting policies, in a manner that
provides relevant, reliable, comparable and understandable information;
* provide additional disclosure when compliance with the specific requirements
in IFRS is insufficient to enable users to understand the impact of
particular transactions, other events and conditions on the Group's and the
Company's financial position and financial performance;
* state that the Group and Company have complied with IFRS, subject to any
material departures disclosed and explained in the financial statements;
and
* make judgements and estimates that are reasonable and prudent.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the transactions of the Group and the Company and
disclose with reasonable accuracy at any time the financial position of the
Group and Company and enable them to ensure that the Group and Company financial
statements comply with the Companies Act 2006 and Article 4 of the IAS
Regulation. They are also responsible for safeguarding the assets of the Group
and Company and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
Each of the Directors confirms that to the best of his knowledge:
* the financial statements, prepared in accordance with IFRS as adopted by the
European Union, give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Group and the Company; and
* the Report of the Directors includes a fair review of the development and
performance of the business and the position of the Group and Company
together with a description of the principal risks and uncertainties that
they face.
For and on behalf of the Board:
Greg Aldridge
Chairman
14 March 2013
Audited Group Statement of Comprehensive Income
for the year ended 31 December 2012
Revenue Capital Total
Return Return
Notes GBP GBP GBP
=-------------------------------------------------------------------------------
Capital losses on investments
Losses on investments held at fair value - (1,287,667) (1,287,667)
=-------------------------------------------------------------------------------
- (1,287,667) (1,287,667)
Revenue
Investment Income 159,949 - 159,949
Other Income 334 - 334
=-------------------------------------------------------------------------------
Total Income 160,283 (1,287,667) (1,127,384)
=-------------------------------------------------------------------------------
Expenditure
Other expenses (155,105) - (155,105)
=-------------------------------------------------------------------------------
Total expenditure (155,105) - (155,105)
=-------------------------------------------------------------------------------
Profit/(loss) before taxation 5,178 (1,287,667) (1,282,489)
Taxation - - -
=-------------------------------------------------------------------------------
Profit/(loss) for year/total 3
comprehensive income 5,178 (1,287,667) (1,282,489)
=-------------------------------------------------------------------------------
Return per Ordinary Share: 3 0.05p (11.68)p (11.63)p
Audited Group Statement of Comprehensive Income
for the year ended 31 December 2011
Revenue Capital Total
Return Return
Notes GBP GBP GBP
=-------------------------------------------------------------------------------
Capital losses on investments
Losses on investments held at fair value - (1,897,346) (1,897,346)
=-------------------------------------------------------------------------------
- (1,897,346) (1,897,346)
Revenue
Investment Income 182,659 - 182,659
Other Income 2,424 - 2,424
=-------------------------------------------------------------------------------
Total Income 185,083 (1,897,346) (1,712,263)
=-------------------------------------------------------------------------------
Expenditure
Other expenses (205,240) (85,575) (290,815)
=-------------------------------------------------------------------------------
Total expenditure (205,240) (85,575) (290,815)
=-------------------------------------------------------------------------------
Loss before taxation (20,157) (1,982,921) (2,003,078)
Taxation - - -
=-------------------------------------------------------------------------------
Loss for year/total comprehensive income 3 (20,157) (1,982,921) (2,003,078)
=-------------------------------------------------------------------------------
Return per ordinary share: 3 (0.18)p (17.99)p (18.17)p
Audited Group and Company Balance Sheets
as at 31 December 2012
Group Company Group Company
2012 2012 2011 2011
Notes GBP GBP GBP GBP
=-------------------------------------------------------------------------------
Non-current assets
Investments at fair value
through profit or loss 5,038,235 5,038,235 6,325,902 6,325,902
Subsidiary undertaking - 1,000 - 1,000
=-------------------------------------------------------------------------------
5,038,235 5,039,235 6,325,902 6,326,902
Current assets
Other receivables 44,382 44,382 42,312 42,312
Cash 427,255 426,255 462,019 461,019
=-------------------------------------------------------------------------------
471,637 470,637 504,331 503,331
Current liabilities
Other payables (51,774) (51,774) (89,646) (89,646)
=-------------------------------------------------------------------------------
Net current assets 419,863 418,863 414,685 413,685
=-------------------------------------------------------------------------------
Net assets 5,458,098 5,458,098 6,740,587 6,740,587
=-------------------------------------------------------------------------------
Equity
Called-up Ordinary Share 1,102 1,102
capital 1,102 1,102
Capital reserve (3,315,205) (3,315,205) (2,027,538) (2,027,538)
Special distributable
reserve 8,751,749 8,751,749 8,751,749 8,751,749
Revenue reserve 20,452 20,452 15,274 15,274
=-------------------------------------------------------------------------------
Shareholders' funds 4 5,458,098 5,458,098 6,740,587 6,740,587
=-------------------------------------------------------------------------------
Net asset value per 0.01p
Ordinary Share 4 49.51p 49.51p 61.14p 61.14p
Audited Group and Company Statements of Changes in Equity
for the year ended 31 December 2012
Called up
Ordinary Special
Share Capital Distributable Revenue
Capital Reserve Reserve Reserve Total
GBP GBP GBP GBP GBP
=-------------------------------------------------------------------------------
Group
For the year ended 31
Dec 2012
Net assets at 1 January 1,102 (2,027,538) 8,751,749 15,274 6,740,587
2012
(Loss)/profit for the
year/total
comprehensive - (1,287,667) - 5,178 (1,282,489)
income
=-------------------------------------------------------------------------------
Net assets at 31 1,102 (3,315,205) 8,751,749 20,452 5,458,098
December 2012
=-------------------------------------------------------------------------------
Group
For the year ended 31
Dec 2011
Net assets at 1 January 1,102 (44,617) 9,854,246 35,431 9,846,162
2011
Loss for the year/total
comprehensive - (1,982,921) - (20,157) (2,003,078)
income
Dividends paid - - (1,102,497) - (1,102,497)
=-------------------------------------------------------------------------------
Net assets at 31 1,102 (2,027,538) 8,751,749 15,274 6,740,587
December 2011
=-------------------------------------------------------------------------------
Company
For the year ended 31
Dec 2012
Net assets at 1 January 1,102 (2,027,538) 8,751,749 15,274 6,740,587
2012
(Loss)/profit for the
year/total
comprehensive - (1,287,667) - 5,178 (1,282,489)
income
=-------------------------------------------------------------------------------
Net assets at 31 1,102 (3,315,205) 8,751,749 20,452 5,458,098
December 2012
=-------------------------------------------------------------------------------
Company
For the year ended 31
Dec 2011
Net assets at 1 January 1,102 (44,617) 9,854,246 35,431 9,846,162
2011
Loss for the year/total
comprehensive - (1,982,921) - (20,157) (2,003,078)
income
Dividends paid - - (1,102,497) - (1,102,497)
=-------------------------------------------------------------------------------
Net assets at 31 1,102 (2,027,538) 8,751,749 15,274 6,740,587
December 2011
=-------------------------------------------------------------------------------
Audited Group and Company Cash Flow Statements
for the year ended 31 December 2012
Group Company Group Company
2012 2012 2011 2011
GBP GBP GBP GBP
=-------------------------------------------------------------------------------
Net cash (outflow)/inflow from
operating activities (34,764) (34,764) 435,329 434,329
Financing activities
Equity dividends paid - - (1,102,497) (1,102,497)
=-------------------------------------------------------------------------------
Net cash outflow from financing
activities - - (1,102,497) (1,102,497)
Net decrease in cash and cash (34,764) (34,764)
equivalents (667,168) (668,168)
Cash and cash equivalent at
beginning of period 462,019 461,019 1,129,187 1,129,187
=-------------------------------------------------------------------------------
Cash and cash equivalents at the
end of period 427,255 426,255 462,019 461,019
=-------------------------------------------------------------------------------
Reconciliation of loss before
taxation to net cash
(outflow)/inflow from operating
activities
Loss before taxation (1,282,489) (1,282,489) (2,003,078) (2,003,078)
Losses on investments 1,287,667 1,287,667 1,897,346 1,897,346
Purchases of investments - - (3,496,845) (3,497,845)
Sales of investments - - 4,004,904 4,004,904
(Increase)/decrease in accrued
income and prepayments (2,070) (2,070) 21,466 21,466
(Decrease)/increase in other
payables (37,872) (37,872) 11,536 11,536
=-------------------------------------------------------------------------------
Net cash (outflow)/inflow from
operating activities (34,764) (34,764) 435,329 434,329
=-------------------------------------------------------------------------------
Notes:
1. The financial statements of the Company and the Group have been prepared in
accordance with the Companies Act 2006 and International Financial Reporting
Standards ('IFRS') as adopted by the European Union.
The financial statements have been prepared on a going concern basis. Where
presentational guidance set out in the Statement of Recommended Practice
"Financial Statements of Investment Trust Companies and Venture Capital Trusts"
('SORP') issued by the Association of Investment Companies ('AIC') in January
2009 is consistent with the requirements of IFRS, the Directors have sought to
prepare the financial statements on a basis compliant with the recommendations
of the SORP.
The financial information for the year ended 31 December 2012 included in this
report has been taken from the Company's full accounts.
The functional currency of the Group is UK pounds Sterling as this is the
currency of the primary economic environment in which the Group operates.
Accordingly, the financial statements have been prepared in UK pounds sterling.
There have been no significant changes to the accounting policies during the
year 31 December 2012.
2. Financial Instruments
The Group's financial instruments in the year comprised equity and fixed and
floating interest rate securities that are held in accordance with the Company's
investment objective and cash, liquid resources and short term debtors and
creditors that arise directly from the Company's operations.
The Group's investment portfolio consists of unquoted investments representing
92% (2011: 94%) of net assets. This portfolio has a 100% (2011: 100%)
concentration of risk towards small UK based, sterling denominated companies.
The main risks arising from the Group's financial instruments are due to
fluctuations in market prices (market price risk), credit risk and interest rate
risk, although liquidity risk and currency risk are also discussed below. The
Board regularly reviews and agrees policies for managing each of these risks and
these are summarised below. These have been in place throughout the current and
preceding periods.
Market Price Risk
Market price risk arises from uncertainty about the future prices of financial
instruments held in accordance with the Company's investment objective. It
represents the potential gain or loss that the Company might benefit or suffer
from through holding market positions in the face of market movements.
The investments in equity and fixed interest stocks of unquoted companies that
the Group holds are not traded and as such the prices are more uncertain than
those of more widely traded securities. As, in a number of cases, the unquoted
investments are valued by reference to price earnings ratios prevailing in
quoted comparable sectors, their valuations are exposed to changes in the price
earnings ratios that exist in the quoted markets.
The Board's strategy in managing the market price risk inherent in the Group's
portfolio of equities and loan stock investments is determined by the
requirement to meet the Company's investment objective. As part of the
investment process, the Board seeks to maintain an appropriate spread of market
risk, and has full and timely access to relevant information from the Investment
Manager. No single investment is permitted to exceed 15% of total VCT value of
investment assets at the point of investment. The Board meets regularly and
reviews the investment performance and financial results, as well as compliance
with the Company's objectives.
Credit Risk
Credit risk is the risk that a counterparty will fail to discharge an obligation
or commitment that it has entered into with the Group. The carrying amounts of
financial assets best represents the maximum credit risk exposure at the balance
sheet date. The Group has an exposure to credit risk in respect of the loan
stock investments it has made in investee companies, most of which have no
security attached to them, and where they do, such security ranks beneath any
bank debt that an investee company may owe. All of the accrued income is due
within 1 month of the year end.
There could also be a failure by counterparties to deliver securities which the
Group has paid for, or not pay for securities which the Group has delivered.
This risk is considered to be small as most of the Group's investment
transactions are in unquoted investments, where investments are conducted
through solicitors, to ensure that payment matches delivery.
Interest Rate Risk
The Group's fixed and floating interest rate securities, its equity investments
and net revenue may be affected by interest rate movements. Investments are
often in relatively small businesses, which are relatively high risk investments
sensitive to interest rate fluctuations.
The Group's assets include fixed and floating rate interest instruments. The
rate of interest earned is regularly reviewed by the Board, as part of the risk
management processes applied to these instruments, already disclosed under
market price risk.
Liquidity Risk
The investment in equity and fixed interest stocks of unquoted companies that
the Group holds are not traded. They are not readily realisable. The ability of
the Group to realise the investments at their carrying value may at times not be
possible if there are no willing purchasers. The Group's ability to sell
investments may also be constrained by the requirements set down by the VCTs.
The maturity profile of the Group's loan stock investments disclosed within the
consideration of credit risk indicates that a majority of these assets will be
readily realisable within the next 3 years from the year end.
All creditors and accruals are due within one year and are comfortably covered
by cash held and short term debtors.
Currency Risk
All assets and liabilities are denominated in sterling and therefore there is no
currency risk.
3. Return per Ordinary share
Year ended Year ended
31 Dec 2012 31 Dec 2011
GBP GBP
i. Basic return from ordinary activities after (1,282,489) (2,003,078)
taxation
Basic return per share (11.63)p (18.17)p
ii. Net revenue return from ordinary activities after 5,178 (20,157)
taxation
Revenue return per share 0.05p (0.18)p
iii. Net capital return from ordinary activities after (1,287,667) (1,982,921)
taxation
Capital return per share (11.68)p (17.99)p
iv. Weighted average number of ordinary shares in 11,024,969 11,024,969
issue in the year
4. Net asset value
Net asset value per Ordinary Share is based on the net assets at the end of the
year of GBP5,458,098 (2011: GBP6,740,587), and on 11,024,969 Ordinary Shares (2011:
same), being the number of Ordinary Shares in issue on that date.
5. Following the successful launch of Core Capital I LP, the general partner of
the LP, receives GBP750,000 per annum until the fourth anniversary, payable out of
the assets of Core Capital I LP.
Core Secretarial Services LLP provided both accounting and company secretarial
services to the Company for the period to 11 February 2012 and received fees
totalling GBP3,571 (2011: GBP36,431) from the Company. Rhonda Nicoll is a member of
Core Capital LLP and is also a partner of Core Secretarial Services LLP.
6. This announcement is not the Company's statutory accounts. The statutory
accounts for the year ended 31 December 2011 have been delivered to the
Registrar of Companies and have received an audit report which was unqualified
and did not contain any emphasis of matter and did not contain any statements
under sections 498(2) and 498(3) of the Companies Act 2006.
The preliminary announcement is prepared on the same basis as set out in the
prior year statutory accounts and was approved by the Board on 14 March 2013.
The Annual Report for the year ended 31 December 2012 will be posted to
shareholders and is available for inspection at 9 South Street, London W1K 2XA,
the registered office of the Company, and on the Company's website, www.core-
cap.com.
Enquiries
Stephen Edwards 020 3179 0919
Rhonda Nicoll 020 3179 0930
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: Core VCT V plc via Thomson Reuters ONE
[HUG#1685654]
Core Vct V (LSE:CR5)
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