TIDMCR5
Core VCT V PLC
From: Core VCT V PLC
Date: 29 August 2013
Half-Yearly Financial Report for the six months ended
30 June 2013
Performance Summary
Ordinary Shares 30 June 2013 30 June 2012 31 December 2012
Net asset value per share 45.65 pence 55.03 pence 49.51 pence
Total return to date per
share(1) 63.15 pence 72.53 pence 67.01 pence
Share price (mid market) 22.50 pence 34.00 pence 20.50 pence
Ongoing charges ratio(2) 0.98% 0.96% 2.28%
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 period.
Chairman's Statement
Results
In the six months to 30 June 2013, the Net Asset Value
(NAV) Total Return per Ordinary Share was 63.15p,
comprising a NAV of 45.65p and cumulative dividends
paid of 17.50p per Ordinary Share. This represents
a decrease from the Combined NAV Total Return to 31
December 2012 of 5.8%, (3.86p) per Ordinary Share.
This reduction is attributable to the interim valuation
of our unquoted investments, in which we use International
Private Equity and Venture Capital ("IPEVC") valuation
guidelines based upon most recently available financial
information on trading.
Investments
Core Capital I LP ("CCILP")
During the period a further GBP3.75 million was drawn
down from the Institutional Investors in CCILP. The
main recipient of these funds were Ark Home Healthcare
Limited GBP1.75 million, Colway Limited GBP1.2 million
and SPL Services Limited GBP0.8 million. As at 30
June 2013, GBP4.1 million remains to be called (net
of General Partner Fee).
During the period, the valuation reduced by 2.55p.
Within the portfolio, the underlying strategic plans
have not changed significantly, but several of the
underlying budgets have had to be revised, especially
in the case of SPL, and these revisions have been
reflected in the valuations. During the period, the
main focus has been to drive through operational efficiencies
and management change to prepare the investments for
exit over the next couple of years.
Allied International Holdings Limited ("Allied")
Allied, an investment directly held by Core VCT V
plc, required further funding to progress with its
turnaround plan. Both Core V plc and Core VCT IV plc
did not participate in the further funding due to
their cash constraints and GBP150,000 was injected
by Core VCT plc, by way of a loan to provide preference
on the capital. As a result the valuation reduced
by GBP193,000 (1.75p per share).
The Manager's Review provides an update on all the
investments held in the Company including those held
in CCILP.
Dividends
Future capital dividends will only be paid to shareholders
following the successful exit of investments within
the portfolio, when we plan to distribute all the
realised proceeds available, subject to working capital
and VCT requirements.
Share Price and Share Buy Backs
We would remind shareholders that we view 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 5.8% over
the period. However, we believe that the underlying
portfolio performance will improve as the strategic
business plans and operational efficiencies are implemented
over the next 12-18 months.
We are conscious that the mid price of the shares
continues to be at a significant discount to the NAV
(51% at 30 June 2013). Whilst the Company has the
ability to buy back its own shares, the Boards' view
remains that surplus cash should be returned to all
shareholders by way of a distribution. The Ordinary
Shares (CR5) are fully listed shares. Prices are available
on www.thelondonstockexchange.com.
Outlook
The outlook for the UK economy remains subdued but
there appears to be some encouraging signs. Against
this backdrop, it is reassuring 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 additionally 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 remain focused on operating
improvements in our investments with the intention
of seeking realisations for our shareholders over
the medium term.
Greg Aldridge
Chairman
29 August 2013
Statement of Principal Risks and Uncertainties
The Company's assets consist of unquoted investments,
cash and liquid resources. It principal risks are
therefore market risk, credit risk and liquidity risk.
Other risks faced by the Company include economic
risk, the loss of approval as a Venture Capital Trust,
failure to comply with other regulatory requirements,
and broader risks such as reputational, operational,
and financial risks. These risks and the way in which
they are managed, are described in more detail in
the Annual Report for the year ended 31 December 2012,
in note 16 to the accounts. The Company's principal
risks and uncertainties have not changed materially
since the date of that report and it is not envisaged
that there will be any changes to the risks and uncertainties
in the remaining six months of the financial year.
Statement of Directors' Responsibilities in Respect
of the Half Year Report
We confirm to the best of our knowledge:
the condensed set of financial statements have been
-- prepared in accordance with IAS 34 'Interim Financial
Reporting' and give a true and fair view of the assets,
liabilities, financial position and loss of the Company;
the interim management report includes a fair review
-- of the information required by the Disclosure and
Transparency Rules ('DTR') 4.2.7R, being an indication
of important events that have occurred during the
first six months of the financial year and their impact
on the financial statements;
the Statement of Principal Risks and Uncertainties
-- shown above is a fair review of the information required
by DTR 4.2.7R; and
the condensed set of financial statements includes
-- a fair review of the information required by DTR 4.2.8R,
being related party transactions that have taken place
in the first six months of the financial year and
that have materially affected the financial position
or performance of the Company during the period, and
any changes in the related party described in the
last Annual Report that could do so.
For and behalf of the Board:
Greg Aldridge
Chairman
29 August 2013
Unaudited Consolidated Statement of Comprehensive
Income
For the Six Months ended 30 June 2013
Revenue Capital Total
Return Return
Notes GBP GBP GBP
Income
Investment Income 3 85,325 - 85,325
Other Income 3 917 - 917
Losses on investments held at fair
value 6 - (461,332) (461,332)
Total Income 86,242 (461,332) (375,090)
Expenditure
Other expenses (50,465) - (50,465)
Total expenditure (50,465) - (50,465)
Profit/(loss) before taxation 35,777 (461,332) (425,555)
Taxation - - -
Profit/(loss) for period/total
comprehensive income 5 35,777 (461,332) (425,555)
Return per ordinary share (pence): 5 0.32 (4.18) (3.86)
Unaudited Consolidated Statement of Comprehensive
Income
For the Six Months ended 30 June 2012
Revenue Capital Total
Return Return
Notes GBP GBP GBP
Income
Investment Income 3 77,513 - 77,513
Other Income 3 142 - 142
Losses on investments held at fair
value - (677,030) (677,030)
Total Income 77,655 (677,030) (599,375)
Expenditure
Other expenses (73,860) - (73,860)
Total expenditure (73,860) - (73,860)
Profit/(loss) before taxation 3,795 (677,030) (673,235)
Taxation - - -
Profit/(loss) for period/total
comprehensive income 5 3,795 (677,030) (673,235)
Return per ordinary share (pence): 5 0.03 (6.14) (6.11)
Audited Consolidated Statement of Comprehensive Income
for the year ended 31 December 2012
Revenue Capital Total
Return Return
Notes GBP GBP GBP
Income
Investment Income 3 159,949 - 159,949
Other Income 3 334 - 334
Losses on investments held at fair
value - (1,287,667) (1,287,667)
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
comprehensive income 5 5,178 (1,287,667) (1,282,489)
Return per ordinary share (pence): 5 0.05 (11.68) (11.63)
Consolidated Balance
Sheet
As at As at As at
30 June 2013 30 June 2012 31 December 2012
Notes (unaudited) (unaudited) (audited)
GBP GBP GBP
Non-current assets
Investments at fair value 6 4,576,279 5,648,872 5,038,235
Current assets
Other receivables 49,769 45,786 44,382
Cash 433,759 409,203 427,255
483,528 454,989 471,637
Current liabilities
Other payables (27,264) (36,509) (51,774)
Net current assets 456,264 418,480 419,863
Net assets 5,032,543 6,067,352 5,458,098
Capital and reserves
Called-up Ordinary share
capital 1,102 1,102 1,102
Capital reserve (3,776,534) (2,704,568) (3,315,205)
Special distributable
reserve 8,751,749 8,751,749 8,751,749
Revenue reserve 56,226 19,069 20,452
Shareholders' funds 7 5,032,543 6,067,352 5,458,098
Net asset value per 0.01p 7 45.65p 55.03p 49.51p
ordinary share
Consolidated Statement of Changes in Equity
As at 30 June 2013
Called up
Ordinary Special
Share Capital Distributable Revenue
Capital Reserve Reserve Reserve Total
GBP GBP GBP GBP GBP
For the six months
ended 30 June 2013
(unaudited)
Net assets at 1
January 2013 1,102 (3,315,205) 8,751,749 20,452 5,458,098
(Loss)/profit for
the period/total
comprehensive
income - (461,332) - 35,777 (425,555)
Net assets at 30
June 2013 1,102 (3,776,537) 8,751,749 56,229 5,032,543
Called up
Ordinary Special
Share Capital Distributable Revenue
Capital Reserve Reserve Reserve Total
GBP GBP GBP GBP GBP
For the six months
ended 30 June 2012
(unaudited)
Net assets at 1
January 2012 1,102 (2,027,538) 8,751,749 15,274 6,740,587
(Loss)/profit for
the period/total
comprehensive
income - (677,030) - 3,795 (673,235)
Net assets at 30
June 2012 1,102 (2,704,568) 8,751,749 19,069 6,067,352
Called up
Ordinary Special
Share Capital Distributable Revenue
capital Reserve Reserve Reserve Total
GBP GBP GBP GBP GBP
For the year
ended 31
December 2012
(audited)
Net assets at 1
January 2012 1,102 (2,027,538) 8,751,749 15,274 6,740,587
(Loss)/profit for
the year/total
comprehensive
income - (1,287,667) - 5,178 (1,282,489)
Net assets at 31
December 2012 1,102 (3,315,205) 8,751,749 20,452 5,458,098
Consolidated Cash Flow Statement
for the six months ended 30 June 2013
As at As at As at
30 Jun 2013 30 Jun 2012 31 Dec 2012
(unaudited) (unaudited) (audited)
GBP GBP GBP
Net cash inflow/(outflow) from operating activities 6,504 (52,816) (34,764)
Net increase/(decrease) in cash and cash
equivalents 6,504 (52,816) (34,764)
Cash and cash equivalents at beginning of period 427,255 462,019 462,019
Cash and cash equivalents at the end of period 433,759 409,203 427,255
Reconciliation of loss before taxation to net cash
inflow/(outflow) from operating activities
Loss before taxation (425,555) (673,235) (1,282,489)
Losses on investments 461,332 677,030 1,287,667
Increase in accrued income and prepayments (5,387) (3,474) (2,070)
Decrease in other payables (23,886) (53,137) (37,872)
Net cash inflow/(outflow) from operating activities 6,504 (52,816) (34,764)
Notes:
1. Accounting policies
1.1 Basis of Preparation
The unaudited interim results have been prepared in
accordance with IAS 34 Interim Financial Reporting
and the accounting policies set out in the audited
statutory accounts of the Group for the year ended
31 December 2012, except for the adoption of new standards
and interpretations effective as at 1 January 2013.
The Group applies, for the first time, certain standards
and amendments. These include IAS 1 Presentation of
Financial Statements and IFRS 13 Fair Value Measurement.
The Group had not adopted IFRS 10 Consolidated Financial
Statements and IAS 27 Separate Financial Statements
as this standard has not yet been adopted by the EU.
As required by IAS 34, the nature and effect of these
changes are disclosed below.
IAS 1 Presentation of Items of Other Comprehensive
Income - Amendment to IAS 1 introduce a grouping of
items presented in other comprehensive income (OCI).
As the Group has no OCI the amendment had no impact
to the financial statements.
IFRS 13 Fair Value Measurement establishes a single
source of guidance under IFRS for all fair value measurements.
IFRS 13 does not change when an entity is required
to use fair value, but rather provides guidance on
how to measure fair value under IFRS when fair value
is required or permitted.
Several other new standards and amendments apply for
the first time in 2013. However, they do not impact
the annual consolidated financial statements of the
Group or the interim consolidated financial statements
of the Group.
The functional currency of the Group is UK pounds
sterling as this is the currency of primary economic
environment in which the Group operates. Accordingly,
the financial statements are prepared in UK pounds
sterling.
The interim consolidated financial statements do not
include all the information required for full annual
accounts and should be read in conjunction with the
consolidated Accounts of the Group for the year ended
31 December 2012, which were prepared under full IFRS
requirements.
1.2 Going concern
These statements have been prepared on a going concern
basis and nothing has happened that would change the
Directors' going concern assessment from the last
audited financial statements of 31 December 2012.
In arriving at this conclusion the Directors have
considered the liquidity of the Company and its ability
to meet obligations as they fall due for a period
of twelve months from the date these financial statements
were approved. As at 30 June 2013, the Company held
cash balances of GBP0.4 million. Cashflow projections
have been reviewed and show that the Company has sufficient
funds to meet its contracted expenditure.
1.3 Use of estimates
The preparation of financial statements requires the
Group to make estimates and assumptions that affect
the items reported in the balance sheet and statement
of comprehensive income and the disclosure of financial
assets and liabilities at the date of the financial
statements. Although these estimates are based on
management's best knowledge of current facts, circumstances
and, to some extent, future events and actions, the
Group's actual results may ultimately differ from
those estimates, possibly significantly.
2. Earnings for the six months should not be taken as
a guide to the results of the financial year to 31
December 2013.
3. Income
As at As at As at
30 Jun 2013 30 Jun 2012 31 Dec 2012
(unaudited) (unaudited) (audited)
GBP GBP GBP
Investment Income 85,325 77,513 159,949
Other Income
Deposit interest 917 142 334
86,242 77,655 160,283
4. Taxation
There will be no tax charge due by the Company since
total expenses (including brought forward unutilised
management expenses) are expected to be more than
income.
5. Earnings and return per share
As at As at As at
30 Jun 2013 30 Jun 2012 31 Dec 2012
(unaudited) (unaudited) (audited)
GBP GBP GBP
(i) Basic return from ordinary activities after taxation (425,555) (673,235) (1,282,489)
Basic return per share (3.86)p (6.11)p (11.63)p
Net revenue return from ordinary activities after
(ii) taxation 35,777 3,795 5,178
Revenue return per share 0.32p 0.03p 0.05p
Net capital return from ordinary activities after
(iii) taxation (461,332) (677,030) (1,287,667)
Capital return per share (4.18)p (6.14)p (11.68)p
Weighted average number of ordinary shares in issue
(iv) in the period 11,024,969 11,024,969 11,024,969
6. Investments
Financial assets measured at fair value Unlisted
(level 3) Total
GBP GBP
Equity instruments 1,010,000 1,010,000
Debt instruments 1,515,633 1,515,633
LP interest 2,050,626 2,050,626
Total 4,576,279 4,576,279
Valuation at 31 December 2012 5,038,235 5,038,235
Sale proceeds (624) (624)
Gain on sale 624 624
Investment written off (50,915) (50,915)
Investment holding losses (411,041) (411,041)
Valuation at 30 June 2013 4,576,279 4,576,279
Book Cost 30 June 2013 6,264,488 6,264,488
Investment holding losses at 30 June 2013 (1,688,209) (1,688,209)
Valuation at 30 June 2013 4,576,279 4,576,279
7. Net asset value
As at As at As at
30 Jun 2013 30 Jun 2012 31 Dec 2012
(unaudited) (unaudited) (audited)
GBP GBP GBP
Net assets 5,032,543 6,067,352 5,458,098
Number of shares in issue 11,024,969 11,024,969 11,024,969
Net asset value per share 45.65p 55.03p 49.51p
8. Financial Instruments and Fair Value
Set out below is an overview of financial instruments,
other than cash and short-term deposits, held by the
Group as at 30 June 2013 and their fair value.
The carrying value is the same as the fair value and
has not been disclosed.
As at
30 June 2013
(Fair Value)
GBP
Assets at fair value through profit
and loss
Investments (level 3) 4,576,279
Total non current 4,576,279
Other receivables 49,769
Total current 49,769
Total 4,626,048
Financial liabilities:
Other payables 27,264
Total current 27,264
Total 27,264
Fair Value Hierarchy
All financial instruments for which fair value is
recognised or disclosed are categorised within the
fair value hierarchy, described as follows, based
on the lowest level input that is significant to the
fair value
measurement as a whole:
Level 1 - Quoted market prices in an active market
(that are unadjusted) for identical assets or liabilities
Level 2 - Valuation techniques (for which the lowest
level input that is significant to the fair value
measurement is directly or indirectly observable)
Level 3 - Valuation techniques (for which the lowest
level input that is significant to the fair value
measurement is unobservable)
The level 3 reconciliation is provided in note 6 to
the accounts.
Valuation techniques
The fair value of the unquoted investments has been
determined adopting a variety of valuation methodologies
which are consistent with the IPEVC valuation guidelines
published in 2009. The valuation process requires
management to make certain assumptions about unobservable
inputs which are disclosed below:
Fair Value
as at
Valuation Unobservable
Description 30 June 2013 Technique(s) input Range
GBP
Marketability
Private equity Market discount 10-20%
investments 4,576,279 Comparable
Companies Multiple of:
EBITDA 5.4-7.5x
Gross Profit 1.0x
FUM 1.5x
Net asset
value n/a n/s
Provision n/a n/a
A change of the multiples or the marketability discount
shown above would change the effective multiple and
therefore lead to a change in the valuations as illustrated
below:
10% increase +GBP317,000
in effective
multiple
10% decrease -GBP317,000
in effective
multiple
The valuation technique includes the investments held
in CCILP, albeit the Group has a 3.09% interest in
CCILP.
9. Related Party Transaction
Details of the carried interest arrangements between
the Company and the Manager are set out in the Annual
Report for the year ended 31 December 2012. Following
the launch of Core Capital I LP, the general partner
of the LP, will receive GBP750,000 per annum until
the fourth anniversary, payable out of the assets
of Core Capital I LP.
10. The financial information for the six months ended
30 June 2013 and 30 June 2012 has neither been audited
nor reviewed.
11. These are not statutory accounts in terms of Section
434 of the Companies Act 2006. Statutory accounts
for the year to 31 December 2012, which received an
unqualified audit report and did not contain a statement
under sections 498(2) or (3) of the Companies Act
2006, have been lodged with the Registrar of Companies.
No statutory accounts in respect of any period after
31 December 2012 have been reported on by the Company's
auditors or delivered to the Registrar of Companies.
12. Copies of this statement are being sent to all shareholders.
Further copies are available free of charge from the
Company's registered office, 9 South Street, London,
W1K 2XA.
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#1724599
http://www.core-cap.com/
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