TIDMCR5
Core VCT V PLC
From: Core VCT V PLC
Date: 14 March 2014
Yearly Financial Report for the year ended 31 December 2013
Performance Summary
Ordinary Shares 31 December 2013 31 December 2012
Net asset value per share 52.03 pence 49.51 pence
Total return to date per share(1) 69.53 pence 67.01 pence
Share price (mid-market) 23.00 pence 20.50 pence
Cumulative dividends per share since
inception 17.50 pence 17.50 pence
Ongoing charges ratio(2) 2.42 % 2.28 %
Total return per share comprises closing net asset
1. value per share plus cumulative dividends per share
paid to date.
Ongoing charges ratio is calculated by taking the
1. 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
The Net Asset Value ("NAV") Total Return of the Ordinary Shares was
69.53p as at 31 December 2013, comprising a NAV of 52.03p and cumulative
dividends paid of 17.5p per Ordinary Share. This is an increase from
the NAV Total Return to 31 December 2012 of 3.8% (and an increase of
10.1% since 30 June 2013). A net profit of GBP278,227 (an increase of
2.52p per share) was recorded in the Statement of Comprehensive Income
for the year ended 31 December 2013 (2012: net loss of GBP1,282,489).
The increase of 2.52p per Ordinary Share is accounted for by:-
-- An additional 2.08p per Ordinary Share due to an increase in the value of
the unquoted portfolio; and
-- Add 0.44p per Ordinary Share income generated during the year.
Investments
Core Capital I LP ("CCILP")
CCILP is the vehicle for the major part of the portfolio and allowed the
Manager to attract additional capital for expansion from outside
investors in 2011
During the year a further GBP6.8 million was drawn down from the other
institutional investors. The main recipient of these funds were Ark
Home Healthcare Limited (GBP2.7 million), Colway Limited (GBP1.7
million) and SPL Services Limited (GBP1.6 million). As at 31 December
2013, GBP1.7 million remains to be called (net of General Partner Fee).
During the year, the valuation of the Company's interest increased by an
amount equivalent to 2.74p per Ordinary Share or 13%.
Investments directly held by Core VCT V plc
The investments directly held by the Company being Allied International
Holdings Limited, Camwatch Limited and Momentous Moving Holdings Ltd
decreased by 0.67p per share during the year.
Allied International Holdings Limited ("Allied") an investment directly
held by Core VCT plc, required further funding to progress with its
turnaround plan. Both Core VCT V plc and Core VCT IV plc did not
participate in the further funding due to their cash constraints and
GBP700,000 was injected by Core VCT plc during the year, by way of a
loan to provide preference on the capital. As a result of further
senior management changes made during the year, this investment has
stabilised and should start to improve during 2014.
The Manager's Review provides an update on all the investments held in
the Company including those held in CCILP.
Dividends
In order to meet the VCT tests for the year to 31 December 2013, your
Board is recommending a final revenue dividend of 0.5p per share to be
paid on 8 May 2014 to shareholders on the register on 28 March 2014. As
I have reported in the past, significant dividends will only be paid to
shareholders following a 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.
Alternative Investment Fund Managers' Directive ("AIFMD")
The AIFMD is European legislation which creates a framework for
regulating managers of alternative investment funds ("AIFs") that are
managed and/or marketed in the European Economic Area. Closed-end
investment companies fall within the remit of these new regulations.
The legislation came into force in July 2013 but there is a twelve month
transitional period which means that the Company has until July 2014 to
comply. The Board has reviewed the impact of the Directive and
concluded that the Manager does not need to apply the AIFMD regulatory
framework to the Company, as the Company meets the criteria of a
"grandfathered AIF."
Management Arrangements
Core Capital LLP formed a new partnership called Core Capital Partners
LLP, in order to comply with the AIFMD regulatory requirements. On 6
January 2014, the Board terminated the existing management deed and
appointed Core Capital Partners LLP as the Manager of the Company on
substantially similar terms.
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. We are
pleased that the underlying portfolio performance that we expected at
the interim stage has started to come through and NAV Total return was
up 3.8% over the year and 10.1% since the half year.
We are conscious that the mid price of the shares continues to be at a
significant discount to the NAV (55.8% as at 31 December 2013). Whilst
the Company has the ability to buy back its own shares, the Board's view
is that any cash realised from a disposal of investments should be
returned to all shareholders by way of distribution. The Ordinary
Shares (CR5) are fully listed shares. Prices are available on
www.londonstockexchange.com.
Annual General Meeting
We have taken shareholders' views on board and this year the Company
will hold a joint AGM with both Core VCT plc and Core VCT IV plc. The
Company's Annual General Meeting will be held at 11.00 am on 1 May 2014
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.
Outlook
There has been a period of substantial change in the investment
portfolio, especially in those investments held in CCILP, in particular
the implementation of new funding, operational and management regimes.
This is now starting to show in maintainable EBITDA growth in our
largest investments, particularly Kelway Holdings Limited and Abriand
Limited.
The UK is beginning to show some improving liquidity conditions for both
transactions and exit activity as well as for alternate debt. The
Manager has successfully completed the debt refinancing for Abriand
Limited. The Board and Manager remain focused on achieving further
operating improvements, so as to seek realisations for our shareholders.
We look forward to reporting on the progress of achieving our
realisations in the future.
Greg Aldridge
Chairman
14 March 2014
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's 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.
Under applicable law and regulations, the Directors are responsible for
preparing a Strategic Report, a Directors' report, a Directors'
Remuneration Report and a Corporate Governance Statement.
We confirm to the best of our 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 2014
Audited Consolidated Statement of Comprehensive Income
for the year ended 31 December 2013
Revenue Capital Total
Return Return
Notes GBP GBP GBP
Income
Investment income 175,455 - 175,455
Other income 1,083 - 1,083
Gains on investments held at fair value - 229,573 229,573
Total Income 176,538 229,573 406,111
Expenditure
Other expenses (127,884) - (127,884)
Total expenditure (127,884) - (127,884)
Profit before taxation 48,654 229,573 278,227
Taxation - - -
Profit for year/total comprehensive
income 3 48,654 229,573 278,227
Return per Ordinary Share: 3 0.44p 2.08p 2.52p
Audited Group Statement of Comprehensive Income
for the year ended 31 December 2012
Revenue Capital Total
Return Return
Notes GBP GBP GBP
Income
Investment income 159,949 - 159,949
Other income 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 loss 3 5,178 (1,287,667) (1,282,489)
Return per ordinary share: 3 0.05p (11.68)p (11.63)p
Audited Consolidated and Company Balance Sheets
as at 31 December 2013
Group Company Group Company
2013 2013 2012 2012
Notes GBP GBP GBP GBP
Non-current assets
Investments at fair
value through
profit or loss 5,267,184 5,267,184 5,038,235 5,038,235
Subsidiary
undertaking - 1,000 - 1,000
5,267,184 5,268,184 5,038,235 5,039,235
Current assets
Other receivables 47,890 47,890 44,382 44,382
Cash 469,858 468,858 427,255 426,255
517,748 516,748 471,637 470,637
Current liabilities
Other payables (48,607) (48,607) (51,774) (51,774)
Net current assets 469,141 468,141 419,863 418,863
Net assets 5,736,325 5,736,325 5,458,098 5,458,098
Equity
Called-up Ordinary
Share capital 1,102 1,102 1,102 1,102
Capital reserve (3,085,632) (3,085,632) (3,315,205) (3,315,205)
Special
distributable
reserve 8,751,749 8,751,749 8,751,749 8,751,749
Revenue reserve 69,106 69,106 20,452 20,452
Shareholders' funds 4 5,736,325 5,736,325 5,458,098 5,458,098
Net asset value per 4 52.03p 52.03p 49.51p 49.51p
0.01p Ordinary
Share
Audited Consolidated and Company Statements of Changes in Equity
for the year ended 31 December 2013
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
2013
Net assets at 1
January 2013 1,102 (3,315,205) 8,751,749 20,452 5,458,098
Profit for the
year/total
comprehensive
income - 229,573 - 48,654 278,227
Net assets at 31
December 2013 1,102 (3,085,632) 8,751,749 69,106 5,736,325
Group
For the year
ended 31 Dec
2012
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
loss - (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
Company
For the year
ended 31 Dec
2013
Net assets at 1
January 2013 1,102 (3,315,205) 8,751,749 20,452 5,458,098
Profit for the
year/total
comprehensive
income - 229,573 - 48,654 278,227
Net assets at 31
December 2013 1,102 (3,085,632) 8,751,749 69,106 5,736,325
Company
For the year
ended 31 Dec
2012
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
loss - (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
Audited Consolidated and Company Cash Flow Statements
for the year ended 31 December 2013
Group Company Group Company
2013 2013 2012 2012
GBP GBP GBP GBP
Net cash inflow/(outflow) from operating activities 42,603 42,603 (34,764) (34,764)
Financing activities
Equity dividends paid - - - -
Net cash outflow from financing activities - - - -
Net decrease in cash and cash equivalents 42,603 42,603 (34,764) (34,764)
Cash and cash equivalent at beginning of period 427,255 426,255 462,019 461,019
Cash and cash equivalents at the end of period 469,858 468,858 427,255 426,255
Reconciliation of profit/(loss) before taxation to
net cash inflow/(outflow) from operating activities
Profit/(loss) before taxation 278,227 278,227 (1,282,489) (1,282,489)
(Profit)/loss on investments (229,573) (229,573) 1,287,667 1,287,667
Purchases of investments - - - -
Sales of investments - - - -
Increase in accrued income and prepayments (3,508) (3,508) (2,070) (2,070)
Decrease in other payables (2,543) (2,543) (37,872) (37,872)
Net cash inflow/(outflow) from operating activities 42,603 42,603 (34,764) (34,764)
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 2013 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 2013.
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 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 2013 31 Dec 2012
GBP GBP
i. Basic return from ordinary activities after taxation 278,227 (1,282,489)
Basic return per share 2.52p (11.63)p
Net revenue return from ordinary activities after
ii. taxation 48,654 5,178
Revenue return per share 0.44p 0.05p
Net capital return from ordinary activities after
iii. taxation 229,573 (1,287,667)
Capital return per share 2.08p (11.68)p
Weighted average number of ordinary shares in issue
iv. in the year 11,024,969 11,024,969
4. Net asset value
Net asset value per Ordinary Share is based on the net assets at the end
of the year of GBP5,736,325 (2012: GBP5,458,098), and on 11,024,969
Ordinary Shares (2012: same), being the number of Ordinary Shares in
issue on that date.
5. The proposed final revenue dividend of 0.5p per Ordinary Shares will
be paid on 8 May 2014 to shareholders on the register at the close of
business on 28 March 2014.
6. 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.
7. This announcement is not the Company's statutory accounts. The
statutory accounts for the year ended 31 December 2012 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 2014.
The Annual Report for the year ended 31 December 2013 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 NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the information
contained therein.
Source: Core VCT V plc via Globenewswire
HUG#1768948
http://www.core-cap.com/
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