TIDMCR5
Core VCT V PLC
From: Core VCT V PLC
Date: 16 March 2012
Yearly Financial Report for the year ended 31 December 2011
Performance Summary
Ordinary Shares 31 December 2011 31 December 2010
Net asset value per share 61.14 pence 89.31 pence
Total return to date per share(1) 78.64 pence 96.81 pence
Share price (mid-market) 45.00 pence 50.25 pence
Cumulative dividends per share since inception 17.50 pence 7.50 pence
Total expense ratio(2) 2.24 % 1.30%
1. Total return per share comprises closing net asset value per share plus
cumulative dividends per share paid to date.
2. Total expense ratio has been calculated using total operating expenses of
the Group, excluding trail commission, third party transaction costs and
the costs associated with the Proposals as a percentage of closing net
assets.
Chairman's Statement
Results
In my interim Chairman's Statement, I reported that shareholders voted in favour
of the Proposals, as outlined in the Circular dated 9 June 2011. From 8 July
2011, the Group holds a partnership interest of 3.09% in Core Capital I LP
("CCILP"). The LP, managed by Core Capital LLP, holds investments in Ark Home
Healthcare Limited, Abriand Limited (formerly Brasserie Bar Co. Limited), Colway
Limited, Kelway Limited, SPL Services Limited and Core Mezz II Limited (which
owns Better at Home Limited). CCILP is a GBP76 million LP fund of which GBP46.8
million was raised from new institutional investors.
The Circular reported that the assets were being transferred into CCILP based on
the valuations at 31 December 2010 and the effective discount to Core VCT V plc
was 19.55%, resulting in the Net Asset Value ("NAV") falling by 9.24% (8.26p per
Ordinary Share), when these assets were added to the rest of the portfolio and
cash.
Following completion of the transaction on 8 July 2011, a 10p capital dividend
was paid to ordinary shareholders on 12 August 2011.
As at 31 December 2011, the Net Asset Value (NAV) Total Return of the Ordinary
Shares was 78.64p, comprising a NAV of 61.14p and cumulative dividends paid of
17.50p per Ordinary Share. This is a decrease from the Combined NAV Total
Return to 31 December 2010 of 18.77%, (18.17p) per ordinary share and can be
summarised as follows:
+-------------------------------------------------------+----------------------+
| | Pence per ordinary|
| | share|
+-------------------------------------------------------+------+---------------+
|NAV Total Return as at 31 December 2010 | | 96.81|
+-------------------------------------------------------+------+---------------+
|Transfer of assets to CCILP (per Circular to|(8.26)| |
|shareholders) | | |
+-------------------------------------------------------+------+---------------+
|Movement in fair value at the year end |(7.11)| |
+-------------------------------------------------------+------+---------------+
|Georgina Goodman Limited write-off |(1.84)| |
+-------------------------------------------------------+------+---------------+
|Total movement in fair value for the year (per note 9 | | (17.21)|
|of the annual report) | | |
+-------------------------------------------------------+------+---------------+
|Operating costs, including non-recurring charges of| | (0.96)|
| GBP85,575, relating to the Proposals | | |
+-------------------------------------------------------+------+---------------+
|NAV Total Return as at 31 December 2011 | | 78.64|
+-------------------------------------------------------+------+---------------+
All the VCT qualifying tests have been met throughout the year.
Investments
Apart from the transfer of assets to CCILP, one new investment totalling GBP0.58
million was completed during the year in Better at Home Limited ("BAH"). This
investment partially utilised Core Mezz II limited with the remaining funds
being returned to Core VCT V plc by way of a capital reduction. This investment
complements our investment in Ark Home Healthcare Limited. A further GBP1.0
million was invested in Momentous Moving Excellence and GBP0.25 million was
invested in Allied International Holdings Limited to support working capital
requirements for both businesses. Further small investments were completed into
two existing portfolio companies, Intercede 2387 Limited (Georgina Goodman
Limited), which was subsequently provided for and Ark Home Healthcare Limited,
prior to transferring to CCILP. Since CCILP was launched, 77% of the capital
committed has been drawn at the year end. The drawdowns have funded an GBP8.2
million payment to the VCTs, of which Core VCT V plc received GBP1.4 million.
GBP3.3 million was utilised to purchase management shares in Kelway Limited and
GBP4.6 million was utilised to acquire third party shares and securities in
Abriand Limited. A further GBP12.1 million has been provided to Abriand Limited
to fund both working capital requirements and the acquisition of several Chéz
Gerard sites in London. A further GBP0.8 million has also been provided to Ark
Home Healthcare Limited to fund an acquisition.
The Manager's Review refers in more detail to the prospects of the investment
portfolio, which now comprises 6 investments with an investment cost and a
valuation of GBP6.3 million.
Dividends
As I mentioned earlier in my statement, a 10p capital dividend was paid to
shareholders on 12 August 2011. Your Board is not in a position to recommend a
final dividend to shareholders.
Share Price
The Ordinary Shares (CR5) are fully listed shares. The price is available
onwww.londonstockexchange.com.
We would remind shareholders that we view the NAV Total Return, rather than
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.
Core VCT V plc does have the ability to buy back shares, although we are not
anticipating making any share buy backs for the foreseeable future so that we
are best placed as a Company to maximise distributions made to all shareholders.
Annual General Meeting
The Company's Annual General Meeting will be held at 10.30 am on 2 May 2012 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 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 completion of the transfer of certain assets from Core VCT V plc into CCILP
has been a significant step and has secured the availability of further capital
for the investment portfolio. The Manager is deploying this capital to support
the business plans of each of these companies. Notably, the acquisition of the
Chéz Gerard estate by Abriand Limited, an investment held by CCILP, has been
completed during January 2012. Whilst it is clear that the UK economy will
continue to present challenges, it is equally clear that well-funded businesses
are likely to fare better in a difficult climate.
Greg Aldridge
Chairman
15 March 2012
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 small companies'
valuations.
* 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
15 March 2012
Audited Consolidated 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)
Currency gains - - -
=-------------------------------------------------------------------------------
- (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
Transaction costs and investment
management expenses - - -
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 Consolidated Statement of Comprehensive Income
for the year ended 31 December 2010
Revenue Capital Total
Return Return
Notes GBP GBP GBP
=-------------------------------------------------------------------------------
Capital gains on investments
Gains on investments held at fair value - 871,140 871,140
Currency gains - 84 84
=-------------------------------------------------------------------------------
- 871,224 871,224
Revenue
Investment Income 197,202 - 197,202
Other Income 4,612 - 4,612
=-------------------------------------------------------------------------------
Total Income 201,814 871,224 1,073,038
=-------------------------------------------------------------------------------
Expenditure
Transaction costs and investment
management expenses (305) (44,860) (45,165)
Other expenses (223,518) - (223,518)
=-------------------------------------------------------------------------------
Total expenditure (223,823) (44,860) (268,683)
=-------------------------------------------------------------------------------
(Loss)/profit before taxation (22,009) 826,364 804,355
Taxation 460 - 460
=-------------------------------------------------------------------------------
(Loss)/profit for year/total comprehensive 3
income (21,549) 826,364 804,815
=-------------------------------------------------------------------------------
Return per Ordinary Share: 3 (0.20)p 7.50p 7.30p
Audited Consolidated and Company Balance Sheets
as at 31 December 2011
Group Company Company
2011 2011 2010
Notes GBP GBP GBP
=-------------------------------------------------------------------------------
Non-current assets
Investments at fair value through profit
or loss 6,325,902 6,325,902 8,867,758
Subsidiary undertaking - 1,000 -
=-------------------------------------------------------------------------------
6,325,902 6,326,902 8,867,758
Current assets
Other receivables 42,312 42,312 63,778
Cash 462,019 461,019 1,129,187
=-------------------------------------------------------------------------------
504,331 503,331 1,192,965
Current liabilities
Other payables (89,646) (89,646) (214,561)
=-------------------------------------------------------------------------------
Net current assets 414,685 413,685 978,404
=-------------------------------------------------------------------------------
Net assets 6,740,587 6,740,587 9,846,162
=-------------------------------------------------------------------------------
Equity
Called-up Ordinary Share capital 1,102 1,102 1,102
Capital reserve (2,027,538) (2,027,538) (44,617)
Special distributable reserve 8,751,749 8,751,749 9,854,246
Revenue reserve 15,274 15,274 35,431
=-------------------------------------------------------------------------------
Shareholders' funds 4 6,740,587 6,740,587 9,846,162
=-------------------------------------------------------------------------------
Net asset value per 0.01p Ordinary Share 4 61.14p 61.14p 89.31p
Audited Consolidated and Company Statements of Changes in Equity
for the year ended 31 December 2011
Called up
Ordinary Special
Share Capital Distributable Revenue
Capital Reserve Reserve Reserve Total
GBP GBP GBP GBP GBP
Group
For the year ended 31
December 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
Called up
Ordinary Special
Share Capital Distributable Revenue
Capital Reserve Reserve Reserve Total
GBP GBP GBP GBP GBP
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
Profit 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
Called up
Ordinary Special
Share Capital Distributable Revenue
capital Reserve Reserve Reserve Total
GBP GBP GBP GBP GBP
Company
For the year ended 31
December 2010
Net assets at 1 January 1,102 (870,981) 9,854,246 112,104 9,096,471
2010
Profit/(loss) for the
year/total
comprehensive income - 826,364 - (21,549) 804,815
Dividends paid - - - (55,124) (55,124)
Net assets at 31 December 1,102 (44,617) 9,854,246 35,431 9,846,162
2010
Audited Consolidated and Company Cash Flow Statements
for the year ended 31 December 2011
Group Company Company
2011 2011 2010
GBP GBP GBP
=-------------------------------------------------------------------------------
Net cash inflow/(outflow) from operating
activities 435,329 434,329 (750,938)
Financing activities
Equity dividends paid (1,102,497) (1,102,497) (55,124)
Called up share capital received - - 1,200,000
=-------------------------------------------------------------------------------
Net cash (outflow)/inflow from financing
activities (1,102,497) (1,102,497) 1,144,876
Net (decrease)/increase in cash and cash
equivalents (667,168) (668,168) 393,938
Cash and cash equivalents at beginning of
period 1,129,187 1,129,187 735,249
=-------------------------------------------------------------------------------
Cash and cash equivalents at the end of
period 462,019 461,019 1,129,187
=-------------------------------------------------------------------------------
Reconciliation of (loss)/profit before
taxation to net cash inflow/(outflow) from
operating activities
(Loss)/profit before taxation (2,003,078) (2,003,078) 804,355
Losses/(gains) on investments 1,897,346 1,897,346 (871,140)
Purchases of investments (3,496,845) (3,497,845) (2,035,159)
Sales of investments 4,004,904 4,004,904 1,370,563
Corporation tax paid - - (11,596)
Decrease/(increase) in accrued income and
prepayments 21,466 21,466 (26,452)
Increase in other payables 11,536 11,536 18,491
=-------------------------------------------------------------------------------
Net cash inflow/(outflow) from operating
activities 435,329 434,329 (750,938)
=-------------------------------------------------------------------------------
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. Previously, the
financial statements were prepared in accordance with UK GAAP.
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 2010 included in
this report has been taken from the Company's full accounts, as restated to
comply with IFRS. Restatement of opening balances relating to equity values,
assets and liabilities and profits and losses of the Group and Company
between UK GAAP as previously reported and under IFRS as restated have not
been presented as there have been no required changes to these reported
amounts. Therefore, restatement tables have not been prepared for any of the
primary statements.
The functional currency of the Group is UK pounds Sterling as this is 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 2011.
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 94% (2010: 90%) of net assets. This portfolio has a 100% (2010:
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.
GBP37,654 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 5 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 December 2011 31 December 2011
GBP GBP
i. Basic return from ordinary activities (2,003,078) 804,815
after taxation
Basic return per share (18.17)p 7.30p
ii. Net revenue return from ordinary (20,157) (21,549)
activities after taxation
Revenue return per share (0.18)p (0.20)p
iii. Net capital return from ordinary (1,982,921) 826,364
activities after taxation
Capital return per share (17.99)p 7.50p
iv. Weighted average number of ordinary shares 11,024,969 11,024,969
in 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 GBP6,740,587 (2010: GBP9,846,162), and on 11,024,969 Ordinary Shares
(2010: 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.
6. This announcement is not the Company's statutory accounts. The statutory
accounts for the year ended 31 December 2010 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, apart from the adoption of IFRS and was
approved by the Board on 15 March 2012.
The Annual Report for the year ended 31 December 2011 will be posted to
shareholders and is available for inspection at 103 Baker Street, London, W1U
6LN, 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#1594488]
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