TIDMCR5
Core VCT V PLC
From: Core VCT V PLC
Date: 6 April 2011 at 9.45am
Yearly Financial Report for the year ended 31 December 2010
Performance Summary
Ordinary Shares 31 December 2010 31 December 2009
Net asset value per share 89.31 pence 82.51 pence
Total return to date per share[1] 96.81 pence 89.51 pence
Share price (mid market) 50.25 pence 60.00 pence
Cumulative dividends per share since inception 7.50 pence 7.50 pence
Total expense ratio[2] 1.30% 0.91%
[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 Company, excluding trail commission and third party transaction costs as a
percentage of closing net assets.
Chairman's Statement
Results
The Net Asset Value (NAV) Total Return per Ordinary Shares was 96.81p as at 31
December 2010, comprising a NAV per Ordinary Share of 89.31p and cumulative
dividends paid of 7.5p per Ordinary Share. This is an increase from the NAV
Total Return to 31 December 2009 of 8.2%. A net return of GBP804,815 (7.3p per
share) was recorded through the Income Statement for the year ended 31 December
2010 (2009: net return of GBP391,288).
The increase of 7.3p per share is accounted for by:
* 7.9p per share due to movement in the unquoted portfolio; and
* Less 0.6p per share for operating costs.
Your Board is not in a position to recommend a final dividend to shareholders.
Investments
One new portfolio investment totalling GBP1.0 million was completed during the
year, into Ark Home Healthcare Limited, Core VCT plc invested GBP2 million and
Core VCT IV plc invested GBP1.0 million. Further investments totalling GBP1.0
million were completed into two existing portfolio companies, Allied
International Limited, and Georgina Goodman Limited.
The Manager's Review in the Annual Report and Accounts refers in more detail to
the prospects of the investment portfolio, which now comprises 9 unquoted
companies with an investment cost of GBP7.8 million and a valuation of GBP8.9
million.
Share Price
The Ordinary Shares (CR5) are fully listed shares. Prices are available
onwww.londonstockexchange.com and the Ordinary Shares are published in the
Financial Times. Shareholders are reminded that they must hold their shares for
at least five years in order to retain the tax reliefs obtained.
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.
Cash Assets
We have reported regularly on the performance of the Cash Asset portfolio under
the management of Credit Suisse. Their contract was terminated on 19 May 2010
and since then we have realised the remaining instruments for cash. Since
inception, the total losses generated by Credit Suisse amounted to GBP1.0 million,
equivalent to 8.9p per share. This clearly has reduced our ability to make
distributions to shareholders on the scale initially targeted. We have examined
all routes available to us to recover this loss, but have concluded that the
costs of pursuing any further action would be prohibitive. The Company has net
current assets of GBP1.0 million, equivalent to 8.9p per share.
Board Changes
There were several Board changes implemented during the year in order to comply
with the new independence conditions of Chapter 15 of the UKLA Listing Rules
which took effect during September 2010. I resigned as a non executive Director
of Core VCT IV plc to take up the Chairmanship of the Company. Ray Maxwell
resigned as Chairman of the Company to take up the Chairmanship of Core VCT IV
plc. David Harris was also appointed a non executive Director of the Company.
Annual General Meeting
The Company's Annual General Meeting will be held at 10.15 am (or as soon
thereafter as the Annual General Meeting of Core VCT IV plc has concluded) on
20 June 2011 at 19 Cavendish Square, London, W1A 2AW. This is a good
opportunity for shareholders to meet the Directors and Manager and I would
encourage you to attend.
The Notice of the Annual General Meeting is contained on pages 36 to 37 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 investment programme for making new investments has now been completed and
given that we are now fully invested we are constrained in the amount of capital
we have available to invest further into the portfolio. However, some of our
largest investments have reached a stage where they are looking to build on
their success and raise further capital for expansion and to maximise the growth
in value that this is expected to create. The Directors, together with the
Manager and the other Core VCTs are considering options to raise further funding
for the underlying portfolio companies. Should these discussions be successful
we will inform shareholders immediately.
Greg Aldridge
Chairman
5 April 2011
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 explanations 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 and movements in interest
rates 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 exempted 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 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 though 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
In accordance with Chapter 4 of the Disclosure and Transparency Rules, we
confirm that to the best of our knowledge, in respect of the Annual Report for
the year ended 31 December 2010, of which this statement of results is an
extract:
* The financial statements have been prepared in accordance with applicable UK
Accounting Standards, on a going concern basis, and give a true and fair
view of the assets, liabilities, financial position and return of the
Company;
* This Annual Financial Report includes a fair review of the important events
that have occurred during the financial year and their impact on the
financial statements;
* This Annual Financial Report includes a description of the Company's
principal risks and uncertainties; and
* This Annual Financial Report includes details of related party transactions
that have taken place during the financial year.
For and behalf of the Board:
Greg Aldridge
Chairman
5 April 2011
Audited Income Statement
For the Year ended 31 December 2010
Notes Revenue Capital Total
GBP GBP GBP
Movement in investment holdings - 874,297 874,297
Losses on disposal of investments - (3,157) (3,157)
Exchange differences - 84 84
Income 201,814 - 201,814
Transaction costs and investment
management expenses (305) (44,860) (45,165)
Other expenses (223,518) - (223,518)
-----------------------------
Return on ordinary activities before taxation (22,009) 826,364 804,355
Tax on ordinary activities 460 - 460
-----------------------------
Return attributable to equity shareholders 3 (21,549) 826,364 804,815
-----------------------------
Return per Ordinary Share 3 (0.20)p 7.50p 7.30p
The total column of this statement is the profit and loss account of the
Company.
There were no other gains or losses in the year ended 31 December 2010.
All revenue and capital items in the above statement derive from continuing
operations.
No operations were acquired or discontinued in the year.
Audited Reconciliation of Movements in Shareholders' Funds
for the year ended 31 December 2010
GBP
Opening Shareholders' funds 9,096,471
Net return for the year 804,815
Dividends paid - revenue (55,124)
-------------
Closing Shareholders' funds 9,846,162
-------------
Audited Income Statement
For the Year ended 31 December 2009
Notes Revenue Capital Total
GBP GBP GBP
Movement in investment holdings 208,224 208,224
Gains on sale of investments 138,480 138,480
Income 223,771 - 223,771
Transaction costs and investment
management fees (2,122) (16,845) (18,967)
Other expenses (147,288) - (147,288)
-----------------------------
Return on ordinary activities before
taxation 74,361 329,859 404,220
Tax on ordinary activities (16,070) 3,138 (12,932)
-----------------------------
Return attributable to equity shareholders 3 58,291 332,997 391,288
-----------------------------
Return per share 3 0.53p 3.02p 3.55p
Audited Reconciliation of Movements in Shareholders' Funds
for the year ended 31 December 2009
GBP
Opening Shareholders' funds 9,421,806
Net return for the year 391,288
Dividends paid - revenue (165,375)
Dividends paid - capital (551,248)
-------------
Closing Shareholders' funds 9,096,471
-------------
Audited Balance Sheet As At As At
31 December 2010 31 December 2009
Notes
GBP GBP
Non-current assets
Investments at fair value 8,867,758 7,253,947
----------------------------------
Current assets
Debtors and prepayments 63,778 1,237,326
Cash at bank 1,129,187 735,249
----------------------------------
1,192,965 1,972,575
Creditors: amounts falling due within
one year (214,561) (130,051)
----------------------------------
Net current assets 978,404 1,842,524
----------------------------------
Net assets
9,846,162 9,096,471
----------------------------------
Capital and reserves
Called-up Ordinary share capital 1,102 1,102
Capital reserve (44,617) (870,981)
Special distributable reserve 9,854,246 9,854,246
Revenue reserve 35,431 112,104
----------------------------------
Total equity shareholders' funds 4 9,846,162 9,096,471
----------------------------------
Net asset value per 0.01p Ordinary Share 4 89.31p 82.51p
Audited Cash Flow Statement
Year ended Year ended
31 December 2010 31 December 2009
GBP GBP
Operating activities
Investment income received 180,615 291,220
Investment management fees paid (3,471) (10,706)
Other cash payments (251,974) (441,774)
----------------------------------
Net cash outflow from operating activities (74,830) (161,260)
Taxation
UK Corporation paid (11,596) (25,554)
Investing activities
Acquisition of investments (2,035,159) (9,390,205)
Disposal of investments 1,370,563 8,182,330
Exchange differences 84 -
----------------------------------
Net cash outflow from financial investment (664,512) (1,207,875)
Equity dividends paid (55,124) (716,623)
Called up share capital received 1,200,000 1,700,000
----------------------------------
Net cash inflow/(outflow) before financing 393,938 (411,312)
Increase/(decrease) in cash 393,938 (411,312)
----------------------------------
Notes:
1. The accounts have been prepared under the fair value rules of the Companies
Act 2006, and in accordance with applicable accounting standards (United Kingdom
Generally Accepted Accounting Practice) and the Statement of Recommended
Practice, "Financial Statements of Investment Trust Companies and Venture
Capital Trusts" issued in January 2009.
The Directors have considered the future cash flows of the Company and are
satisfied that it is appropriate to prepare the financial statements on a going
concern basis. In forming this opinion, the cashflow projections of the Company
were reviewed and confirmed that the Company had sufficient funds to meets its
contracted expenditure.
The Directors are considering the options available to raise further funding for
the underlying portfolio companies and this may involve restructuring the VCT.
This may, or may not, result in a proposal being put to shareholders in the
future to restructure the Company.
2. Financial Instruments
The Company's financial instruments in the year comprised equity and fixed and
floating rate interest 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 Company's investment portfolio consists of unquoted investments representing
90% (2009: 76%) of net assets. This portfolio has a 100% (2009: 100%)
concentration or risk towards small UK based, sterling denominated companies.
The Credit Suisse portfolio was fully realised during the year.
The main risks arising from the Company'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 through the current year
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 a 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 Company 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 quoted markets.
The Board's strategy in managing the market price risk inherent in the Company'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 their
obligation or commitment that it has entered into with the Company. The Company
has 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. GBP51,619 of the accrued income is due within 3 months of the
year end.
There could be a failure by counterparties to deliver securities which the
Company has paid for, or pay for securities which the Company has delivered.
This risk is considered to be small as most of the Company's investment
transactions are in unquoted investments, where investments are conducted
through solicitors, to ensure that payment matches delivery.
Interest Rate Risk
The Company's fixed and floating rate interest 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 Company's assets include fixed and floating rate instruments. The rate of
interest earned is regularly reviewed by the Board, as part of the risk
management process, already disclosed under market price risk.
Liquidity Risk
The investment in equity and fixed interest stocks of unquoted companies that
the Company holds are not traded. They are not readily realisable. The ability
of the Company to realise the investments at their carrying value may at times
not be possible if there are no willing purchasers. The Company's ability to
sell investments may also be constrained by the requirements set down by the
VCTs. The maturity profile of the Company's loan stock investments disclosed
within the consideration of credit risk indicates that a majority of these
assets are also not readily realisable until dates up to 5 years or more from
the year end.
To counter these risks to the Company's liquidity 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. Earnings and return per share
Year ended Year ended
31 December 2010 31 December 2009
GBP GBP
(i)Total return from ordinary
activities after taxation 804,815 391,288
Basic return per share 7.30p 3.55p
(ii) Revenue return from ordinary
activities after taxation (21,549) 58,291
Revenue return per share (0.20)p 0.53p
(iii) Capital return from ordinary
activities after taxation 826,364 332,997
Capital return per share 7.50p 3.02p
(iv)Weighted average number of
ordinary shares in issue 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 GBP9,846,162 (2009: GBP9,096,471) and on 11,024,969 Ordinary Shares (2009:
same), being the number of Ordinary Shares in issue on that date.
5. The operations of the Company are wholly in one business segment, investment
holding, and one geographical segment, the United Kingdom.
6. Paul Richards is a partner of Core Capital LLP, the Manager. Details of the
carried interest arrangements between the Company and the Manager are set out in
Note 3 to the Annual Report and Accounts.
7. This announcement is not the Company's statutory accounts. The statutory
accounts for the year ended 31 December 2009 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.
The Annual Report for the year ended 31 December 2010 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
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