TIDMCR3
Core VCT PLC
From: Core VCT 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 50.84 pence 59.33 pence 57.90 pence
Total return to date per
share(1) 81.99 pence 90.48 pence 89.05 pence
Share price (mid market) 23.50 pence 29.00 pence 25.75 pence
Ongoing charges(2) 0.56% 0.54% 1.24%
B Shares 30 June 2013 30 June 2012 31 December 2012
Net asset value per share 0.01 pence 0.01 pence 0.01 pence
Total return to date per share 0.01 pence 0.01 pence 0.01 pence
Share price (mid market) 7.50 pence 12.50 pence 10.00 pence
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 expenses 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 81.99p,
comprising a NAV of 50.84p and a weighted average
cumulative dividend paid of 31.15p per Ordinary Share.
This represents a decrease from the Combined NAV Total
Return to 31 December 2012 of 7.9%, (7.06p) per Ordinary
Share. This reduction is mainly 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")
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 period a further GBP3.75 million was drawn
down from the other 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 of your Company's
interest decreased by an amount equivalent to 4.92p.
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 trading-related 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.
Investments directly held by Core VCT plc
Allied International Holdings Limited has encountered
mix trading fortunes and has required further funding
to progress with its turnaround plan. Both Core IV
plc and Core VCT V 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 benefitting from yield and capital preference.
The overall result was that the valuation reduced
by GBP321,000 (0.74p per share).
During the period, the value of Momentous Moving Excellence
was reduced by GBP0.5 million (1.13p per Ordinary
Share). This reduction reflected downward trends in
asset values.
The Manager's Review provides an update on all the
investments held in the Company including those held
in CCILP.
Dividends
Future 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 regulatory requirements.
B Shares
Shareholders will be aware that the Company has an
innovative charging structure. No annual management
fees are paid to Core Capital LLP, which is only rewarded
for performance once shareholders have been returned
all of their effective initial capital of 60 pence,
and subject to a hurdle rate of 5 per cent per annum.
This is achieved through the issue of B Shares, which
collectively receive 40% of distributions above the
effective initial capital plus hurdle. Of these shares,
73% are held by Core Capital LLP, such that Core Capital
LLP will thus receive 29% of distributions above the
effective initial cost plus hurdle.
As at 30 June 2013, total cumulative distributions
(31.15p), including hurdle, are approximately 51.50p
per Ordinary Share short of the required threshold
(82.65p), following the achievement of which the B
Shares would participate in distributions. However,
I would like to remind ordinary shareholders that
once this threshold is achieved, distributions to
Ordinary Shares will be reduced to 60% of the total,
and that your holding in B Shares therefore forms
an integral part of your investment along with your
holding in Ordinary Shares.
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 7.9% 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
(54% at 30 June 2013). Whilst the Company has the
ability to buy back its own shares, the Boards' view
remains that any surplus cash should be returned to
all shareholders by way of a distribution. Both the
Ordinary Shares (CR3) and B Shares (CR3B) 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.
Peter Smaill
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:
Peter Smaill
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 10,000 - 10,000
Other Income 3 317 - 317
Losses on investments held at fair
value 6 - (2,939,724) (2,939,724)
Total Income 10,317 (2,939,724) (2,929,407)
Expenditure
Other expenses (126,881) - (126,881)
Total expenditure (126,881) - (126,881)
Loss before taxation (116,564) (2,939,724) (3,056,288)
Taxation - - -
Loss for period/total
comprehensive income 5 (116,564) (2,939,724) (3,056,288)
Return per ordinary share (pence): 5 (0.27) (6.79) (7.06)
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 10,000 - 10,000
Other Income 3 448 - 448
Losses on investments held at fair
value - (1,157,541) (1,157,541)
Total Income 10,448 (1,157,541) (1,147,093)
Expenditure
Other expenses (138,864) - (138,864)
Total expenditure (138,864) - (138,864)
Loss before taxation (128,416) (1,157,541) (1,285,957)
Taxation - - -
Loss for period/total
comprehensive income 5 (128,416) (1,157,541) (1,285,957)
Return per ordinary share (pence): 5 (0.30) (2.67) (2.97)
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 10,000 - 10,000
Other Income 3 870 - 870
Losses on investments held at fair
value - (1,594,933) (1,594,933)
Total Income 10,870 (1,594,933) (1,584,063)
Expenditure
Other expenses (321,232) - (321,232)
Total expenditure (321,232) - (321,232)
Profit/(loss) before taxation (310,362) (1,594,933) (1,905,295)
Taxation - - -
Profit/(loss) for year/total
comprehensive income 5 (310,362) (1,594,933) (1,905,295)
Return per ordinary share (pence): 5 (0.72) (3.68) (4.40)
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 21,330,919 24,379,551 24,120,643
Current assets
Other receivables 8,315 8,917 2,657
Cash 754,414 1,396,989 1,075,281
762,729 1,405,906 1,077,938
Current liabilities
Other payables (75,568) (91,751) (124,213)
Net current assets 687,161 1,314,155 953,725
Net assets 22,018,080 25,693,706 25,074,368
Capital and reserves
Called-up Ordinary share
capital 4,330 4,330 4,330
Called up B share capital 2,887 2,887 2,887
Share premium account - - -
Special distributable
reserve 30,635,667 30,635,667 30,635,667
Capital reserve (7,965,201) (4,588,085) (5,025,477)
Revenue reserve (659,603) (361,093) (543,039)
Equity shareholders'
funds 7 22,018,080 25,693,706 25,074,368
Assets attributable to
Ordinary Shareholders 22,015,194 25,690,820 25,071,482
Assets attributable to B
Shareholders 2,886 2,886 2,886
Net asset value per 0.01p 7 50.84p 59.33p 57.90p
Ordinary Share
Net asset value per 0.01p 7 0.01p 0.01p 0.01p
B share
Consolidated Statement of Changes in Equity
As at 30 June 2013
Called Called
up up
Ordinary B Special
Share Share Distributable Capital Revenue
Capital Capital Reserve Reserve Reserve Total
GBP GBP GBP GBP GBP GBP
For the six months ended
30 Jun 2013 (unaudited)
Net assets at 1 Jan 2013 4,330 2,887 30,635,667 (5,025,477) (543,039) 25,074,368
Loss for the year/total
comprehensive income - - - (2,939,724) (116,564) (3,056,288)
Net assets at 30 Jun 2013 4,330 2,887 30,635,667 (7,965,201) (659,603) 22,018,080
Called Called
up up
Ordinary B Special
Share Share Distributable Capital Revenue
Capital Capital Reserve Reserve Reserve Total
GBP GBP GBP GBP GBP GBP
For the six months ended
30 Jun 2012 (unaudited)
Net assets at 1 Jan 2012 4,330 2,887 32,367,724 (3,430,544) (232,677) 28,711,720
Loss for the year/total
comprehensive income - - - (1,157,541) (128,416) (1,285,957)
Dividends paid - - (1,732,057) - - (1,732,057)
Net assets at 30 Jun 2012 4,330 2,887 30,635,667 (4,588,085) (361,093) 25,693,706
Called Called
up up
Ordinary B Special
Share Share Distributable Capital Revenue
Capital Capital Reserve Reserve Reserve Total
GBP GBP GBP GBP GBP GBP
For the year ended
31 Dec 2012 (audited)
Net assets at 1 Jan
2012 4,330 2,887 32,367,724 (3,430,544) (232,677) 28,711,720
Loss for the year/total
comprehensive income - - - (1,594,933) (310,362) (1,905,295)
Dividends paid - - (1,732,057) - - (1,732,057)
Net assets at 31 Dec
2012 4,330 2,887 30,635,667 (5,025,477) (543,039) 25,074,368
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 outflow from operating activities (320,867) (516,290) (837,998)
Financing activities
Equity dividends paid - (1,732,057) (1,732,057)
Net cash outflow from financing activities - (1,732,057) (1,732,057)
Net decrease in cash and cash equivalents (320,867) (2,248,347) (2,570,055)
Cash and cash equivalents at beginning of period 1,075,281 3,645,336 3,645,336
Cash and cash equivalents at the end of period 754,414 1,396,989 1,075,281
Reconciliation of loss before taxation to net cash
outflow from operating activities
Loss before taxation (3,056,288) (1,285,957) (1,905,295)
Losses on investments 2,939,724 1,157,541 1,594,933
Purchases of investments (150,000) (350,000) (950,000)
Sales of investments - - 421,516
(Increase)/decrease in accrued income and
prepayments (5,658) (2,376) 3,884
Decrease in other payables (48,645) (35,498) (3,036)
Net cash outflow from operating activities (320,867) (516,290) (837,998)
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 GBP0.8 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 2012 30 Jun 2012 31 Dec 2012
(unaudited) (unaudited) (audited)
GBP GBP GBP
Investment Income 10,000 10,000 10,000
Other Income
Deposit interest 317 448 870
10,317 10,448 10,870
4. Taxation
There will be no tax charge due by the Company since
total expenses (including fees allocated to capital)
are expected to be more than income.
5. Return per ordinary 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 (3,056,288) (1,285,957) (1,905,295)
Basic return per share (7.06)p (2.97)p (4.40)p
Net revenue return from ordinary activities after
(ii) taxation (116,564) (128,416) (310,362)
Revenue return per share (0.27)p (0.30)p 0.72p
Net capital return from ordinary activities after
(iii) taxation (2,939,724) (1,157,541) (1,594,933)
Capital return per share (6.79)p (2.67)p (3.68)p
Weighted average number of ordinary shares in issue
(iv) in the period 43,301,414 43,301,414 43,301,414
6. Investments
Financial assets measured at fair value Unlisted
(level 3) Total
GBP GBP
Equity instruments 1,400,480 1,400,480
Debt instruments 4,430,051 4,430,051
LP interest 15,500,388 15,500,388
Total 21,330,919 21,330,919
Valuation at 31 December 2012 24,120,643 24,120,643
Purchases at cost 150,000 150,000
Investment holding losses (2,939,724) (2,939,724)
Valuation at 30 June 2013 21,330,919 21,330,919
Book Cost 30 June 2013 24,040,469 24,040,469
Investment holding losses at 30 June 2013 (2,709,550) (2,709,550)
Valuation at 30 June 2013 21,330,919 21,330,919
The Company only holds unquoted investments (level
3).
7. Net asset value
The net asset values per share, as disclosed in the
balance sheet, are based on the attributable assets
at the balance sheet date and assume that no break-up
of the Company will occur. The Board considers that
the Articles basis reflects the attribution of assets
between the two classes of shares that would occur
in the event that a liquidation of the Company took
place. On liquidation B Shareholders could be entitled
to up to 40% of the assets remaining after Ordinary
Shareholders first recover their effective initial
cost of 60 pence per share plus the annual hurdle
rates due to both share classes, achieved up to the
date of liquidation.
The attribution to the B shares of purely the capital
contributed of 0.01 pence per share reflects the Board's
best estimate at 30 June 2013 of the B shares' entitlement
to assets at 30 June, given the inherent uncertainties
in projecting the investment performance of the Manager
(which will ultimately determine the B shares' entitlement
to the Company's assets). The Net Asset Values per
share have been calculated by reference to the number
of shares in issue as at 30 June 2013.
As at As at
30 Jun 2013 30 Jun 2012
(unaudited) (unaudited)
GBP GBP
Share Capital
43,301,414 ordinary shares of 0.01p 4,330 4,330
28,867,227 B shares of 0.01p 2,887 2,887
7,217 7,217
Total attributable
net assets
30 June 2013 Net asset value
GBP (pence per share)
Ordinary Shares of 0.01p each in
accordance with
the Articles 22,015,194 50.84
Additional entitlement to assets on
attributed basis - -
Attributed basis 22,015,194 50.84
B Shares of 0.01p each in accordance
with
the Articles 2,886 0.01
Reduced entitlement to assets on
attributed basis - -
Attributed basis 2,886 0.01
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) 21,330,919
Total non current 21,330,919
Other receivables 8,315
Total current 8,315
Total 21,339,234
Financial liabilities:
Other payables (75,568)
Total current (75,568)
Total (75,568)
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.
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
Description 30 June 2013 Technique(s) Unobservable input Range
GBP
Marketability
Private equity Market discount 10-20%
investments 21,330,919 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 in effective multiple +GBP1,522,000
10% decrease in effective multiple - GBP1,463,000
The valuation technique includes the investments held
in CCILP, albeit the Group has a 23.38% interest in
CCILP.
9. Related Party Transaction
David Dancaster is a partner of Core Capital LLP,
the Company's Manager, and the group finance director
of Caparo plc, which is a member of Core Capital LLP.
Caparo hold 1,177,254 ordinary shares and 34,807 B
shares in Core VCT plc. No amounts have been paid
or are payable to Caparo plc except dividends paid
to all ordinary shareholders of the Company totalling
a cumulative weighed average of 31.15p per share to
30 June 2013. Nothing (2012: GBPnil) was due to the
Manager at 30 June 2013. 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. Post Balance Sheet Event
Since 30 June 2013, a further GBP200,000 has been
invested in Allied International Holdings Limited
by way of a loan benefitting from yield and capital
preference.
11. The financial information for the six months ended
30 June 2013 and 30 June 2012 has not been audited
nor reviewed.
12. 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.
13. 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 plc via Thomson Reuters ONE
HUG#1723477
http://www.core-cap.com/
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