TIDMCR3
Core VCT PLC
From: Core VCT PLC
Date: 21 August 2014
Half-Yearly Financial Report for the six months ended
30 June 2014
Performance Summary
Ordinary Shares 30 June 2014 30 June 2013 31 December 2013
Net asset value per share 65.01 pence 50.84 pence 60.59 pence
Total return to date per
share(1) 96.16 pence 81.99 pence 91.74 pence
Share price (mid market) 27.25 pence 23.50 pence 21.25 pence
Ongoing charges(2) 0.49% 0.56% 1.29%
B Shares 30 June 2014 30 June 2013 31 December 2013
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) 6.50 pence 7.50 pence 7.50 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 2014, the Net Asset Value
(NAV) Total Return per Ordinary Share was 96.16p,
comprising a NAV of 65.01p and weighted average cumulative
dividends paid of 31.15p per Ordinary Share. This
represents an increase from the Combined NAV Total
Return to 31 December 2013 of 4.8%, (4.42p) per Ordinary
Share. This increase is attributable to the interim
valuation of our unquoted investments based upon the
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 GBP0.2 million was drawn
down from the Institutional Investors in CCILP. The
recipient of these funds was Ark Home Healthcare Limited
to fund working capital requirements. As at 30 June
2014, GBP1.5 million remains to be called (net of
General Partner Fee).
During the period, the valuation of your Company's
interest increased by an amount equivalent to 4.63p
per Ordinary Share or 10%. I am pleased to report
that the operational efficiencies and management changes
implemented in the underlying portfolio companies
during 2013 have delivered an increase in the overall
Earnings Before Interest, Tax, Depreciation and Amortisation
("EBITDA") of the portfolio and are now delivering
maintainable growth.
Investments directly held by Core VCT plc
The valuation of the investments directly held by
the Company being Allied International Holdings Limited
("Allied"), Cording Real Estate Group LLP and Momentous
Moving Holdings Limited increased by 0.07p per Ordinary
Share during the period.
Allied's valuation increased by GBP305,000 during
the period, equivalent to 0.70p per Ordinary Share.
It is encouraging that this "turnaround" investment
is beginning to generate positive results with sales
in all divisions up year on year. Early indications
for 2015 bookings show a further continued positive
trend, as the benefits of all the restructuring conducted
during 2013 start to take effect.
The Manager's Review provides a more detailed update
on all the investments held in the Company including
those held in CCILP.
Dividends
Future capital dividends will only be paid to shareholders
following the successful exit of investments within
the portfolio, when we plan to distribute all the
realised proceeds available, subject to working capital
and VCT requirements. There were no realisations made
during the period, and accordingly no interim dividend
is proposed.
B Shares
Shareholders will be aware that the Company has an
innovative charging structure. No annual management
fees are paid to the Manager, Core Capital Partners
LLP, which is only rewarded 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 distribution
above the effective initial capital plus hurdle. Of
these shares, 74% are held by the Manager, such that
the Manager will receive 29% of distributions above
the effective initial cost plus hurdle.
Currently total cumulative distributions, including
the hurdle, are approximately 54p per Ordinary Share
short of the required threshold following the achievement
of which the B Shares would participate in distributions.
However, I would like to remind shareholders that
once the threshold is achieved, distributions to Ordinary
Shares will be reduced to 60% of the total, and that
your holding in B Shares 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
appropriate 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 conscious that the mid price of the shares
continues to be at a significant discount to the NAV
(58% as at 30 June 2014). 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.
Both the Ordinary Shares (CR3) and B Shares (CR3B)
are fully listed shares. Prices are available on www.londonstockexchange.com.
Outlook
The increase in valuation is mainly driven by the
growth in EBITDA of the underlying portfolio companies,
as we start to see the benefits of the operational
and management changes implemented during 2013. Several
companies are now generating maintainable EBITDA growth
which have had a positive impact on valuations, in
particular Abriand Limited, Kelway Limited and SPL
Services Limited.
Your Board and Manager remain focused on continuing
to drive operating improvements in the portfolio companies
whilst also exploring opportunities to achieve realisations
for our shareholders. We look forward to reporting
on the progress in delivering realisations in the
future.
Peter Smaill
Chairman
21 August 2014
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 2013,
in note 15 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
21 August 2014
Unaudited Statement of Comprehensive Income
For the Six Months ended 30 June 2014
Revenue Capital Total
Return Return
Notes GBP GBP GBP
Income
Investment Income 3 10,000 - 10,000
Other Income 3 186 - 186
Gains on investments held at fair
value 6 - 2,038,959 2,038,959
Total Income 10,186 2,038,959 2,049,145
Expenditure
Other expenses (134,420) - (134,420)
Total expenditure (134,420) - (134,420)
(Loss)/profit before taxation (124,234) 2,038,959 1,914,725
Taxation - - -
(Loss)/profit for period/total
comprehensive income 5 (124,234) 2,038,959 1,914,725
Return per ordinary share (pence): 5 (0.29) 4.71 4.42
Unaudited 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 loss 5 (116,564) (2,939,724) (3,056,288)
Return per ordinary share (pence): 5 (0.27) (6.79) (7.06)
Audited Statement of Comprehensive Income
for the year ended 31 December 2013
Revenue Capital Total
Return Return
Notes GBP GBP GBP
Income
Investment Income 3 10,000 - 10,000
Other Income 3 563 - 563
Gains on investments held at fair
value - 1,456,130 1,456,130
Total Income 10,563 1,456,130 1,466,693
Expenditure
Other expenses (300,969) - (300,969)
Total expenditure (300,969) - (300,969)
(Loss)/Profit before taxation (290,406) 1,456,130 1,165,724
Taxation - - -
(Loss)/Profit for year/total
comprehensive income 5 (290,406) 1,456,130 1,165,724
Return per ordinary share (pence): 5 (0.67) 3.36 2.69
Balance Sheet
As at As at As at
30 June 2014 30 June 2013 31 December 2013
Notes (unaudited) (unaudited) (audited)
GBP GBP GBP
Non-current assets
Investments at fair value 6 27,841,732 21,331,919 25,802,773
Current assets
Other receivables 8,394 8,315 2,825
Cash 348,294 753,414 563,552
356,688 761,729 566,377
Current liabilities
Other payables (43,603) (75,568) (129,058)
Net current assets 313,085 686,161 437,319
Net assets 28,154,817 22,018,080 26,240,092
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
Special distributable
reserve 30,635,667 30,635,667 30,635,667
Capital reserve (1,530,388) (7,965,201) (3,569,347)
Revenue reserve (957,679) (659,603) (833,445)
Equity shareholders'
funds 7 28,154,817 22,018,080 26,240,092
Assets attributable to
Ordinary Shareholders 28,151,930 22,015,193 26,237,205
Assets attributable to B
Shareholders 2,887 2,887 2,887
Net asset value per 0.01p 7 65.01p 50.84p 60.59p
Ordinary Share
Net asset value per 0.01p 7 0.01p 0.01p 0.01p
B share
Statement of Changes in Equity
As at 30 June 2014
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 2014 (unaudited)
Net assets at 1 Jan 2014 4,330 2,887 30,635,667 (3,569,347) (833,445) 26,240,092
Loss for the year/total
comprehensive income - - - 2,038,959 (124,234) 1,914,725
Net assets at 30 Jun 2014 4,330 2,887 30,635,667 (1,530,388) (957,679) 28,154,817
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 year ended
31 Dec 2013 (audited)
Net assets at 1 Jan
2013 4,330 2,887 30,635,667 (5,025,477) (543,039) 25,074,368
Profit/ (Loss) for the
year/total
comprehensive income - - - 1,456,130 (290,406) 1,165,724
Net assets at 31 Dec
2013 4,330 2,887 30,635,667 (3,569,347) (833,445) 26,240,092
Cash Flow Statement
for the six months ended 30 June 2014
As at As at As at
30 Jun 2014 30 Jun 2013 31 Dec 2013
(unaudited) (unaudited) (audited)
GBP GBP GBP
Net cash outflow from operating activities (215,258) (320,867) (510,729)
Net decrease in cash and cash equivalents (215,258) (320,867) (510,729)
Cash and cash equivalents at beginning of period 563,552 1,074,281 1,074,281
Cash and cash equivalents at the end of period 348,294 753,414 563,552
Reconciliation of Profit/(Loss) before taxation to
net cash outflow from operating activities
Profit/(Loss) before taxation 1,914,725 (3,056,288) 1,165,724
(Gains)/Losses on investments (2,038,959) 2,939,724 (1,456,130)
Purchases of investments - (150,000) (700,000)
Sales of investments - - 475,000
Increase in accrued income and prepayments (5,569) (5,658) (168)
(Decrease)/Increase in other payables (85,455) (48,645) 4,845
Net cash outflow from operating activities (215,258) (320,867) (510,729)
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 2013, except for the adoption of new standards
and interpretations effective as at 1 January 2014.
The Company applies, for the first time, certain standards
and amendments. These include IFRS 10 Consolidated
Financial Statements and as required by IAS 34, the
nature and effect of these changes are disclosed below.
Several other new standards and amendments apply for
the first time in 2014. However, they do not impact
the annual financial statements of the Company or
the interim financial statements of the Company.
The nature and impact of the new standard/amendment
is described below:
Investment Entities (IFRS 10, IFRS 12 and IAS 27)
These amendments provide an exception to the consolidation
requirement for entities that meet the definition
of an investment entity under IFRS 10 Consolidated
Financial Statements. The exception to consolidate
requires investment entities to account for subsidiaries
at fair value through the profit and loss account.
Core (BVI) Limited which was previously consolidated
and remains a subsidiary of the Company, is now accounted
for as an investment at fair value through the profit
and loss account. The accounts for the year ended
31 December 2013 and interim accounts for the six
months to 30 June 2013 have been restated to deconsolidate
Core (BVI) Limited. Based on these changes the Company
will no longer need to produce consolidated accounts.
The impact of the implementation of IFRS 10 is explained
in note 12.
Assessment of an investment entity
Entities that meet the definition of an investment
entity within IFRS 10 are permitted to measure their
subsidiaries at fair value through profit and loss
account rather than consolidate them. The criteria
which define an investment entity are as follows:
-- An entity that obtains funds from one or more
investors for the purpose of providing those
investors with investment services
-- An entity that commits to its investors that its
business purpose is to invest funds solely for
returns from capital appreciation, investment income
or both
-- An entity that measures and evaluates the performance
of substantially all of its investments on a fair
value basis
The Board has agreed with the recommendation of the
Audit Committee that the Company meets the definition
of an investment entity as it satisfies each of the
criteria above and that this accounting treatment
better reflects the Company's activities as a Venture
Capital Trust.
The functional currency of the Company is UK pounds
sterling as this is the currency of the primary economic
environment which the Company operates. Accordingly,
the financial statements are prepared in UK pounds
sterling.
The interim financial statements do not include all
the information required for full annual accounts
and should be read in conjunction with the consolidated
accounts for the year ended 31 December 2013, which
was 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 2013.
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 2014, the Company held
cash balances of GBP0.3 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 2014.
3. Income
As at As at As at
30 Jun 2014 30 Jun 2013 31 Dec 2013
(unaudited) (unaudited) (audited)
GBP GBP GBP
Investment Income 10,000 10,000 10,000
Other Income
Deposit interest 186 317 563
10,186 10,317 10,563
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
31 Dec
30 Jun 2014 30 Jun 2013 2013
(unaudited) (unaudited) (audited)
GBP GBP GBP
(i) Basic return from ordinary activities after taxation 1,914,725 (3,056,288) 1,165,724
Basic return per share 4.42p (7.06)p 2.69p
Net revenue return from ordinary activities after
(ii) taxation (124,234) (116,564) (290,406)
Revenue return per share (0.29)p (0.27)p (0.67)p
Net capital return from ordinary activities after
(iii) taxation 2,038,959 (2,939,724) 1,456,130
Capital return per share 4.71p (6.79)p 3.36p
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 1,451,942 1,451,942
Debt instruments 4,466,484 4,466,484
LP interest 21,923,306 21,923,306
Total 27,841,732 27,841,732
Valuation at 31 December 2013 25,802,773 25,802,773
Investment holding gains 2,038,959 2,038,959
Valuation at 30 June 2014 27,841,732 27,841,732
Book Cost 30 June 2014 24,340,989 24,340,989
Investment holding gains at 30 June 2014 3,500,743 3,500,743
Valuation at 30 June 2014 27,841,732 27,841,732
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 2014 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 2014.
As at As at
30 Jun 2014 30 Jun 2013
(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 2014 Net asset value
GBP (pence per share)
Ordinary Shares of 0.01p each in
accordance with
the Articles 23,430,395 54.11
Additional entitlement to assets on
attributed basis 4,721,535 10.90
Attributed basis 28,151,930 65.01
B Shares of 0.01p each in accordance
with
the Articles 4,724,422 16.37
Reduced entitlement to assets on
attributed basis (4,721,535) (16.36)
Attributed basis 2,887 0.01
8. Related Party Transaction
Details of the carried interest arrangements between
the Company and the Manager are set out in Note 3
of the Annual Report and Accounts to 31 December 2013.
Following the 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.
9. The financial information for the six months ended
30 June 2014 and 30 June 2013 has not been audited
nor reviewed.
10. These are not statutory accounts in terms of Section
434 of the Companies Act 2006. Statutory accounts
for the year to 31 December 2013, 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 2013 have been reported on by the Company's
auditors or delivered to the Registrar of Companies.
11. 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.
12. Restatement of Prior Periods
In prior years the Company had to present consolidated
accounts to shareholders.
Core (BVI) Limited is an Investment Entity and no
longer needs to be consolidated in accordance with
IFRS 10 Consolidated Financial Statements. The balance
previously reported by the Company and not the Group
are now appropriate.
There is no change to the figures previously reported
as the fair value of Core Capital I LP had been valued
through the profit and loss account.
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 plc via Globenewswire
HUG#1850385
http://www.core-cap.com/
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