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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Core Vct I | LSE:CR. | London | Ordinary Share | GB00B03FH337 | ORD 1P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 72.00 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
Core VCT I plc Preliminary results for the year ended 31 December 2007 Chairman's Statement Results The Total Return per Ordinary Share was 104.59p as at 31 December 2007, comprising a Net Asset Value (NAV) per Ordinary Share of 101.49p and cumulative dividends paid of 3.10p per Ordinary Share. This is an increase over the Total Return to 31 December 2006 of 6.70%, and an increase of 3.13% since 30 June 2007. A surplus of £718,441 was earned during the twelve month period. Dividends Core VCT I is structured to maximise distributions of both capital and income to Shareholders over the life of the Company. Following the completion of the initial investment programme of the Fund a final dividend of 4.00p per share is being recommended by the Directors. This comprises 1.50p of income earned in the year, plus 2.50p of assets. This distribution brings the cumulative distributions to shareholders since inception to 7.10p per share, which is in addition to the 40p per share tax relief shareholders may have received following their initial subscription. The Directors fully intend to make further distributions of cash assets in order to achieve the targeted distribution of at least 30p per share after year 3 (ie after 31 December 2007), as was set out in the prospectus. Core VCT I had 24p of liquidity at the year end and from this we propose to fund the 4p dividend. The balance is intended to be held back while the Directors evaluate further the position of the portfolio and assess the capacity of your Company to make further distributions later in the year. The key factors affecting this decision are market factors in general, including banking conditions, and the specific performance of some stocks, where it is likely that additional investment in the next six months will be prudent with a view to strengthening the potential for commercial success in these businesses over the longer term. In addition provision needs to be made for financing the operating costs of the VCT. Market conditions have inclined your Managers to recommend and procure investment in positions with more of a bias to capital growth rather than current yield than might have been anticipated on formation of the Company, such that a prudent holding back of liquidity to underpin operational costs makes business sense. As the portfolio of income yielding assets managed by Credit Suisse has been progressively liquidated, as planned, to finance qualifying private equity stakes this factor has become apparent. Future dividends will be derived from the distribution of the remaining cash assets when prudent to do so, and from income received from the unquoted investments and investment realisations as they arise. VCT Qualifying Status At 31 December 2007, 77.13% of the Fund's total investments were represented by VCT qualifying investments in respect of the required 70% threshold for VCT purposes. This means that the Fund has comfortably achieved the investment level required to maintain its status as a VCT, and with a sufficient margin of contingency. Following the proposed distribution referred to above, the relevant VCT qualifying proportion will increase to 80.26%. Investments The Manager's Review refers in more detail to the prospects of the investment portfolio and reflects the greater emphasis placed by the Manager on portfolio management rather than the completion of new investments. Whilst there are reductions as well as increases in the valuations of individual companies, the net increase in the value of the Portfolio was £656,000, or some 8.4% over total initial cost. We look forward to realising this value as the portfolio matures and exits become attractive. Change in Directors As referred to in the Interim Report, Helen Bagan retired from the Board in August due to increasing demands on her time outside of the Company and we welcomed John Brimacombe as a non-executive director. Information for Shareholders The Board supports open communication with investors and welcomes any comments or questions you may have. Company contact information is provided at the back of this Report. Share Price and Secondary Market Both the Ordinary Shares (CR.) and the B Shares (CR.B) are fully listed shares. Prices are available on www.londonstockexchange.com and the Ordinary Share price is published daily in the Financial Times. Shares can be bought and sold using a stockbroker, as with shares in other listed companies. For shareholders considering selling their shares, however, we recommend that you contact the Company Secretary, Matrix-Securities Limited, in the first instance and consider using the Company's share buy-back policy of acquiring shares at a discount to NAV of up to 10% as this is likely to be more attractive than sales of shares in the secondary market. This policy remains, however, at the discretion of the Board and buy backs must comply with further restrictions which may apply as a result of the Listing Rules. Shareholders are reminded that they should take advice before acquiring or disposing of shares and that their holding of B Shares forms an integral part of their investment along with their holding of Ordinary Shares. Outlook With the Fund having completed its initial three year investment programme and exceeded one of the key tests to achieve VCT qualifying status, the Company has passed a significant milestone in its life. We now move towards a period of managing the existing investments, and over time planning and executing realisations which we anticipate will enable the Company to make attractive distributions of proceeds to shareholders. Peter Smaill Chairman Manager's Review Investment Highlights * VCT qualifying investment level of 70% exceeded, being 77.13% as at 31 December 2007, and 80.26% after the payment of the proposed dividend; * Proposed dividend of 4.00p per share, bringing cumulative dividends since inception to 7.10p per share; * Investment Portfolio comprises 8 investments with a cost of £7.9 million and a value of £8.5 million, an increase of 8.4% over cost. New Investments We completed two new investments and one further investment in the full year ended 31 December 2007, as follows :- Pureleaf Limited (Baxters International) Cost Valuation £1,088,000 £694,000 We completed the management buy in (MBI) of Baxters in January with total funding of £8 million, in which the Core Funds collectively invested £4.35 million. Core VCT I invested £1.09 million. Baxters is a long established removals and storage business with substantial freehold property and a long-standing relationship with the Ministry of Defence, for whom Baxters carries out a significant amount of long term storage. As reported in the Interim accounts, since the completion of the investment we uncovered a number of areas where we anticipated pursuing claims against the vendors. We made a provision for the financial effects of what we discovered (including the anticipated costs of these actions) notwithstanding our confidence in recovering the sums due. We are pleased to report that, since the year end, we have successfully settled our claims without the need for litigation, and we will re-examine the valuation of this investment before or at the time of the interim accounts. SPL Services Limited Cost £1,002,000 Valuation £1,002,000 SPL Services is a specialist logistics provider, focused on the pharmaceutical and particularly clinical trial markets which are growing globally. Since the date of our investment, short term trading has been adversely affected by dollar currency movements and some major studies closing earlier than anticipated. However, we have recruited additional experienced sales personnel and established a new entity in India to take advantage of the significant market opportunity available to us. We anticipate making a further investment into this business to give the company the additional resources to achieve this growth and to take full advantage of the long term opportunities available in the market. Adapt Group Limited (formerly Highpitch Limited) Cost £980,040 Valuation £ 1,296,000 Adapt is a virtual network operator (VNO) providing telecoms solutions to small and medium sized businesses. We first invested in Highpitch (formerly trading as MNet) in June 2006 as a small participant in the mezzanine debt of the £7.5 million Management Buy out (MBO) of the business. Since then, the business has grown significantly, rebranded as Adapt, and in June this year acquired Centric Telecom. We took the opportunity to increase our investment at this time to fund this acquisition, structured with an attractive ongoing yield. The valuation increase reflects the adoption of a market based multiple of turnover. Existing Portfolio Kelway Holdings Limited Cost £1,250,000, Valuation £1,944,000 Kelway is a fast growing IT reseller targeting organisations with 250 to 1,000 employees. The company has made good progress since our investment last year, and completed a substantial acquisition in June, acquiring Elcom. This brings the combined forecast revenues to over £90 million and has been completed without requiring senior debt and utilising only trade finance, so this business remains relatively ungeared. The increase in valuation compared to cost reflects the adoption of an earnings multiple as was used in the interim accounts. Blanc Brasseries Holdings plc Cost £1,000,000, Valuation £1,172,000 Blanc Brasseries currently operates 7 units in the premium casual dining market. The business model has been successfully re-worked and whilst finding new sites on attractive economic terms has taken longer than originally expected, there is now a strong contracted pipeline of sites in place. The new sites opened, at Leeds and Milton Keynes, are trading significantly ahead of expectations, which bodes well for the future trading of the group as a whole. In addition, Blanc has now secured the £3.5 million of debt funding required to complete the roll out of the site pipeline identified to date. The increase in the valuation of this investment reflects the adoption of an earnings multiple applied to a full year's performance for the sites actually operated. Colway Limited Cost £1,000,000, Valuation £1,444,000 (trading as London Graphic Centre and Red Box) London Graphic Centre is a long established office and graphic supplies business. Since our original investment, the business has rebranded its core B2B activities as Red Box, and completed 3 acquisitions, including the acquisition of a £5 million turnover business called JPS, which required additional funding provided by other Core Funds as mezzanine funding. With further acquisitions identified, we see this business growing to over £30 million in turnover compared to the £15.5 million at the date of our original investment in 2006, placing it firmly as one of the largest independent stationery and office supplies businesses serving the London market. Our valuation increase is based upon the adoption of an earnings based valuation, reflecting the good performance compared to plan and the company's increase in scale following the completion of the acquisitions. Ma Hubbards Limited Cost £1,500,000, Valuation £924,000 The business operates freehold pubs offering value for money food in the North Midlands. We have disposed of some underperforming sites at premiums over our cost to reduce bank debt. We have also appointed a new manager following the change in control of the previous corporate manager, Honeycombe. However, trading remains challenging and we have reduced our valuation in line with the third party offers we have received, but rejected, for the business. The asset values of the freeholds underpin the value of this investment. This investment is syndicated with Electra VCTs. Augentius Fund Administration LLP Cost £30,144, Valuation £30,144 Augentius is a leading onshore administrator of private equity funds and was formerly Ansbacher Fund Services. The business operates from London and Guernsey and provides out-sourced administration services to many leading private equity funds. This small investment has a cash yield of 9.5%. The business is winning new clients rapidly, but we have made no increase in the valuation given its size and stage. Future Investments Core VCT I has now completed its investment programme and is 77.13% invested in qualifying investments compared to the minimum requirement of 70% to maintain VCT qualifying status. This will increase to 80.26% following the payment of the proposed dividend in respect of the financial year ended 31 December 2007, giving the Fund significant contingency against the required VCT targets. Following the achievement of this significant milestone in the Company's development, we are now moving to a period of managing a maturing portfolio firstly to build value into our investments, and then to achieve exits over the next few years at attractive multiples of investment cost. We plan to distribute the proceeds from these investments to shareholders in the form of tax free distributions of income and capital. Income Statement for the year ended 31 December 2007 Year ended 31 December 2007 Year ended 31 December 2006 Revenue Capital Total Revenue Capital Total £ £ £ £ £ £ Unrealised gains on - 611,917 611,917 - 93,617 93,617 investments Net realised gains/ - 23,713 23,713 - (56,578) (56,578) (losses) on investments Income 323,073 - 323,073 507,398 - 507,398 Investment (2,725) (28,220) (30,945) (4,298) (49,567) (53,865) management expense Other expenses (210,585) - (210,585) (153,715) - (153,715) ------------ ------------ ------------ ------------ ------------ ------------ Return on ordinary 109,763 607,410 717,173 349,385 (12,528) 336,857 activities before taxation Tax on ordinary (3,012) 4,280 1,268 (66,702) 9,419 (57,283) activities ------------ ------------ ------------ ------------ ------------ ------------ Return attributable 106,751 611,690 718,441 282,683 (3,109) 279,574 to equity shareholders ======= ======= ======= ======= ======= ======= Return per Ordinary 0.98p 5.59p 6.57p 2.58p (0.03)p 2.55p Share There were no other gains or losses in the year ended 31 December 2007, or the comparative period. All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the period. Balance Sheet As at 31 December 2007 31 December 2007 31 December 2006 £ £ £ £ £ £ Non-current assets Investments at fair 10,890,734 10,436,107 value Current assets Debtors and 195,362 219,551 prepayments Cash at bank 141,831 161,093 ----------- ----------- ----------- ----------- 337,193 380,644 Creditors: amounts falling due within one year Corporation tax 23 57,283 Other creditors 21,451 25,858 Accruals 35,515 42,272 ----------- ----------- ----------- ----------- (56,988) (125,413) ----------- ----------- ----------- ----------- Net current assets 280,205 255,231 ----------- ----------- Net assets 11,170,939 10,691,338 ======= ======= Capital and reserves Called up Ordinary 109,346 109,446 Share capital Called up B Share 72,964 72,964 capital Capital redemption 100 - reserve Share premium account 5,113,629 5,113,629 Capital reserve - (53,035) (110,452) realised Capital reserve - 647,890 93,617 unrealised Special distributable 5,104,625 5,113,629 reserve Revenue reserve 175,420 298,505 ------------- ------------- Total equity 11,170,939 10,691,338 shareholders' funds ======= ======= Net asset value per 101.49p 97.02p 1p Ordinary Share Net asset value per 1.00p 1.00p 1p B Ordinary Share Reconciliation of Movements in Shareholders' Funds for the year ended 31 December 2007 Year ended Year ended 31 December 2007 31 December 2006 £ £ Opening Shareholders' funds before 10,691,338 10,411,764 restatement Prior year adjustment arising from the - 109,446 introduction of FRS 21 ------------- ------------- At 1 January 2007 10,691,338 10,521,210 Net share capital bought back in the (9,004) - year Profit for the year 718,441 279,574 Dividends paid (229,836) (109,446) ------------- ------------- Closing Shareholders' funds at 31 11,170,939 10,691,338 December 2007 ======== ======== Cash Flow Statement for the year ended 31 December 2007 Year ended Year ended 31 December 2007 31 December 2006 Operating activities £ £ £ £ Investment income 293,081 561,280 received Investment management (14,820) (38,552) expense paid Other cash payments (194,866) (425,807) ------------ ------------ ------------ ------------ Net cash inflow from 83,395 96,921 operating activities Taxation UK Corporation tax paid (55,992) (26,164) Investing activities Acquisition of (4,347,071) (22,189,371) investments Disposal of investments 4,539,246 12,790,303 ------------ ------------ ------------ ------------ 192,175 (9,399,068) Equity Dividends paid (229,836) (109,446) ------------ ------------ Cash outflow before (10,258) (9,437,757) financing Financing Buyback of ordinary (9,004) - shares ------------ ------------ ------------ ------------ Net cash outflow from (9,004) - financing ------------ ------------ Net outflow in cash for (19,262) (9,437,757) the year ======= ======= Notes 1. The accounts have been prepared under the fair value rules of the Companies Act 1985, and in accordance with applicable accounting standards and, to the extent that it does not conflict with the Companies Act 1985 and UK accounting standards, the 2003 Statement of Recommended Practice, `Financial Statements of Investment Trust Companies', revised December 2005. 2. Total return after taxation for the period was £718,441 (2006: £279,574). The basic return per Ordinary Share is based on the net profit from ordinary activities and on 10,938,050 (2006: 10,944,556) Ordinary Shares, being the weighted average number of Ordinary Shares in issue during the period. The revenue return per Ordinary Share for the year ended 31 December 2007 is based on the revenue return on ordinary activities after taxation of £106,751 (2006: £282,683), and is based on 10,938,050 (2006: 10,944,556) Ordinary Shares, being the weighted average number of Ordinary Shares in issue during the period. The capital return per Ordinary Share for the year ended 31 December 2007 is based on a capital return on ordinary activities after taxation of £611,690 (2006: capital loss £3,109) and is based on 10,938,050 (2006: 10,944,556) Ordinary shares, being the weighted average number of Ordinary Shares in issue during the period. 3. A final dividend of 4 pence per Ordinary Share, comprising 1.50p of income earned during the year and 2.50p of cash assets, will be paid to Ordinary Fund Shareholders on 23 June 2008 to shareholders on the register on 30 May 2008, costing £437,383 in total. 4. The statutory accounts for the period to 31 December 2007 prepared by the Company and have not yet been delivered to the Registrar of Companies. The auditors' report on the statutory accounts for 31 December 2007 is unqualified and does not contain any statements under section 237(2) or (3) of the Companies Act 1985. This announcement does not constitute statutory accounts within the meaning of s240 of the Companies Act 2005. 5. The Annual General Meeting of the Company will be held at 11.00 am on 4 June 2008 at the offices of Core Capital LLP, 103 Baker Street, London W1U 6LN. END
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