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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 |
Hot Features
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Core VCT I plc ("the Company")
Half-Yearly Report for the six months ended 30 June 2008
Investment Objective
Core VCT I plc ("Core VCT I", "the Company" or "the Fund") is a tax efficient
listed company which aims to achieve long-term capital and income growth and to
distribute tax free dividends comprising realised gains and investors' capital
investment.
Investment Approach
We invest management buyout and development capital, typically in:
* Established, private companies, which show:
+ Sufficient operating critical mass, with an established economic model.
+ Quality management teams with the key skills in place to deliver a
well-defined business model.
* Amounts of £3 - £8 million in companies valued at £5 - £25 million.
Fund Structure
Core VCT I is structured as follows :-
* No Annual Management fees
Only when Shareholders have received the first 60 pence of distributions, which
together with an assumed 40 pence of initial tax relief will have realised them
100 pence, will the Manager start to be entitled to 30% of distributions from
the Fund (for further information please see Note 1d) to the Accounts below).
* Maximise distributions of income and capital
Core VCT I has a policy to distribute all proceeds from realised investments.
The Company has no fixed life but intends to naturally liquidate and distribute
its assets over time. The Manager's incentives are structured to align their
interests in delivering this liquidity for Shareholders as well as maximising
overall investment performance.
Investment Policy
Core VCT I intends to achieve its overall Investment Objective, consistent with
maintaining its qualifying status as a VCT, by pursuing the following
Investment Policy:-
* Asset Allocation
The Company may invest all of its assets into private companies. These
investments are unquoted, and include, but are not limited to, Management
Buy-Outs (MBOs) and Development Capital for expansion or acquisition funding
for established companies. After 31 December 2007, the Company must have in
excess of 70% of its assets invested in Qualifying Investments as defined for
VCT purposes.
However, due to the nature of completing and realising such investments, and
the need to maintain some liquid reserves, there will inevitably be periods
when a proportion of its assets are not held in Unquoted Investments.
* Risk Management
The Company's Asset Allocation includes a potentially large proportion of the
Company's assets to be held in 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.
The Company manages its investment risk within the restrictions of maintaining
its qualifying VCT status by using a number of methods commonly used in the
Private Equity industry, including :-
* The active monitoring of its investments by the Manager;
* Seeking the agreement of various rights associated with each investment,
such as board representation, information rights, and veto rights;
* Seeking to hold larger investment stakes by co-investing with other funds
managed by the Manager, so as to gain more significant influence in the
investment and to facilitate investing in larger companies which may reduce
the risk compared to investing in smaller companies;
* Ensuring a spread of investments is achieved.
The Company has no fixed life but intends to realise its assets over time, and
distribute all proceeds (net of costs) from its realised investments. This
process will naturally result in each retained investment representing an
increased proportion of the remaining net assets of the Company.
* Gearing
The Company has the authority to borrow up to the amount paid on the issued
share capital and the amount standing to the credit of the reserves of the
Company but does not ordinarily take advantage of this authority.
As is common in the Private Equity industry, in many cases the Company makes
investments into Unquoted Companies which have, or may have, substantial
borrowings from third party lenders.
Performance Summary
Ordinary Shares 30 June 2008 30 June 2007 31 December 2007
Net asset value per share 91.65 pence 98.32 pence 101.49 pence
Total return to date per share1 98.75 pence 101.42 pence 104.59 pence
Share price (mid-market) 79.50 pence 90.00 pence 90.00 pence
Earnings per share (5.84) pence 3.39 pence 6.57 pence
Cumulative dividends paid per 7.10 pence 3.10 pence 3.10 pence
share since inception
B shares 30 June 2008 30 June 2007 31 December 2007
Net asset value per share 1.00 pence 1.00 pence 1.00 pence
Total return to date per share1 1.00 pence 1.00 pence 1.00 pence
Share price (mid-market) 4.00 pence 4.50 pence 4.50 pence
Earnings per share 0.00 pence 0.00 pence 0.00 pence
Dividends per share 0.00 pence 0.00 pence 0.00 pence
1 Total return per share comprises closing net asset value per share plus
cumulative dividends per share paid to date.
Chairman's Statement
Results
The Net Asset Value (NAV) total return per Ordinary Share was 98.75p as at 30
June 2008, comprising a NAV per Ordinary Share of 91.65p and cumulative
dividends paid of 7.10p per Ordinary Share. This is a decrease over the Total
Return to 31 December 2007 of 5.58%. A deficit of £639,060 was made during the
six month period, mainly due to the provisions made in the unquoted qualifying
investment portfolio, as referred to below.
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 by 31 December 2007, we are also
working towards returning the proportion of the Fund we do not intend to invest
into unquoted private equity investments, approximating to 30p per share. A
distribution of 4p per share was made in June. At the period end, there was
liquidity approximating to 14p per share and we intend to consider distributing
a proportion of this amount following the year end.
Investments
The Manager's Review refers in more detail to the prospects of the investment
portfolio, which now comprises eight investments with a cost of £8.10 million
and a valuation of £8.23 million. Although we are seeing good trading
performance in most of the portfolio, we have not increased the valuation of
any investment since the year end given the negative sentiment in the equity
markets. In addition, we have chosen to decrease the valuation of two of the
investments below cost. This portfolio is still relatively young, and whilst
the current climate will produce challenges it will also present acquisition
opportunities for companies in the portfolio, some of which may be funded from
internal resources.
Developments at the Manager
Core Capital LLP ("Core Capital" or "the Manager") has announced a new UK-wide
business partnership with Aberdeen Asset Management plc ("Aberdeen"). This
alliance is aimed at providing a wider pool of transaction opportunities to
Core Capital, and facilitating in the completion of larger investments both of
which should bring benefits to investors. In addition, Aberdeen will administer
the Core VCTs from 1 July 2008, and we hope that shareholders will benefit from
improvements in our communications in future. Further information on this
important development is contained in the Manager's Review.
Information for Shareholders
The Board supports open communication with investors and welcomes any comments
or questions you may have. As a result of Aberdeen's appointment as
administrator and company secretary, new contact details are provided at the
back of this Report.
Share Price
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. Shareholders are reminded that
their holding of B Shares forms an integral part of their investment along with
their holding of Ordinary Shares.
We are conscious that the mid price of the shares is at a discount to the Net
Asset Value. This discount has widened over recent months, as it has for many
other VCTs, which simply reflects the lack of liquidity in the secondary
market. In addition, whilst Core VCT I is able to buy back shares, we are not
anticipating making any share buy backs over the coming months so that we are
best placed as a Fund to maximise distributions made to all shareholders, as
referred to above. We would also 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.
Outlook
The current economic and investment outlook is very uncertain, with sentiment
poor and liquidity, especially from banks, tightening. Our investments cannot
be immune from these economic pressures, although the active management that
goes into the portfolio is reaping benefits. In addition, whilst the Fund does
not plan to make new investments, there will be opportunities for our existing
investments to make acquisitions at lower prices and so take advantage of these
conditions.
Peter Smaill
Chairman
28 August 2008
Principal Risks and Uncertainties
The Company's assets consist of unquoted investments, securities, cash and
liquid resources. Its principal risks are therefore market risk, credit risk
and liquidity risk. Other risks faced by the Company include economic risks,
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
2007, in note 18 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.
Related Party Transactions
Details of related party transactions in accordance with Disclosure and
Transparency Rule 4.2.8 can be found in Note 11 to the Accounts below.
Responsibility Statement
The Directors confirm that to the best of their knowledge:
a. the condensed set of financial statements have been prepared under the fair
value rules of the Companies Act 1985, applicable accounting standards, ASB
Statement on Half-Yearly Financial Reporting and the 2003 Statement of
Recommended Practice "Financial Statements of Investment Trust Companies",
revised December 2005, and give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Company, as
required by Disclosure & Transparency Rule 4.2.4; and
b. the interim management report includes a fair review of the information
required by Disclosure & Transparency Rules 4.2.7 - 8 in accordance with
Disclosure & Transparency Rule 4.2.10.
For and on behalf of the Board:
Peter Smaill
Chairman
Co-investment scheme of the Manager
A co-investment scheme has been agreed with the Manager for implementation
during the coming year which will allow executives and members of the Manager
to invest alongside the Company. The Directors believe that the scheme will
further the alignment of interests of the executives and the Company's
shareholders by creating a mechanism for executives to make an investment in
each transaction alongside the Company. In addition, the adoption of such a
scheme brings Core Capital into line with several other leading VCT managers,
and such a scheme is becoming an accepted incentive mechanism to enable the
Manager to attract and retain high quality investment executives in a highly
competitive market.
The scheme will operate through a nominee which will facilitate the investment
alongside the Company in unquoted investments, including any follow-on
investments. In an unlisted investment, the transaction will normally be
structured such that 70% to 90% of the investment is by way of fixed interest
instrument, loan note, or preferred instrument, and 30% to 10% in ordinary
shares. The amount which will be invested by the nominee company is fixed at up
to 5% of the value of the ordinary shares which are available to the Company.
Investment Portfolio Summary
As at 30 June 2008
Date of Book cost Valuation % of net
initial assets by
investment value
£'000 £'000
Qualifying investments
(unquoted)
Kelway Holdings Limited November 2006 1,162 1,912 18.9%
IT Services
Colway Limited (trading as May 2006 1,000 1,462 14.5%
London Graphic Centre)
Office and graphics supplies
Adapt Group Limited June 2006 980 1,280 12.7%
(formerly Highpitch Limited)
Internet connections and
co-location services
Blanc Brasseries Holdings April 2006 1,000 1,172 11.6%
plc
Premium casual dining
brasseries
Pureleaf Limited (Baxter January 2007 1,212 819 8.1%
International)
Removal company
SPL Services Limited July 2007 1,064 799 7.9%
Specialist courier company
focusing on the medical
industry
Ma Hubbards Limited July 2005 1,500 658 6.5%
Managed freehold pubs
------------ ------------ ------------
Total qualifying investments 7,918 8,102 80.3%1
------------ ------------ ------------
Non-qualifying investments
Kelway Holdings Limited June 2008 139 97 1.0%
IT Services
Augentius Fund October 2006 30 30 0.3%
Administration LLP
Fund administrator
Core Holdings I Limited2 March 2007 501 510 5.0%
Core Holdings III Limited2 March 2007 502 468 4.6%
Short-dated variable rate 449 447 4.4%
securities
Listed securities 80 77 0.8%
------------ ------------ ------------
Total non-qualifying 1,701 1,629 16.1%
investments
------------ ------------ ------------
Total investments 9,619 9,731 96.4%
======= ======= =======
Current assets 391 3.9%
Current liabilities (27) (0.3%)
------------ ------------
Net assets 10,095 100.0%
======= =======
1 Book value of total qualifying investments represents 80.3%of the total book
value of investments. The VCT investment tests are measured broadly on original
cost of investments, including cash balances, and this gives the figure of
84.89% in relation to maintaining a minimum of 70% of total investments
invested in qualifying investments from 31 December 2007 onwards.
2 The Core Holdings companies have been set up for the purpose of acquiring
future investments.
Managers' Review
Investment Highlights
* The investment portfolio now comprises eight investments with a cost of £
8.10 million and a value of £8.23 million;
* Trading is meeting or exceeding our expectations in most businesses.
Valuations, however, have not been increased, reflecting the uncertainty in
the equity and other markets; and
* Core Capital has announced a new partnership with Aberdeen, giving us
access to additional funds and investment opportunities, and an enhanced
administrative and support infrastructure;
Investments
Overall, we are pleased with the current trading and prospects of most of the
investments in the portfolio, although we are vigilant to problems that might
arise as the economic climate worsens. We have made no material increases in
the valuations of any of the investments, but have made a provision against one
investment, SPL Services, reflecting the weaker short term trading being
experienced. Conversely, we anticipate that there will be attractive
acquisition opportunities available over the next 12 months or so, and we are
working to continue to ensure that certain of the existing investments are well
placed to take advantage.
Given the relatively young average age of the investments, we are not planning
any realisations and we would expect the current climate to delay the timeframe
for achieving attractive exits.
With the initial investment programme of the fund now completed, we have made
no new investments and have invested a further £326,000 into three existing
portfolio companies.
Each investment is described below:
* Kelway Holdings Limited Cost £1,301,000, Valuation £2,009,000
Kelway is a fast growing IT reseller targeting organisations with 250 to 1,000
employees. Since the date of our investment, turnover has increased to £97
million in the year ended 31 March 2008. This reflects the successful
completion and integration of a major acquisition completed last year and the
strong overall performance of the business. This business has the capacity to
make further acquisitions and has a low overall level of bank gearing.
* Ma Hubbards Limited Cost £1,500,000, Valuation £658,000
The business operates freehold pubs offering value for money food in the North
Midlands. This investment has the benefit of freehold property which supports
the valuation of the investment, although these valuations have fallen in line
with values of pub businesses generally. Current trading is holding up well in
a difficult climate, and we are in the process of de-gearing this investment to
provide additional funds to freshen up the concept. This investment is
syndicated with Electra VCTs.
* Blanc Brasseries Holdings plc Cost £1,000,000, Valuation £1,172,000
Blanc Brasseries now operates 7 units and plans to open a number of new units
this year. The business model has been successfully re-worked and trading from
the new and refurbished units is ahead of expectations. We are however mindful
that the climate for consumers is likely to worsen and there are significant
cost pressures in the leisure industry which require careful management. We
have yet to see better economic terms for new sites, but this business is well
placed to take advantage when this does occur.
* Pureleaf Limited
(Baxter International) Cost £1,212,000 Valuation £819,000
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 accounts to 31 December 2007, we have settled our claims
against the vendors to our satisfaction. However, we have chosen to maintain
the provision against the cost of this investment but anticipate a release of
this as we see the benefits of the settlement in the actual trading results.
This business has no senior bank gearing and significant unencumbered freehold
assets.
* Colway Limited Cost £1,000,000, Valuation £1,462,000
Colway is a long established office and graphic supplies business. Since our
original investment, the business has completed four acquisitions and we are
actively pursuing a `buy & build' model to increase the scale of this business.
Turnover has grown from £15.5 million at the date of our investment to over £20
million in the year ended 31 March 2008. Whilst we can expect some impact from
the tougher economic climate, we are planning to take advantage of further
acquisition opportunities as they arise.
* Adapt Group Limited (formerly
Highpitch Limited) Cost £980,040 Valuation £1,280,000
Adapt is a virtual network operator (VNO) providing telecoms solutions to small
and medium sized businesses.
Adapt has traded in line with expectations. Our investment is structured as a
high yielding investment, and we have received £57k since inception in addition
to the valuation increase over cost as detailed above.
* SPL Services Limited Cost £1,064,000, Valuation £799,000
SPL Services is a specialist logistics business servicing the pharmaceutical
sector. Whilst this business operates in an attractive market, it is
characterised by long term contracts and relationships; growth can therefore
take some time to be evidenced and we have made a provision against the cost of
this investment to reflect the weaker than expected short term trading. In
addition, we have invested in additional resources primarily in sales,
established an operation in India and are re-locating in the UK, and have
invested a further £62k in the period. We believe these actions will result in
the successful outcome from a number of significant tender contracts which
would restore growth to the business.
* 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 and property funds.
This small investment has a cash yield of 9.5%. The business is trading to
expectations, but we have made no increase in the valuation given the
immaterial size of this investment.
Developments at Core Capital
Core Capital and Aberdeen have agreed a new UK-wide business partnership, aimed
at leveraging the respective strengths of both businesses to provide the best
possible returns for our investors.
Under the terms of this agreement, Core Capital and Aberdeen will operate as
one team, sharing transactions and offering an integrated package of finance
for fast growing SMEs and will manage in excess of £200m in funds.
This alliance will bring significant benefits to investors, providing access to
a wider pool of transactions with broader geographical and risk
diversification.
Aberdeen will also provide back-office administration, accounting and investor
relations services to the Core Funds and the new contact details are set out at
the back of this report.
Unaudited Income Statement
(incorporating the Revenue Account of the Company for the six months ended 30
June 2008)
Six months ended Six months ended
30 June 2008 30 June 2007
(unaudited) (unaudited)
Notes Revenue Capital Total Revenue Capital Total
£ £ £ £ £ £
Unrealised 8 - (554,822) (554,822) - 332,066 332,066
(losses)/gains
on investments
Realised 8 - (73,020) (73,020) - (81,796) (81,796)
(losses)/gains
on investments
Income 5 69,091 - 69,091 224,252 - 224,252
Transaction 1 d) (536) (2,223) (2,759) (2,100) (10,336) (12,436)
costs and
investment
management
expense
Other expenses (77,550) - (77,550) (72,817) - (72,817)
---------- ---------- ---------- ---------- ---------- ----------
(Loss)/return (8,995) (630,065) (639,060) 149,335 239,934 389,269
on ordinary
activities
before taxation
Tax on ordinary 6 - - - (19,124) 1,186 (17,938)
activities
---------- ---------- ---------- ---------- ---------- ----------
(Loss)/return (8,995) (630,065) (639,060) 130,211 241,120 371,331
attributable to
equity
shareholders
====== ====== ====== ====== ====== ======
(Loss)/return 7 (0.08)p (5.76)p (5.84)p 1.19p 2.20p 3.39p
per 1p Ordinary
share
Dividends paid £ £ £ £ £ £
Final dividend 164,018 273,364 437,382 - - -
paid for year
ended 31
December 2007
of 4.0p per
share
Final dividend - - - 229,836 - 229,836
paid for year
ended 31
December 2006
of 2.10p per
share
Year ended 31 December 2007
(audited)
Notes Revenue Capital Total
£ £ £
Unrealised 8 - 611,917 611,917
(losses)/gains on
investments
Realised (losses) 8 - 23,713 23,713
/gains on
investments
Income 5 323,073 - 323,073
Transaction costs 1 d) (2,725) (28,220) (30,945)
and investment
management
expense
Other expenses (210,585) - (210,585)
---------- ---------- ----------
Return/(loss) on 109,763 607,410 717,173
ordinary
activities before
taxation
Tax on ordinary 6 (3,012) 4,280 1,268
activities
---------- ---------- ----------
Return/(loss) 106,751 611,690 718,441
attributable to
equity
shareholders
====== ====== ======
Return/(loss) per 7 0.98p 5.59p 6.57p
1p Ordinary share
Dividends paid £ £ £
Final dividend - - -
paid for year
ended 31 December
2007 of 4.0p per
share
Final dividend 229,836 - 229,836
paid for year
ended 31 December
2006 of 2.10p per
share
Unaudited Balance Sheet
As at 30 June 2008
As at As at As at
30 June 30 June 2007 31 December 2007
2008
(unaudited) (unaudited) (audited)
Notes £ £ £
Non-current assets
Investments at fair 8 9,731,256 11,391,859 10,890,734
value
Current Assets
Debtors and 344,501 814,842 195,362
prepayments
Cash at bank 46,562 (260,548) 141,831
---------- ---------- ----------
391,063 554,294 337,193
Creditors: amounts (27,822) (1,122,324) (56,988)
falling due within
one year
---------- ---------- ----------
Net current assets/ 363,241 (568,030) 280,205
(liabilities)
---------- ---------- ----------
Net assets 10,094,497 10,823,829 11,170,939
======= ======= =======
Capital and reserves 9
Called up Ordinary 109,346 109,346 109,346
Share capital
Called up B Share 72,964 72,964 72,964
capital
Capital redemption 100 100 100
reserve
Share premium account 5,113,629 5,113,629 5,113,629
Capital reserve - 111,273 435,180 647,890
unrealised
Capital reserve - (146,483) (210,895) (53,035)
realised
Special distributable 4,831,261 5,104,625 5,104,625
reserve
Revenue reserve 2,407 198,880 175,420
---------- ---------- ----------
Total equity 10,094,497 10,823,829 11,170,939
shareholders' funds
======= ======= =======
Net asset value per
share (attributable
assets basis)
Net asset value per 10 91.65p 98.32p 101.49p
1p Ordinary Share
Net asset value per 10 1.00 p 1.00p 1.00p
1p B Share
Reconciliation of Movements in Shareholders' Funds
for the six months ended 30 June 2008
Six months Six months Year ended
ended ended
30 June 2008 30 June 2007 2007
£ £ £
Opening shareholders 11,170,939 10,691,338 10,691,338
funds
Net share capital bought - (9,004) (9,004)
back in the period
(Loss)/profit for the (639,060) 371,331 718,441
period
Dividends paid in period (437,382) (229,836) (229,836)
------------- ------------- -------------
Closing shareholders' 10,094,497 10,823,829 11,170,939
funds
======== ======== ========
Unaudited Summarised Cash Flow Statement
For the six months ended 30 June 2008
Six months Six months Year ended
ended ended 30 June 31 December
30 June 2008 2007 2007
(unaudited) (unaudited) (audited)
Notes £ £ £
Operating activities
Income received 119,245 210,809 293,081
Transaction costs (2,468) (9,810) (14,820)
paid
Other cash payments (136,868) (121,399) (194,866)
------------- ------------- -------------
Net cash (outflow)/ (20,091) 79,600 83,395
inflow from
operating activities
Taxation
UK Corporation tax - - (55,992)
paid
Investing activities
Acquisitions of 8 (1,749,357) (2,771,239) (4,347,071)
investments
Disposals of 8 2,111,561 2,508,838 4,539,246
investments
------------- ------------- -------------
Net cash inflow/ 362,204 (262,401) 192,175
(outflow) from
investing activities
Equity dividends (437,382) (229,836) (229,836)
paid
------------- ------------- -------------
Cash (outflow)/ (95,269) (412,637) (10,258)
inflow before
financing and liquid
resource management
Financing
Share capital bought - (9,004) (9,004)
back
------------- ------------- -------------
(Decrease)/increase (95,269) (421,641) (19,262)
in cash for the
period
======= ======= =======
Reconciliation of revenue return before taxation to net cash (outflow)/inflow
from operating activities
For the six months ended 30 June 2008
Six months Six months Year ended
ended ended 31 December
30 June 2008 30 June 2007 2007
(unaudited) (unaudited) (audited)
£ £ £
Revenue return before (8,995) 149,335 109,763
taxation
Investment management fees (2,223) (10,336) (28,220)
charged to capital
Increase/(decrease) in 20,293 (31,556) 13,020
debtors
(Decrease)/increase in (29,166) (27,843) (11,168)
creditors
------------- ------------- -------------
Net cash (outflow)/inflow (20,091) 79,600 83,395
from operating activities
======== ======== ========
Notes to the unaudited financial statements
1. Principal accounting policies
A summary of the principal accounting policies, all of which have been applied
consistently throughout the period, is set out below:
a. Basis of accounting
The accounts have been prepared under the fair value rules of the Companies Act
1985, and in accordance with United Kingdom Generally Accepted Accounting
Practice, consistent with the accounting policies set out in the audited
statutory accounts for the year ended 31 December 2007 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, amended October 2006.
b. Presentation of Income Statement
In order to better reflect the activities of a VCT and in accordance with the
SORP, supplementary information which analyses the Income Statement between
items of a revenue and capital nature has been presented alongside the total
column. The revenue return is the measure the Directors believe appropriate in
assessing the Company's compliance with certain requirements set out in Section
274 Income Tax Act 2007.
c. Investments
All investments held by the Company are classified as at "fair value through
profit and loss". For investments actively traded in organised financial
markets, fair value is generally determined by reference to Stock Exchange
market quoted bid prices at the close of business on the balance sheet date.
Unquoted investments are valued by the Directors in accordance with the
following rules, which are consistent with the International Private Equity
Venture Capital Valuation (IPEVCV) guidelines published in 2005:
i. Investments which have been made in the last 12 months are valued at fair
value, which unless another methodology gives a better indication of fair
value, will be at cost.
ii. Investments in companies at an early stage of their development are valued
at fair value, which unless another methodology gives a better indication
of fair value, will be at cost.
iii. Where investments have gone beyond the stage in their development in (ii)
above, the shares may be valued, in the absence of overriding factors, by
applying a suitable price-earnings ratio to that company's maintainable
earnings (the ratio used being based on a comparable listed company or
sector but the resulting value being discounted to reflect lack of
marketability). Where overriding factors apply, alternative methods of
valuation will be used. These may include the application of a material
arms length transaction by an independent third party, cost, cost less
provision for impairment, discounted cash flow, or a net asset basis.
iv. Where a value is indicated by a material arms-length transaction by a third
party in the shares of a company, this value will be used.
v. Where a company's underperformance against plan indicates a permanent
diminution in the value of the investment, provision against cost is made
and charged to the realised capital reserve.
d. Transaction costs and investment management expense
The Company is responsible for any external costs such as legal or accounting
fees incurred on transactions that do not proceed to completion. Such
transaction costs, along with other transaction costs, are charged 100% against
capital.
The Board have considered the intrinsic value of the B shares allotted to the
Manager at the period end, as the valuation should be considered over the
period of the Manager's service. The resulting valuation, less the amount
subscribed by the Manager for these shares, is spread over the estimated
investing period.
Given the inherent uncertainties in projecting the investment performance of
the Manager (which will ultimately determine the value of the B shares) the
Board consider that the fair value of these shares at the period end is £
54,723, being 1p per share. This is the subscription price paid by the Manager,
and as the Manager has paid this value in cash, there is no investment
management expense attributable to Core Capital LLP in the current period.
75% of the investment management expense attributable to Credit Suisse is
charged against capital. This is in line with the Board's expected long-term
split of returns from the investment portfolio of the Company.
Third party transaction costs arose from aborted transactions where such costs
were not otherwise recoverable. Under the agreement with the manager, these
costs are to be borne by the Company and by the other VCTs managed by Core
Capital. The amount of such costs for the period ended 30 June 2008 is £nil (30
June 2007: £3,531; 31 December 2007: £18,817).
e. Income
Dividends receivable on quoted equity shares are brought into account on the
ex-dividend date. Dividends receivable on unquoted equity shares are brought
into account when the Company's right to receive payment is established and
there is no reasonable doubt that payment will be received. Fixed returns on
non-equity shares are recognised on a time apportionment basis so as to reflect
the effective yield, provided there is no reasonable doubt that payment will be
received in due course. Fixed returns on debt securities are recognised on a
time-apportioned basis so as to reflect the effective yield. Provisions are
made against such income receivable as soon as it is considered doubtful that
such income will be received.
f) Expenses
All expenses are accounted for on an accruals basis. Expenses are charged
wholly to revenue, with the exception of expenses incidental to the acquisition
or disposal of an investment, which are charged to the capital column of the
Income Statement.
g) Taxation
Deferred tax is recognised in respect of all timing differences that have
originated but not reversed at the balance sheet date where transactions or
events that result in an obligation to pay more tax in the future or a right to
pay less tax in the future have occurred at the balance sheet date. Timing
differences are differences between the Company's taxable profits and its
results as stated in the financial statements.
Deferred tax is measured at the average tax rates that are expected to apply in
the periods in which the timing differences are expected to reverse based on
tax rates and laws that have been enacted or substantially enacted at the
balance sheet date. Deferred tax is measured on a non-discounted basis.
Any tax relief obtained in respect of management fees allocated to capital is
reflected in the capital reserve - realised and a corresponding amount is
charged against revenue. The tax relief is the amount by which corporation tax
payable is reduced as a result of these capital expenses.
2. The revenue column of the Income Statement is the profit and loss account
of the Company. There were no other gains and losses in the six months
ended 30 June 2008, or the comparative periods.
3. All revenue and capital items in the Income Statement derive from
continuing operations.
4. Earnings for the six months ended 30 June 2008 should not be taken as a
guide to the results for the year ending 31 December 2008.
5. Income
Six months Six months Year
ended ended ended 31
30 June 30 June December
2008 2007 2007
(unaudited) (unaudited) (audited)
£ £ £
From:
Dividends 22,709 48,676 90,817
Fixed and 16,629 74,056 74,222
variable
interest
securities
Loan 24,003 94,382 145,374
stocks
Bank 5,750 7,138 12,660
interest
------------- ------------- -------------
69,091 224,252 323,073
======== ======== ========
Loan stock income above is stated after providing against £66,578 of loan
interest receivable recognised in the previous year.
6. Taxation
There is no tax charge for the period, as taxable losses have been incurred for
the period.
7. Earnings and return per share
Six months Six months Year
ended ended ended 31
30 June 30 June December
2008 2007 2007
(unaudited) (unaudited) (audited)
£ £ £
i) Total (639,060) 371,331 718,441
earnings
after
taxation
Basic (5.84)p 3.39p 6.57p
earnings
per share
ii) Net (8,995) 130,211 106,751
revenue
from
ordinary
activities
after
taxation
Revenue (0.08)p 1.19p 0.98p
return per
share
Net (73,020) (81,796) 23,713
realised
capital
(losses)/
gains
Net (554,822) 332,066 611,917
unrealised
capital
(losses)/
gains
Capital (2,223) (9,150) (23,940)
expenses
iii) Total (630,065) 241,120 611,690
capital
return
Capital (5.76)p 2.20p 5.59p
return per
share
iv) 10,934,571 10,941,588 10,938,050
Weighted
average
number of
ordinary
shares in
issue in
the period
The basic earnings, revenue return and capital return per share shown above for
each period are respectively based on numerators i)-iii), each divided by iv),
the weighted average number of shares in issue in the period.
None of the returns to date are attributable to the B shares. Accordingly, no
diluted earnings and return per share are disclosed.
8. Summary of investments during the period
Unlisted Investments Fixed and
Fully listed ordinary Loan stock in variable Funds and Total
shares associated interest trusts
companies securities
£ £ £ £ £ £ £
Valuation at 1 385,285 3,250,242 5,256,148 1,008,366 - 990,693 10,890,734
January 2008
Purchases at 47,360 200,866 125,000 - 1,130,670 76,029 1,579,925
cost
Sales - (422,752) - (87,500) - (679,358) (921,951) (2,111,561)
proceeds
- realised 74,536 - - - (2,785) (144,771) (73,020)
gains/(losses)
Movement in (7,259) (62,226) (453,020) (30,369) (1,948) - (554,822)
unrealised
losses
----------- ----------- ----------- ----------- ----------- ----------- -----------
Valuation at 77,170 3,388,882 4,840,628 977,997 446,579 - 9,731,256
30 June 2008
----------- ----------- ----------- ----------- ----------- ----------- -----------
Book cost at 80,035 2,413,880 5,674,422 1,003,119 448,527 - 9,619,983
30 June 2008
Unrealised (2,865) 975,002 (833,794) (25,122) (1,948) - 111,273
(losses)/gains
at 30 June
2008
----------- ----------- ----------- ----------- ----------- ----------- -----------
Valuation at 77,170 3,388,882 4,840,628 977,997 446,579 - 9,731,256
30 June 2008
====== ====== ====== ====== ====== ====== ======
Reconciliation of cash movements in investment transactions
Purchases of investments above exclude £169,432 held with solicitors awaiting
completion . Adding this amount to purchases above equals acquisitions of £
1,749,357 as shown in the summarised cash flow statement.
9. Capital and reserves
Called up ordinary Called up B Capital Share Unrealised
share capital share redemption premium capital
capital reserve account reserve
£ £ £ £ £
At 1 January 2008 109,346 72,964 100 5,113,629 647,890
Losses on disposal - - - - -
of investments
Unrealised - - - - (554,822)
movements in fair
value
Costs of investment - - - - -
transactions
Management fees on - - - - -
Credit Suisse
portfolio
Realisation of - - - - 18,205
previously
unrealised
movements in fair
value
Net loss for the - - - - -
period
Dividends paid - - - - -
----------- ----------- ----------- ----------- -----------
At 30 June 2008 109,346 72,964 100 5,113,629 111,273
Realised Special
capital distributable Revenue
reserve reserve reserve Total
£ £ £ £
At 1 January 2008 (53,035) 5,104,625 175,420 11,170,939
Losses on disposal (73,020) - - (73,020)
of investments
Unrealised movements - - - (554,822)
in fair value
Costs of investment (616) - - (616)
transactions
Management fees on (1,607) - - (1,607)
Credit Suisse
portfolio
Realisation of (18,205) - - -
previously
unrealised movements
in fair value
Net loss for the - - (8,995) (8,995)
period
Dividends paid - (273,364) (164,018) (437,382)
----------- ----------- ----------- -----------
At 30 June 2008 (146,483) 4,831,261 2,407 10,094,497
10. Net asset values
The Net Asset Values per share, as disclosed on the balance sheet, are based on
attributable assets at the date of the balance sheet and assume that no
break-up of the Company will occur. The Board consider 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.
At this early stage in the Company's life, the Board considers that liquidation
is unlikely, and that attributing to the B shares purely the capital
contributed of 1 penny per share reflects the Board's best estimate at 30 June
2008 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 numbers
of shares in issue at 30 June 2008, as follows:
As at 30 June 2008 As at 30 June 2007
£ £
Share capital
10,934,571 (30 June 2007: 10,934,571) 109,346 109,346
1p ordinary shares
7,296,381 (30 June 2007: 7,296,381) 1p 72,964 72,964
B shares
----------- -----------
182,310 182,310
1p Ordinary shares Total attributable Net asset value
net assets (pence per share)
£
In accordance with the Articles 8,680,995 79.39p
Additional entitlement to assets on the 1,340,538 12.26p
attributed basis
----------- -----------
Attributed basis 10,021,533 91.65p
======= =======
1p B shares
In accordance with the Articles 1,413,502 (18.37)p
Reduced entitlement to assets on the (1,340,538) 19.37p
attributed basis
----------- -----------
Attributed basis 72,964 1.00p
======= =======
11. Related party transactions
Lord Walker is also a Director of Caparo plc, which is a member of the Manager,
Core Capital LLP. No amounts have been paid or are payable to Caparo plc.
12. The financial information for the six months ended 30 June 2008 and 30 June
2007 has neither been audited nor reviewed.
13. The information for the year to 31 December 2007 does not comprise full
financial statements within the meaning of Section 240 of the Companies Act
1985. The financial statements for the year ended 31 December 2007 have
been filed with the Registrar of Companies. The auditors have reported on
these financial statements and that report was unqualified and did not
contain a statement under section 237(2) of the Companies Act 1985.
14. Copies of this statement are being sent to all shareholders. Further copies
are available free of charge from the Company's registered office, One Bow
Churchyard, London, EC4M 9HH.
Shareholder enquiries:
For information on your holding, to notify the Company of a change of address
or to request a dividend mandate form (should you wish to have future dividends
paid directly into your bank account) please contact the Company's Registrars,
Capita IRG plc, Northern House, Woodsome Park, Fennay Bridge, Huddersfield HD8
0LA (Tel: 0871 664 0300 (calls cost 10p per minute plus network extras), if
calling from overseas dial +44 208 639 3399) or should you prefer visit their
website at www.capitaregistrars.com.
For enquiries concerning the performance of the Company, please contact the
Investment Manager at Core Capital LLP:
Stephen Edwards on 020 7317 0150 or by e-mail on Stephen.Edwards@Core-Cap.com
Walid Fakhry on 020 7317 0145 or by e-mail on Walid.Fakhry@Core-Cap.com
For other Shareholder enquiries, including the sale of shares, please contact
the Company Secretary and Administrator, Aberdeen Asset Management plc
Sutherland House, 149 St Vincent Street, Glasgow G2 5NW (telephone 0845 300
2830) or alternatively visit their website www.aberdeen-asset.com, email:
vcts@aberdeen-asset.com.
Corporate Information
Directors www.core-cap.com
Peter Smaill (Chairman)
Lord Walker
John Brimacombe
All of whom are non-executive and of: Solicitors
One Bow Churchyard SJ Berwin
London 10 Queen Street Place
EC4M 9HH London
EC4R 1BE
Secretary and administrator Auditors
Aberdeen Asset Management plc Ernst & Young LLP
Sutherland House 1 More London Place
149 St Vincent Street London
Glasgow SE1 2AF
G2 5NW
Investment Manager Bankers
Core Capital LLP Bank of Scotland
103 Baker Street PO Box No. 39900 Level 7
London Bishopsgate Exchange
W1U 6LN 155 Bishopsgate
London EC2M 3YB
VCT Tax Adviser Sponsor and Promoter
PricewaterhouseCoopers LLP Collins Stewart Limited
1 Embankment Place 9th Floor
London 88 Wood Street
WC2N 6RH London EC2V 7QR
Receiving Agent Stockbroker
Capita IRG plc Brewin Dolphin Securities Limited
PO Box 166 PO Box 512
The Registry National House
34 Beckenham Road 36 St Ann Street
Beckenham Manchester M60 2EP
Kent BR3 4TU
Cash Assets Investment Manager Registrar
Credit Suisse Capita Registrars Limited
Private Banking, London Branch Northern House
17th Floor Woodsome Park
1 Cabot Square Fennay Bridge
London E14 4QJ Huddersfield HD8 0LA
Company No : 5258348
END
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