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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Core Vct V | LSE:CR5 | London | Ordinary Share | GB00B1GJY496 | ORD 0.01P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 45.50 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
TIDMCR5 RNS Number : 0736L Core VCT V PLC 29 April 2010 ? Core VCT V plc Annual Financial Report Announcement Investment Objective Core VCT V plc ('Core VCT V', 'the Company' or 'the Fund') is a tax efficient listed company which aims to achieve an attractive yield from its underlying investments (Mezzanine and Private Equity Investments), to be distributed to shareholders as tax free dividends of both income and capital gains over time. Core VCT V invests alongside Core VCT IV plc, and has a co-investment policy with Core VCT, which is also managed by Core Capital LLP ('the Manager' or 'Core Capital'). Investment Approach Core Capital invests primarily in: · Established, private companies, which show sufficient operating critical mass, with an established economic model, and able, motivated management teams with the key skills in place to deliver a well-defined business plan · Total investment sizes are typically GBP3 - GBP8 million, of which GBP1 - GBP3 million may typically be provided by Core VCT IV and Core VCT V plc. Fund Structure Core VCT V is structured as follows :- · No annual management fees There are no annual management fees paid to Core Capital. Instead, Core Capital receives a share of the investment profits generated from the underlying investments; · Provide attractive distributions The Company intends to provide shareholders with an attractive level of income by distributing all available profits generated through income and capital gains. Investment Policy Core VCT V seeks 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 its assets in 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 businesses. Since 31 December 2009, 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 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 toinvesting in
smaller companies; · Ensuring a spread of investments is achieved. 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 | 31 December 2009 | 31 December 2008 | +----------------------+-------------------------------------+---------------------+ | | p | % | p | % | +----------------------+--------------------------+----------+----------+----------+ | Net asset value per | 82.51 | | 85.46 | | | share | | | | | +----------------------+--------------------------+----------+----------+----------+ | Total return per | 89.51 | (6.2) | 85.96 | (9.00) | | share1 | | | | | +----------------------+--------------------------+----------+----------+----------+ | NAV Total Return | 119.51 | 18.65 | 115.96 | 15.96 | | including initial | | | | | | tax relief2 | | | | | +----------------------+--------------------------+----------+----------+----------+ | NAV Total Return | 128.81 | 27.95 | 116.66 | 16.66 | | including initial | | | | | | tax relief on | | | | | | dividends3 | | | | | +----------------------+--------------------------+----------+----------+----------+ | Share price | 60.00 | | 80.00 | | | (mid-market) | | | | | +----------------------+--------------------------+----------+----------+----------+ | Earnings per share | 3.55 | | (6.90) | | +----------------------+--------------------------+----------+----------+----------+ | Cumulative dividends | 7.50 | | 7.00 | | | paid and proposed | | | | | | per share4 | | | | | +----------------------+--------------------------+----------+----------+----------+ | Total expense ratio5 | | 1.85 | | 2.27 | +----------------------+--------------------------+----------+----------+----------+ 1) NAV Total Return per share comprises closing net asset value per share plus cumulative dividends per share paid to date (as a percentage of starting NAV of 94.5p) 2) Based on initial subscription of 100p and initial tax relief of 30% 3) Based on initial subscription of 100p, initial tax relief at 30% and tax relief on dividends at 32.5% 4) Consists of a proposed final dividend of 0.5p (2008: 6.5p) and dividends paid to date of 7.0p (2008: 0.5p) 5) Total expense ratio has been calculated using total operating costs divided by closing net assets Chairman's Statement Results The Net Asset Value (NAV) Total Return per Ordinary Share was 89.51p as at 31 December 2009, comprising a NAV per Ordinary Share of 82.51p and cumulative dividends paid of 7.0p per Ordinary Share. This is an increase from the NAV Total Return to 31 December 2008 of 4.1% compared to a 24.9% increase in the value of the FTSE All share index over the same period. A surplus of GBP391,288 was recorded during the year ended 31 December 2009. The increase of 3.55p per share is accounted for by: - 3.14p per share due to increases in the valuation of the unquoted portfolio - 2.03 p per share due to the increase in the value of the Cash Assets - Less 1.62p per share for operating costs. Investments Three new investments totalling GBP2.1 million were completed during the year, into Allied International, Brasserie Blanc, and Georgina Goodman. Further investments totalling GBP0.7 million were completed into two existing portfolio companies, Colway and Camwatch. Further details of these investments and the rest of the portfolio are contained in the Manager's Review. In completing the investments made during this year, the level of yield has fallen from our earlier targets, reflecting the current market conditions, but a higher equity component has been achieved. The weighted average gross yield on the unquoted portfolio is 12.05% per annum. The Company is 70.6% invested in unquoted companies, exceeding the required minimum to be over 70% invested for VCT qualifying purposes. Credit Suisse The part of the funds which are not invested in unquoted companies are the 'Cash Assets', invested in a range of securities under a discretionary management agreement with Credit Suisse. As we have previously reported, the financial instrument portfolio managed by Credit Suisse has incurred losses since inception, which amounted to 3.8p per share as at 31 December 2009. Credit Suisse's portfolio management team was appointed on behalf of the VCT to manage the cash assets on a discretionary basis. Credit Suisse's express investment mandate was to manage the assets in accordance with a low-risk investment profile. Whilst market conditions have been challenging, in our opinion a contributing cause of the losses suffered by the portfolio was Credit Suisse's failure to manage it in accordance with the low-risk investment profile. Following reviews of the performance of the portfolio by the Board, Credit Suisse were instructed in 2008 to exit higher volatility holdings and restrict the portfolio to bonds and similar instruments. In 2009 we commenced discussions with Credit Suisse with a view to recovering compensation. Credit Suisse have steadfastly refused to admit any liability. We are terminating Credit Suisse's retainer and will ask the FSA to review the matter. The remaining assets in this portfolio total GBP701,000, which will be directly managed by the Company and held primarily in cash and cash equivalents. Dividends Core VCT V intends to provide Shareholders with an attractive level of income by distributing available profits generated through income and capital gains. In relation to the year ended 31 December 2009, we are recommending an income dividend of 0.5p, subject to shareholder approval and payable on 25 May 2010 to shareholders on the register at 14 May 2010. This will bring the cumulative dividends paid to 7.5p per share, which amounts to a net annual yield of 3.6% on the net cost of subscription after tax relief. We continue to work towards returning the proportion of the cash assets we do not intend to invest into unquoted private equity investments, approximating to 30p per share of the original capital raised. We intend making further distributions of this capital as further investments are completed. A summary of our progress against this target is as follows: Pence per share Cumulative dividends since inception 7.0 Dividends proposed in respect of current year 0.5 Since inception losses on Credit Suisse portfolio 3.8 Cash equivalents retained 20.8 (Surplus against target) (2.1) ____ 30.0 ____ Share Price and Share buy backs The Ordinary Shares (CR5) 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 they must hold their shares for at least five years in order to retain the tax reliefs obtained. We are conscious that the mid-market price of the shares continues to be at a discount to the Net Asset Value, as it is for many other VCTs. This simply reflects the lack of liquidity in the secondary market. In addition, whilst the Company does have the ability to buy-back shares, we are not anticipating making any share buy-backs for the foreseeable future so that we are best placed as a Company to maximise distributions made to all shareholders, 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. Information for Shareholders The Board supports open communication with investors and welcomes any comments or questions you may have, and full contact details are provided at the back of this Report. Outlook The current economic and investment outlook is not without its challenges, but we can see that, at least for now, current trading levels are not worsening, and indeed some improvements are evident. Having completed three new investments towards the end of 2009, we believe that new investment opportunities are now becoming more attractive than they have been for some time, and from which we are well placed to benefit. Manager's Review Investment Highlights · Three new investments were completed, totalling GBP2.1 million, and GBP0.7 million was invested into two existing portfolio companies; · Investment Portfolio now comprises ten investments with a cost of GBP6.7 million and a value of GBP6.9 million; · The Company was 70.6% invested in qualifying companies as at 31 December 2009, exceeding the required minimum to be over 70% invested for VCT purposes; · The weighted average gross yield on the unquoted portfolio is 12.05% per annum New Investments We acquired a significant holding in Allied International, investing an initial GBP1 million into the business alongside the same amounts from Core VCT IV and Core VCT. Allied is a leading Destination Management Company, with 26 locations throughout the USA, Europe and the Middle East. We acquired the business by acquiring all of the senior debt at a substantial discount and providing working capital funding. We acquired the business at a low point in the business cycle, and we believe this has the potential to grow organically and by acquisition into a major global operation. In December, we invested GBP1 million into Brasserie Blanc, alongside the same amount form Core VCT IV. Blanc is a leading branded restaurant business operating in the premium casual dining segment of the market. This is an existing investment in the Core VCT portfolio, and the funds provided will enable the business to recommence its expansion programme. In December we also invested a small amount (GBP250,000) into Georgina Goodman, equally with Core VCT IV, and alongside an initial GBP1.5 million from co-investors introduced by Core. Georgina Goodman is a designer, wholesaler, and retailer of luxury women's shoes. There is approximately GBP2 million of cash available for future investments and we have established two new companies which are actively seeking acquisitions in their chosen sectors. Existing Investments We invested a further GBP0.5 million alongside Core VCT V and Core VCT into Colway as part of a restructuring of the senior debt, and in order to provide funding for future acquisitions. We made a further investment of GBP248,000 into Camwatch alongside Core VCT IV to provide additional working capital funding. A more detailed description of the status of each investment follows. Colway Limited Investment Cost GBP1,554,000 Valuation GBP1,601,000 Colway is a long established office and graphic supplies business, with three principal divisions - Business, Systems, and Retail. Colway operates in a mature market, and where the growth opportunity is largely acquisition led. Colway has completed five acquisitions since the date of our investment in 2006, but has been hampered during 2009 in particular whilst its senior lender, Kaupthing Singer & Friedlander, was placed into administration. We successfully renegotiated and restructured this debt in December 2009, and provided additional funding totalling GBP1.5million (of which GBP0.5 million was provided by Core VCT V) to be used in order to complete further acquisitions in future. We believe that this, together with organic improvement in trading, will grow value in this investment over time. As a part of this restructure, we have reduced the paid element of our yield but maintain capital priority over the ordinary shares in respect of our original investment quantum of GBP1 million. Blanc Brasseries Holdings plc Investment Cost GBP1,000,000 Valuation GBP1,000,000 Brasserie Blanc owns and operates branded restaurants in the premium casual dining segment of the market. We invested as a part of a total GBP4 million equity raising in December. Whilst Core VCT did not participate because of its own fund constraints, Core VCT IV and V invested GBP1 million each. This fund raising is intended to facilitate the restart in new unit openings which will bring further scale to the business. Trading has proved resilient, with restaurant EBITDA doubling from GBP991k in 2008 to GBP1.96 million in the year ended 28 June 2009. This business has a complete, experienced and capable management team in place which can manage a very substantial increase in the number of sites in the business. This investment is structured 90% in loan notes yielding 7% per annum, and 10% in equity to provide capital gain potential. Allied International Investment Cost GBP1,000,000 Valuation GBP995,000 Allied is a leading Destination Management Company (DMC) with 26 locations throughout the USA, Europe and the Middle East. We acquired the business by acquiring all of the senior debt at a substantial discount and providing working capital funding. We acquired the business at a low point in the business cycle, and believe this has the potential to grow organically and by acquisition into a major global operation. We have introduced new management at a senior level, eliminated senior debt and anticipate providing further funding during 2010 to be used for growth and acquisitions. We continue to hold several discussions over potential merger and acquisition targets. Camwatch Limited Investment Cost GBP995,000 Valuation GBP1,152,000 Camwatch is a designer, supplier, and installer of detector activated remote CCTV monitoring systems and provides a 24/7 remote monitoring service for over 20,000 cameras across the UK and abroad. We invested a further GBP248,000 alongside Core VCT IV, in the same investment structure as the existing investment. This is in a junior secured structure, with the majority of our anticipated return being earned through an attractive paid yield. This additional funding will allow for the rapid expansion of the sales function and ultimately further growth in the business. Georgina Goodman Limited Investment Cost GBP125,000 Valuation GBP125,000 Georgina Goodman is the designer, wholesaler and retailer of luxury women's shoes, branded 'Georgina Goodman'. The products are targeted at the top end of the luxury market. The management team are seeking to develop 'Georgina Goodman' as an international luxury brand with shops in Mayfair and Old Bond Street, London. Wholesale clients include many of the world's leading department stores. We invested GBP125,000 alongside Core VCT IV and a co-investor introduced by Core Capital in the first GBP2m tranche of a GBP4m anticipated fundraising by the company. The investment is structured 90% in a loan note with a preferred return and 10% in equity. +--------------------+-+----------+-----------+----------+----------+-----------+----------+--------+-+ | | Date of | | | % of net | | +----------------------+----------------------+---------------------+-----------+-------------------+-+ | | initial | Bookcost | Valuation | assets by | | | | investment | | | | | +----------------------+----------------------+---------------------+-----------+-------------------+-+ | Qualifying | | GBP'000 | GBP'000 | value | | Investments | | | | | | (unquoted) | | | | | +--------------------+------------+----------------------+---------------------------------+----------+ | | | | | | +--------------------+------------+----------------------+---------------------------------+----------+ | | | | | | +--------------------+------------+----------------------+---------------------------------+----------+ | Colway Limited | Sep-07 | 1,554 | 1,601 | 17.5 | +--------------------+------------+----------------------+---------------------------------+----------+ | Office and | | | | | | graphics supplies | | | | | +--------------------+------------+----------------------+---------------------------------+----------+ | Camwatch Limited | Mar-08 | 995 | 1,152 | 12.7 | +--------------------+------------+----------------------+---------------------------------+----------+ | Designer, supplier | | | | | | and installer of | | | | | | detector | | | | | +--------------------+------------+----------------------+---------------------------------+----------+ | activated remote | | | | | | CCTV monitoring | | | | | | systems | | | | | +--------------------+------------+----------------------+---------------------------------+----------+ | Core Mezz I | Dec-09 | 1,000 | 1,000 | 11.0 | | Limited | | | | | +--------------------+------------+----------------------+---------------------------------+----------+ | Support services | | | | | +--------------------+------------+----------------------+---------------------------------+----------+ | Core Mezz II | Dec-09 | 1,000 | 1,000 | 11.0 | | Limited | | | | | +--------------------+------------+----------------------+---------------------------------+----------+ | Business services | | | | | +--------------------+------------+----------------------+---------------------------------+----------+ | Blanc Brasseries | Dec-09 | 1,000 | 1,000 | 11.0 | +--------------------+------------+----------------------+---------------------------------+----------+ | Operator of | | | | | | restaurants in the | | | | | | premium casual | | | | | +--------------------+------------+----------------------+---------------------------------+----------+ | dining sector | | | | | +--------------------+------------+----------------------+---------------------------------+----------+ | Allied | Jul-09 | 1,000 | 995 | 10.9 | | International | | | | | | Holdings Limited | | | | | +--------------------+------------+----------------------+---------------------------------+----------+ | Destination | | | | | | management company | | | | | +--------------------+------------+----------------------+---------------------------------+----------+ | Georgina Goodman | Dec-09 | 125 | 125 | 1.4% | | Limited | | | | | +--------------------+------------+----------------------+---------------------------------+----------+ | High end ladies | | | | | | shoe design and | | | | | | retail | | | | | +--------------------+------------+----------------------+---------------------------------+----------+ | Cordingland | Jul-09 | 10 | 10 | 0.1% | +--------------------+------------+----------------------+---------------------------------+----------+ | Real-estate | | | | | | investment and | | | | | | asset management | | | | | | company. | | | | | +--------------------+------------+----------------------+---------------------------------+----------+ | BRG Trading | Jul-09 | 10 | 10 | 0.1% | | Limited | | | | | +--------------------+------------+----------------------+---------------------------------+----------+ | Leisure | | | | | +--------------------+------------+----------------------+---------------------------------+----------+ | Pureleaf Limited | Jul-09 | 5 | 5 | 0.1% | | trading as Baxters | | | | | +--------------------+------------+----------------------+---------------------------------+----------+ | Provider of | | | | | | removal and | | | | | | storage services | | | | | +--------------------+------------+----------------------+---------------------------------+----------+ | | | | | | +--------------------+------------+----------------------+---------------------------------+----------+ | Total qualifying | | 6,699 | 6,898 | 75.8 | | investments | | | | | +--------------------+------------+----------------------+---------------------------------+----------+ | | | | | | +--------------------+------------+----------------------+---------------------------------+----------+ | Non-Qualifying | | | | | | Investments | | | | | +--------------------+------------+----------------------+---------------------------------+----------+ | | | | | | +--------------------+------------+----------------------+---------------------------------+----------+ | Listed securities | | 665 | 352 | 3.9 | +--------------------+------------+----------------------+---------------------------------+----------+ | Gilts | | 4 | 3 | 0.0% | +--------------------+------------+----------------------+---------------------------------+----------+ | | | | | | +--------------------+------------+----------------------+---------------------------------+----------+ | Total | | 669 | 355 | 3.9 | | non-qualifying | | | | | | investments | | | | | +--------------------+------------+----------------------+---------------------------------+----------+ | | | | | | +--------------------+------------+----------------------+---------------------------------+----------+ | Total Investments | | 7,368 | 7,253 | 79.7 | +--------------------+------------+----------------------+---------------------------------+----------+ | | | | | | +--------------------+------------+----------------------+---------------------------------+----------+ | Other assets | | | 1,107 | 12.2 | +--------------------+------------+----------------------+---------------------------------+----------+ | Cash balances | | | 735 | 8.1 | +--------------------+------------+----------------------+---------------------------------+----------+ | | | | | | +--------------------+------------+----------------------+---------------------------------+----------+ | Net Assets | | | 9,096 | 100.0% | +--------------------+------------+----------------------+---------------------------------+----------+ | | | | | | | | | | | +--------------------+-+----------+-----------+----------+----------+-----------+----------+--------+-+ 10 Largest Investments +-------------------+----------------------+---------------------+--------+ | Colway Limited | 1,601 | 1,601 | 17.6 | +-------------------+----------------------+---------------------+--------+ | Camwatch | 1,152 | 1,152 | 12.7 | +-------------------+----------------------+---------------------+--------+ | Core Mezzanine I | 1,000 | 1,000 | 11.0 | | Limited | | | | +-------------------+----------------------+---------------------+--------+ | Core Mezzanine II | 1,000 | 1,000 | 11.0 | | Limited | | | | +-------------------+----------------------+---------------------+--------+ | Blanc Brasseries | 1,000 | 1,000 | 11.0 | +-------------------+----------------------+---------------------+--------+ | Allied | 995 | 995 | 10.9 | | International | | | | | Holdings Limited | | | | +-------------------+----------------------+---------------------+--------+ | Acenica Debt | 297 | 185 | 2.0 | | Strategies | | | | | Limited (exchange | | | | | traded debt hedge | | | | | fund) | | | | +-------------------+----------------------+---------------------+--------+ | JP Morgan | 220 | 134 | 1.5 | | International | | | | | Derivatives | | | | | (structured | | | | | investment | | | | | product) | | | | +-------------------+----------------------+---------------------+--------+ | Georgina Goodman | 125 | 125 | 1.4 | | Limited | | | | +-------------------+----------------------+---------------------+--------+ | Speymill Deutsche | 148 | 33 | 0.4 | | Immobilien | | | | +-------------------+----------------------+---------------------+--------+ | | | | | +-------------------+----------------------+---------------------+--------+ | Total | 7,538 | 7,225 | 79.5 | +-------------------+----------------------+---------------------+--------+ Income Statement +----------------+-------+---------------+----------------+-------------------+----------------+---------------+-----------------+ | | | | | | | | | +----------------+-------+---------------+----------------+-------------------+----------------+---------------+-----------------+ | For the | | | | | | | | | year ended | | | | | | | | | 31 | | | | | | | | | December | | | | | | | | | 2009 | | | | | | | | +----------------+-------+---------------+----------------+-------------------+----------------+---------------+-----------------+ | | | | Year ended | | | Year ended | | +----------------+-------+---------------+----------------+-------------------+----------------+---------------+-----------------+ | | | | 31 | | | 31 | | | | | | December | | | December | | | | | | 2009 | | | 2008 | | +----------------+-------+---------------+----------------+-------------------+----------------+---------------+-----------------+ | | | Revenue | Capital | Total | Revenue | Capital | Total | +----------------+-------+---------------+----------------+-------------------+----------------+---------------+-----------------+ | |Notes | GBP | GBP | GBP | GBP | | GBP | +----------------+-------+---------------+----------------+-------------------+----------------+---------------+-----------------+ | Movement | 9 | | 208,224 | 208,224 | | (233,146) | (233,146) | | in | | - | | | - | | | | investment | | | | | | | | | holding | | | | | | | | +----------------+-------+---------------+----------------+-------------------+----------------+---------------+-----------------+ | Gains/(losses) | 9 | | 138,480 | 138,480 | | (696,015) | (696,015) | | on disposal of | | - | | | - | | | | investments | | | | | | | | +----------------+-------+---------------+----------------+-------------------+----------------+---------------+-----------------+ | Income | 2 | 223,771 | | 223,771 | 406,144 | | 406,144 | | | | | - | | | - | | +----------------+-------+---------------+----------------+-------------------+----------------+---------------+-----------------+ | Transaction | 3 | (2,122) | (16,845) | (18,967) | (4,840) | (49,563) | (54,403) | | costs and | | | | | | | | | investment | | | | | | | | | management | | | | | | | | | expenses | | | | | | | | +----------------+-------+---------------+----------------+-------------------+----------------+---------------+-----------------+ | Other | 4 | (147,288) | | (147,288) | (159,284) | | (159,284) | | expenses | | | - | | | - | | +----------------+-------+---------------+----------------+-------------------+----------------+---------------+-----------------+ | Return on | | 74,361 | 329,859 | 404,220 | 242,020 | (978,724) | (736,704) | | ordinary | | | | | | | | | activities | | | | | | | | | before | | | | | | | | | taxation | | | | | | | | +----------------+-------+---------------+----------------+-------------------+----------------+---------------+-----------------+ | Tax on | 6 | (16,070) | 3,138 | (12,932) | (35,626) | 10,948 | (24,678) | | ordinary | | | | | | | | | activities | | | | | | | | +----------------+-------+---------------+----------------+-------------------+----------------+---------------+-----------------+ | Return | | 58,291 | 332,997 | 391,288 | 206,394 | (967,776) | (761,382) | | attributable | | | | | | | | | to equity | | | | | | | | | shareholders | | | | | | | | +----------------+-------+---------------+----------------+-------------------+----------------+---------------+-----------------+ | Return per | 8 | 0.53p | 3.02p | 3.55p | 1.87p | (8.77)p | (6.90)p | | Ordinary | | | | | | | | | Share | | | | | | | | +----------------+-------+---------------+----------------+-------------------+----------------+---------------+-----------------+ The revenue column is the profit and loss account of the Company. There were no other gains or losses in the year ended 31 December 2009. All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the year. The notes on pages 24 - 35 form an integral part of these Financial Statements. +---+--------------------+-------+--------------------+--------------------+-----+--------------------------+-------------+--------+ | Reconciliation of Movements in | | | | | Shareholders' Funds | | | | +-----------------------------------------------------+--------------------------+----------------------------------------+--------+ | For the year ended 31 December 2009 | | | | +-----------------------------------------------------+--------------------------+----------------------------------------+--------+ | | Year ended | Year ended | | +-----------------------------------------------------+--------------------------+----------------------------------------+--------+ | | 31 December | 31 December | | | | 2009 | 2008 | | +-----------------------------------------------------+--------------------------+----------------------------------------+--------+ | | GBP | GBP | | +-----------------------------------------------------+--------------------------+----------------------------------------+--------+ | Opening Shareholders' Funds | 9,421,806 | 10,238,313 | | +-----------------------------------------------------+--------------------------+----------------------------------------+--------+ | Net Return for the year | 391,288 | (761,382) | | +-----------------------------------------------------+--------------------------+----------------------------------------+--------+ | Dividends paid - revenue | (165,375) | (55,125) | | +-----------------------------------------------------+--------------------------+----------------------------------------+--------+ | Dividends paid - capital | (551,248) | | | | | | - | | +-----------------------------------------------------+--------------------------+----------------------------------------+--------+ | Closing Shareholders' funds at 31 | 9,096,471 | 9,421,806 | | | December 2009 | | | | +-----------------------------------------------------+--------------------------+----------------------------------------+--------+ | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance Sheet | | | | | | +---+--------------------+-------+--------------------+--------------------+--------------------------------+----------------------+ | | as at 31 December | | | | | | | | 2009 | | | | | | +---+--------------------+-------+--------------------+--------------------+--------------------------------+----------------------+ | | | | | | | | +---+--------------------+-------+--------------------+--------------------+--------------------------------+----------------------+ | | | | 31 | | 31 | | | | | | December | | December | | | | | | 2009 | | 2008 | | +---+--------------------+-------+--------------------+--------------------+--------------------------------+----------------------+ | | |Notes | GBP | GBP | GBP | GBP | +---+--------------------+-------+--------------------+--------------------+--------------------------------+----------------------+ | | Non-current assets | | | | | | +---+--------------------+-------+--------------------+--------------------+--------------------------------+----------------------+ | | Investments at | 9 | | 7,253,947 | | 5,710,649 | | | fair value | | | | | | +---+--------------------+-------+--------------------+--------------------+--------------------------------+----------------------+ | | | | | | | | +---+--------------------+-------+--------------------+--------------------+--------------------------------+----------------------+ | | Current assets | | | | | | +---+--------------------+-------+--------------------+--------------------+--------------------------------+----------------------+ | | Debtors and | 11 | 1,237,326 | | 2,693,574 | | | | prepayments | | | | | | +---+--------------------+-------+--------------------+--------------------+--------------------------------+----------------------+ | | Cash at bank | 17 | 735,249 | | 1,146,561 | | +---+--------------------+-------+--------------------+--------------------+--------------------------------+----------------------+ | | | | | 1,972,575 | | 3,840,135 | +---+--------------------+-------+--------------------+--------------------+--------------------------------+----------------------+ | | Creditors: amounts | | | | | | | | falling due within | | | | | | | | one year | | | | | | +---+--------------------+-------+--------------------+--------------------+--------------------------------+----------------------+ | | Other creditors | 12 | 71,056 | | 24,678 | | +---+--------------------+-------+--------------------+--------------------+--------------------------------+----------------------+ | | Accruals | 12 | 58,995 | | 104,300 | | +---+--------------------+-------+--------------------+--------------------+--------------------------------+----------------------+ | | | | | 130,051 | | 128,978 | +---+--------------------+-------+--------------------+--------------------+--------------------------------+----------------------+ | | Net current assets | | | 1,842,524 | | 3,711,157 | +---+--------------------+-------+--------------------+--------------------+--------------------------------+----------------------+ | | Net assets | | | 9,096,471 | | 9,421,806 | +---+--------------------+-------+--------------------+--------------------+--------------------------------+----------------------+ | | | | | | | | +---+--------------------+-------+--------------------+--------------------+--------------------------------+----------------------+ | | | | | | | | +---+--------------------+-------+--------------------+--------------------+--------------------------------+----------------------+ | | Capital and | | | | | | | | reserves | | | | | | +---+--------------------+-------+--------------------+--------------------+--------------------------------+----------------------+ | | Called up Ordinary | 13 | | 1,102 | | 1,102 | | | Share capital | | | | | | +---+--------------------+-------+--------------------+--------------------+--------------------------------+----------------------+ | | Share premium | 14 | | | | | | | account | | | - | | - | +---+--------------------+-------+--------------------+--------------------+--------------------------------+----------------------+ | | Capital reserve | 14 | | (870,981) | | (1,203,978) | +---+--------------------+-------+--------------------+--------------------+--------------------------------+----------------------+ | | Special | 14 | | 9,854,246 | | 10,405,494 | | | distributable | | | | | | | | reserve | | | | | | +---+--------------------+-------+--------------------+--------------------+--------------------------------+----------------------+ | | Revenue reserve | 14 | | 112,104 | | 219,188 | +---+--------------------+-------+--------------------+--------------------+--------------------------------+----------------------+ | | Total equity | | | 9,096,471 | | 9,421,806 | | | shareholders' | | | | | | | | funds | | | | | | +---+--------------------+-------+--------------------+--------------------+--------------------------------+----------------------+ | | | | | | | | +---+--------------------+-------+--------------------+--------------------+--------------------------------+----------------------+ | | Net asset value | 15 | | 82.51p | | 85.46p | | | per 0.01p Ordinary | | | | | | | | Share | | | | | | +---+--------------------+-------+--------------------+--------------------+--------------------------------+----------------------+ | | | | | | | | | | +---+--------------------+-------+--------------------+--------------------+-----+--------------------------+-------------+--------+ Cash Flow Statement For the Year ended 31 December 2009 +-------------------------+-------+--------------------+-------------------+------------------+-------------------+ | | | Year ended | Year ended | +-------------------------+-------+----------------------------------------+--------------------------------------+ | | | 31 December | 31 December | | | | 2009 | 2008 | +-------------------------+-------+----------------------------------------+--------------------------------------+ | | Notes | GBP | GBP | GBP | GBP | +-------------------------+-------+--------------------+-------------------+------------------+-------------------+ | Operating activities | | | | | | +-------------------------+-------+--------------------+-------------------+------------------+-------------------+ | Investment income | | 291,220 | | 367,844 | | | received | | | | | | +-------------------------+-------+--------------------+-------------------+------------------+-------------------+ | Investment management | | (10,706) | | (20,710) | | | fees paid | | | | | | +-------------------------+-------+--------------------+-------------------+------------------+-------------------+ | Other cash payments | | (441,774) | | (264,377) | | +-------------------------+-------+--------------------+-------------------+------------------+-------------------+ | Net cash | 16 | | (161,260) | | 82,757 | | (outflow)/inflow from | | | | | | | operating activities | | | | | | +-------------------------+-------+--------------------+-------------------+------------------+-------------------+ | | | | | | | +-------------------------+-------+--------------------+-------------------+------------------+-------------------+ | Taxation | | | | | | +-------------------------+-------+--------------------+-------------------+------------------+-------------------+ | Corporation tax paid | | | (25,554) | | | | | | | | | - | +-------------------------+-------+--------------------+-------------------+------------------+-------------------+ | | | | | | | +-------------------------+-------+--------------------+-------------------+------------------+-------------------+ | Investing activities | | | | | | +-------------------------+-------+--------------------+-------------------+------------------+-------------------+ | Acquisition of | 9 | (9,390,205) | | (6,724,134) | | | investments | | | | | | +-------------------------+-------+--------------------+-------------------+------------------+-------------------+ | Disposal of investments | 9 | 8,182,330 | | 7,101,945 | | +-------------------------+-------+--------------------+-------------------+------------------+-------------------+ | Net cash | | | (1,207,875) | | 377,811 | | (outflow)/inflow from | | | | | | | financial investment | | | | | | +-------------------------+-------+--------------------+-------------------+------------------+-------------------+ | | | | | | | +-------------------------+-------+--------------------+-------------------+------------------+-------------------+ | Equity dividends paid | | | (716,623) | | (55,125) | +-------------------------+-------+--------------------+-------------------+------------------+-------------------+ | Called up share capital | | | 1,700,000 | | | | received | | | | | | +-------------------------+-------+--------------------+-------------------+------------------+-------------------+ | Net cash | | | (411,312) | | 405,443 | | (outflow)/inflow before | | | | | | | financing | | | | | | +-------------------------+-------+--------------------+-------------------+------------------+-------------------+ | | | | | | | +-------------------------+-------+--------------------+-------------------+------------------+-------------------+ | (Decrease)/increase in | 17 | | (411,312) | | 405,443 | | cash | | | | | | +-------------------------+-------+--------------------+-------------------+------------------+-------------------+ +----+----------+----------+----+--------+--------+-------+----------+---------+-------+-------+-----+----------+ | Notes to the Accounts | +---------------------------------------------------------------------------------------------------------------+ | for the year ended 31 December 2009 | +---------------------------------------------------------------------------------------------------------------+ | 1 | Accounting policies | | | | | | | +----+--------------------------------------------+-------+----------+---------+-------+-------+----------------+ | | A summary of the principal accounting policies, all of which have been applied consistently throughout | | | the current year, is set out below: | +----+----------------------------------------------------------------------------------------------------------+ | a) | Basis of accounting | | | | | | | +----+--------------------------------------------+-------+----------+---------+-------+-------+----------------+ | | The accounts have been prepared under the fair value rules of the Companies Act 2006, and in accordance | | | with applicable accounting standards and, to the extent that it does not conflict with the Companies Act | | | 2006 and UK accounting standards, the 2003 Statement of Recommended Practice, 'Financial Statements of | | | Investment Companies, issued in January 2009. | +----+----------------------------------------------------------------------------------------------------------+ | | | | | | | | | | | +----+--------------------------+--------+--------+-------+----------+---------+-------+-------+----------------+ | b) | Presentation of the 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 Net revenue 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 (IPEV) guidelines published | | | in 2009: | +----+----------------------------------------------------------------------------------------------------------+ | | | | | | | | | | | +----+--------------------------+--------+--------+-------+----------+---------+-------+-------+----------------+ | | (i) | Investments which have been made in the last 12 months are 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 also | | | | 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, discounted to reflect lack of | | | | marketability to that company's maintainable earnings (the ratio used being | | | | based on a comparable listed company or sector. 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, this amount is transferred to the | | | | realised reserve from the unrealised reserve. | +----+--------------------------+-------------------------------------------------------------------------------+ | | | | | | | | | | | +----+--------------------------+--------+--------+-------+----------+---------+-------+-------+----------------+ | d) | 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 are recognised on a time-apportioned 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 | | | investments are recognised on a time-apportioned basis so as to reflect the effective yield. | +----+----------------------------------------------------------------------------------------------------------+ | e) | 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 are charged 100% against | | | capital. | +----+----------------------------------------------------------------------------------------------------------+ | | | | | | | | | | | +----+--------------------------+--------+--------+-------+----------+---------+-------+-------+----------------+ | | 75% of the investment management expense 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. | +----+----------------------------------------------------------------------------------------------------------+ | | | | | | | | | | | +----+--------------------------+--------+--------+-------+----------+---------+-------+-------+----------------+ | 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 years in which | | | 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. | +----+----------------------------------------------------------------------------------------------------------+ | h) | Fair value measurement | | +---------------+------------------------------------------------------------------------------------+----------+ | | | | +---------------+----------+------------------------------------------------------------------------------------+ | | Fair value is defined as the price that the Company would receive upon selling an | | | | investment in a timely transaction to an independent buyer in the principal or the | | | | most advantageous market of the investment. A three-tier hierarchy has been | | | | established to maximise the use of observable market data and minimise the use of | | | | unobservable inputs and to establish classification of fair value measurements for | | | | disclosure purposes. Inputs refer broadly to the assumptions that market | | | | participants would use in pricing the asset or liability, including assumptions | | | | about risk, for example, the risk inherent in a particular valuation technique | | | | used to measure fair value including such a pricing model and/or the risk inherent | | | | in the inputs to the valuation technique. Inputs may be observable or | | | | unobservable. Observable inputs are inputs that reflect the assumptions market | | | | participants would use in pricing the asset or liability developed based on market | | | | data obtained from sources independent of the reporting entity. Unobservable | | | | inputs are inputs that reflect the reporting entity's own assumptions about the | | | | assumptions market participants would use in pricing the asset or liability | | | | developed based on best information available in the circumstances | | +---------------+ +----------+ | | | | +---------------+ +----------+ | | | | +---------------+ +----------+ | | | | +---------------+ +----------+ | | | | +---------------+ +----------+ | | | | +---------------+ +----------+ | | | | +---------------+ +----------+ | | | | +---------------+ +----------+ | | | | +---------------+------------------------------------------------------------------------------------+----------+ | | | | | +---------------+----------+-------------------------------------------------------------------------+----------+ | | The three-tier hierarchy of inputs is summarised in the three broad levels listed | | | | below. | | +---------------+------------------------------------------------------------------------------------+----------+ | | - Level 1 - quoted prices in active markets for identical investments | | | | - Level 2 - other significant observable inputs (included quoted prices for | | | | similar investments, interest | | | | rates, prepayment speeds, credit risk etc). | | | | - Level 3 - significant unobservable inputs (including the Company's own | | | | assumptions in determining the | | | | fair value of investments). | | +---------------+ +----------+ | | | | +---------------+ +----------+ | | | | +---------------+------------------------------------------------------------------------------------+----------+ | | | | | | | | | | | | | | +----+----------+----------+----+--------+--------+-------+----------+---------+-------+-------+-----+----------+ Income +----------+-------------------+---------------+-----------------+ | 2. Income | 2009 | 2008 | +------------------------------+---------------+-----------------+ | | Income from | GBP | GBP | | | investments | | | +----------+-------------------+---------------+-----------------+ | | - from loan | 147,660 | 104,737 | | | stock | | | +----------+-------------------+---------------+-----------------+ | | - from fixed | 74,213 | 205,864 | | | income | | | +----------+-------------------+---------------+-----------------+ | | - from dividends | | 70,337 | | | | - | | +----------+-------------------+---------------+-----------------+ | | | 221,873 | 380,938 | +----------+-------------------+---------------+-----------------+ | | Interest income | | | +----------+-------------------+---------------+-----------------+ | | Bank interest | 1,898 | 25,206 | +----------+-------------------+---------------+-----------------+ | | Total income | 223,771 | 406,144 | +----------+-------------------+---------------+-----------------+ | | | | | +----------+-------------------+---------------+-----------------+ | | Total income | | 70,337 | | | | - | | +----------+-------------------+---------------+-----------------+ | | Dividends | 74,213 | 205,864 | +----------+-------------------+---------------+-----------------+ | | Fixed Income | 147,660 | 104,737 | +----------+-------------------+---------------+-----------------+ | | Loan Stock | 1,898 | 25,206 | | | Interest | | | +----------+-------------------+---------------+-----------------+ | | Bank Interest | 223,771 | 406,144 | +----------+-------------------+---------------+-----------------+ | | | | | +----------+-------------------+---------------+-----------------+ | | Income from | | | | | investments | | | | | comprises | | | +----------+-------------------+---------------+-----------------+ | | Dividends | | 70,337 | | | | - | | +----------+-------------------+---------------+-----------------+ | | Fixed Income | 74,213 | 205,864 | | | securities | | | +----------+-------------------+---------------+-----------------+ | | Unlisted UK | 147,660 | 104,737 | | | securities | | | +----------+-------------------+---------------+-----------------+ | | | 221,873 | 380,938 | +----------+-------------------+---------------+-----------------+ Investments +------------------+-----------------+------------------+------------------+ | Investments | Unlisted | Listed | | | | | | | +------------------+-----------------+------------------+------------------+ | | (Level | (Level | | | | 3) | 1) | | +------------------+-----------------+------------------+------------------+ | | | | Total | +------------------+-----------------+------------------+------------------+ | | GBP | GBP | GBP | +------------------+-----------------+------------------+------------------+ | Valuation at 31 | 1,750,000 | 3,960,649 | 5,710,649 | | December 2008 | | | | +------------------+-----------------+------------------+------------------+ | Investment | | 322,727 | 322,727 | | holding losses | - | | | | at 31 December | | | | | 2008 | | | | +------------------+-----------------+------------------+------------------+ | Cost at 31 | 1,750,000 | 4,283,376 | 6,033,376 | | December 2008 | | | | +------------------+-----------------+------------------+------------------+ | | | | | +------------------+-----------------+------------------+------------------+ | Purchases at | 4,949,324 | 4,440,881 | 9,390,205 | | cost | | | | +------------------+-----------------+------------------+------------------+ | Sale proceeds | | (8,182,330) | (8,182,330) | | | - | | | +------------------+-----------------+------------------+------------------+ | Gains on sale | | 138,480 | 138,480 | | | - | | | +------------------+-----------------+------------------+------------------+ | Amortisation | | (11,281) | (11,281) | | | - | | | +------------------+-----------------+------------------+------------------+ | Cost at 31 | 6,699,324 | 669,126 | 7,368,450 | | December 2009 | | | | +------------------+-----------------+------------------+------------------+ | | | | | +------------------+-----------------+------------------+------------------+ | Investment | 198,877 | (313,380) | (114,503) | | holding | | | | | gains/(losses) | | | | | at 31 December | | | | | 2009 | | | | +------------------+-----------------+------------------+------------------+ | Valuation at 31 | 6,898,201 | 355,746 | 7,253,947 | | December 2009 | | | | +------------------+-----------------+------------------+------------------+ Share Capital and Reserves +-------------+-------------------+-------------------+-----------------+--------------------+------------------+-------------------+ | | Called | Capital | Capital | Special | | | | | up | | | | | | +-------------+-------------------+-------------------+-----------------+--------------------+------------------+-------------------+ | | Share | reserve | reserve | distributable | Revenue | | | | | | | | | | +-------------+-------------------+-------------------+-----------------+--------------------+------------------+-------------------+ | Company | Capital | (realised) | (unrealised) | reserve | reserve | Total | | | | | | | | | +-------------+-------------------+-------------------+-----------------+--------------------+------------------+-------------------+ | | GBP | GBP | GBP | GBP | GBP | GBP | | | | | | | | | +-------------+-------------------+-------------------+-----------------+--------------------+------------------+-------------------+ | | | | | | | | +-------------+-------------------+-------------------+-----------------+--------------------+------------------+-------------------+ | As at 1 | 1,102 | (881,251) | (322,727) | 10,405,494 | 219,188 | 9,421,806 | | January | | | | | | | | 2009 | | | | | | | +-------------+-------------------+-------------------+-----------------+--------------------+------------------+-------------------+ | Gains on | | 138,480 | | | | 138,480 | | sale | - | | - | - | - | | +-------------+-------------------+-------------------+-----------------+--------------------+------------------+-------------------+ | Movement | | | 208,224 | | | 208,224 | | in | - | - | | - | - | | | investment | | | | | | | | holding | | | | | | | +-------------+-------------------+-------------------+-----------------+--------------------+------------------+-------------------+ | Capitalised | | (16,845) | | | | (16,845) | | management | - | | - | - | - | | | fees | | | | | | | +-------------+-------------------+-------------------+-----------------+--------------------+------------------+-------------------+ | Dividends | | | | | (165,375) | (165,375) | | - revenue | - | - | - | - | | | +-------------+-------------------+-------------------+-----------------+--------------------+------------------+-------------------+ | Diviends - | | | | (551,248) | | (551,248) | | capital | - | - | - | | - | | +-------------+-------------------+-------------------+-----------------+--------------------+------------------+-------------------+ | Tax effect | | 3,138 | | | | 3,138 | | of capital | - | | - | - | - | | | items | | | | | | | +-------------+-------------------+-------------------+-----------------+--------------------+------------------+-------------------+ | Net | | | | | 58,291 | 58,291 | | revenue | - | - | - | - | | | +-------------+-------------------+-------------------+-----------------+--------------------+------------------+-------------------+ | At 31 | 1,102 | (756,478) | (114,503) | 9,854,246 | 112,104 | 9,096,471 | | December | | | | | | | | 2009 | | | | | | | +-------------+-------------------+-------------------+-----------------+--------------------+------------------+-------------------+ Net Asset value per share Net asset value per ordinary shares is based on net assets at the end of the year and on 11,024,969 Ordinary Shares, being the number of ordinary shares in issue on that date. Financial Instruments The main risks arising from the Company's financial instruments are due to fluctuations in market prices (market price risk), credit risk and interest rate risk, although liquidity risk and currency risk are also discussed below. The Board regularly reviews and agrees policies for managing each of these risks and they are summarised below. These have been in place throughout the current and preceding periods. Market price risk Market price risk arises from uncertainty about the future prices of financial instruments held in accordance with the Company's investment objectives. It represents the potential gain or loss that the Company might benefit or suffer from through holding market positions in the face of market movements. The investments in equity and fixed interest stocks of unquoted companies that the Company holds are not traded and as such the prices are more uncertain than those of more widely traded securities. As, in a number of cases, the unquoted investments are valued by reference to price earnings ratios prevailing in quoted comparable sectors, their valuation are exposed to changes in the price earnings ratios that exist in the quoted markets. The Board's strategy in managing the market price risk inherent in the Company's portfolio of equities and loan stock investments is determined by the requirement to meet the Company's investment objective. As part of the investment process, the Board seeks to maintain an appropriate spread of market risk, and also has full and timely access to relevant information from the Investment Manager. No single investment is permitted to exceed 15% of total investment assets at the point of investment. The Board meets regularly and reviews the investment performance and financial results, as well as compliance with the Company's objectives. In the case of the Credit Suisse portfolio, derivative instruments are often used to hedge against market risk. Market price risk sensitivity The Board believes that the Company's assets are mainly exposed to market price risk, as the Company is required to hold most of its assets in the form of sterling denominated investments in small companies, and holds the remainder in a portfolio of equity instruments managed by Credit Suisse. The investment made by the Manager in unquoted companies, irrespective of the instruments the Company actually holds, (whether shares or loan stock) carry a full market risk, even though some of the loan stocks may be secured on assets, but behind any prior ranking bank debt in the investee company. The Board considers that the values of investments in equity and loan stock instruments are ultimately sensitive to changes in quoted share prices, insofar as such changes eventually affect the enterprise value of unquoted companies. The impact on net return and net assets of unquoted investments if there were to be a 15% movement in overall share prices for the year would have been an increase or decrease of GBP1,034,730 (2008: GBP262,000). The impact on net return and net assets if there were to be a 15% movement in overall share price for listed quoted securities for the year would have been an increase or decrease in net assets of GBP53,362 (2008: GBP594,097). The above figures assume that each of these sub categories of investments (shares and loan stocks) held by the Company produces a movement overall of 15% and that the actual portfolio of investments held by the Company is perfectly correlated to this overall movement in share prices. However, Shareholders should note that this level of correlation is unlikely to be the case in reality, particularly in the case of the loan stock instruments. This is because loan stock instruments would not share in the impact of any increase in share prices to the same extent as the equity investments, as the returns are set by reference to interest rates and premiums agreed at the time of the initial investment. Similarly, where share prices are falling, the equity instrument could fall in value before the loan stock instrument. It is not considered practical to assess the sensitivity of the loan stock instruments to market price risk in isolation. The impact of a change of 15% has been selected as this is considered reasonable given the current level of volatility observed both on a historical basis and market expectations for future movement. The range in equity prices is considered reasonable given the historic changes that have been observed. Credit risk Credit risk is the risk that a counterparty will fail to discharge an obligation or commitment that it has entered into with the Company. The Company's maximum exposure to credit risk is: +------------+------+------+------+-----------+-------------------+ | | | | | 2009 | 2008 | +------------+------+------+------+-----------+-------------------+ | Financial | | GBP | GBP | | assets/liabilities | | | | +--------------------------+------+-----------+-------------------+ | Securities | | | | 4,589,448 | 4,185,649 | +------------+------+------+------+-----------+-------------------+ | Loan stock | | 2,664,499 | 1,525,000 | | investments | | | | +--------------------------+------+-----------+-------------------+ | Called up share | | 900,000 | 2,600,000 | | capital unpaid | | | | +--------------------------+------+-----------+-------------------+ | Accrued | | | 30,420 | 86,588 | | income | | | | | +-------------------+------+------+-----------+-------------------+ | Other debtors (including | 306,906 | 6,986 | | prepayments) | | | +---------------------------------+-----------+-------------------+ | Cash and cash | | 735,249 | 1,146,561 | | equivalents | | | | +--------------------------+------+-----------+-------------------+ | Total | | | | 9,226,522 | 9,550,784 | +------------+------+------+------+-----------+-------------------+ The Company has an exposure to credit risk in respect of the loan stock investment it has made in investee companies, most of which have little security attached to it, and where it does, such security ranks beneath any bank debt that an investee company may owe. GBP30,420 of the accrued income shown above was due within 2 months of the year end. The following table shows the maturity of the loan stock investment referred to above. +-------+------+-----------+-----------+ | | | 2009 | 2008 | +-------+------+-----------+-----------+ | | | GBP | GBP | +-------+------+-----------+-----------+ | Repayable | | | | within | | | +--------------+-----------+-----------+ | 5 | | 2,664,499 | 1,525,000 | | years | | | | +-------+------+-----------+-----------+ | Total | | 2,664,499 | 1,525,000 | +-------+------+-----------+-----------+ These loan stock investments are made as part of the qualifying investment within the investment portfolio, and the risk management processes applied to loan stock investments have already been set out under market price risk above. Called up share capital unpaid is supported by bank guarantees, so is considered to be low credit risk. There could also be a failure by counterparties to deliver securities which the Company has paid for, or pay for securities which the Company has delivered. This risk is considered to be small as most of the Company's investment transactions are in unquoted investments, where investments are conducted through solicitors, to ensure that payment matches delivery. In respect of any quoted investment transactions that are undertaken, the Company uses brokers with a high credit quality, and these trades usually have a short settlement period. Accordingly, counterparty risk is considered to be relatively low. Interest rate risk The Company's fixed and floating rate interest securities, its equity investments and net revenue may be affected by interest rate movements. Investments are often in relatively small businesses, which are relatively high risk investments sensitive to interest rate fluctuations. Due to the short time to maturity of some of the Company's floating rate investments, it may not be possible to re-invest in assets which provide the same rates as those currently held. The Company's assets include fixed and floating rate interest instruments, as shown below. The rate of interest earned is regularly reviewed by the Board, as part of the risk management processes applied to these instruments, already disclosed under market price risk on page 32. The interest rate profile of the Company's financial net assets at 31 December 2009 was: +-----------+------+--------------------+-----------------+-----------------+----------------+----------+----------+ | | | Financial | Fixed | Floating | |Weighted | Average | | | |assets/liabilities | rate | rate | | average | period | | | | on | financial | financial | |interest | to | | | | which no | assets | assets | | rate |maturity | | | | interest | | | | | | | | | paid | | | | | | +-----------+------+ + + +----------------+ + + | | | | | | | | | +-----------+------+ + + +----------------+ + + | | | | | | | | | +-----------+------+ + + +----------------+ + + | | | | | | | | | +-----------+------+ + + +----------------+ + + | | | | | | Total | | | +-----------+------+--------------------+-----------------+-----------------+----------------+----------+----------+ | | | GBP | GBP | GBP | GBP | % | (years) | +-----------+------+--------------------+-----------------+-----------------+----------------+----------+----------+ | Equity | | 4,589,448 | - | - | 4,589,448 | | | +-----------+------+--------------------+-----------------+-----------------+----------------+----------+----------+ | Gilts | | - | | | | | | | | | | - | - | - | | | +-----------+------+--------------------+-----------------+-----------------+----------------+----------+----------+ | Loan stock | - | 2,664,499 | | 2,664,499 | 12.05 | 4.01 | | | | | - | | | | +------------------+--------------------+-----------------+-----------------+----------------+----------+----------+ | Cash | | | | 735,249 | 735,249 | | | | | | - | - | | | | | +-----------+------+--------------------+-----------------+-----------------+----------------+----------+----------+ | Debtors | | 1,237,326 | | | 1,237,326 | | | | | | | - | - | | | | +-----------+------+--------------------+-----------------+-----------------+----------------+----------+----------+ | Creditors | | (130,051) | | | (130,051) | | | | | | | - | - | | | | +-----------+------+--------------------+-----------------+-----------------+----------------+----------+----------+ | Total | | 5,696,723 | 2,664,499 | 735,249 | 9,096,471 | | | +-----------+------+--------------------+-----------------+-----------------+----------------+----------+----------+ The interest rate profile of the Company's financial net assets at 31 December 2008 was: +-----------+------+--------------------+----------------+----------------+----------------+----------+----------+ | | | Financial | Fixed | Floating | Total |Weighted | Average | | | |assets/liabilities | rate | rate | | average | period | | | | on | financial | financial | |interest | to | | | | which no | assets | assets | | rate |maturity | | | | interest | | | | | | | | | paid | | | | | | +-----------+------+ + + + + + + | | | | | | | | | +-----------+------+ + + + + + + | | | | | | | | | +-----------+------+ + + + + + + | | | | | | | | | +-----------+------+ + + + + + + | | | | | | | | | +-----------+------+--------------------+----------------+----------------+----------------+----------+----------+ | | | GBP | GBP | GBP | GBP | % | (years) | +-----------+------+--------------------+----------------+----------------+----------------+----------+----------+ | Equity | | 2,746,784 | | - | 2,746,784 | | | +-----------+------+--------------------+----------------+----------------+----------------+----------+----------+ | Gilts | - | 1,438,865 | - | 1,438,865 | 4.30 | 0.41 | +------------------+--------------------+----------------+----------------+----------------+----------+----------+ | Loan stock | - | 1,525,000 | - | 1,525,000 | 14.97 | 4.90 | +------------------+--------------------+----------------+----------------+----------------+----------+----------+ | Cash | | - | | 1,146,561 | 1,146,561 | | | | | | | - | | | | | +-----------+------+--------------------+----------------+----------------+----------------+----------+----------+ | Debtors | | 2,693,574 | | | 2,693,574 | | | | | | | - | - | | | | +-----------+------+--------------------+----------------+----------------+----------------+----------+----------+ | Creditors | | (128,978) | | | (128,978) | | | | | | | - | - | | | | +-----------+------+--------------------+----------------+----------------+----------------+----------+----------+ | Total | | 5,311,380 | 2,963,865 | 1,146,561 | 9,421,806 | | | +-----------+------+--------------------+----------------+----------------+----------------+----------+----------+ Floating rate cash earns interest based on LIBOR rates. The Company's investments in equity shares and similar instruments have been excluded from the interest rate risk profile as they have no maturity date and would thus distort the weighted average period information. Interest rate sensitivity Although the Company holds investments in loan stocks that pay interest, the Board does not believe that the income of these instruments is interest rate sensitive, as the majority of the loan is at a fixed rate of interest. The Board does not consider that the impact of interest rate changes materially affects the value of the loan portfolio in isolation, other than the consequent impact that interest rate changes have upon movements in share prices, discussed under equity price risk above. Liquidity risk The investment in equity and fixed interest stocks of unquoted companies that the Company holds are not traded. They are not readily realisable. The ability of the Company to realise the investments at their carrying value may at times not be possible if there are no willing purchasers. The company's ability to sell investments may also be constrained by the requirements set down by VCTs. The maturity profile of the Company's loan stock investments disclosed within the consideration of credit risk above indicates that these assets are also not readily realisable until dates up to 5 years or more from the year end. Note 8 details the three tier hierarchy of inputs used as at 31 December 2009 in valuing the company's investment carried at fair value. To counter these risks to the Company's liquidity, the Manager maintains sufficient ready realisable investments within the Credit Suisse portfolio to meet running costs and other commitments. All creditors and accruals are due within one year and are comfortably covered by funds within the Credit Suisse portfolio and short term debtors. Currency risk All assets and liabilities are denominated in sterling and therefore there is no currency risk. Directors' responsibility statement The directors are responsible for preparing the Directors' Report and the financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice. (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to: · Select suitable accounting policies and then apply them consistently: · Make judgments and accounting estimates that are reasonable and prudent,; and · State whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements. · The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors confirm that, to the best of their knowledge: · the Financial Statements have been prepared in accordance with the applicable accounting standards and give a true and fair view of the assets, liabilities and financial position of the Company as at 31 December 2009 and for the year to that date; and · the Directors' Report includes a fair review of the development and performance of the Company, together with a description of the principal risks and uncertainties that it faces. Other information The Annual General Meeting of the Company will be held on 20 May 2010, commencing at 9.45 a.m. The Annual Report and Financial Statements for the year ended 31 December 2009 is being printed and issued to Shareholders and will shortly be available on the website of Core Capital www.core-cap.com. The financial information contained within this announcement does not constitute the Company's statutory financial statements as defined in the Companies Act 2006 and has not been delivered to the Registrar of Companies. Statutory financial statements will be filed with the Registrar of Companies in due course. The financial information for 2008 is derived from the statutory accounts for 2008 which have been delivered to the Registrar of Companies. The independent auditors' report on the financial statements under the Companies Act 2006 is unqualified. The statutory financial statements for the year ended 31 December 2008 contains an audit report which was unqualified and did not contain statements under Sections 237(2) or (3) of the Companies Act 1985, and have been delivered to the Registrar of Companies. Copies of this announcement will be available to the public at the office of Maven Capital Partners UK LLP, 149 St Vincent Street, Glasgow and at the registered office of the Company, 9 - 13 St Andrew Street, London, EC4A 3AF. By Order of the Board Maven Capital Partners UK LLP Secretary 29 April 2010 This information is provided by RNS The company news service from the London Stock Exchange END FR DMGZDDLMGGZM
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