RNS Number:9205N
Chrysalis VCT PLC
23 June 2005
CHRYSALIS VCT PLC
AND ITS SUBSIDIARIES
Interim Statement for the six months ended 30 April 2005
Recent Performance summary
30 April 31 Oct 30 April
2005 2004 2004
pence pence pence
Net asset value per share 71.9 66.5 60.7
Cumulative dividends per ordinary share 5.4 5.4 5.4
Total return 77.3 71.9 66.1
CHAIRMAN'S STATEMENT
The period since 1 November 2004, has been one of further changes for your
Company. I am pleased to report that our offer for Chrysalis A VCT plc ,
Chrysalis B VCT plc and Chrysalis C VCT plc was hugely successful and, following
acceptances by over 90% of shareholders in each of those VCTs, we are now in the
process of compulsory acquisition of the shares which we do not already own.
This outcome is particularly pleasing for the fact that your Company was the
first VCT to attempt and achieve a merger.
I would like to thank all the advisers who assisted us on the merger and my
fellow directors for their hard work and dedication in achieving this goal,
which produces a substantially larger VCT than was previously the case and, with
that, the benefit of a significantly lower overhead burden for Shareholders.
Annual General Meeting
I was pleased to see a higher than usual attendance at the Company's Annual
General Meeting ("AGM") held in April 2005.
Shortly before the meeting took place, I became aware that a number of
Shareholders had been contacted by Graham Spooner, one of the former investment
managers of the Company. Mr Spooner's correspondence urged Shareholders not to
re-elect the Directors at the AGM.
In the event, all Shareholders in attendance at the meeting, with the exception
of Mr Spooner, voted in favour on the re-election resolutions. Notably, one
shareholder said that he felt he had been mislead by Mr Spooner's letter and
only became aware of the true state of affairs by attending the meeting. Mr
Spooner's objectives appear unclear to the Board and it is regrettable that he
appears intent on wasting the Company's time and money with his actions. If any
Shareholders have any queries regarding this matter I would be happy to discuss
them.
Format of Accounts
For the first time, we are reporting consolidated figures which include the VCTs
we have acquired, namely Chrysalis A VCT plc, Chrysalis B VCT plc and Chrysalis
C VCT plc. Ownership of all the Group's investments has now been transferred to
Chrysalis VCT plc and, in due course, the subsidiary undertakings will be wound
up and struck off, at which point, we will return to presenting single company
accounts.
Net Asset Value
Even more satisfying than the successful mergers is the fact that news from the
Group's investment portfolio has been very positive over the period under
review.
At 30 April 2005, the Group's Net Asset Value per share ("NAV") had risen to
71.9p, an increase of 5.4p (8.1%) since the previous year end of 31 October
2004. In addition, it is worth noting that the NAV has increased by 11.2p
(18.5%) since the management of the VCT was changed in April 2004.
Venture Capital Investments
Excellent progress has been made by a number of investments over the period,
with the Group's investment portfolio rising in value by #1.6 million.
Shortly after the period end, the investment in sit-up Limited was sold for
#5.63 million, a gain against cost of #4.37 million and against the previous
carrying value of #1.95 million.
In addition, Ma Potters, the expanding restaurant chain, has continued to make
strong progress, and has attracted a number of approaches from potential trade
purchasers resulting in its valuation being increased from #2.14 million to
#2.47 million.
With the focus on completing the merger and extracting value from the existing
portfolio, the Company has made relatively few new investments. It did,
however, make a new investment of #54,000 in YouGov plc, the online market
research company, and two follow-on investments, including #150,000 in Computer
Software Group plc.
Share buybacks
As stated in the merger documentation, the Company has undertaken to buy in
shares at a 10% discount to NAV (for at least a limited period). The Company
has been effectively prohibited from buying in shares since last October,
however this is now able to resume.
Any Shareholders wishing to sell their holding should consult their financial
adviser to ensure they understand the potential tax implications of such a
disposal. Shares cannot be sold directly back to the Company but must be sold
through a stockbroker.
Board and Management
On 1 April 2005, Peter Harkness joined the Board as a non-executive director.
Peter is an experienced serial entrepreneur and gives an added dimension to the
Board. Your Board now consists of three non-executive directors, which we
consider an appropriate size for the Company.
The investment management activities are now carried out by the Company's
investment management subsidiary, Chrysalis VCT Management Limited, which is
headed by Chris Kay. The Board is very satisfied with the current investment
management arrangements and the improved performance and, therefore, do not plan
to seek an external investment manager for the foreseeable future.
Dividend
In view of the realisation of the investment in sit-up Limited which took place
in May, the Group has now realised a substantial capital gain. As a result, I
am pleased to announce that the Company will pay an interim capital distribution
of 3p per share. The distribution will be paid on 15 July 2005 to Shareholders
on the register on 1 July 2005.
Shareholders should note that the interim capital distribution has not been
provided in these accounts as it has been declared after the period end. The
Company's shares will be declared "ex-dividend" on 29 June 2005, at which point
the NAV will be adjusted to reflect the dividend in calculating the price at
which the Company buys in shares as described above.
Outlook
A number of investments within the Company's portfolio are facing the
possibility of successful exits in the short and medium term. The Board is
encouraging the investment management team to dedicate a significant level of
their resources to maximising the return to the Company if these exits can be
delivered. If and when these exits occur, the focus will start to shift towards
making new investments.
Over the coming six months the Company will also be completing the final parts
of the merger process such that we will end up with a VCT of an efficient size
which has a portfolio with good prospects. I look forward to reporting progress
with the year end results to 31 October 2005.
Robert Drummond
Chairman
23 June 2005
UNAUDITED GROUP STATEMENT OF TOTAL RETURN
(incorporating the revenue account)
for the six months ended 30 April 2005
Six months ended Six months ended Year ended
30 April 2005 30 April 2004 31 Oct 2004
Revenue Capital Total Revenue Capital Total Total
#'000 #'000 #'000 #'000 #'000 #'000 #'000
Income 255 - 255 182 - 182 475
Gains/(losses) on investments:
- Realised - 10 10 - 317 317 218
- Unrealised - 1,795 1,795 - (143) (143) 1,097
255 1,805 2,060 182 174 356 1,790
Investment management fees (24) (71) (95) (45) (135) (180) (181)
Other expenses (166) - (166) (109) (2) (111) (325)
Return on ordinary activities 65 1,654 1,799 28 37 65 1,284
before taxation
Tax on ordinary activities - - - - - - 2
Return attributable to equity 65 1,654 1,799 28 37 65 1,286
shareholders
Distributions - - - (54) (269) (323) (324)
Transfer to/(from) reserves 65 1,654 1,799 (26) (232) (258) 962
Return per share 0.3p 8.1p 8.4p 0.1p 0.2p 0.3p 5.9p
The revenue column of this statement is the profit and loss account of the
Group.
All revenue and capital items in the above statement derive from continuing
operations.
The Group has only one class of business and derives its income from investments
made in shares, securities and bank deposits.
The above figures for the period to 30 April 2005 include Chrysalis VCT plc for
the whole period and Chrysalis A VCT plc , Chrysalis B VCT plc and Chrysalis C
VCT plc for the period from when the subsidiary undertakings were deemed to be
acquired on 1 March 2005 to 30 April 2005.
The comparative figures are in respect of the six months ended 30 April 2004 and
the year ended 31 October 2004 respectively and are for Chrysalis VCT plc only.
UNAUDITED SUMMARISED GROUP BALANCE SHEET
as at 30 April 2005
30 April 30 April 31 Oct
2005 2004 2004
#'000 #'000 #'000
Fixed assets
Venture capital investments 21,001 7,927 9,262
Listed fixed income 4,569 4,881 4,910
investments 25,570 12,808 14,172
Net current assets 1,061 283 48
Net assets 26,631 13,091 14,220
Capital and reserves
Called up share capital 370 215 214
Capital redemption reserve 34 4 5
Share premium 8,193 - -
Special reserve 16,269 12,824 13,864
Capital reserve - unrealised 1,360 - -
Capital reserve - realised 455 40 40
Revenue reserve (50) 8 97
Total equity shareholders' 26,631 13,091 14,220
funds
Net asset value per share 71.9p 60.7p 66.5p
UNAUDITED GROUP CASHFLOW STATEMENT
for the six months ended 30 April 2005
Six Six
months months
ended ended Year ended
30 Apr 30 Apr 31 Oct
2005 2004 2004
Note #'000 #'000 #'000
Cash (outflow)/inflow from operating
activities and returns on investments
1 (269) (109) 32
Taxation - - 2
Capital expenditure
Purchase of listed fixed income (1,262) - -
investments
Purchase of venture capital (282) (479) (454)
investments
Purchase of other investments (12) - (208)
Proceeds on disposal of listed fixed 1,859 - -
income investments
Proceeds on disposal of venture capital 7 739 742
investments
Net cash inflow from capital 310 260 80
expenditure
Acquisitions and disposals
Cash acquired with subsidiaries 2,045 - -
Equity dividends paid (1,063) (217) (541)
Net cash inflow/(outflow) before 1,023 (66) (427)
financing
Financing
Shares repurchased (11) (92) (173)
Net cash outflow from financing (11) (92) (173)
Increase/(decrease) in cash 2 1,012 (158) (600)
Notes to the cashflow statement:
1 Cash outflow from operating
activities and returns on investments
Net revenue return before taxation 65 28 116
Expenses charged to capital (71) (137) (223)
Merger costs capitalised (409)
Decrease in other debtors 13 13 263
Increase/(decrease) in other creditors 133 (13) 2
Net cash (outflow)/inflow from (269) (109) 260
operating activities
2 Analysis of net funds
Beginning of period 63 663 663
Net cash inflow/(outflow) 1,012 (158) (600)
End of period 1,075 505 63
SUMMARY OF THE GROUP INVESTMENT PORTFOLIO
as at 30 April 2005
Cost Valuation % of portfolio
#'000 #'000 by value
Top ten venture capital investments
sit-up Limited 1,260 5,342 20.9%
Ma Potter's Limited 1,000 2,470 9.7%
Precision Dental Laboratories Limited 1,087 1,996 7.8%
Strainstall Group Limited 1,002 1,405 5.5%
Babel Media Limited 1,000 1,309 5.1%
Centre Design Limited 1,350 1,305 5.1%
Computer Software Group plc * 865 1,223 4.8%
Wessex Advanced Switching Products Ltd 51 795 3.1%
Glisten plc * 223 749 2.9%
Triaster Limited 829 686 2.7%
8,667 17,280 67.6%
Other venture capital investments 12,224 3,722 14.5%
Listed fixed income securities 4,655 4,569 17.9%
Total investments 25,546 25,570 100.0%
All venture capital investments are unquoted unless otherwise stated.
* Quoted on the Alternative Investment Market
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
1. The above financial information has been prepared on the basis of the
accounting policies set out on page 9.
2. The calculation of the revenue and capital return per share for the period
is based upon the net revenue and capital profit after tax of #65,000 and
#1,654,000 respectively, divided by the weighted average number of shares
in issue during the period of 21,475,315.
3. The unaudited financial statements set out above do not constitute
statutory accounts within the meaning of Section 240 of the Companies Act
1985 and have not been delivered to the Registrar of Companies. The
figures for the year ended 31 October 2004 have been extracted from the
financial statements for that year, which have been delivered to the
Registrar of Companies; the auditors' report on those financial statements
was unqualified.
4. Copies of the unaudited interim results will be sent to shareholders
shortly. Further copies can be obtained from the Company's Registered
Office.
PRINCIPAL ACCOUNTING POLICIES
The financial statements are prepared in accordance with applicable accounting
standards and with the Statement of Recommended Practice "Financial Statements
of Investment Trust Companies" (the "SORP") in all material aspects. The
particular accounting policies adopted are described below.
Accounting convention
The financial statements are prepared under the historical cost convention,
modified by the revaluation of investments.
Group accounts
The Group accounts consolidate the accounts of the Company and its wholly owned
subsidiaries; Chrysalis A VCT plc, Chrysalis B VCT plc and Chrysalis C VCT plc
from 1 March 2005. Chrysalis VCT Management Limited, another wholly owned
subsidiary, has not been consolidated as it is not considered material to the
Group. The revenue account is only presented in consolidated form as provided
by Section 230 of the Companies Act 1985. Net revenue after taxation of the
Company for the period amounted to #28,000 (period ended 30 April 2004: #28,000,
year ended 31 October 2004: #118,000).
Investments
Unquoted investments are stated at Directors' valuations which are in accordance
with the BVCA guidelines. The unrealised depreciation or appreciation arising
on the valuation of investments and gains and losses arising on the disposal of
investments are dealt with in the capital reserve.
It is not the Company's policy to exercise controlling influence over investee
companies. Therefore the results of these companies are not incorporated into
the revenue account except to the extent of any income accrued.
Income and expenses
All income and expenses are treated on the accruals basis and dividend income is
included in revenue on a received basis. The fixed returns on non-equity shares
and on debt securities are recognised on a time apportionment basis and only
where there is reasonable certainty of collection. The Company has adopted the
policy of allocating investment managers fees, 75% to the capital reserve and
25% to the revenue account as permitted by the SORP. The allocation is in line
with the Board's expectation of long term returns from the Company's investments
in the form of capital gains and income respectively. Expenses, which are
incidental to the acquisition of an investment, are included in the cost of the
investment. Expenses, which are incidental to the disposal of an investment,
are deducted from the proceeds of the investment.
Deferred Taxation
Deferred taxation is provided in full on timing differences that result in an
obligation at the balance sheet date to pay more tax, or a right to pay less
tax, at a future date, at rates expected to apply when they crystallise based on
current tax rates and law. Timing differences arise from the inclusion of items
of income and expenditure in taxation computations in periods different from
those in which they are included in financial statements.
This information is provided by RNS
The company news service from the London Stock Exchange
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