Half-yearly report
Chrysalis VCT plc
Half Yearly Report for the six months ended 30 April 2008
RECENT PERFORMANCE SUMMARY
30 April 31 Oct 30 April
2008 2007 2007
pence pence pence
Ordinary shares
Net asset value per share 91.10 91.50 88.70
Cumulative dividends paid per share 16.95 13.45 13.45
Total return 108.05 104.95 102.15
'D' share
Net asset value per share 81.50 106.10 104.30
Cumulative dividends paid per share 3.25 1.25 1.25
Total return 84.75 107.35 105.55
'E' share
Net asset value per share 67.30 95.30 95.00
Cumulative dividends paid per share 3.25 1.25 1.25
Total return 70.55 96.55 96.25
CHAIRMAN'S STATEMENT
Introduction
The period to 30 April 2008 has been notable for the sharp
deterioration in the economic climate and general investor
confidence. Against this backdrop, it is very pleasing to be able to
report a further improvement in the performance of the Company's
Ordinary Share pool. Unfortunately, the younger and more immature
investments which make up the 'D' Share and 'E' Share pools have been
much more vulnerable to the challenging conditions.
Net Asset Value
Ordinary Shares
At 30 April 2008, the Net Asset Value per Ordinary Share ("NAV") had
risen to 91.1p, an increase of 3.1p (3.5%) since the previous year
end of 31 October 2007 (after adjusting for the 3.5p per Ordinary
Share dividend paid in the period).
Total Return to original Ordinary Shareholders (NAV plus cumulative
dividends paid since launch) now stands at 108.05p per share,
compared to an original net of income tax relief cost of 80p per
share.
'D' Shares
The NAV of the 'D' Shares stood at 81.5p per share at 30 April 2008.
This represents a significant fall since 31 October 2007, when the
'D' Share NAV stood at 106.1p (although a dividend of 2p per share
was paid in the period).
'E' Shares
At 30 April 2008, the NAV of the 'E' Shares had fallen to 67.3p. As
with the 'D' Share pool, this is a significant fall compared to at 31
October 2007 when the NAV stood at 95.3p per share, with a 2p per
share dividend paid in the period.
Venture Capital Investments
Ordinary Share pool
The Ordinary Share pool achieved two notable exits during the
period. The investment in AMI was sold for approximately �1.2
million against an original cost of �615,000, producing a gain in the
period against previous carrying value of �241,000.
Even more satisfying was the disposal of ILG Digital, an investment
made in October 2005, which produced proceeds of �2.6 million against
an original cost of �805,600. The gain against the previous carrying
value was �536,000.
The Ordinary Share pool also made two new investments and two
follow-on investments with a total value of �433,000.
Overall, the Ordinary Share portfolio showed net realised gains of
�301,000 for the period. Of the investments held at the period end,
the Ordinary Share pool showed unrealised gains of �1.1 million on
its unquoted investments. Unfortunately much of this was cancelled
out by unrealised losses on the AIM-quoted investments of �852,000,
leaving net unrealised gains of �313,000.
'D' Share and 'E' Share pool
As 'D' and 'E' Shareholders will be aware, both pools are very small
and as a result, comprise of a reasonably low number of investments.
In the period, both pools have had investments which have either
failed or required full provisions.
Two full provisions were required in the 'D' Share pool, which
produced net unrealised losses of �130,000 over the period, while,
there was one failure and two full provisions required within the 'E'
Share pool, which produced net unrealised losses of �96,000 over the
period and realised losses of �70,000.
Results and dividend
The return after taxation for the Company for the period amounted to
a gain of �597,000 comprising a revenue return of �512,000 and a
capital surplus of �85,000.
Following the successful disposals from the Ordinary Share pool
during the period, the Company is paying an interim dividend of 2.0p
per Ordinary Share on 25 July 2008 to Ordinary Shareholders on the
register at 11 July 2008. This brings the total distributions paid
to Ordinary Shareholders since inception, to 18.95p per Ordinary
Share.
Share buybacks
The Company continues to operate a share buyback policy in order to
provide liquidity in the market for its shares. 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 to the Company but must be
sold via the Stock Market through a stockbroker.
During the period, the Company purchased 773,599 Ordinary shares, at
an average price of 76.1p per share, for cancellation. These
purchases were generally undertaken at a 15% discount to the last
published NAV.
The Company also purchased 3,090 'D' Shares for cancellation, at a
price of 81.5p per share, which was a 10% discount to the last
published NAV.
Risks and uncertainties
Under the Disclosure and Transparency Directive, the Board is now
required in the Company's half year results, to report on principal
risks and uncertainties facing the Company over the remainder of the
financial year.
The Board has concluded that the key risks facing the Company over
the remainder of the financial period are as follows:
(i) investment risk associated with investing in small and
immature businesses; and
(ii) failure to maintain approval as a VCT.
In both cases the Board is satisfied with the Company's approach to
these risks. As a VCT the Company is forced to have significant
exposure to relatively immature businesses. This risk is mitigated
to some extent by holding a well-diversified portfolio.
The Company's compliance with the VCT regulations is continually
monitored by the Administration Manager, who regularly reports to the
Board on the current position. The Company also retains
PricewaterhouseCoopers to provide regular reviews and advice in this
area. The Board considers that this approach reduces the risk of a
breach of the VCT regulations to a minimal level.
Outlook
The impact of the "credit crunch" has already spread far and wide and
the short-term prospects for the economy are bleak. The
unavailability of bank finance and the more aggressive approach now
being taken by banks towards their customers will provide a
challenging period for small, developing businesses.
The Ordinary Share pool, which includes more mature businesses, has
continued to fare well. Since the period end, this pool has achieved
another profitable disposal. Its investment in Babel Media Limited
was sold in June at an uplift of �1.6 million over cost and �253,000
over the valuation at 31 October 2007. This is another excellent
result, which comes after several years of intensive support from the
investment management team.
With exits from many of the Ordinary Share pool's best performing
investments in recent years, it is not realistic to expect to see
further substantial growth in NAV in the short term. In the current
conditions, the immediate goal will be preservation of value for the
Ordinary, 'D' and 'E' Share pools.
Robert Drummond
Chairman
UNAUDITED SUMMARISED BALANCE SHEET
as at 30 April 2008
As at As at As at
30 Apr 30 Apr 31 Oct
2008 2007 2007
Total Total Total
�'000 �'000 �'000
Investments 23,510 24,337 26,724
Net current assets 6,379 6,438 4,316
Net assets 29,889 30,775 31,040
Capital and reserves
Called up share capital 330 346 338
Capital redemption reserve 57 41 49
Share premium 1,064 1,064 1,064
Merger reserve 8,694 8,694 8,694
Special reserve 6,304 8,007 7,318
Capital reserve - realised 11,211 9,518 9,870
Capital reserve - unrealised 1,513 2,784 2,993
Revenue reserve 716 321 714
Total equity 29,889 30,775 31,040
Net asset value per:
Ordinary share 91.1p 88.7p 91.5p
'D' share 81.5p 104.3p 106.1p
'E' share 67.3p 95.0p 95.3p
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the period ended 30 April 2008
30 Apr 31 Oct
30 Apr 2008 2007 2007
Ordinary 'D' 'E'
shares Shares Shares Total Total Total
�'000 �'000 �'000 �'000 �'000 �'000
Opening 29,898 569 573 31,040 30,124 30,124
shareholders'
funds
Purchase of own (591) (3) - (594) (619) (1,232)
shares
Total recognised
gains/ 874 (121) (156) 597 2,305 3,183
(losses) in the
period
Distributions (1,131) (11) (12) (1,154) (1,035) (1,035)
29,050 434 405 29,889 30,775 31,040
UNAUDITED SUMMARISED BALANCE SHEET
as at 30 April 2008
Analysed by share pool
Ordinary Shares As at As at As at
30 Apr 30 Apr 31 Oct
2008 2007 2007
�'000 �'000 �'000
Investments 23,130 23,789 26,068
Net current assets 5,920 5,856 3,830
Net assets 29,050 29,645 29,898
Capital and reserves
Called up share capital 319 335 327
Reserves 28,731 29,310 29,571
Total equity 29,050 29,645 29,898
Net asset value per Ordinary Share 91.1p 88.7p 91.5p
'D' Shares As at As at As at
30 Apr 2008 30 Apr 2007 31 Oct 2007
�'000 �'000 �'000
Investments 280 448 410
Net current assets 154 111 159
Net assets 434 559 569
Capital and reserves
Called up share capital 5 5 5
Reserves 429 554 564
Total equity 434 559 569
Net asset value per 'D' Share 81.5p 104.3p 106.1p
'E' Shares As at As at As at
30 Apr 30 Apr 31 Oct
2008 2007 2007
�'000 �'000 �'000
Investments 100 100 246
Net current assets 305 471 327
Net assets 405 571 573
Capital and reserves
Called up share capital 6 6 6
Reserves 399 565 567
Total equity 405 571 573
Net asset value per 'E' Share 67.3p 95.0p 95.3p
UNAUDITED INCOME STATEMENT
for the six months ended 30 April 2008
Six months ended
Company Total 30 April 2008
Revenue Capital Total
�'000 �'000 �'000
Income 848 - 848
Gains on investments - Realised - 232 232
- - Unrealised - 84 84
848 316 1,164
Investment management fees (64) (192) (256)
Performance incentive fees - (114) (114)
Other expenses (143) (17) (160)
Return on ordinary activities before 641 (7) 634
taxation
Taxation (129) 92 (37)
Return attributable to equity 512 85 597
shareholders
Return per Ordinary share 1.5p 1.2p 2.7p
Return per 'D' share 1.6p (24.3p) (22.7p)
Return per 'E' share 1.7p (27.7p) (26.0p)
Six months ended Year ended
Company Total 30 April 2007 31 October 2007
Revenue Capital Total Total
�'000 �'000 �'000 �'000
Income 522 - 522 1,294
Gains on investments - - 1,207 1,207 1,436
Realised
- - Unrealised - 1,195 1,195 1,556
522 2,402 2,924 4,286
Investment management fees (62) (188) (250) (502)
Performance incentive fees - (219) (219) (228)
Other expenses (150) - (150) (308)
Return on ordinary 310 1,995 2,305 3,248
activities before taxation
Taxation (97) 97 - (65)
Return attributable to
equity shareholders 213 2,092 2,305 3,183
Return per Ordinary share 0.6p 6.0p 6.6p 9.3p
Return per 'D' share 1.1p 8.0p 9.1p 10.9p
Return per 'E' share 1.3p (0.5p) 0.8p 1.1p
Six months ended
Ordinary shares 30 April 2008
Revenue Capital Total
�'000 �'000 �'000
Income 820 - 820
Gains on investments - Realised - 302 302
- - Unrealised - 310 310
820 612 1,432
Investment management fees (64) (192) (256)
Performance incentive fees - (114) (114)
Other expenses (143) (17) (160)
Return on ordinary activities before 613 289 902
taxation
Taxation (120) 92 (28)
Return attributable to equity 493 381 874
shareholders
Six months ended Year ended
Ordinary shares 30 April 2007 31 October 2007
Revenue Capital Total Total
�'000 �'000 �'000 �'000
Income 496 - 496 1,239
Gains on investments - - 1,207 1,207 1,409
Realised
- - Unrealised - 1,150 1,150 1,534
496 2,357 2,853 4,182
Investment management fees (60) (180) (240) (484)
Performance incentive fees - (219) (219) (228)
Other expenses (144) - (144) (296)
Return on ordinary 292 1,958 2,250 3,174
activities before taxation
Taxation (93) 95 2 (56)
Return attributable to 199 2,053 2,252 3,118
equity shareholders
Six months ended
'D' Shares 30 April 2008
Revenue Capital Total
�'000 �'000 �'000
Income 12 - 12
Gains on investments - Realised - - -
- - Unrealised - (130) (130)
12 (130) (118)
Investment management fees - - -
Other expenses - - -
Return on ordinary activities before 12 (130) (118)
taxation
Taxation (3) - (3)
Return attributable to equity 9 (130) (121)
shareholders
Six months ended Year ended
'D' Shares 30 April 2007 31 October 2007
Revenue Capital Total Total
�'000 �'000 �'000 �'000
Income 11 - 11 24
Gains on investments - - - - 27
Realised
- - Unrealised - 45 45 26
11 45 56 77
Investment management fees (1) (3) (4) (9)
Other expenses (2) - (2) (6)
Return on ordinary 8 42 50 62
activities before taxation
Taxation (2) 1 (1) (3)
Return attributable to 6 43 49 59
equity shareholders
Six months ended
'E' Shares 30 April 2008
Revenue Capital Total
�'000 �'000 �'000
Income 16 - 16
Gains on investments - Realised - (70) (70)
- - Unrealised - (96) (96)
16 (166) (150)
Investment management fees - - -
Other expenses - - -
Return on ordinary activities before 16 (166) (150)
taxation
Taxation (6) - (6)
Return attributable to equity 10 (166) (156)
shareholders
Six months ended Year ended
'E' Shares 30 April 2007 31 October 2007
Revenue Capital Total Total
�'000 �'000 �'000 �'000
Income 15 - 15 31
Gains on investments - - - - -
Realised
- - Unrealised - - - (4)
15 - 15 27
Investment management fees (1) (5) (6) (9)
Other expenses (4) - (4) (6)
Return on ordinary 10 (5) 5 12
activities before taxation
Taxation (2) 1 (1) (6)
Return attributable to 8 (4) 4 6
equity shareholders
UNAUDITED CASH FLOW STATEMENT
for the six months ended 30 April 2008
Six months Six months Year ended
ended ended 31 October
30 April 30 April 2007
2008 2007
Note �'000 �'000 �'000
Cash inflow/(outflow) from
operating activities and 1
returns on investments 369 (1,639) 164
Taxation - - (73)
Capital expenditure
Purchase of investments (3,790) (5,585) (7,851)
Proceeds on disposal of 4,683 8,426 8,895
investments
Net cash outflow from 893 2,841 1,044
capital expenditure
Equity dividends paid (1,154) (1,035) (1,035)
Net cash inflow before 108 167 100
financing
Financing
Share issue costs - (6) (6)
Purchase of own shares (604) (588) (1,254)
Net cash outflow from (604) (594) (1,260)
financing
Decrease in cash 2 (496) (427) (1,160)
Notes to the cash flow
statement:
1 Cash inflow from
operating activities and
returns on investments
Return on ordinary 634 2,305 3,248
activities before taxation
Gains on investments (316) (2,402) (2,992)
Increase in other debtors (21) (1,608) (106)
Increase in other 72 66 14
creditors
Net cash inflow/(outflow) 369 (1,639) 164
from operating activities
2 Analysis of net funds
Beginning of period 4,258 5,418 5,418
Net cash outflow (496) (427) (1,160)
End of period 3,762 4,991 4,258
SUMMARY OF INVESTMENT PORTFOLIO
as at 30 April 2008
Ordinary Share pool % of
Movement portfolio
in the by value
Cost Valuation period
�'000 �'000 �'000
Top ten venture capital
investments
Babel Media Limited 1,705 3,189 253 12.1%
Precision Dental Laboratories 2,100 3,072 905 11.6%
Group plc
Wessex Advanced Switching 699 2,861 1,435 10.8%
Products Limited
Triaster Limited 758 1,245 325 4.7%
Centre Design Limited 1,350 1,205 - 4.6%
Mentorion Limited 700 987 167 3.7%
British International Holdings 700 807 106 3.0%
Limited
Ensign Communications Limited 500 704 19 2.7%
Mentorion II Limited 700 700 - 2.6%
Glisten plc * 149 604 (136) 2.3%
9,361 15,374 3,074 58.1%
Other venture capital investments 7,105 2,815 (2,761) 10.7%
Listed fixed income securities 4,951 4,941 (3) 18.7%
Subtotal 21,417 23,130 310 87.5%
Cash at bank and in hand 3,297 12.5%
Ordinary Share Pool - Total 26,427 100.0%
Movement % of
in the portfolio
Cost Valuation period by value
�'000 �'000 �'000
'D' Share pool
Mentorion Limited 50 70 11 16.1%
British International Holdings 50 58 8 13.4%
Limited
Rhino Sport and Leisure Limited 50 52 2 12.0%
CPI Acquisition UK Limited 50 50 - 11.5%
Mentorion 2 Limited 50 50 - 11.5%
Hat Pin plc ** 80 - (105) -
Spice Inns Limited 50 - (46) -
380 280 (130) 64.5%
Cash at bank and in hand 154 35.5%
'D' Share pool - Total 434 100.0%
'E' Share pool
CPI Acquisition UK Limited 50 50 - 12.2%
Optima Data Intelligence Services 50 50 - 12.2%
Limited
Spice Inns Limited 50 - (46) -
Ultralon Holdings Limited 50 - (50) -
200 100 (96) 24.4%
Cash at bank and in hand 311 75.6%
'E' Share pool - Total 411 100.0%
All venture capital investments are unquoted unless otherwise stated.
* quoted on AIM
** quoted on AIM (currently suspended)
SUMMARY OF INVESTMENT MOVEMENTS
for the six months ended 30 April 2008
Additions
Ordinary 'D' 'E'
Total Shares Shares Shares
�'000 �'000 �'000 �'000
Babel Media Limited 100 100 - -
Hat Pin plc 125 125 - -
Nucleus Cash Trust 291 291 - -
Treasury 4�% 2011 Stock 1,883 1,883 - -
Treasury 8% 2013 Stock 1,163 1,163 - -
Ultralon Holdings Limited 28 28 - -
Zest Juice Limited 200 180 - 20
3,790 3,770 - 20
Disposals
Market Gain/ Total
value at (loss) realised
1 November Disposal against gain/
Cost 2007 * Proceeds cost (loss)
�'000 �'000 �'000 �'000 �'000
Ordinary Share pool
Full disposals
Advance Media
Information Limited 615 934 1,175 560 241
ILG Digital Limited 806 2,101 2,637 1,831 536
Tellings Golden Miller
plc 75 30 48 (27) 18
Partial disposals
BreakingViews Limited - 45 56 56 11
You Gov plc 24 150 106 82 (44)
Liquidation
Zest Juice Limited 630 630 - (630) (630)
Retention monies from
prior disposals - - 169 169 169
Fixed interest
securities
Nucleus Cash Trust 2 2 2 - -
Treasury 4�% 2007 Stock 2,084 1,927 1,925 (159) (2)
Treasury 5% 2008 Stock 1,218 1,200 1,203 (15) 3
5,454 7,019 7,321 1,867 302
'E' Share pool
Liquidation
Zest Juice Limited 70 70 - (70) (70)
70 70 - (70) (70)
* Adjusted for purchases in the period
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
1. The unaudited half yearly financial results cover the six months
to 30 April 2008 and have been prepared in accordance with the
accounting policies set out in the statutory accounts for the year
ended 31 October 2007 which were prepared under UK Generally Accepted
Accounting Practice ("UK GAAP") and in accordance with the Statement
of Recommended Practice "Financial Statements of Investment Trust
Companies" revised December 2005 ("SORP").
2. All revenue and capital items in the Income Statement derive from
continuing operations.
3. The Company has only one class of business and derives its income
from investments made in shares, securities and bank deposits.
4. The comparative figures were in respect of the period ended 30
April 2007 and the year ended 31 October 2007 respectively.
5. Basic and diluted Net Asset Value per share calculations are
based on the following:
Ordinary Shares 'D' Shares 'E' Shares
Net Assets (�'000) 29,050 434 405
Number of shares in issue 31,895,521 532,982 601,376
at period end
6. Basic and diluted return per share calculations are based on the
following:
Ordinary Shares 'D' Shares 'E' Shares
Revenue return per share
based on:
Net revenue return after 493 9 10
taxation (�'000)
Capital return per share
based on:
Net capital gain/(loss) 381 (130) (166)
after taxation (�'000)
Weighted average number of 32,427,098 535,002 601,376
shares in issue
7. Dividends
30 April 2008 31 Oct 2007
Revenue Capital Total Total
�'000 �'000 �'000 �'000
Paid in year
Ordinary shares 2007 final (paid 484 647 1,131 -
20 Mar 08)
'D' shares 2007 final (paid 20 11 - 11 -
Mar 08)
'E' shares 2007 final (paid 20 12 - 12 -
Mar 08)
Ordinary shares 2006 interim - - - 1,021
(paid 2 Mar 07)
'D' shares 2006 final (paid 27 - - - 7
Mar 07)
'E' shares 2006 final (paid 27 - - - 7
Mar 07)
507 647 1,154 1,035
Proposed
Ordinary shares 2008 interim - 638 638 -
(payable on 25 July 08)
Ordinary shares 2007 final - - - 1,143
'D' shares 2007 final - - - 11
'E' shares 2007 final - - - 12
- 638 638 1,166
8. Reserves
Share Capital Merger Special Capital Capital Revenue
premium redemption reserve reserve reserve reserve reserve
reserve unrealised realised
�'000 �'000 �'000 �'000 �'000 �'000 �'000
At 1 November 1,064 49 8,694 7,318 2,993 9,870 714
2007
Shares - 8 - (591) - - (3)
repurchased
Expenses - - - - - (323) -
capitalised
Tax on - - - - - 92 -
capital
expenses
Gains on - - - - 84 232 -
investments
Transfer
between - - - (423) (1,564) 1,987 -
reserves
Retained net
revenue for - - - - - - 512
the year
Distributions - - - - - (647) (507)
paid in year
At 30 April 1,064 57 8,694 6,304 1,513 11,211 716
2008
The above figures relate to the Company as a whole. The
Special Reserve, Capital Reserve - Realised and Revenue Reserve are
all distributable reserves.
9. The Directors confirm that, to the best of their knowledge, the
half-yearly financial statements have been prepared in accordance
with the "Statement: Half-Yearly Financial Reports" issued by the UK
Accounting Standards Board and the half-yearly financial report
includes a fair review of the information required by:
a. DTR 4.2.7R of the Disclosure and Transparency Rules, being an
indication of important events that have occurred during the first
six months of the financial year and their impact on the condensed
set of financial statements, and a description of the principal risks
and uncertainties for the remaining six months of the year; and
b. DTR 4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place in the first six
months of the current financial year and that have materially
affected the financial position or performance of the entity during
that period, and any changes in the related party transactions
described in the last annual report that could do so.
10. The unaudited financial statements set out herein do not
constitute statutory accounts within the meaning of Section 434 of
the Companies Act 2006 and have not been delivered to the Registrar
of Companies. The figures for the year ended 31 October 2007 have
been extracted from the financial statements for that year, which
have been delivered to the Registrar of Companies; the Independent
Auditors' Report on those financial statements was unqualified.
11. Copies of the unaudited half yearly report will be sent to
Shareholders shortly. Further copies can be obtained from the
Company's Registered Office and will be available for download from
www.downing.co.uk
- ---END OF MESSAGE---
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