TIDMCYS
Chrysalis VCT plc
Half Yearly Report for the six months ended 30 April 2009
CHAIRMAN'S STATEMENT
I am pleased to present the half year Report for Chrysalis VCT plc
for the period to 30 April 2009. Despite the unwelcome move of the
economy into a period of recession, Chrysalis continues to fare
reasonably well. With GBP9.8 million of liquid funds, after the payment
of an interim dividend, the Company remains in a strong position to
support its existing portfolio companies and make new investments
when suitable opportunities arise.
The economic position has inevitably impacted on some portfolio
companies, but I am pleased to report that the Company's net asset
value has held up well.
'D' and 'E' Share conversion
Following the payment of dividends to the 'D' and 'E' Shareholders of
16.75p and 26.75p respectively, the 'D' and 'E' Shares were converted
into Ordinary Shares on 30 April 2009 at the rates shown in the
following table:
Conversion
'D'/'E' New rate per
Share Shares Ordinary 1,000
class in issue Shares 'D'/'E' Share
'D' 532,982 411,441 772
'E' 601,376 290,429 483
Following the conversion, the Company has 31,442,475 Ordinary Shares
in issue.
Net Asset Value
At 30 April 2009, the Net Asset Value per Ordinary Share ("NAV")
stood at 83.2p, a decrease of 1.1p (1.3%) since the previous year end
of 31 October 2008 (after adjusting for the 4p per Ordinary Share
dividend paid in the period).
Total Return (NAV plus cumulative dividends paid since launch) to
original Ordinary Shareholders, who invested in 2000/2001, now
stands at 106.15p per share, compared to an original net of income
tax relief cost of 80p per share.
Venture Capital Investments
Before commenting on recent events it is worth noting how Chrysalis
is continually refreshing itself with its venture capital portfolio
considerably changing over time. Indeed, of the top 16 investments
which make up 94% of the portfolio by value, 12 have been made during
the last four years and, of the remaining four companies, two have
received significant further investments.
Turning to the past six months, the Company invested GBP500,000 during
the period in Escape Studios Limited, together with follow-on
investments in Optima Data Intelligence Limited of GBP151,000 and
Planet Sport Holdings Limited of GBP13,000. Escape is Europe's leading
school of computer graphics, delivering learning, recruitment and
technology services for the visual effects and games industries
(www.escapestudios.com).
The Company benefited from the unexpected distribution of GBP217,000 in
respect of an investment which was liquidated several years ago. In
addition, the Company received confirmation of the release of
GBP101,000 of retention monies, in respect of Babel Media Limited which
was sold in 2008.
The Board has been mindful of the economic climate in its valuation
review of the unquoted portfolio. Provisions of GBP1.2 million have
been made against nine investments, notably Centre Design Limited has
been written down by GBP277,000; Optima Data Intelligence Limited by
GBP331,000 and Precision Dental Laboratories Limited by GBP396,000.
I am pleased to report that four unquoted companies have bucked the
trend and justified increases to their valuations of GBP456,000 in
aggregate. Included within this figure are Mentorion Limited (trading
as Loco Locale) and Wessex Advanced Switching Products Limited which
are both trading well and have been revalued upwards by GBP212,000 and
GBP187,000 respectively.
The AIM portfolio, which made up 4.4% of the Company's venture
capital portfolio by value at the period end, decreased in value by
GBP95,000.
Overall the net unrealised losses on the Venture Capital Portfolio in
the period were GBP854,000 and net realised gains were GBP318,000.
Listed fixed income securities
The Company invested GBP3.6 million in two gilt-edged securities during
the period, GBP2.8 million of which was re-invested from maturing
securities together with GBP699,000 arising on the partial sale of the
Nucleus Cash Trust holding.
At the period end, this portfolio was valued at GBP8.4 million and
comprised five gilt-edged securities, all of which are yielding at
rates above base, together with a small Nucleus Cash Trust holding.
During the period, net unrealised gains thereon amounted to GBP165,000
and net realised gains were GBP7,000.
Results and dividend
The loss after taxation for the Company for the period was GBP443,000
comprising a revenue return of GBP91,000 and a capital loss of
GBP534,000.
Although the Company did not have any disposals in the period, the
Board has decided to pay an interim dividend of 2.0p per Ordinary
Share, partly out of historic realised gains. This will be paid on 31
July 2009 to Ordinary Shareholders on the register at 10 July 2009.
This brings the total distributions paid to Ordinary Shareholders
since inception, to 24.95p per Ordinary Share.
Share buybacks
The Company continues to operate a share buyback policy in order to
provide liquidity in the market. 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 387,847 Ordinary Shares, at
an average price of 63.1p per share, for cancellation. These
purchases were generally undertaken at a 25% discount to the last
published NAV. The Board reviews the discount at which share buybacks
are undertaken and makes changes from time to time as it sees fit.
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:
* investment risk associated with investing in small
and immature businesses; and
* 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
Good quality investment opportunities are currently few and far
between. However, when the tide begins to turn, your Company will be
in an excellent position to take advantage of the upswing.
Peter Harkness
Chairman
UNAUDITED SUMMARISED BALANCE SHEET
as at 30 April 2009
As at As at As at
30 Apr 30 Apr 31 Oct
2009 2008 2008
GBP'000 GBP'000 GBP'000
Fixed assets
Investments 24,050 23,510 23,966
Current assets
Debtors 273 2,945 268
Cash at bank and in hand 2,037 3,762 4,398
2,310 6,707 4,666
Creditors: amounts falling due within
one year (202) (328) (290)
Net current assets 2,108 6,379 4,376
Net assets 26,158 29,889 28,342
Capital and reserves
Called up share capital 314 330 323
Capital redemption reserve 73 57 64
Share premium 1,064 1,064 1,064
Merger reserve 8,694 8,694 8,694
Special reserve 5,067 6,304 5,554
Investment holding (losses)/ gains (1,166) 1,513 (696)
Capital reserve - realised 11,656 11,211 12,196
Revenue reserve 456 716 1,143
Equity shareholders' funds 26,158 29,889 28,342
Net asset value per Ordinary share 83.2p 91.1p 88.3p
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the period ended 30 April 2009
As at As at As at
30 Apr 30 Apr 31 Oct
2009 2008 2008
Total Total Total
GBP'000 GBP'000 GBP'000
Opening shareholders' funds 28,342 31,040 31,040
Purchase of own shares (246) (594) (1,177)
Total recognised (losses)/ gains
in the period (443) 597 268
Dividends paid (1,495) (1,154) (1,789)
Closing shareholders' funds 26,158 29,889 28,342
UNAUDITED INCOME STATEMENT
for the six months ended 30 April 2009
Six months ended
30 April 2009
Revenue Capital Total
GBP'000 GBP'000 GBP'000
Income 460 - 460
Net (losses)/ gains on investments - (383) (383)
460 (383) 77
Investment management fees (58) (176) (234)
Performance incentive fees - (3) (3)
Other expenses (281) (2) (283)
Return on ordinary activities before 121 (564) (443)
taxation
Taxation (30) 30 -
Return attributable to equity 91 (534) (443)
shareholders
Return per Ordinary share 0.3p (1.7p) (1.4p)
Six months ended Year ended
30 April 2008 31 October
2008
Revenue Capital Total Total
GBP'000 GBP'000 GBP'000 GBP'000
Income 848 - 848 1,602
Net (losses)/ gains on - 316 316 (258)
investments
848 316 1,164 1,344
Investment management fees (64) (192) (256) (503)
Performance incentive fees - (114) (114) (175)
Other expenses (143) (17) (160) (320)
Return on ordinary activities 641 (7) 634 346
before taxation
Taxation (129) 92 (37) (78)
Return attributable to equity 512 85 597 268
shareholders
Return per Ordinary share 1.5p 1.2p 2.7p 1.7p
UNAUDITED CASH FLOW STATEMENT
for the six months ended 30 April 2009
Six Six Year
months months ended
ended ended 31
30 April 30 April October
2009 2008 2008
Note GBP'000 GBP'000 GBP'000
Cash (outflow)/inflow from operating
activities and returns on investments 1 (10) 369 609
Taxation - - (64)
Capital expenditure
Purchase of investments (4,273) (3,790) (8,160)
Proceeds on disposal of investments 3,724 4,683 10,675
Net cash (outflow)/inflow from capital (549) 893 2,515
expenditure
Equity dividends paid (1,496) (1,154) (1,792)
Net cash (outflow)/inflow before (2,055) 108 1,268
financing
Financing
Purchase of own shares (306) (604) (1,128)
Net cash outflow from financing (306) (604) (1,128)
(Decrease)/increase in cash 2 (2,361) (496) 140
Notes to the cash flow statement:
1. Cash inflow from operating
activities and
returns on investments
(Loss)/return on ordinary activities (443) 634 346
before
taxation
(Losses)/gains on investments 384 (316) 258
Decrease/(increase) in other debtors 45 (21) 8
(Decrease)/increase in other creditors (30) 72 (3)
Net cash (outflow)/inflow from (10) 369 609
operating
activities
2. Analysis of net funds
Beginning of period 4,398 4,258 4,258
Net cash (outflow)/inflow (2,361) (496) 140
End of period 2,037 3,762 4,398
SUMMARY OF INVESTMENT PORTFOLIO
as at 30 April 2009
Movement % of
in the portfolio
Cost Valuation period by
GBP'000 GBP'000 GBP'000 value
Top ten venture capital
investments
Wessex Advanced Switching 704 3,054 187 11.7%
Products Limited
Precision Dental Laboratories 2,110 2,778 (396) 10.7%
Group Limited
Mentorion Limited 750 1,269 212 4.9%
Centre Design Limited 1,350 1,205 (277) 4.6%
London Italian Restaurants 1,000 1,000 - 3.8%
Limited
Triaster Limited 758 829 (60) 3.2%
British International Holdings 750 795 (59) 3.0%
Limited
Mentorion 2 Limited 750 778 28 3.0%
Ensign Communications Limited 500 772 68 3.0%
Escape Studios Limited 500 500 - 1.9%
9,172 12,980 (297) 49.8%
Other venture capital 7,853 2,637 (557) 10.1%
investments
Listed fixed income securities 8,191 8,433 165 32.3%
Subtotal 25,216 24,050 (689) 92.2%
Cash at bank and in hand 2,037 7.8%
Total investments 26,087 100.0%
All venture capital investments are unquoted unless otherwise stated.
SUMMARY OF INVESTMENT MOVEMENTS
for the six months ended 30 April 2009
Additions
Total
GBP'000
New investments
Escape Studios Limited 500
Follow on investments
Optima Data Intelligence Limited 151
Planet Sport Holdings Limited 13
Bonds
Treasury Gilt 3¿% 07/12/2011 1,293
Treasury Gilt 2¿% 07/03/2014 2,316
4,273
Disposals
Market Gain/ Total
value at 1 (loss) realised
November Disposal against gain/
Cost 2008 * Proceeds cost (loss)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Retention monies - - 101 101 101
Net liquidation position 255 - 217 (38) 217
Bonds
Nucleus Cash Trust 703 707 699 (4) (8)
Treasury Gilt 4%
07/12/2011 1,215 1,232 1,228 13 (4)
2,173 1,939 2,245 72 306
Treated as income
UK THM Treasury 2009 1,546 1,561 1,580 34 19
* 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 2009 and have been prepared in accordance with the
accounting policies set out in the statutory accounts for the year
ended 31 October 2008 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 and Venture Capital Trusts" issued in January 2009
("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 six months ended 30
April 2008 and the year ended 31 October 2008 respectively.
5. Basic and diluted NAV per share for the period has been calculated
on 31,442,475 shares, being the number of shares in issue at the
period end.
6. Basic and diluted return per share for the period has been
calculated on 31,014,960 shares, being the weighted average number of
shares in issue during the period.
7. Dividends
30 April 2009 31 Oct 2008
Revenue Capital Total Total
GBP'000 GBP'000 GBP'000 GBP'000
Paid in year
Ordinary shares 2007 final (paid 20 - - - 1,131
Mar 08)
'D' shares 2007 final (paid 20 Mar - - - 11
08)
'E' shares 2007 final (paid 20 Mar - - - 12
08)
Ordinary shares 2008 interim (paid - - - 635
25 Jul 08)
Ordinary shares 2008 interim (paid 778 467 1,245 -
15 Dec 08)
'D' shares 2008 interim (paid 24 - 89 89 -
Apr 09)
'E' shares 2008 interim (paid 24 - 161 161 -
Apr 09)
778 717 1,495 1,789
Proposed
Ordinary shares 2009 interim (due 157 472 629 -
31 July 09)
8. Reserves
Capital Investment Capital
redemption Share Merger Special holding reserve Revenue
reserve premium reserve reserve losses realised reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 64 1,064 8,694 5,554 (696) 12,196 1,143
November
2008
Shares 9 - - (246) - - -
repurchased
Expenses - - - - - (181) -
capitalised
Tax on - - - - - 30 -
capital
expenses
(Losses)/
gains on - - - - (689) 306 -
investments
Transfer
between - - - (241) 219 22 -
reserves
Retained
net revenue - - - - - - 91
for the
year
Dividends - - - - - (717) (778)
paid
At 30 April 73 1,064 8,694 5,067 (1,166) 11,656 456
2009
Distributable reserves comprise the Special Reserve, Capital Reserve
- Realised and the Revenue Reserve. Additionally GBP5,974,000 of the
Merger Reserve is considered to be distributable together with losses
within the Investment Holding Losses Reserve of GBP5,306,000. Reserves
available for distribution at the period end therefore amounted to
GBP17,847,000.
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 2008 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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