TIDMCYS
Chrysalis VCT plc
Half-Yearly Financial Report for the six months ended 30 April 2010
Recent performance summary
30 April 2010 31 Oct 2009 30 April 2009
pence pence pence
Net asset value per share 82.80 82.90 83.20
Cumulative dividends paid per share 26.95 24.95 22.95
----------------------------------------
Total return* 109.75 107.85 106.15
* (Net asset value
per share plus cumulative dividends)
CHAIRMAN'S STATEMENT
The Company's performance continues to be stable and positive, with the
portfolio performing well, both in terms of income and value generation.
At the Annual General Meeting in April 2010, I was pleased to announce that the
VCT's performance is such that your Board has decided on a new medium-term
dividend policy in order to give shareholders confidence to remain long-term
holders. Providing that there are no exceptional reverses in economic
circumstances, the Company intends to pay annual dividends totalling a minimum
of 3.0p per share. This policy will be maintained for at least three years,
with dividends expected to be paid in two tranches each year. Based on the
current share price, this dividend represents a tax-free return of more than 5%
per annum. We are therefore proposing to pay 1.5p in July 2010, being the first
tranche of this year's 3.0p dividend.
Net Asset Value
At 30 April 2010, the Net Asset Value per Ordinary Share ("NAV") stood at
82.8p, an increase of 1.9p (2.2%) since the previous year end of 31 October
2009 (after adjusting for the 2.0p 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 109.75p per
share, compared to an original net of income tax relief cost of 80p per share.
Venture Capital Investments
New deal flow remains difficult. The VCT managers have worked closely with the
Board to identity attractive investment proposals and, as a result, a number of
new investment proposals have been considered over the past six months. However,
it is not yet the case that prices and prospects are in the right alignment for
our tastes. We believe that the investment climate is improving, and the
management team continues to work hard on prospecting for opportunities and
analysing those which we have been able to identify.
In general, prospective investments seem to absorb more effort than we would
normally expect, but we believe we are wise to hold out for the right deals.
Happily there are signs of progress. After the half-year date, the Company
completed on a GBP500,000 transaction with Autocue Group Limited, which provides
tele-prompting products to the TV production industry globally. Autocue is a
well-known brand in Europe and owns a similarly recognised brand in the USA. So
far GBP300,000 has been drawn down.
During the period, the Company made three follow-on investments - GBP158,000 in
British International Holdings Limited, GBP84,000 in GCrypt Limited and GBP30,000 in
Life's Kitchen Limited. The latter is a good example of a supportive VCT working
with a keen management team. Life's Kitchen is the preferred or listed caterer
at some unique venues in London and management requested the extra sum to
support a business expansion drive which has already yielded significant new
contracts.
Glisten plc was taken over in early April 2010, with investors receiving GBP1.40
per share. The Company received GBP260,000 in respect of this investment,
realising a profit against the original cost of GBP111,000. This, combined with
historic sales of holdings in Glisten, brings the overall profit against cost to
GBP441,000.
The holdings in BreakingViews Limited and Component Source Inc, both of which
the Company acquired at nil value as part of mergers in 2005, were also sold
with proceeds thereon received of GBP159,000 and GBP4,000 respectively.
The existing portfolio continues to fare well despite the ongoing uncertainty
in the economy. The Board has reviewed the unquoted investments at the period
end and made both upward and downward adjustments to the carrying values as
appropriate. The most notable valuation movement to report is the uplift of
GBP249,000 in Escape Studios Limited, which was purchased just over a year ago and
is currently trading well.
The AIM portfolio, which represents 2.5% of the total investment portfolio, was
valued at GBP652,000 at the period end. All of the investments, with the
exception of The Capital Pub Company plc, fell in value during the period. Net
unrealised gains on the AIM portfolio over the period were GBP109,000.
At the period end, the Company held a portfolio of 27 investments, in quoted and
unquoted companies which were valued at GBP16.1 million. Unrealised gains arising
on the portfolio during the period amounted to GBP332,000 and realised gains
amounted to GBP150,000.
Listed fixed income securities
The Company disposed of two of its fixed income securities in the period and
re-invested the proceeds into a three-year fixed term cash deposit account with
Royal Bank of Scotland, which is reported as cash within the accounts. The
unrealised gain on the portfolio over the period was GBP25,000, with realised
losses arising thereon of GBP4,000.
Results and dividend
The return after taxation for the Company for the period was GBP532,000 comprising
a revenue return of GBP162,000 and a capital return of GBP370,000.
The 1.5p dividend mentioned earlier will be paid on 30 July 2010 to Shareholders
on the register at 9 July 2010. This will bring the total distributions paid to
Ordinary Shareholders since inception, to 28.45p 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. The Company has
made market purchases of shares over the past few months at a 25% discount to
the last published NAV. The discount level, together with the level of share
buybacks undertaken is kept under review by the Board.
During the period, the Company purchased 150,000 Ordinary Shares for
cancellation, for an aggregate price of GBP92,000, being an average price of 61p
per share.
Risks and uncertainties
Under the Disclosure and Transparency Directive, the Board is 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 election of the coalition government has yet to be seen and,
like everybody in this industry we wait to see what improvements there will be
in the economy from new policies and the recent Emergency Budget. However, we
believe that your Company remains in a good position to meet any economic
challenges that may arise.
Peter Harkness
Chairman
UNAUDITED INCOME STATEMENT
for the six months ended 30 April 2010
Six months ended
30 April 2010
Revenue Capital Total
GBP'000 GBP'000 GBP'000
Income 395 - 395
Net gains/(losses) on investments - 503 503
--------- --------- ------
395 503 898
Investment management fees (53) (160) (213)
Performance incentive fees - (5) (5)
Other expenses (147) (1) (148)
--------- --------- ------
Return on ordinary activities before taxation 195 337 532
Taxation (33) 33 -
--------- --------- ------
Return attributable to equity shareholders 162 370 532
Return per Ordinary share 0.5p 1.2p 1.7p
Six months ended Year ended
31 October
30 April 2009 2009
Revenue Capital Total Total
GBP'000 GBP'000 GBP'000 GBP'000
Income 460 - 460 1,187
Net gains/(losses) on investments - (383) (383) (237)
--------- --------- -------- ------------
460 (383) 77 950
Investment management fees (58) (176) (234) (449)
Performance incentive fees - (3) (3) (14)
Other expenses (281) (2) (283) (430)
--------- --------- -------- ------------
Return on ordinary activities before 121 (564) (443) 57
taxation
Taxation (30) 30 - (10)
--------- --------- -------- ------------
Return attributable to equity 91 (534) (443) 47
shareholders
Return per Ordinary share 0.3p (1.7p) (1.4p) 0.1p
UNAUDITED SUMMARISED BALANCE SHEET
as at 30 April 2010
As at As at As at
30 Apr 2010 30 Apr 2009 31 Oct 2009
GBP'000 GBP'000 GBP'000
Fixed assets
Investments 22,798 24,050 24,416
------------------------------------
Current assets
Debtors 178 273 523
Cash at bank and in hand 2,893 2,037 1,137
------------------------------------
3,071 2,310 1,660
Creditors: amounts falling due within
one year (193) (202) (218)
------------------------------------
Net current assets 2,878 2,108 1,442
------------------------------------
------------------------------------
Net assets 25,676 26,158 25,858
Capital and reserves
Called up share capital 310 314 312
Capital redemption reserve 77 73 75
Share premium 1,064 1,064 1,064
Merger reserve 2,832 8,694 8,694
Special reserve 7,455 5,067 1,795
Capital reserve - realised 11,423 11,656 11,493
Investment holding gains/(losses) 1,839 (1,166) 1,678
Revenue reserve 676 456 747
------------------------------------
Equity shareholders' funds 25,676 26,158 25,858
Net asset value per Ordinary share 82.8p 83.2p 82.9p
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the period ended 30 April 2010
As at As at As at
30 Apr 2010 30 Apr 2009 31 Oct 2009
Total Total Total
GBP'000 GBP'000 GBP'000
Opening shareholders' funds 25,858 28,342 28,342
Purchase of own shares (92) (246) (408)
Total recognised gains/(losses) in the 532 (443) 47
period
Dividends paid (622) (1,495) (2,123)
------------------------------------
Closing shareholders' funds 25,676 26,158 25,858
UNAUDITED CASH FLOW STATEMENT
for the six months ended 30 April 2010
Six months Six months Year
ended ended ended
30 April 30 April 2009 31 October 2009
2010
Note GBP'000 GBP'000 GBP'000
Cash inflow/(outflow) from
operating activities and 1
returns on investments 32 (10) 327
----------------------------------------------
Taxation - - (78)
----------------------------------------------
Capital expenditure
Purchase of investments (1,074) (4,273) (5,612)
Proceeds on disposal of 3,494 3,724 4,645
investments
----------------------------------------------
Net cash inflow/(outflow) from 2,420 (549) (967)
capital expenditure
----------------------------------------------
Equity dividends paid (620) (1,496) (2,121)
----------------------------------------------
Net cash inflow/(outflow) 1,832 (2,055) (2,839)
before financing
Financing
Purchase of own shares (76) (306) (422)
----------------------------------------------
Net cash outflow from (76) (306) (422)
financing
----------------------------------------------
Increase/(decrease) in cash 2 1,756 (2,361) (3,261)
Notes to the cash flow
statement:
1 Cash inflow from operating activities and
returns on investments
Return/(loss) on ordinary 532 (443) 57
activities before taxation
(Gains)/losses on (503) 383 237
investments
Capital income adjustment - - (19)
Decrease/(increase) in other 45 97 44
debtors
(Decrease)/increase in other (42) (27) 8
creditors
----------------------------------------------
Net cash (outflow)/inflow from 32 (10) 327
operating activities
2 Analysis of net funds
Beginning of period 1,137 4,398 4,398
Net cash inflow/ (outflow) 1,756 (2,361) (3,261)
----------------------------------------------
End of period 2,893 2,037 1,137
SUMMARY OF INVESTMENT PORTFOLIO
as at 30 April 2010
| | | | |
| | |Movement in the | | % of portfolio
|Cost |Valuation| period| | by
=----------------------+---------+-+-------+-+--------------+-+----------------
| GBP'000| | GBP'000| | GBP'000| | value
=----------------------+---------+-+-------+-+--------------+-+----------------
| | | | | | |
=----------------------+---------+-+-------+-+--------------+-+----------------
Top ten venture | | | | | | |
capital investments | | | | | | |
=----------------------+---------+-+-------+-+--------------+-+----------------
Wessex Advanced | 704| | 3,330| | (96)| | 13.0%
Switching Products | | | | | | |
Limited | | | | | | |
=----------------------+---------+-+-------+-+--------------+-+----------------
Precision Dental | 2,110| | 2,175| | -| | 8.5%
Laboratories Group | | | | | | |
Limited | | | | | | |
=----------------------+---------+-+-------+-+--------------+-+----------------
Locale Enterprises| 1,500| | 2,020| | -| | 7.9%
Limited | | | | | | |
=----------------------+---------+-+-------+-+--------------+-+----------------
Centre Design Limited | 1,350| | 1,572| | -| | 6.1%
=----------------------+---------+-+-------+-+--------------+-+----------------
Ensign Communications| 500| | 1,303| | 21| | 5.1%
Limited | | | | | | |
=----------------------+---------+-+-------+-+--------------+-+----------------
British International| 908| | 1,002| | (25)| | 3.9%
Holdings Limited | | | | | | |
=----------------------+---------+-+-------+-+--------------+-+----------------
London Italian| 1,000| | 1,000| | -| | 3.9%
Restaurants Limited | | | | | | |
=----------------------+---------+-+-------+-+--------------+-+----------------
Escape Studios Limited| 750| | 999| | 249| | 3.9%
=----------------------+---------+-+-------+-+--------------+-+----------------
Triaster Limited | 758| | 829| | -| | 3.2%
=----------------------+---------+-+-------+-+--------------+-+----------------
The Capital Pub| 505| | 514| | 161| | 2.0%
Company plc * | | | | | | |
=----------------------+---------+-+-------+-+--------------+-+----------------
| 10,085| | 14,744| | 310| | 57.5%
=----------------------+---------+-+-------+-+--------------+-+----------------
| | | | | | |
=----------------------+---------+-+-------+-+--------------+-+----------------
Other venture capital | 4,327| | 1,389| | 22| | 5.3%
investments | | | | | | |
=----------------------+---------+-+-------+-+--------------+-+----------------
| | | | | | |
=----------------------+---------+-+-------+-+--------------+-+----------------
Listed fixed income | | | | | | | 25.9%
securities | 6,547| | 6,665| | 25| |
=----------------------+---------+-+-------+-+--------------+-+----------------
| | | | | | |
=----------------------+---------+-+-------+-+--------------+-+----------------
Subtotal | 20,959| | 22,798| | 357| | 88.8%
=----------------------+---------+-+-------+-+--------------+-+----------------
| | | | | | |
=----------------------+---------+-+-------+-+--------------+-+----------------
Royal Bank of Scotland 3.41% | | | | | | 7.8%
fixed term deposit account | | 2,000| | | |
=----------------------+---------+-+-------+-+--------------+-+----------------
Cash at bank and in | | | | | | | 3.5%
hand | | | 893| | | |
=----------------------+---------+-+-------+-+--------------+-+----------------
| | | | | | |
=----------------------+---------+-+-------+-+--------------+-+----------------
Total investments | | | 25,691| | | | 100.0%
All venture capital investments are unquoted unless otherwise stated.
SUMMARY OF INVESTMENT MOVEMENTS
for the six months ended 30 April 2010
Additions
Total
GBP'000
Follow on investments
British International Holdings Limited 158
G-Crypt Holdings Limited 84
Life's Kitchen Limited 30
Bonds
Treasury 2Å?% Stock 07/03/2014 802
--------
1,074
Disposals
Market value at Gain/ Total
1 November 2009 (loss) realised
* Disposal Against gain/
Cost Proceeds cost (loss)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Venture Capital
disposals
Breaking Views
Limited - 141 159 159 18
CPI Acquisitions
Limited 34 34 38 4 4
Component Source Inc - - 4 4 4
Glisten plc 149 136 260 111 124
Heath and Green Pub 30 - - (30) -
Company Limited
Bonds
Smith and Williamson 1 1 1 - -
Cash Trust
Treasury 5Å?% Stock 1,477 1,553 1,552 75 (1)
2012
Treasury 8% Stock 1,163 1,184 1,181 18 (3)
2013
-----------------------------------------------------------
2,854 3,049 3,195 341 146
* 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
2010 and have been prepared in accordance with the accounting policies set out
in the statutory accounts for the year ended 31 October 2009 which were prepared
under UK Generally Accepted Accounting Practice and in accordance with the
Statement of Recommended Practice "Financial Statements of Investment Trust
Companies" revised January 2009.
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
2009 and the year ended 31 October 2009 respectively.
5. Basic and diluted NAV per share for the period has been calculated on
31,025,509 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
31,154,376 shares, being the weighted average number of shares in issue during
the period.
7. Dividends
30 April 2010 31 Oct 2009
Pence Revenue Capital Total Total
per share GBP'000 GBP'000 GBP'000 GBP'000
Paid in period
2009 Final Ordinary Share 2.00 233 389 622 -
2009 interim Ordinary Share 2.00 - - - 629
2009 Special 'D' Share 16.75 - - - 89
2009 Special 'E' Share 26.75 - - - 161
2008 interim Ordinary Share 4.00 - - - 1,244
--------- --------- ------- ------------
233 389 622 2,123
Proposed
2010 interim Ordinary Share 1.50 - 465 465 624
8. Reserves
Capital Capital Investment
redemption Share Merger Special reserve holding Revenue
reserve premium reserve reserve realised gains reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 November 75 1,064 8,694 1,795 11,493 1,678 747
2009
Shares 2 - - (92) - - -
repurchased
Expenses - - - - (166) - -
capitalised
Tax on capital - - - - 33 - -
expenses
Gains on - - - - 146 357 -
investments
Realisation of
revaluations from - - - - 196 (196) -
previous years
Realisation of
assets acquired - - (5,862) - 5,862 - -
through historic
merger
Transfer - - - 5,752 (5,752) - -
between reserves
Retained net
revenue for the - - - - - - 162
year
Dividends paid - - - - (389) - (233)
---------------------------------------------------------------
At 30 April 77 1,064 2,832 7,455 11,423 1,839 676
2010
The Special reserve is a distributable reserve, which was created to enable the
Company to purchase its own shares in the market without affecting its ability
to pay dividends/capital distributions.
Distributable reserves comprise the special reserve, capital reserve - realised,
revenue reserve, and investment holding losses of GBP2,856,000 (31/10/2009:
GBP3,014,000). GBP276,000 of the merger reserve is also deemed to be
distributable. At the period end there were GBP16,974,000 (31/10/2009:
GBP17,158,000) of reserves available for distribution.
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 2009 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.
[HUG#1428309]
This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients.
The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other applicable laws; and
(ii) they are solely responsible for the content, accuracy and originality of the information contained therein.
All reproduction for further distribution is prohibited.
Source: Chrysalis VCT PLC via Thomson Reuters ONE
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