TIDMCYS
CHRYSALIS VCT PLC
FINAL RESULTS FOR THE YEAR ENDED 31 OCTOBER 2010
FINANCIAL HIGHLIGHTS
Year Year
Ended Ended
31 Oct 10 31 Oct 09
Pence Pence
Net asset value per share 83.00 82.90
Cumulative dividends paid since launch 28.45 24.95
Total return 111.45 107.85
CHAIRMAN'S STATEMENT
I am pleased to present the Report and Accounts for the year ended 31 October
2010. While the UK's economic climate remained difficult throughout the year and
good investments have been hard to find, on the whole this has been a successful
period for your company.
Subject to approval at the forthcoming Annual General Meeting ("AGM"),
Shareholders will have enjoyed dividend income of 3p per share for the period
and still the net asset value per share has continued to rise. The Board
believes this is a commendable result, particularly as individuals pay no tax on
the dividend payments. With a rising Net Asset Value ("NAV") and an effective
tax-free yield of 3.6%, we feel our policy of self-management is fully
justified. We keep the costs of investment and portfolio management low and we
have an active approach to monitoring each portfolio asset, ensuring that
opportunities for exit or for further growth are fully explored.
New investments are not coming forward in anything like the numbers they
previously were, but the Company has used the networking skills of its executive
and non-executives to maximise the opportunities we see. All the investments
completed, or due for completion, have been sourced in this way and I believe
Shareholders have benefited considerably as a consequence - not just from the
opportunities themselves but because no fees have been paid for introductions
internally or externally.
Once again I believe Shareholders are well served by the investment policies set
by the Board and by the diligence and expertise of the investment team, led by
Chris Kay.
Net Asset Value
At 31 October 2010, the NAV per Ordinary Share was 83.0p, an increase of 3.6p or
4.3% over the year (after adjusting for the dividends totalling 3.5p per share
paid during the year).
The Total Return (NAV plus cumulative dividends paid since launch) to Ordinary
Shareholders since the Company's launch (when it was known as Downing Classic
VCT 3 plc) now stands at 111.45p per Ordinary Share compared to an original
investment (net of income tax relief) of 80p per Ordinary Share.
Venture capital investments
The Board continues to be satisfied with our policy of being a self-managed
Venture Capital Trust ("VCT"). We believe that Shareholders gain both from low
operating costs and from the additional flexibility and greater involvement in
the investee companies, which our dedicated investment team provides.
At the year end, the Company held a portfolio of 29 investments, valued at GBP16.8
million.
Further commentary on the portfolio, together with a schedule of the additions,
disposals and details of the highest value investments can be found within the
Investment Management Report and Review of Investments.
Listed fixed income securities
The Company continues to hold a portfolio of fixed income securities, which was
valued at GBP3.8 million at the year end and comprised almost entirely gilt-edged
securities. The portfolio has been carefully monitored and we have reduced it
in size since 2009, partly to fund acquisitions in the Venture Capital
investment portfolio. GBP2 million has also been transferred to a fixed rate
deposit bank account (shown as a current investment), which matures in 2012.
Results and dividends
The return on activities after taxation for the year was GBP1,034,000 (2009:
GBP47,000), comprising a revenue return of GBP230,000 and a capital return of
GBP804,000.
Dividends paid in respect of the year ended 31 October 2010 were as follows:
Pence
per share GBP'000
Interim dividend
Ordinary Share - 30 July 2010 1.5 465
Subject to Shareholder approval at the forthcoming AGM, and in line with our
announced dividend policy, your Board is proposing to pay a final dividend of
1.5p per share on 31 March 2011 to Shareholders on the register at 25 February
2011.
Following payment of this dividend, Shareholders who invested in the Company at
the outset, will have received dividends totalling 29.95p per Ordinary Share.
Share buybacks
The Company has continued a limited programme of share buybacks, recognising
that some Shareholders require liquidity due to unplanned events, but we believe
that the prime duty of the Board is to develop the net worth of the company on
behalf of Shareholders who remain committed to us.
Our policy is that share buy-backs are only made if they represent good
investment value to the Company (and therefore the remaining Shareholders) and
we always buy at a discount to NAV. In the period under review we have bought
at a discount of 25% but have always made it clear that any discount level - and
funds available for buy-backs - can be varied by the Board from time to time.
During the year the Company repurchased 272,000 Ordinary Shares of 1p each for
an aggregate consideration of GBP167,000 being an average price of 61.1p per
Ordinary Share of 1p each and representing 0.9% of the issued Ordinary Share
capital held at 1 November 2009. These shares were subsequently cancelled and at
the year end the Company had 30,903,509 Ordinary Shares in issue.
Some sellers have been unhappy because they have not received the same price
from market makers as that which has been paid by the Company. As shares cannot
be sold directly to the Company we have had no influence over the "spread"
applied by intermediaries, but we note that some of the prices received by
Shareholders have been significantly lower than we have subsequently paid for
the shares.
In order that there should be as much clarity in the market as possible, at the
end of October 2010, the Company appointed Singer Capital Markets Limited
("Singers") as its Corporate Broker. Following their appointment, the Board has
decided it will no longer indicate an NAV discount percentage which will apply
to any shares bought back for cancellation. When shares are offered to the
company a decision will be made on a case-by-case basis whether to buy and at
what price. The overriding criterion will be that the purchase represents good
value to remaining Shareholders. We hope that this appointment will
significantly reduce the spread on our shares.
Details of the relevant contacts at Singers appear elsewhere in the annual
report and, Shareholders should advise their own broker to contact Singers.
On 11 November 2010 the Company was offered, via Singers, 60,000 Ordinary 1p
Shares each at 49.5p each and we accepted this transaction, in line with the
Board's policy.
Trading in VCT shares as a sector is not significant, but we do believe that the
dividend yield of Chrysalis VCT shares could make them a relevant purchase for
certain individuals interested in our investment policy and, who would benefit
from the tax free dividend payments. Secondary buyers enjoy the same dividend
benefits as the original subscribers and Shareholders may wish to note that
Directors of the company have been buyers from time to time in the public
market.
Annual General Meeting
The forthcoming AGM will be held at 10 Lower Grosvenor Place, London, SW1W 0EN
at 11:30 am on 23 March 2011. Notice of the meeting is at the end of this
document.
One item of Special Business is proposed at the meeting which is to renew the
authority to allow the Company to make market purchases of the Company's shares.
Outlook
There seem to be mixed views on the prospects for UK commerce in 2011 and
beyond. Feedback from our investee companies and from the sectors we follow
most closely is not pessimistic, but there is certainly an air of caution - and
we must take heed of that. Your Board's focus is on utilising our available
resources to make fresh investments and to help existing investee companies
develop new opportunities. Alongside this we intend to make returns to
Shareholders by way of at least a 3p annual dividend. We have both the reserves
and the cash to make this payment in the coming year. As Chris Kay explains in
his Managers report, following the year end we have already made two new
investments and realised a substantial cash sum from an exit. So far, so good!
As a self-managed Fund there is substantially more reliance on the non-executive
Board than would be typical elsewhere and I would like to place on record my
appreciation of the work of my two Board colleagues, Julie Baddeley and Martin
Knight for their counsel, support and all-round common sense, which have again
been invaluable.
Peter Harkness
Chairman
INVESTMENT MANAGEMENT REPORT
It is pleasing to report that total return for shareholders exceeded GBP1 million
for the year largely due to increased profitability of our portfolio.
In investment terms it was a reasonably quiet year with total investment of GBP1.6
million being neatly matched by sale proceeds of an almost identical amount.
Two new companies were added to the portfolio, VEEMEE and Autocue.
VEEMEE is an early stage company specialising in casual gaming applications and
the exploitation of brands in the digital media. We have backed a team with
excellent connections in its sector and are hopeful of repeating progress in
future years.
Autocue manufactures its world renowned eponymous products in the UK. We have
taken a 15% stake.
Since the year end we have invested GBP750,000 in a secondary buy-out of My Hobby
Store which is a publisher of niche hobby magazines, and GBP1 million in Knowledge
Pool Group Limited, a training outsourcer.
We have, however, missed out on a number of investment opportunities where trade
bidders have paid considerably more than we were prepared to. This reflects
both our desire not to overpay and also our belief that 2011 is likely to be a
tough year with public sector cuts and increased taxation.
During the year we finally exited from Glisten plc which was taken over at 140p
a share. Over the years Chrysalis made a profit of GBP443,000 from Glisten out of
an original GBP225,000 investment i.e. a 173% gain.
The most significant portfolio exit actually took place after the year end when
we sold our investment in Centre Design Limited for GBP1.4 million being a small
profit over the original cost, however in addition Centre Design Limited also
paid GBP750,000 of loan note interest during the period that it was held.
We also helped to finance a secondary buy-out at Ensign which took place due to
the desire of some original EIS investors to realise their investment. We
considered that the exit price was not attractive and, therefore, effectively
rolled-over our investment. The net effect is that we now have an increased
equity stake (39.3% up from 25.0%) without further investment and had over half
our original loan repaid and fully expect the balance to be repaid during this
year.
Overall the trading performance of the overwhelming majority of our existing
portfolio has held up well. However during the year two companies went into
administration, CPI Acquisitions and Optima Data Intelligence. We have
recovered slightly more than our valuation from CPI Acquisitions and Optima Data
Intelligence was fully provided for last year.
We are particularly pleased with the trading at British International Holdings,
which provides helicopter services, where operating profits have increased
three-fold this year and at Ensign where operating profits are up over 30% for
the third year running.
We have only a very small AIM portfolio of GBP655,000 and 82% of that is in one
company, namely The Capital Pub Company Plc where, thanks to improved trading,
the share price has risen from 70p to 107p in the year and risen further since
the year end.
Looking forward to this financial year, we have three opportunities with a total
investment of GBP2.4 million which should complete over the next few months, but
that still leaves sufficient cash for further investment in both our existing
portfolio and new companies.
We are not anticipating any significant exits during the year but attractive
offers such as the one for Centre Design Limited can come at any time especially
if the economy continues to recover.
Chrysalis VCT Management Limited
REVIEW OF INVESTMENTS
Portfolio of investments
The following investments, all of which are incorporated in England and Wales,
were held at 31 October 2010:
Valuation
movement in year % of portfolio
Cost Valuation GBP'000 by value
GBP'000 GBP'000
Ten largest venture capital
investments (by value)
Wessex Advanced 704 3,123 (303) 12.9%
Switching Products
Limited
Precision Dental 2,110 2,161 (14) 9.0%
Laboratories Limited
Locale Enterprises 1,500 2,155 135 8.9%
Limited
British International 908 1,719 692 7.1%
Holdings Limited
Ensign Communication 522 1,656 1,134 6.9%
Holdings Limited
Centre Design Limited 1,350 1,386 (187) 5.8%
Escape Studio Limited 750 990 240 4.1%
London Italian 1,000 875 (125) 3.6%
Restaurants Limited
Triaster Limited 758 686 (143) 2.9%
The Capital Pub 505 540 187 2.2%
Company plc *
-------- ----------- ------------------ -----------------
10,107 15,291 1,616 63.4%
-------- ----------- ------------------ -----------------
Other venture capital
investments
VEEMEE Limited 350 350 - 1.5%
G-Crypt Limited 305 305 (23) 1.3%
Life's Kitchen 300 300 100 1.2%
Limited
Autocue Group Limited 300 300 - 1.2%
Rhino Sport & Leisure 166 74 (75) 0.3%
Limited
Global3 Digital 67 67 - 0.3%
Limited
ILX Group plc * 100 31 (6) 0.1%
YouGov plc * 20 31 (7) 0.1%
Best of the Best plc 98 29 (25) 0.1%
*
Cashfac Initiatives - 26 5 0.1%
Limited
BreakingViews Limited - 18 18 0.1%
The Kellan Group plc 320 12 (8) 0.1%
*
The Mission Marketing 150 12 (28) -
Group plc *
Art VPS Limited 358 - - -
CPI Acquisitions UK 400 - - -
Limited
IX Group Limited 250 - - -
Kids Safteynet 637 - - -
Limited
Planet Sport Holdings 263 - (225) -
Limited
Real Time Logistic
Solutions Limited 55 - - -
(formerly Y88 Product
Developments Limited)
-------- ----------- ------------------ -----------------
4,139 1,555 (274) 6.4%
-------- ----------- ------------------ -----------------
Listed fixed income
securities
United Kingdom 2.25% 1,827 1,911 87 7.9%
Gilt 07/03/2014
United Kingdom 2.75% 1,032 1,029 (3) 4.3%
Gilt 22/01/2015
United Kingdom 4.5% 878 876 (2) 3.6%
Bond 07/03/2013
-------- ----------- ------------------ -----------------
3,737 3,816 82 15.8%
-------- ----------- ------------------ -----------------
Total 17,983 20,662 1,424 85.6%
Cash at bank and in 1,463 6.1%
hand
Royal Bank of 2,000 8.3%
Scotland plc
3.41% 2012 deposit
----------- -----------------
Total investments 24,125 100.0%
All investments are unquoted unless otherwise stated.
*Quoted on AIM
Investment movements for the year ended 31 October 2010
ADDITIONS
Total
GBP'000
New investments
Autocue Limited 300
VEEMEE Limited 350
Follow on investments
British International Holdings Limited 158
G-Crypt Holdings Limited 96
Life's Kitchen Limited 135
Restructuring
Ensign Communications Holdings Limited 567
--------
Total venture capital investment additions 1,606
--------
Listed fixed income securities
United Kingdom 4.5% Bond 07/03/2013 1,639
United Kingdom 2.25% Gilt 07/03/2014 802
United Kingdom 2.75% Gilt 22/01/2015 1,636
--------
4,077
--------
Total investments 5,683
DISPOSALS
Cost MV at Proceeds Profit/ Realised gain/
31/10/09* (loss) vs cost (loss)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Venture Capital
disposals
Breaking Views Limited - 141 159 159 18
CPI Acquisitions UK
Limited 68 68 75 7 7
Component Source Inc - - 4 4 4
Ensign Communications 500 1,282 792 292 (490)
Limited **
Ensign Communications 45 45 45 - -
Holdings Limited
Glisten plc 149 136 260 111 124
Heath and Green Pub
Company Limited 30 - - (30) -
Optima Data Intelligence 651 - - (651) -
Limited
Real Time Logistic
Solutions Limited 270 270 270 - -
Liquidation proceeds - - 2 2 2
--------------------------------------------------------
1,713 1,942 1,607 (106) (335)
--------------------------------------------------------
Listed fixed income
securities
Smith & Williamson Cash
Trust 57 56 56 (1) -
United Kingdom 4.25%
Gilt 07/03/2011 1,883 1,986 1,927 44 (59)
United Kingdom 3.25%
Gilt 07/12/2011 1,293 1,289 1,280 (13) (9)
United Kingdom 5.25%
Gilt 2012 1,477 1,553 1,552 75 (1)
United Kingdom 8%Gilt
2013 1,163 1,184 1,181 18 (3)
United Kingdom 4.5% Bond
07/03/2013 761 761 758 (3) (3)
United Kingdom Gilt
2.25% 07/03/2014 1,488 1,486 1,553 65 67
United Kingdom Gilt
2.75% Gilt 22/01/2015 604 604 600 (4) (4)
--------------------------------------------------------
8,726 8,919 8,907 181 (12)
--------------------------------------------------------
Total 10,439 10,861 10,514 75 (347)
* Adjusted for purchases in the year
**Proceeds include GBP292,000 of re-invested equity into Ensign Communications
Holdings Limited
Statement of Directors' responsibilities
The Directors are responsible for preparing the Report of the Directors, the
Directors' Remuneration Report and the financial statements in accordance with
applicable law and regulations. They are also responsible for ensuring that the
annual report includes information required by the Listing Rules of the
Financial Services Authority.
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 and 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 estimates that are reasonable and prudent;
* state whether applicable Accounting Standards have been followed, subject to
any material departures disclosed and explained in the financial statements;
and
* prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Company will continue in business.
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 are responsible for the maintenance and integrity of the corporate
and financial information included on the Company's website. Legislation in the
United Kingdom governing the preparation and dissemination of the financial
statements and other information included in annual reports may differ from
legislation in other jurisdictions.
Statement as to disclosure of information to auditors
The Directors in office at the date of this report have confirmed, as far as
they are aware, that there is no relevant audit information of which the
Auditors are unaware. Each of the Directors has confirmed that they have taken
all the steps that they ought to have taken as Directors in order to make
themselves aware of any relevant audit information and to establish that it has
been communicated to the Auditor.
By order of the Board
Grant Whitehouse
Secretary of Chrysalis VCT plc
Company number: 4095791
Registered Office:
10 Lower Grosvenor Place
London SW1W 0EN
INCOME STATEMENT
for the year ended 31 October 2010
Year ended 31 October Year ended 31 October
2010 2009
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 713 - 713 1,187 - 1,187
Gains/(losses) on - 1,077 1,077 - (237) (237)
investments
--------- --------- ------- --------- --------- ------
713 1,077 1,790 1,187 (237) 950
Investment management (106) (319) (425) (112) (337) (449)
fees
Performance incentive - (8) (8) - (14) (14)
fees
Other expenses (320) (3) (323) (429) (1) (430)
--------- --------- ------- --------- --------- ------
Return/(loss) on
ordinary activities
before tax 287 747 1,034 646 (589) 57
Tax on ordinary (57) 57 - (108) 98 (10)
activities
--------- --------- ------- --------- --------- ------
Return/(loss)
attributable to equity
Shareholders 230 804 1,034 538 (491) 47
Basic and diluted
return/(loss) per share 0.7p 2.6p 3.3p 1.7p (1.6p) 0.1p
All Revenue and Capital items in the above statement derive from continuing
operations. No operations were acquired or discontinued during the year. The
total column within the Income Statement represents the profit and loss account
of the Company.
A Statement of Total Recognised Gains and Losses has not been prepared as all
gains and losses are recognised in the Income Statement as shown above.
Other than revaluation movements arising on investments held at fair value
through the profit and loss account, there were no differences between the
return/deficit as stated above and historical cost.
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the year ended 31 October 2010
2010 2009
GBP'000 GBP'000
Opening shareholders' funds 25,858 28,342
Purchase of own shares (167) (408)
Total recognised gains for the year 1,034 47
Dividends paid (1,087) (2,123)
----------- ----------
Closing shareholders' funds 25,638 25,858
BALANCE SHEET
at 31 October 2010
2010 2009
GBP'000 GBP'000 GBP'000 GBP'000
Fixed assets
Investments 20,662 24,416
Current assets
Debtors 1,672 523
Current investments 2,000 -
Cash at bank and in hand 1,463 1,137
------- -------
5,135 1,660
Creditors: amounts falling due within one year (159) (218)
------- -------
Net current assets 4,976 1,442
-------- -------
Net assets 25,638 25,858
Capital and reserves
Called up share capital 309 312
Capital redemption reserve 78 75
Share premium 1,064 1,064
Merger reserve 2,832 8,694
Special reserve 6,599 1,795
Capital reserve - realised 11,333 11,493
Revaluation reserve 2,679 1,678
Revenue reserve 744 747
-------- -------
Total equity shareholders' funds 25,638 25,858
Basic and diluted net asset value per share 83.0p 82.9p
CASH FLOW STATEMENT
for the year ended 31 October 2010
2010 2009
GBP'000 GBP'000
Net cash (outflow)/inflow from operating activities (8) 327
--------- --------
Taxation (10) (78)
--------- --------
Capital expenditure
Purchase of investments (5,391) (5,612)
Sale of investments 9,030 4,645
--------- --------
Net cash inflow/(outflow) from capital expenditure 3,639 (967)
--------- --------
Management of liquid resources
Purchase of current investment (2,000) -
--------- --------
Net cash outflow from liquid resources (2,000)
--------- --------
Equity dividends paid (1,083) (2,121)
--------- --------
Net cash inflow/(outflow) before financing 538 (2,839)
Financing
Purchase of own shares (212) (422)
--------- --------
Net cash outflow from financing (212) (422)
--------- --------
Increase/(decrease) in cash 326 (3,261)
NOTES ON THE ACCOUNTS
for the year ended 31 October 2010
1. Accounting policies
Basis of accounting
The Company has prepared its financial statements under UK Generally Accepted
Accounting Practice and in accordance with the Statement of Recommended Practice
"Financial Statements of Investment Trust Companies and Venture Capital Trusts"
January 2009 ("SORP").
The financial statements are prepared under the historical cost convention
except for certain financial instruments measured at fair value and on the basis
that it is not appropriate to prepare consolidated accounts as explained in note
9.
The Company implements new Financial Reporting Standards issued by the
Accounting Standards Board when required.
Presentation of Income Statement
In order to better reflect the activities of a venture capital trust 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 Income Statement. The net revenue is the measure the directors
believe appropriate in assessing the Company's compliance with certain
requirements set out in Part 6 of the Income Tax Act 2007.
Investments
Investments are designated as "fair value through profit or loss" assets due to
investments being managed and performance evaluated on a fair value basis. A
financial asset is designated within this category if it is both acquired and
managed, with a view to selling after a period of time, in accordance with the
Company's documented investment policy. The fair value of an investment upon
acquisition is deemed to be cost. Thereafter investments are measured at fair
value in accordance with the International Private Equity and Venture Capital
Valuation Guidelines ("IPEV") together with FRS26.
Listed fixed income investments and investments quoted on AIM are measured using
bid prices in accordance with the IPEV.
For unquoted instruments, fair value is established using the IPEV. The
valuation methodologies for unquoted entities used by the IPEV to ascertain the
fair value of an investment are as follows:
* Price of recent investment;
* Multiples;
* Net assets;
* Discounted cash flows or earnings (of underlying business);
* Discounted cash flows (from the investment); and
* Industry valuation benchmarks.
The methodology applied takes account of the nature, facts and circumstances of
the individual investment and uses reasonable data, market inputs, assumptions
and estimates in order to ascertain fair value.
Where an investee company has gone into receivership, liquidation, or
administration (where there is little likelihood of recovery), the loss on the
investment, although not physically disposed of, is treated as being realised.
Gains and losses arising from changes in fair value are included in the Income
Statement for the year as a capital item and transaction costs on acquisition or
disposal of the investment expensed.
It is not the Company's policy to exercise either significant or controlling
influence over investee companies. Therefore the results of these companies are
not incorporated into the Income Statement except to the extent of any income
accrued. This is in accordance with the SORP that does not require portfolio
investments to be accounted for using the equity method of accounting.
Current asset Investments
Current asset investments comprise amounts held on fixed term deposits at a
banking institution and are valued at par.
Income
Dividend income from investments is recognised when the shareholders' rights to
receive payment has been established, normally the ex dividend date.
Interest income is accrued on a timely basis, by reference to the principal
outstanding and at the effective interest rate applicable and only where there
is reasonable certainty of collection.
Expenses
All expenses are accounted for on an accruals basis. In respect of the analysis
between revenue and capital items presented within the Income Statement, all
expenses have been presented as revenue items except as follows:
* Expenses which are incidental to the acquisition of an investment are
deducted as a capital item.
* Expenses which are incidental to the disposal of an investment are deducted
from the disposal proceeds of the investment.
* Expenses are split and presented partly as capital items where a connection
with the maintenance or enhancement of the value of the investments held can
be demonstrated. The Company has adopted the policy of allocating investment
managers fees, 75% to capital and 25% to revenue 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.
* Performance incentive fees arising from the disposal of investments are
deducted as a capital item.
Taxation
The tax effects on different items in the Income Statement are allocated between
capital and revenue on the same basis as the particular item to which they
relate using the Company's effective rate of tax for the accounting period.
Due to the Company's status as a Venture Capital Trust and the continued
intention to meet the conditions required to comply with Part 6 of the Income
Tax Act 2007, no provision for taxation is required in respect of any realised
or unrealised appreciation of the Company's investments which arises.
Deferred taxation, is not discounted, and 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 the
accounts.
Other debtors and other creditors
Other debtors (including accrued income) and other creditors are included within
the accounts at amortised cost, equivalent to the fair value of the expected
balance receivable/payable by the Company.
2. Basic and diluted return per share
2010 2009
Return per Share based on:
Net revenue return for the financial year ( GBP'000) 230 538
Capital return per Share based on:
Net capital gain/(loss) for the financial year 804 (491)
( GBP'000)
Weighted average number of Shares in issue 31,060,084 31,183,605
As the Company has not issued any convertible securities or share options, there
is no dilutive effect on return per share. The return per share disclosed
therefore represents both basic and diluted return per share.
3. Basic and diluted net asset value per ordinary share
2010 2009
Shares in issue Net Asset Value Net Asset Value
2010 2009 Pence per GBP'000 Pence per GBP'000
share share
Ordinary
Shares 30,903,509 31,175,509 83.0p 25,638 82.9p 25,858
As the Company has not issued any convertible securities or share options, there
is no dilutive effect on net asset per share. The net asset value per share
disclosed therefore represents both basic and diluted return per share.
On 11 November 2010 the Company repurchased 60,000 Ordinary Shares of 1p each at
49.5p. These shares have subsequently been cancelled. The total number of
Ordinary Shares in issue at the date of this report is 30,843,509.
4. Principal financial risks
As a VCT, the majority of the Company's assets are represented by financial
instruments which are held as part of the investment portfolio. In order to
ensure continued compliance with relevant VCT regulations and to be in a
position to deliver the long term capital growth, which is part of the Company's
investment objective, the Board is very much aware of the need to manage and
mitigate the risks associated with these financial instruments.
The management of these risks starts with the application of a clear investment
policy which has been developed by the Board who are experienced investment
professionals. Furthermore, the Board has appointed an experienced Investment
Manager to whom they have communicated the Company's investment objectives and
whose remuneration is linked to the achievement of those objectives. The
Investment Manager reports regularly to the Board on performance, and to
facilitate the direct Board involvement with key decisions, on whether or not to
invest, disinvest and the nature, terms and the security of investments being
made.
Further information about the VCT's investment policy is set out in the Report
of the Directors.
In assessing the risk profile of its investment portfolio, the Board has
identified three principal classes of financial instrument which are analysed
within note 9. Investments are "fair value through the profit and loss account"
and are recognised as such on initial recognition.
In addition to its investment portfolio, the VCT holds cash balances with one of
the main UK banks and the Listed Fixed Income Securities Manager. The Directors
consider that the risk profile associated with cash deposits is low and thus the
carrying value in the Financial Statements is a close approximation of its fair
value.
The Board has reviewed the Company's financial risk profile and concluded that
the current sensitivity level remains appropriate.
A review of the specific financial risks faced by the Company follows.
Market risks
The key market risks to which the Company is exposed are interest rate risk and
market price risk. The Company has undertaken sensitivity analysis on its
financial instruments, split into the relevant component parts, taking into
consideration the economic climate at the time of review in order to ascertain
the appropriate risk allocation.
Interest rate risk
Board decisions in relation to amounts to be retained as cash deposits and held
in fixed interest investments (including yields) are influenced by actual and
potential changes in the Bank of England base rate.
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 loss that the Company might suffer through holding
market positions in the face of market movements. At 31 October 2010, the net
unrealised gain on the quoted portfolios (AIM-quoted and fixed income
investments) was GBP194,000 (2009: net unrealised loss of GBP799,000).
The investments the Company holds are (with the exception of listed fixed income
securities), in the main, thinly traded (due to the underlying nature of the
investments) and, as such, the prices are more volatile than those of more
widely traded, full list, securities. In addition, 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 ability of the Company to purchase or
sell investments is also constrained by the requirements set down for VCTs.
The Board considers each investment purchase to ensure that an acquisition will
enable the Company to continue to have an appropriate spread of market risk and
that an appropriate risk reward profile is maintained.
It is not the Company's policy to use derivative instruments to mitigate market
risk, as the Board believes that the effectiveness of such instruments does not
justify the cost or risk involved.
Credit risk
Credit risk is the risk that a counterparty to a financial instrument is unable
to discharge a commitment to the Company made under that instrument.
Investments in loan stocks comprise a fundamental part of the Company's venture
capital investments and are managed within the main investment management
procedures.
The Company only has one current investment, which is held in a three year fixed
rate deposit account at Royal Bank of Scotland plc, which is a "Long Term" Aa3
rated financial institution (Moody's) and, consequently the Directors consider
that the risk profile associated with this deposit is low.
Operating cash is mainly held by Bank of Scotland plc, which is an Aa3 rated
financial institution (Moody's) and, consequently the Directors consider that
the risk profile associated with cash deposits is low.
Interest, dividends and other receivables are predominantly covered within the
investment management procedures.
Liquidity risk
Liquidity risk is the risk that the Company encounters difficulties in meeting
obligations associated with its financial liabilities. Liquidity risk may also
arise from either the inability to sell financial instruments when required at
their fair values or from the inability to generate cash inflows as required.
As the Company only ever has a low level of creditors, (2010: GBP159,000, 2009:
GBP218,000) has no borrowings and has a healthy bank balance, the Board believes
that the Company's exposure to liquidity risk is minimal.
5. Related party transactions
Chrysalis VCT Management Limited, a wholly owned subsidiary, is the Company's
Investment Manager which receives a fee of 1.65% of net assets per annum.
During the period GBP425,000 (2009: GBP449,000) was paid to Chrysalis VCT
Management Limited in respect of these fees. No amounts were outstanding at the
year end.
An exit fee is payable quarterly to Chrysalis VCT Management Ltd (with effect
from 1 May 2006) based on cash realisations from all investments excluding
quoted loan notes, redemptions of loan notes in the normal course of business
and other treasury functions. The exit fee is the greater of 1% of the cash
proceeds of any exit or 5% of the gain to the Company after all exit costs for
investments made after 30 April 2004 reduced to 2.5% of investments made prior
to 30 April 2004. During the year exit fees of GBP8,000 (2009: GBP14,000) were due
to Chrysalis VCT Management Ltd. At the year-end GBP4,000 was outstanding (2009:
GBP10,000).
ANNOUNCEMENT BASED ON AUDITED ACCOUNTS
The financial information set out in this announcement does not constitute the
Company's statutory financial statements in accordance with section 434
Companies Act 2006 for the year ended 31 October 2010, but has been extracted
from the statutory financial statements for the year ended 31 October 2010,
which were approved by the Board of Directors on 7 February 2011 and will be
delivered to the Registrar of Companies following the Company's Annual General
Meeting. The Independent Auditor's Report on those financial statements was
unqualified and did not contain any emphasis of matter nor statements under s
498(2) and (3) of the Companies Act 2006.
The statutory accounts for the year ended 31 October 2009 have been delivered to
the Registrar of Companies and received an Independent Auditors report which was
unqualified and did not contain any emphasis of matter nor statements under s
498(2) and (3) of the Companies Act 2006.
A copy of the full annual report and financial statements for the year ended 31
October 2010 will be printed and posted to Shareholders shortly. Copies will
also be available to the public at the registered office of the Company at 10
Lower Grosvenor Place, London, SW1W 0EN and will be available for download from
www.chrysalisvct.co.uk and www.downing.co.uk.
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.
Source: Chrysalis VCT PLC via Thomson Reuters ONE
[HUG#1486077]
Chrysalis Vct (LSE:CYS)
Historical Stock Chart
Von Jun 2024 bis Jul 2024
Chrysalis Vct (LSE:CYS)
Historical Stock Chart
Von Jul 2023 bis Jul 2024
