TIDMCYS
Chrysalis VCT plc
Half-Yearly Report for the six months ended 30 April 2011
Recent performance summary 30 April 2011 31 Oct 2010 30 April 2010
pence pence pence
Ordinary Shares
Net asset value per share 83.70 83.00 82.80
Cumulative dividends paid per share 29.95 28.45 26.95
--------------- ------------- --------------
Total return 113.65 111.45 109.75
(Net asset value per share plus
cumulative dividends)
CHAIRMAN'S STATEMENT
I am pleased to present the half yearly report for the Company, covering another
successful period. It is pleasing to note that since April 2009 the performance
of the Fund has enabled us to pay out a total of GBP2.1 million in dividends to
shareholders and spend GBP451,000 buying back shares in the market whilst
slighting increasing the value of your portfolio.
We continue to identify promising opportunities and your directors believe we
currently have a healthy portfolio of investments.
During the half year we have made further progress, in co-operation with our
brokers, in improving the price which shareholders who wish to exit, can
achieve. At the same time we have begun to see new shareholders buying in the
market and we attribute this interest to the Board's dividend policy and
successful investment strategy.
Net Asset Value
At 30 April 2011, the Net Asset Value per Ordinary Share ("NAV") stood at
83.7p, an increase of 2.2p (2.7%) since the previous year end of 31 October
2010 (after adjusting for the 1.5p per Ordinary Share dividend paid in the
period).
Total Return (NAV plus cumulative dividends paid since launch), now stands at
113.65p per share, compared to an original net of income tax relief cost of 80p
per share.
Venture Capital Investments
Unquoted investments
The company has added three new investments to the portfolio during the period.
One million pounds, was invested in Knowledge Pool Group , a training
outsourcer and GBP750,000 into My HobbyStore Holding, a publishing company
developing e-commerce opportunities in specialist hobby activities. An
investment of GBP250,000 has been made in Livvakt, a property development company
.
We have also invested a further GBP150,000, by way of equity and loan stock, into
VEEMEE bringing our total investment to GBP500,000.
In December 2010 the investment in Centre Design was sold for GBP1.4 million. In
addition to this disposal, Ensign Communication Holdings repaid our loan stock
some 4 and a half years before the actual redemption date. The remaining
investment in Ensign is now purely in equity holdings.
At the period end, the Company held a portfolio of 25 unquoted investments which
were valued at GBP16.9 million. This portfolio continues to trade well, with the
overall valuation being uplifted by GBP373,000.
AIM quoted investments
The AIM portfolio, which represents 3.4% of the total investment portfolio and
comprises five investments, was valued at GBP872,000 at the period end. During the
period, the Company disposed of its holding in YouGov plc. The AIM portfolio
has performed well recently with net unrealised gains over the period being
GBP247,000 (an increase of 38%) and with realised gains amounting to GBP3,000.
Listed fixed income securities
The Company continues to hold a portfolio of fixed income securities, which was
valued at GBP3.8 million at the period end. The unrealised loss on the portfolio
over the period was GBP30,000, with realised losses arising thereon of GBP19,000.
Results and dividend
The return after taxation for the Company for the period was GBP594,000,
comprising a revenue return of GBP167,000 and a capital return of GBP427,000.
The Company intends to pay a 1.5p dividend on 29 July 2011 to Shareholders on
the register at 1 July 2011 in respect of the year to 31 October 2011. This
will bring the total distributions paid to Ordinary Shareholders since inception
to 31.45p per Ordinary Share.
Share buybacks
The Company does not operate a fixed-price policy when purchasing its own
shares. If shares are offered to the Company via its brokers, Singers, a
decision is 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.
During the period, the Company purchased 248,444 Ordinary Shares for an
aggregate price of GBP123,000, being an average price of 49.0p per share. These
shares were subsequently cancelled.
Since the appointment of Singers the Board has worked to increase the exit price
received by any shareholders, or deceased estate, wishing to sell shares. The
success of this strategy has seen a considerable narrowing of the spread on our
shares which has produced an increase of 33% in the sale price achieved. In
addition, new investors have emerged from time to time and the Board sees this
as an endorsement of our investment performance and our dividend policy.
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.
Going concern
The Company has sufficient financial resources at the period end, and holds a
diversified portfolio of investments. As a consequence, the Directors believe
that the Company is well placed to manage its business risks successfully
despite the current uncertain economic outlook.
The Directors confirm that they are satisfied that the Company has adequate
resources to continue in business for the foreseeable future. For this reason
they believe that the Company continues to be a going concern and that it is
appropriate to apply the going concern basis in preparing the financial
statements.
Outlook
The Board is committed to providing value to the investors in the Company and we
anticipate that the remaining months of the financial year will continue the
steady performance that has been achieved in recent years.
Peter Harkness
Chairman
UNAUDITED INCOME STATEMENT
for the six months ended 30 April 2011
Six months ended
30 April 2011
Revenue Capital Total
GBP'000 GBP'000 GBP'000
Income 378 - 378
Net gains on investments - 572 572
--------- --------- -------
378 572 950
Investment management fees (53) (158) (211)
Performance incentive fees - (15) (15)
Other expenses (128) (2) (130)
--------- --------- -------
Return on ordinary activities before taxation 197 397 594
Taxation (30) 30 -
--------- --------- -------
Return attributable to equity shareholders 167 427 594
Return per Ordinary share 0.5p 1.4p 1.9p
Six months ended Year ended
31 October
30 April 2010 2010
Revenue Capital Total Total
GBP'000 GBP'000 GBP'000 GBP'000
Income 395 - 395 713
Net gains on investments - 503 503 1,077
--------- --------- ------- ------------
395 503 898 1,790
Investment management fees (53) (160) (213) (425)
Performance incentive fees - (5) (5) (8)
Other expenses (147) (1) (148) (323)
--------- --------- ------- ------------
Return on ordinary activities before 195 337 532 1,034
taxation
Taxation (33) 33 - -
--------- --------- ------- ------------
Return attributable to equity 162 370 532 1,034
shareholders
Return per Ordinary share 0.5p 1.2p 1.7p 3.3p
UNAUDITED SUMMARISED BALANCE SHEET
as at 30 April 2011
As at As at As at
30 Apr 2011 30 Apr 2010 31 Oct 2010
GBP'000 GBP'000 GBP'000
Fixed assets
Investments 21,642 22,798 20,662
------------- ------------- ------------
Current assets
Debtors 186 178 1,672
Current investments 2,000 - 2,000
Cash at bank and in hand 1,914 2,893 1,463
------------- ------------- ------------
4,100 3,071 5,135
Creditors: amounts falling due within
one year (93) (193) (159)
------------- ------------- ------------
Net current assets 4,007 2,878 4,976
------------- ------------- ------------
------------- ------------- ------------
Net assets 25,649 25,676 25,638
Capital and reserves
Called up share capital 306 310 309
Capital redemption reserve 81 77 78
Share premium 1,064 1,064 1,064
Merger reserve 2,186 2,832 2,832
Special reserve 7,037 7,455 6,599
Capital reserve - realised 11,086 11,423 11,333
Revaluation reserve 3,208 1,839 2,679
Revenue reserve 681 676 744
------------- ------------- ------------
Equity shareholders' funds 25,649 25,676 25,638
Net asset value per Ordinary share 83.7p 82.8p 83.0p
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the six months ended 30 April 2011
As at As at As at
30 Apr 2011 30 Apr 2010 31 Oct 2010
Total Total Total
GBP'000 GBP'000 GBP'000
Opening shareholders' funds 25,638 25,858 25,858
Purchase of own shares (123) (92) (167)
Total recognised gains in the period 594 532 1,034
Dividends paid (460) (622) (1,087)
------------- ------------- ------------
Closing shareholders' funds 25,649 25,676 25,638
UNAUDITED CASH FLOW STATEMENT
for the six months ended 30 April 2011
Six months Six months
ended ended Year ended
30 April 2011 30 April 2010 31 October
2010
Note GBP'000 GBP'000 GBP'000
Cash (outflow)/inflow from
operating activities and 1
returns on investments (50) 32 (8)
---------------- --------------- ---------------
Taxation - - (10)
---------------- --------------- ---------------
Capital expenditure
Purchase of investments (2,929) (1,074) (5,391)
Proceeds on disposal of 4,013 3,494 9,030
investments
---------------- --------------- ---------------
Net cash inflow from 1,084 2,420 3,639
capital expenditure
---------------- --------------- ---------------
Management of liquid
resources
Purchase of current - - (2,000)
investments
---------------- --------------- ---------------
Net cash outflow from - - (2,000)
liquid resources
---------------- --------------- ---------------
Equity dividends paid (460) (620) (1,083)
---------------- --------------- ---------------
Net cash inflow before 574 1,832 538
financing
Financing
Purchase of own shares (123) (76) (212)
---------------- --------------- ---------------
Net cash outflow from (123) (76) (212)
financing
---------------- --------------- ---------------
Increase in cash 2 451 1,756 326
Notes to the cash flow
statement:
1 Cash inflow from
operating activities and
returns on investments
Return on ordinary 594 532 1,034
activities before taxation
Gains on investments (572) (503) (1,077)
(Increase)/decrease in (5) 45 40
other debtors
Decrease in other creditors (67) (42) (5)
---------------- --------------- ---------------
Net cash (outflow)/inflow (50) 32 (8)
from operating activities
2 Analysis of net funds
Beginning of period 3,463 1,137 1,137
Net cash inflow 451 1,756 326
Purchase of liquidity fund - - 2,000
---------------- --------------- ---------------
End of period 3,914 2,893 3,463
SUMMARY OF INVESTMENT PORTFOLIO
as at 30 April 2011
Movement in the % of portfolio by
Cost Valuation period
GBP'000 GBP'000 GBP'000 value
Top ten venture
capital investments
Wessex Advanced 704 2,612 (511) 10.2%
Switching Products
Limited
Precision Dental 2,110 2,187 26 8.6%
Laboratories Limited
Locale Enterprises 1,500 2,152 (3) 8.4%
Limited
British International 908 1,868 149 7.3%
Holdings Limited
Ensign Communication 292 1,736 310 6.8%
Holdings Limited
Escape Studio Limited 750 1,243 253 4.9%
My HobbyStore Holding 750 1,053 303 4.1%
Limited
Knowledge Pool Group 1,000 1,000 - 3.9%
Limited
London Italian 1,000 875 - 3.4%
Restaurants Limited
The Capital Pub 505 782 242 3.1%
Company plc *
------------- --------- ---------------- ------------------
9,519 15,508 769 60.7%
Other venture capital 5,127 2,296 (149) 9.0%
investments
Listed fixed income 3,788 3,838 (30) 15.0%
securities
------------- --------- ---------------- ------------------
18,434 21,642 590 84.7%
Royal Bank of Scotland 3.41% 7.8%
fixed term deposit account 2,000
Cash at bank and in 7.5%
hand 1,914
--------- ------------------
Total investments 25,556 100.0%
All venture capital investments are unquoted unless otherwise stated.
* Quoted on AIM
SUMMARY OF INVESTMENT MOVEMENTS
for the six months ended 30 April 2011
Additions
Total
GBP'000
New investments
Knowledge Pool Group Limited 1,000
Livvakt Limited 250
My HobbyStore Holding Limited 750
Bonds
United Kingdom Gilt 2% 22/01/2016 929
--------
2,929
Disposals
Market Total
value at Gain/ realised
1 November Disposal (loss) gain/
Cost 2010* Proceeds against cost (loss)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Venture Capital
disposals
BreakingViews Limited - 18 18 18 -
Centre Design Limited 1,350 1,386 1,384 34 (2)
Ensign Communication
Holdings Ltd 230 230 230 - -
You Gov plc 20 30 33 13 3
Bonds
United Kingdom Bonds
4.5% 07/03/2013 878 876 857 (21) (19)
-----------------------------------------------------------
2,478 2,540 2,522 44 (18)
* 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
2011 and have been prepared in accordance with the accounting policies set
out in the statutory accounts for the year ended 31 October 2010 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
2010 and the year ended 31 October 2010 respectively.
5. Basic and diluted return per share
30 Apr 2011 30 Apr 2010 31 Oct 2010
Return per share based on:
Net revenue loss for the period ( GBP'000) 167 162 230
Capital return per share based on:
Net capital gain for the period ( GBP'000) 427 370 804
Weighted average number of Ordinary 30,780,243 31,154,376 31,060,084
Shares
6. Dividends
30 April 2011 31 Oct 2010
Pence Revenue Capital Total Total
per share GBP'000 GBP'000 GBP'000 GBP'000
Paid in period
2010 final 1.5 230 230 460 -
2010 interim 1.5 - - - 465
2009 final 2.0 - - - 622
--------- --------- ------- ------------
230 230 460 1,087
7. Basic and diluted return per share
30 Apr 2011 30 Apr 2010 31 Oct 2010
Net Asset Value per share based on:
Net Assets ( GBP'000) 25,649 25,676 25,638
Number of Ordinary Shares in issue at
the period end 30,655,065 31,025,509 30,903,509
Net Asset Value per share 83.7p 82.8p 83.0p
8. Called up share capital
Ordinary Shares
Shares GBP'000
As at 1 November 2010: Ordinary Shares of 1p each 30,903,509 309
Shares bought back and cancelled (248,444) (3)
---------------------
As at 30 April 2011: Ordinary Shares of 1p each 30,655,065 306
9. Reserves
Capital redemption Capital
reserve Share Merger Special reserve Revaluation Revenue
premium reserve reserve realised reserve reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 November 78 1,064 2,832 6,599 11,333 2,679 744
2010
Shares 3 - - (123) - - -
repurchased
Expenses - - - - (175) - -
capitalised
Tax on capital
expenses - - - - 30 - -
(Losses)/gains on
investments - - - - (18) 590 -
Realisation of
revaluations from
previous years - - - - 61 (61) -
Realisation of
assets acquired
through historic - - (646) - 646 - -
merger
Transfer between
reserves - - - 561 (561) - -
Retained net
revenue for the - - - - - - 167
period
Dividends paid - - - - (230) - (230)
---------------------------------------------------------------
At 30 April 2011 81 1,064 2,186 7,037 11,086 3,208 681
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 GBP2,692,000 (31/10/2010:
GBP2,711,000). GBP275,000 of the merger reserve is also deemed to be distributable.
At the period end there were GBP16,387,000 (31/10/2010: GBP16,240,000) of reserves
available for distribution.
10. 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.
11. 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 2010 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.
12. 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.
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
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