TIDMCYS
Chrysalis VCT plc
Half-Yearly Report for the six months ended 30 April 2012
Recent performance summary
30 April 31 October 30 April
2012 2011 2011
pence pence pence
Net asset value per share 81.9 84.9 83.7
Cumulative dividends paid per share 34.0 31.5 30.0
---------- ------------ ---------
Total Return 115.9 116.4 113.7
---------- ------------ ---------
(Net asset value per share plus cumulative
dividends)
CHAIRMAN'S STATEMENT
Shareholders will not need me to tell them that we are going through an almost
unprecedented period of economic uncertainty and confusion. Against this
background, Chrysalis VCT - and the majority of our investee companies - can
report a half year of relative stability.
Our existing portfolio of private equity investments, regularly reviewed by the
Board, remains heartening in its resilience when compared with the uncomfortable
ride being experienced on stock markets.
We continue to believe that attractive investments can be found and, just a
couple of days after the close of the reporting period, we completed a GBP525,000
investment in a growth capital opportunity, Internet Fusion Limited, which has
established an interesting business in the fast-growing e-commerce sector.
The stability of our portfolio, and the fact that we have sufficient resources
for new investments in the medium term, has enabled your Board to increase the
half year dividend to 1.75p - an improvement of more than 16% on last year. We
feel that Shareholders will welcome this significant improvement in dividend
yield.
Net asset value
At 30 April 2012, the net asset value per share ("NAV") stood at 81.9p, a
decrease of 0.5p (0.6%) since the previous year end of 31 October 2011 (after
adjusting for the 2.5p dividend paid on 30 March 2012).
Total Return (NAV plus cumulative dividends paid since launch) now stands at
115.9p per share, compared to an original net of income tax relief cost of
80.0p per share.
The Company's net assets are now GBP24.5 million, which is a decrease of GBP1.1
million since the last year end, however, GBP900,000 of that decrease is due to
the payment of dividends and share buybacks.
Venture capital investments
As might be expected, the current troubled economic climate has had a mixed
effect on the portfolio held by the Company. Unfortunately, Aerialcell Ltd, an
early stage investment, found that its business model was not sustainable and
has gone into liquidation resulting in a provision of GBP325,000. However, the
remainder of the portfolio has continued to adapt to the tough environment and,
overall, has shown an increase in value of GBP102,000.
I would particularly like to highlight Life's Kitchen which has recently signed
agreements to become the in-house caterer for two more Livery Halls which should
mean that its revenue this year will be five times greater than in 2009. We are
also pleased with the profitable growth being achieved by MyHobbyStore and
VEEMEE. All three investments have seen an uplift in value over the period.
Less encouraging has been the performance of London Italian Restaurants whose
restaurants in South London are suffering from weak trading and, consequently, a
provision of GBP219,000 has been made.
The Company has not made any significant disposals over the period but the few
additions and disposals that were made are shown below.
Listed fixed income securities
The Company continues to hold a portfolio of fixed income securities, which was
valued at GBP3.2 million at the period end. The unrealised loss on the portfolio
over the period was GBP4,000.
Results and dividend
The loss after taxation for the Company for the period was GBP216,000 comprising a
revenue return of GBP133,000 and a capital loss of GBP349,000.
The interim dividend of 1.75p per share will be paid on 31 July 2012 to
Shareholders on the register at 6 July 2012 in respect of the year to 31 October
2012. This will bring the total distributions paid to Ordinary Shareholders
since inception to 35.7p 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, Singer Capital
Markets, 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. One very pleasing statistic is that the discount to
NAV has been cut yet again, improving by approximately five percentage points
since the end of the financial year. Shareholders, and potential holders, seem
to have noted the value and yield we offer and demand for shares is much firmer
than it has been.
During the period, the Company purchased 253,448 shares for an aggregate
consideration of GBP124,000 and these shares were subsequently cancelled.
Outlook
We remain cautious about the remainder of the financial year - and beyond. Even
well run businesses are affected in a general downturn, however, we foresee no
unpleasant news from within the portfolio - but neither do we expect any
significant value boost from exits.
We're keeping calm and we're carrying on with the job in hand - which seems to
me to be exactly the right approach in such peculiar times.
Peter Harkness
Chairman
UNAUDITED INCOME STATEMENT
for the six months ended 30 April 2012
Year
ended
Six months ended Six months ended 31 Oct
30 April 2012 30 April 2011 2011
Revenue Capital Total Revenue Capital Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 345 - 345 378 - 378 781
Net (losses)/gains on
investments
- realised - 12 12 - (18) (18) 263
- unrealised - (227) (227) - 590 590 944
------------------------ ----------------------- -------
345 (215) 130 378 572 950 1,988
Investment management
fees (53) (159) (212) (53) (158) (211) (423)
Performance incentive
fees - (1) (1) - (15) (15) (27)
Other expenses (133) - (133) (128) (2) (130) (271)
------------------------ ----------------------- -------
Return on ordinary
activities
before taxation 159 (375) (216) 197 397 594 1,267
Taxation (26) 26 - (30) 30 - -
------------------------ ----------------------- -------
Return attributable to
equity shareholders 133 (349) (216) 167 427 594 1,267
------------------------ ----------------------- -------
Return per share 0.4p (1.1p) (0.7p) 0.5p 1.4p 1.9p 4.1p
UNAUDITED SUMMARISED BALANCE SHEET
as at 30 April 2012
As at As at As at
30 Apr 30 Apr 31 Oct
2012 2011 2011
Note
GBP'000 GBP'000 GBP'000
Fixed assets
Investments 21,139 21,642 21,876
-------- -------- -------
Current assets
Debtors 123 186 222
Current investments 2,000 2,000 2,000
Cash at bank and in hand 1,396 1,914 1,680
-------- -------- -------
3,519 4,100 3,902
Creditors: amounts falling due within one year (110) (93) (138)
-------- -------- -------
Net current assets 3,409 4,007 3,764
-------- -------- -------
Net assets 24,548 25,649 25,640
-------- -------- -------
Capital and reserves
Called up share capital 8 299 306 302
Capital redemption reserve 9 88 81 85
Share premium 9 1,064 1,064 1,064
Merger reserve 9 2,106 2,186 2,128
Special reserve 9 6,150 7,037 6,377
Capital reserve - realised 9 10,447 11,086 10,897
Revaluation reserve 9 3,702 3,208 3,927
Revenue reserve 9 692 681 860
-------- -------- -------
Equity shareholders' funds 7 24,548 25,649 25,640
-------- -------- -------
Net asset value per share 7 81.9p 83.7p 84.9p
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the six months ended 30 April 2012
As at As at As at
30 Apr 30 Apr 31 Oct
2012 2011 2011
Note
GBP'000 GBP'000 GBP'000
Opening Shareholders' funds 25,640 25,638 25,638
Purchase of own shares (124) (123) (346)
Total recognised (losses)/gains in the period (216) 594 1,267
Dividends paid (752) (460) (919)
-------- -------- -------
Closing Shareholders' funds 7 24,548 25,649 25,640
-------- -------- -------
UNAUDITED CASH FLOW STATEMENT
for the six months ended 30 April 2012
Six months Six months Year
ended ended ended
30 April 30 April 31 October
2012 2011 2011
Note
GBP'000 GBP'000 GBP'000
Cash inflow/(outflow) from operating
activities
a
and returns on investments 66 (50) (14)
------------ ------------ -----------
Capital expenditure
Purchase of investments (500) (2,929) (3,579)
Proceeds on disposal of investments 1,021 4,013 5,063
------------ ------------ -----------
Net cash inflow from capital 521 1,084 1,484
expenditure
------------ ------------ -----------
Equity dividends paid (752) (460) (919)
------------ ------------ -----------
Net cash (outflow)/inflow before (165) 574 551
financing
Financing
Purchase of own shares (119) (123) (334)
------------ ------------ -----------
Net cash outflow from financing (119) (123) (334)
------------ ------------ -----------
(Decrease)/increase in cash b (284) 451 217
------------ ------------ -----------
Notes to the cash flow statement:
a) Cash inflow/(outflow) from operating activities
and returns on investments
(Loss)/return on ordinary activities before (216) 594 1,267
taxation
Losses/(gains) on investments 215 (572) (1,207)
Decrease/(increase) in other debtors 98 (5) (40)
Decrease in other creditors (31) (67) (34)
------------ ------------ -----------
Net cash inflow/(outflow) from operating 66 (50) (14)
activities
------------ ------------ -----------
b)Analysis of net funds
Beginning of period 3,680 3,463 3,463
Net cash (outflow)/inflow (284) 451 217
------------ ------------ -----------
End of period 3,396 3,914 3,680
------------ ------------ -----------
SUMMARY OF INVESTMENT PORTFOLIO
as at 30 April 2012
Movement
in the % of
Cost Valuation period portfolio
GBP'000 GBP'000 GBP'000 by value
Top ten venture capital
investments
Wessex Advanced Switching Products 704 2,250 33 9.2%
Limited
Locale Enterprises Limited 1,338 2,019 (71) 8.2%
Precision Dental Laboratories 2,110 1,955 117 8.0%
Limited
British International Holdings 908 1,919 (71) 7.8%
Limited
Ensign Communication Holdings 292 1,614 (30) 6.6%
Limited
MyHobbyStore Holding Limited 750 1,366 130 5.6%
Escape Studios Limited 750 1,364 (238) 5.6%
VEEMEE Limited 500 1,019 202 4.1%
KnowledgePool Group Limited 1,000 1,000 - 4.1%
Triaster Limited 707 922 78 3.8%
------------ ----------- -------- ----------
9,059 15,428 150 63.0%
Other venture capital investments 5,385 2,560 (373) 10.4%
Listed fixed income securities 2,993 3,151 (4) 12.8%
------------ ----------- -------- ----------
17,437 21,139 (227) 86.2%
------------ --------
Royal Bank of Scotland 3.41% fixed term 8.1%
deposit account 2,000
Cash at bank and in hand 1,396 5.7%
----------- ----------
Total investments 24,535 100.0%
----------- ----------
All venture capital investments are unquoted unless otherwise stated.
SUMMARY OF INVESTMENT MOVEMENTS
for the six months ended 30 April 2012
Additions
GBP'000
Follow-on investments
Aerialcell Limited 50
Livvakt Limited 300
Bonds
S&W Investment Funds Cash Funds 150
--------
500
--------
Disposals
Market
value at Gain Total
1 November Disposal against realised
Cost 2011 proceeds cost gain
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Venture capital disposals
Best of the Best plc 16 4 16 - 12
Triaster Limited 51 51 51 - -
Bonds
United Kingdom Bonds
2.75% 22/01/2015 944 954 954 10 -
--------------------------------------------
1,011 1,009 1,021 10 12
--------------------------------------------
* 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 2012 and have been prepared in accordance with the accounting policies set
out in the statutory accounts for the year ended 31 October 2011 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
2011 and the year ended 31 October 2011 respectively.
5. Basic and diluted return per share
30 Apr 30 Apr 31 Oct
2012 2011 2011
Return per share based on:
Net revenue return for the period ( GBP'000) 133 167 346
------------ ------------ -----------
Capital return per share based on:
Net capital (loss)/gain for the period (349) 427 921
( GBP'000)
------------ ------------ -----------
Weighted average number of Ordinary Shares 30,576,806 30,780,243 30,655,950
------------ ------------ -----------
6. Dividends
30 Apr 31 Oct
30 April 2012 2011 2011
Pence per Revenue Capital Total Total Total
share GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Paid in period
2011 final 2.5 301 451 752 - -
2011 interim 1.5 - - - - 459
2010 final 1.5 - - - 460 460
----------------------------- ---------- ---------
301 451 752 460 919
----------------------------- ---------- ---------
7. Basic and diluted net asset value per share
30 Apr 30 Apr 31 Oct
2012 2011 2011
Net asset value per share based on:
Net assets ( GBP'000) 24,548 25,649 25,640
------------ ------------ -----------
Number of Ordinary Shares in issue
at the period end
29,958,849 30,655,065 30,212,297
------------ ------------ -----------
Net asset value per share 81.9p 83.7p 84.9p
------------ ------------ -----------
8. Called up share capital
No. of shares GBP'000
As at 1 November 2011: ordinary shares of 1p each 30,212,297 302
Shares bought back and cancelled (253,448) (3)
----------------- --------
As at 30 April 2012: ordinary shares of 1p each 29,958,849 299
----------------- --------
9. Reserves
Capital Capital
redemption Share Merger Special reserve Revaluation Revenue
reserve premium reserve reserve -realised reserve reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 November 2011 85 1,064 2,128 6,377 10,897 3,927 860
Shares repurchased 3 - - (124) - - -
Expenses capitalised - - - - (160) - -
Tax on capital - - - - 26 - -
expenses
Gains/(losses) on - - - - 12 (227) -
investments
Realisation of
revaluations
from previous years - - - - (2) 2 -
Realisation of
assets
acquired through -
historic merger
- (22) - 22 - -
Transfer between
reserves
- - - (103) 103 - -
Retained net revenue
for
the period - - - - - - 133
Dividends paid - - - - (451) - (301)
------------------------------------------------------------
At 30 April 2012 88 1,064 2,106 6,150 10,447 3,702 692
------------------------------------------------------------
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 include investment holding losses of GBP3.1 million
(31/10/2011: GBP2.6 million). GBP275,000 of the merger reserve is also deemed to be
distributable. At the period end there were GBP14 million (31/10/2011: GBP16
million) 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 2011 have been extracted from the financial statements for
that year, which have been delivered to the Registrar of Companies; the
Independent Auditor's Report on those financial statements was unqualified.
12. 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.
13. 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.
14. 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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