TIDMCYS
Chrysalis VCT plc
Final results for the year ended 31 October 2014
FINANCIAL SUMMARY
31 Oct 31 Oct
2014 2013
pence pence
Net asset value per share ("NAV") 81.90 83.50
Cumulative dividends paid per share since launch * 53.20 40.70
Total Return 135.10 124.20
(Net asset value per share plus cumulative dividends)
Dividends in respect of financial year
Interim dividend per share (paid) 1.75 1.75
Special dividend per share (paid) 7.50 -
Final proposed dividend per share 3.25 3.25
12.50 5.00
* Excludes final proposed dividend
CHAIRMAN'S STATEMENT
*Record year for dividends at 12.5p
*2014 return triple that of 2013
*13.1% increase in net asset value over last year
*Total return on 80p investment now at 135.1p
I am delighted to present the results for the year to 2014, which has
been an exceptional one for the Company. The headline achievement is
that we will have paid out a total of 12.5p per share during the year
under review and despite this substantial pay-out, the Net Asset Value
("NAV") per share is virtually unchanged at the year end.
The star turn was our very successful exit of our investment in Wessex
Advance Switching Products Limited ("WASP"), but there has been plenty
of other solid portfolio management by our team.
Chrysalis had been invested in WASP since 1999 and, as we reported in
our Half Year statement, the eventual proceeds of GBP8.9 million were
over double WASP's carrying value and produced a very healthy profit of
GBP8.85 million on the original cost as paid by Downing Classic VCT plc.
As a result of this exit, the Company paid a special dividend of 7.5p
per share in July 2014, alongside the normal interim dividend of 1.75p.
Combined with the proposed final dividend of 3.25p per share, the total
dividends in respect of the year to 31 October 2014 total 12.5p.
Following the payment of the final dividend, total dividends paid since
launch will have topped 56p.
We have achieved another significant exit from a more recent investment
- Autocue, which makes the ubiquitous prompting technology used by TV
presenters. We invested in June 2010, and in October 2014, we sold with
a profit of around GBP500,000. We are hopeful of further payments being
released over time from an escrow account.
Portfolio
At the year end, the Company held a portfolio of 25 venture capital
investments, valued at GBP13.8 million. As you will see from the
Investment Management Report it has been a busy year for investment
activity.
In summary, the investment team has undertaken:
*four new investments;
*two follow-on investments;
*one investment restructuring; and
*two unquoted investment exits
All this went alongside loan note redemptions and other investment
activities.
I believe all shareholders will join with myself and my Board colleagues
in expressing our thanks for a job well done to the key executives of
our investment management company, Managing Director Chris Kay and
Investment Director Robert Wilson. This is a year when their skill and
efforts have been fully on display.
Chris Kay provides further commentary on our portfolio companies in his
Investment Management report. We are delighted to have increased our
interest in the children's entertainment group, Coolabi, which is
bringing "The Clangers" back to BBC TV with 26 episodes narrated by
Michael Palin being aired from June 2015. Chris also reports on
investments in precision engineers, Electrobase, the digital publisher,
Green Star Media and in optical image stabilisation pioneers, Cambridge
Mechatronics Ltd, which has an exciting technology to reduce blur in
camera phone images.
Cash and fixed income securities
The Company held GBP7.1 million in cash and fixed income securities at
the year-end; split as cash of GBP4.9 million and fixed income
securities of GBP2.2 million.
The proposed final dividend will cost the company GBP1 million, which
leaves a healthy GBP3.9 million of cash ready both to make new
investments and to support existing investments where required.
Management of the Company
Shareholders will be aware that our investment management fees are low
compared with the VCT industry in general, at 1.6% of net assets due
essentially to the self-managed structure we created in 2005.
The Board keeps this position under review, but we still believe that
being self-managed remains as being in the best interests for
shareholders - as evidenced by this year's results.
Net asset value, results and dividend
Shareholders have enjoyed splendid returns this year, yet despite the
Company paying out dividends totalling GBP3.7 million during the year,
the Company's NAV per share at 31 October 2014 has remained fairly
static at 81.9p. In comparison to the NAV at 2013 of 83.5p, and after
adjusting for dividends paid during the year, the year end results show
an increase of 10.9p or 13.1% over the year.
The return on activities after taxation for the year was GBP3.2 million
(2013: GBP1.1 million), comprising a revenue return of GBP217,000 and a
capital return of GBP3.0 million.
The Company paid an interim dividend of 1.75p per share on 31 July 2014,
together with a special dividend of 7.5p per share. Subject to
Shareholder approval at the forthcoming AGM, your Board is proposing to
pay a final dividend of 3.25p per share on 6 March 2015 to Shareholders
on the register at 6 February 2015.
Share buybacks
The Company maintains a policy of making ad hoc share buybacks when they
are offered via its broker, Nplus1 Singer Capital Markets, with a
decision on whether to buy, and at what price, being taken on a
case-by-case basis. The Directors feel that, in general, our resources
are better applied to the dividend payments from which all Shareholders
benefit directly, than to share buy-backs.
During the year no such transactions occurred as investor interest
mopped up all available shares in the secondary market.
We recommend that Shareholders wishing to acquire more shares, or to
sell, contact the company brokers, Nplus1 Singer Capital Markets, who
are usually aware of other parties looking to buy or sell.
Directors
During the year, the Fund has again had the benefit of sound counsel and
support from all Directors and I have greatly appreciated the
contributions of my non-executive colleagues Julie Baddeley and Martin
Knight.
Annual General Meeting
The forthcoming AGM will be held at Ergon House, Horseferry Road, London
SW1P 2AL at 11:00am on 25 February 2015.
Conclusion
This has, indeed, been a splendid year for the Fund and our shareholders
have been the beneficiaries. But it is at times like this that we should
clearly understand that strong returns do not result from mere chance.
The seeds of this year's harvest were planted and nurtured over several
years.
Behind the scenes this work continues as the Chrysalis team follows the
Board's steady and determined strategy of seeking sound investments and
backing the skills and sector knowledge of their management teams.
WASP was a particularly profitable exit, but it was no flash in the pan.
My final thanks go to all shareholders for your continued support.
Peter Harkness
Chairman
INVESTMENT MANAGEMENT REPORT
It has been both a busy and highly successful year with over GBP11
million being realised from the investment portfolio and GBP5.5 million
of proceeds being invested in qualifying holdings. Since at the start of
the financial year the investment portfolio was only valued at GBP16.2
million, that represents quite a high turnover.
The pleasing outcome of all this activity was that overall return for
shareholders for the year totalled GBP3.2 million or 10.9p per share
which is the best return for eight years and means that total return per
share has more than doubled from 65.4p to 135.1p since we took over the
management role in April 2004 despite that period including a major
financial recession.
The stand out deal was the sale of Wessex Advanced Switching Products
("WASP") where we received GBP8.9 million for our equity stake, a profit
of GBP8.85 million over the total cost of just GBP50,000. We are also
hopeful of receiving further payments from an escrow account over the
next 3 years (subject to certain conditions being met). In addition over
recent years we had been receiving six figure annual dividend payments
from WASP making the overall return even higher and demonstrating the
reward for a long term approach since the first investment in WASP was
made in 1999.
The second major exit was from a much more recent investment. We first
invested in Autocue in June 2010 subscribing GBP300,000 in equity for an
11% stake and the company was sold in October 2014 with Chrysalis
receiving GBP810,000 which represents an IRR of 28.2%*. Again we are
hopeful of further payments being released over time from an escrow
account.
In both cases we followed the management's lead in deciding when to exit
since we believe that those actually working in the investee companies
are best qualified to determine when is the best time to exit.
We have already been able to re-invest a significant proportion of this
realised cash and a further two investments are scheduled to complete
before the end of 2014 with several more in the pipeline.
Our biggest new investment was the GBP2.0 million invested in Coolabi
Group which specialises in children's entertainment, with its business
now spanning TV production, brand management and licensing, books and
video games. In particular it is bringing The Clangers back to The BBC
with 26 episodes, narrated by Michael Palin, being aired from June 2015.
We have largely provided mezzanine finance with 90% of our investment
being in high yielding loan-stock showing that the banks still seem wary
of anything but very secured lending.
Our second biggest new investment was in ERP NewCo Limited which
manufactures precision components for the telecommunications,
electronics, defence and specialist automotive industries. We invested
GBP1 million alongside a similar amount from Chelverton Asset Management
to facilitate a partial MBI and general shareholder reorganisation which
will hopefully enable Electrobase to grow substantially. The early signs
are certainly encouraging.
GBP650,000 was also invested as development capital in Green Star Media
which is a specialist consumer digital publisher concentrating on sport
coaching. The deal was structured to provide some element of downside
protection with the bulk of the investment being in loan stock with a
redemption premium. Chrysalis is still able to structure investments in
this way because we have the significant advantage of operating under
the old VCT rules which allow much more flexibility than the current
rules which all newly raised money has to abide by.
The final new investment of the year was a GBP300,000 all equity
investment in Cambridge Mechatronics ("CML"). We are very excited about
the prospects for CML which designs and engineers components for cameras
to go in mobile phones which is a huge market.
During the year we also supported the existing portfolio by providing
further investments. In February we invested GBP250,000 to K10 (London)
to help fund its expansion. K10's second sushi restaurant is now
performing well and the company is about to announce the location of its
third outlet.
In March we invested a net GBP300,000 in Locale Enterprises which helped
it to acquire its "sister" company London Italian Restaurants Ltd in
which Chrysalis also had an investment. The merger has streamlined the
management of Locale's restaurants and whilst trading in Locale's
neighbourhood restaurants has yet to recover to pre-recession levels,
its flagship site near the Millennium Wheel at the heart of London
continues to perform exceptionally well.
The exits both this year and last (when 25% of the unquoted portfolio
was realised) has inevitably meant that the portfolio is less mature
than it was and will probably result in fewer exits this year although
we are currently in meaningful discussions about the sale of one
portfolio company. The earlier stage of some of our investee companies
is likely to mean that trading results will be more variable with
corresponding movements in valuations, however generally we are happy
with the overall health of the portfolio.
We are also seeing more new opportunities than for some time and are
hopeful of making some good new investments during this financial year.
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 2014:
Valuation % of
movement portfolio
Cost Valuation in year by value
GBP'000 GBP'000 GBP'000
Top ten venture capital
investments
Locale Enterprises Limited 2,613 2,427 (649) 11.6%
Coolabi Group Limited 1,956 2,079 123 10.0%
MyTime Media Holdings Limited 750 1,761 163 8.4%
Precision Dental Laboratories
Limited 1,510 1,677 (308) 8.1%
ERP Newco Limited 1,000 1,000 - 4.8%
Internet Fusion Limited 700 900 20 4.3%
Green Star Media Limited 650 650 - 3.1%
K10 (London) Limited 600 609 (52) 2.9%
VEEMEE Limited 500 500 (323) 2.4%
Triaster Ltd 306 402 (622) 1.9%
10,585 12,005 (1,648) 57.5%
Other venture capital investments
Ensign Communication Holdings
Limited 292 335 (103) 1.6%
Livvakt Limited 550 329 - 1.6%
Life's Kitchen Limited 245 321 76 1.6%
Cambridge Mechatronics Limited 300 300 - 1.4%
Newquay Helicopters (2013)
Limited 169 169 (137) 0.8%
Zappar Limited - 160 129 0.8%
Cashfac plc - 74 (32) 0.4%
The Mission Marketing Group plc * 150 51 17 0.2%
Progility plc * 100 9 (1) -
The Kellan Group plc * 320 4 - -
Rhino Sport & Leisure Limited 304 - (273) -
Art VPS Limited 358 - - -
G-Crypt Limited 305 - - -
IX Group Limited 250 - - -
Planet Sport Holdings Limited 321 - (58) -
3,664 1,752 (382) 8.4%
Fixed income securities
Intermediate Capital Group plc 7% 745 741 (5) 3.5%
Provident Financial 7% 741 723 (17) 3.5%
Lloyds Banking Group 7% 724 721 (3) 3.5%
2,210 2,185 (25) 10.5%
16,459 15,942 (2,055) 76.4%
Cash at bank and in hand 4,938 23.6%
Total investments 20,880 100%
All investments are unquoted unless otherwise stated.
Investment movements for the year ended 31 October 2014
Additions
GBP'000
New venture capital investments
Coolabi Group Limited 1,956
ERP Newco Limited 1,000
Green Star Media Limited 650
Cambridge Mechatronics Limited 300
Follow-on venture capital investments
Locale Enterprises Limited** 1,300
K10 (London) Limited 250
Planet Sports Holding Limited 58
5,514
Fixed income securities
Intermediate Capital Group plc 7% 745
Lloyds Banking Group 7% 724
Provident Financial 7% 741
2,210
Total investments 7,724
Disposals
Gain/ Realised
Value at (loss) gain/
Cost 01/11/13* Proceeds vs cost (loss)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Venture capital
investments
Quoted
Best of the Best plc 81 64 70 (11) 6
Unquoted
Autocue Group Limited 500 811 1,011 511 200
Global 3 Digital Limited - - 1 1 1
Life's Kitchen Limited 10 10 10 - -
Locale Enterprises
Limited 25 25 25 - -
London Italian
Restaurants Limited** 1,000 437 1,000 - 563
Newquay Helicopters
(2013) Limited 126 126 217 91 91
Precision Dental
Laboratories Limited 200 200 200 - -
Triaster Limited 110 110 110 - -
Wessex Advanced
Switching Products Ltd 704 4,115 8,919 8,215 4,804
Dissolution/liquidation
and retention
Kids Safetynet Limited 637 - - (637) -
Retentions - - 87 87 87
3,393 5,898 11,650 8,257 5,752
Fixed income securities
S&W Investment Funds
Cash Fund 9 9 9 - -
United Kingdom 2.25%
Gilt 07/03/2014 415 423 420 5 (3)
424 432 429 5 (3)
Total 3,817 6,330 12,079 8,262 5,749
* Adjusted for purchases in the year where applicable
** The consideration for London Italian Restaurants Limited was partly
settled by Shares in Locale Enterprises Limited
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Directors' Report, the
Strategic Report and 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 Conduct
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 or 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 accounting estimates that are reasonable and
prudent;
* state whether applicable UK 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, to
disclose with reasonable accuracy at any time the financial position of
the Company and to 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.
In addition, each of the Directors considers that the Annual Report,
taken as a whole, is fair, balanced and understandable and provides the
information necessary for Shareholders to assess the Company's
performance, business model and strategy.
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.
By order of the Board
Grant Whitehouse
Secretary of Chrysalis VCT plc
INCOME STATEMENT
for the year ended 31 October 2014
2014 2013
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 651 - 651 966 - 966
Gains on
investments - 3,694 3,694 - 922 922
651 3,694 4,345 966 922 1,888
Investment (437) (411)
management fees (109) (328) (103) (308)
Performance (366)
incentive fees - (366) - (98) (98)
Other expenses (266) (28) (294) (252) (20) (272)
Return on ordinary
activities before
tax 276 2,972 3,248 611 496 1,107
Tax on ordinary
activities (59) 59 - (92) 92 -
Return
attributable to
equity
shareholders 217 3,031 3,248 519 588 1,107
Basic and diluted 10.9p
return per share 0.7p 10.2p 1.7p 2.0p 3.7p
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 or loss account, there were no differences
between the return as stated above and historical cost.
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the year ended 31 October 2014
2014 2013
GBP'000 GBP'000
Opening Shareholders' funds 24,979 25,168
Issue of shares - 326
Issue of shares under Share Realisation and Reinvestment
Programme - 6,985
Share issue costs - (90)
Purchase of own shares under Share Realisation and
Reinvestment Programme - (7,020)
Total recognised gains for the year 3,248 1,107
Dividends paid (3,740) (1,497)
Closing Shareholders' funds 24,487 24,979
BALANCE SHEET
at 31 October 2014
2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
Fixed assets
Investments 15,942 16,603
Current assets
Debtors 3,876 2,031
Cash at bank and in hand 4,938 6,445
8,814 8,476
Creditors: amounts falling due within one
year (269) (100)
Net current assets 8,545 8,376
Net assets 24,487 24,979
Capital and reserves
Called up share capital 299 299
Capital redemption reserve 89 89
Share premium 1,478 1,478
Merger reserve 1,458 1,981
Special reserve 2,823 2,320
Capital reserve - realised 16,095 11,051
Capital reserve - unrealised 1,689 7,122
Revenue reserve 556 639
Total equity shareholders' funds 24,487 24,979
Net asset value per share 81.9p 83.5p
CASH FLOW STATEMENT
for the year ended 31 October 2014
2014 2013
GBP'000 GBP'000
Net cash (outflow)/inflow from operating activities (300) 260
Taxation - -
Capital expenditure
Payments to acquire investments (7,162) (1,970)
Receipts from sale of investments 9,695 5,809
Net cash inflow from capital expenditure 2,533 3,839
Equity dividends paid (3,740) (1,497)
Net cash (outflow)/inflow before management
of liquid resources and financing (1,507) 2,602
Management of liquid resources
Redemption of current investment - 2,000
Net cash inflow from liquid resources - 2,000
Financing
Proceeds from shares issued - 326
Proceeds from shares issued under Share Realisation
and Reinvestment Programme - 6,985
Share issue costs - (90)
Purchase of own shares - (48)
Purchase of own shares under Share Realisation and
Reinvestment Programme - (7,020)
Net cash inflow from financing - 153
(Decrease)/increase in cash (1,507) 4,755
NOTES TO THE ACCOUNTS
for the year ended 31 October 2014
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 required to prepare consolidated
accounts. The Company's accounts therefore present information about it
as an individual undertaking rather than as a group undertaking.
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. 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.
Fixed asset investments
Investments are designated as "fair value through profit or loss" assets,
upon acquisition, 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.
Fixed income investments and investments quoted on AIM are measured
using bid prices in accordance with the IPEV.
For unquoted investments, 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. Permanent impairments in the value of investments are
deemed to be realised losses and held within the Capital Reserve -
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 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.
Income
Dividend income from investments is recognised when the Shareholders'
rights to receive payment have 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 management 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.
2.Basic and diluted return per share
2014 2013
Return per share based on:
Net revenue return for the financial year (GBP'000) 217 519
Capital return per share based on:
Net capital gain for the financial year (GBP'000) 3,031 588
Weighted average number of shares in issue 29,917,025 29,864,316
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
2014 2013
Shares in issue Net asset value Net asset value
Pence
Pence per
2014 2013 per share GBP'000 share GBP'000
Ordinary
Shares 29,917,025 29,917,025 81.9p 24,487 83.5p 24,979
As the Company has not issued any convertible securities or share
options, there is no dilutive effect on net asset value per share. The
net asset value per share disclosed therefore represents both basic and
diluted return per share.
4.Principal risks
The Company's investment activities expose the Company to a number of
risks associated with financial instruments and the sectors in which the
Company invests. The principal financial risks arising from the
Company's operations are:
*Investment risks;
*Credit risk; and
*Liquidity risk.
The Board regularly reviews these risks and the policies in place for
managing them. There have been no significant changes to the nature of
the risks that the Company is exposed to over the year and there have
also been no significant changes to the policies for managing those
risks during the year.
The risk management policies used by the Company in respect of the
principal financial risks and a review of the financial instruments held
at the year-end are provided below:
Investment risks
As a VCT, the Company is exposed to investment risks in the form of
potential losses and gains that may arise on the investments it holds in
accordance with its investment policy. The management of these
investment risks is a fundamental part of investment activities
undertaken by Chrysalis VCT Management Limited and overseen by the
Board. The Manager monitors investments through regular contact with
management of investee companies, regular review of management accounts
and other financial information and attendance at investee company board
meetings. This enables the Manager to manage the investment risk in
respect of individual investments. Investment risk is also mitigated by
holding a diversified portfolio spread across various business sectors
and asset classes.
The key investment risks to which the Company is exposed are:
*Investment price risk; and
*Interest rate 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.
Investment price risk
Market price risk arises from uncertainty about the future prices and
valuations of financial instruments held in accordance with the
Company's investment objectives. It represents the potential loss that
the Company might suffer through market price movements in respect of
quoted investments and also changes in the fair value of unquoted
investments that it holds.
Interest rate risk
The Company accepts exposure to interest rate risk on floating-rate
financial assets through the effect of changes in prevailing interest
rates. The Company receives interest on its cash deposits at a rate
agreed with its bankers and on liquidity funds at rates based on the
underlying investments. Investments in loan stock and fixed interest
investments attract interest predominantly at fixed rates. A summary of
the interest rate profile of the Company's investments is shown below.
Interest rate risk profile of financial assets and financial liabilities
There are three levels of interest which are attributable to the
financial instruments as follows:
*"Fixed rate" assets represent investments with predetermined yield
targets and comprise fixed interest and loan note investments.
*"Floating rate" assets predominantly bear interest at rates linked to
Bank of England base rate and comprise cash at bank.
*"No interest rate" assets do not attract interest and comprise equity
investments, loans and receivables (excluding cash at bank) and other
financial liabilities.
The Company monitors the level of income received from fixed, floating
and non interest rate assets and, if appropriate, may make adjustments
to the allocation between the categories, in particular, should this be
required to ensure compliance with the VCT regulations.
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. The Company is exposed to credit risk through its holdings
of loan stock in investee companies, investments in liquidity funds,
cash deposits and debtors.
The Manager manages credit risk in respect of loan stock with a similar
approach as described under Investment risks above. In addition the
credit risk is partially mitigated by registering floating charges over
the assets of certain investee companies. The strength of this security
in each case is dependent on the nature of the investee company's
business and its identifiable assets. The level of security is a key
means of managing credit risk. Similarly, the management of credit risk
associated interest, dividends and other receivables is covered within
the investment management procedures.
Cash is mainly held at Royal Bank of Scotland plc with a balance also
maintained at Bank of Scotland plc, both of which are A-rated financial
institutions and ultimately part-owned by the UK Government.
Consequently, the Directors consider that the risk profile associated
with cash deposits is low.
There have been no changes in fair value during the year that can be
directly attributable to changes in credit risk.
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. The Company usually has a relatively
low level of creditors (2014: GBP269,000, 2013: GBP100,000) and has no
borrowings. The Company always holds sufficient levels of funds as cash
and readily realisable investments in order to meet expenses and other
cash outflows as they arise. For these reasons, the Board believes that
the Company's exposure to liquidity risk is minimal.
The Company's liquidity risk is managed by Chrysalis VCT Management
Limited in line with guidance agreed with the Board and is reviewed by
the Board at regular intervals.
5. Related party transactions
Chrysalis VCT Management Limited, a wholly owned subsidiary, provides
investment management services to the Company for a fee of 1.65% of net
assets per annum. During the year, GBP437,000 (2013: GBP411,000) was
paid to Chrysalis VCT Management Limited in respect of these fees. No
amounts were outstanding at the year end.
A performance incentive fee is payable to Chrysalis VCT Management
Limited based on realisations from all investments excluding quoted loan
notes, redemptions of loan notes in the normal course of business and
other treasury functions. The performance incentive 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
performance incentive fees of GBP366,000 (2013: GBP98,000) were due to
Chrysalis VCT Management Limited. At the year end, GBP218,000 was
outstanding and payable (2013: GBP46,000).
Peter Harkness holds a position of significant influence within MyTime
Media Holdings Limited (formerly MyHobbyStore Holding Limited), an
investment held by the Company, and therefore abstains from discussions
surrounding the valuation or investment decisions regarding the company.
Details of the investment, including cost, valuation and income received
during the year are shown within the Annual Report
Martin Knight holds a position of significant influence within Cambridge
Mechatronics Limited, an investment held by the Company, and therefore
abstains from discussions surrounding the valuation or investment
decisions regarding the company. Details of the investment, including
cost and valuation are shown within the Annual Report
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 2014,
but has been extracted from the statutory financial statements for the
year ended 31 October 2014, which were approved by the Board of
Directors on 19 December 2014 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 s498(2) and (3) of the Companies Act 2006.
The statutory accounts for the year ended 31 October 2013 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 2014 will be printed and posted to shareholders
shortly. Copies will also be available to the public at the registered
office of the Company at Ergon House, Horseferry Road, London, SW1P 2AL
and will be available for download from www.downing.co.uk.
This announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the information
contained therein.
Source: Chrysalis VCT PLC via Globenewswire
HUG#1882259
Chrysalis Vct (LSE:CYS)
Historical Stock Chart
Von Jul 2024 bis Aug 2024
Chrysalis Vct (LSE:CYS)
Historical Stock Chart
Von Aug 2023 bis Aug 2024
