Final Results
22 Dezember 2004 - 8:01AM
UK Regulatory
RNS Number:7123G
Chrysalis VCT PLC
22 December 2004
CHRYSALIS VCT PLC
PRELIMINARY ANNOUNCEMENT OF RESULTS
FOR THE YEAR ENDED 31 OCTOBER 2004
FINANCIAL HIGHLIGHTS
2004 2003
pence pence
Net asset value per share 66.50 61.90
Total capital dividends per ordinary share for year 1.25 -
Total revenue dividends per ordinary share for year 0.25 1.00
Total dividends for the year 1.50 1.00
Cumulative dividends since launch 5.45 3.95
Total return 71.95 65.85
(Net asset value per share plus cumulative dividends)
Net assets #14.2 million #13.4 million
The statement to Shareholders by the Chairman, Robert Drummond, includes the
following comments:
I am pleased to announce that, for the year to 31 October 2004, your Company is,
for the first time, able to report an increase in its Total Return to
Shareholders (Net Asset Value plus cumulative dividends) to 71.95p per share.
This is an uplift of 6.1p since the previous year end, with most of this
increase occurring in the second half of the year.
Background
Following significant changes to your Board of Directors in late 2003, the
Company agreed the termination of the fund management contract held by Classic
Fund Management Ltd on 14th April 2004. The Company became self-managed under
the leadership of Chris Kay and has subsequently changed its name to Chrysalis
VCT plc. These changes were replicated by three other VCTs formerly managed by
Classic Fund Management Ltd which all are now self-managed by the same team and
have identical boards. They are Chrysalis A VCT plc, Chrysalis B VCT plc and
Chrysalis C ("The Chrysalis VCTs").
The changes have made a significant impact on the performance of the Company
with no recent investments failing and no substantial new write-downs. Costs
have been reduced and tightly controlled, although this has been achieved only
by sharing resources with the Chrysalis VCTs, a situation that cannot be
maintained indefinitely since the corporate costs of a fully listed company are
high and at, its current size, your Company cannot attract and retain quality
full-time executives.
The future
In September 2004, the Inland Revenue clarified and changed the tax rules on the
merger of VCTs making the process a realistic possibility. Under the rules, all
tax breaks, including CGT reinvestment relief, can now be carried over from a
holding in one VCT into an acquiring VCT.
Your Board has commenced discussions with the other Chrysalis VCTs with a view
to merging them into one. If this occurs, it will result in a number of
immediate improvements. Firstly, the corporate costs of a public company will
be shared and thereby considerably reduced as a percentage of net assets.
Secondly, the size will enable us to continue to be self managed by our existing
team on a more full-time basis and will be able to recruit anew. Thirdly, the
market for our shares will be wider and more liquid, enhanced by continuing
share buy-backs. (It should be noted that while these discussions are in
progress your Company has been advised that it is prohibited from undertaking
share buy-backs. The Board, however, expect these to resume as soon as the
Company is permitted to do so.)
I will be in contact with you as soon as there is any firm proposal to put to
you.
Board changes
In accordance with maintaining the independence of the Board and establishing
good corporate governance during the merger discussions, Chris Kay and Nicholas
Lewis, both of whom have executive or contractual responsibilities to the
Company, have agreed to step down as Directors and will resign with effect from
31 December 2004. It is intended to appoint a new independent non-executive
director to the Board in due course.
Chris Kay and his team remain responsible for the management of the Company's
funds and investments, whilst Downing Management Services Limited continues to
act as administrator and Grant Whitehouse will remain as Company Secretary.
I would like to thank Nicholas Lewis for his commitment to your Company and for
the major role he has played in effecting the necessary changes in order to
establish a sound base for the future.
Conclusion
I would also like to thank my other colleagues on the Board, our administrators
and the executives of the Company for all the determination and hard work
carried out to ensure a successful series of changes to the structure of this
company. Furthermore, their good judgement and investment management has
contributed to a turn-round in your Company's financial performance.
Annual General Meeting
The next Annual General Meeting of the Company will be held at 69 Eccleston
Square, London SW1V 1PJ at 10:00 am on 12 April 2005. I welcome Shareholders
attendance at that meeting, when I expect to be able to provide an update on the
latest developments.
Robert Drummond
Chairman
INVESTMENT MANAGEMENT REPORT
The interim management team took over managing the portfolio on April 15th when
I was appointed part-time managing director. Due to the need to keep costs down
the team has been kept very small and its first priority was to concentrate
resources on the portfolio.
There are early signs that this policy is proving successful. Overall the
venture capital investments have risen in value from #7.6 million as at 30 April
2004 (adjusted for additions and disposals) to #9.3 million, a rise of #1.7
million or 22%. In addition, income generated from the portfolio has also seen
a marked increase, achieving #153,000 in the second half of the year compared
with #92,000 in the first half, an increase of 66%.
With regard to the individual companies in the portfolio, the largest valuation
increase has come from Ma Potters (up from #1.08 million to #2.11 million).
This is due to improved trading and is supported by a written offer from a third
party.
Sit-up Ltd has also continued to perform very well and is ahead of budget. Its
two shopping channels, price-drop.tv and bid-up.tv are now firmly established.
Consequently, the valuation of Chrysalis' investment has increased to #1.54m.
Capital Pub Company Ltd is also now performing much better and recently
announced that it would be seeking an AIM listing in Spring 2006. Your board
has therefore decided to release most of the provision made against this
investment at the half year.
Our three major AIM quoted stocks have had mixed fortunes. Glisten plc has
increased in value by 31% over the year, although, the valuation has actually
declined in the last 6 months. Computer Software Group plc ("CSG") has
continued its acquisition strategy and the VCT invested a further #150,000 to
help fund the most recent transaction. Overall CSG's shares are up over the
year producing an unrealised gain, net of new investment, of #154,000.
On the negative side, 2 Travel Group plc has recently requested that its shares
be suspended from AIM pending clarification of its financial position.
Accordingly the VCT has taken a full provision against its equity holding (cost
#150,000) and a 50% provision against its loan stock (cost #600,000). We are
endeavouring to work with the company to protect our position.
The only company to fail during the year, Zorbit Babycare, was reported on in
the interim statement. Accede Solutions was also sold for a nominal sum due to
its very poor trading position.
The majority of the rest of the portfolio is broadly trading on budget and
therefore their valuations are largely unchanged.
Overall we are cautiously optimistic about the current state of the portfolio
but we are aware that the qualifying investment percentage, although above the
crucial 70% limit is not as high as we would like. However, due to the current
size of the VCT and the need to control operating costs, it has not been
possible to recruit sufficient executives to make new investments. We strongly
believe that, should the merger discussions mentioned in the Chairman's
Statement ultimately lead to a merger, the increased size of the VCT will enable
us to increase resources so that a number of new investments can be made.
Chris Kay
Managing Director
PORTFOLIO OF INVESTMENTS
The following investments were held at 31 October 2004:
Valuation
movement % of
Cost Valuation in year portfolio
#'000 #'000 #'000 by value
Top ten venture capital investments
Ma Potter's Limited 1,000 2,112 1,112 14.8%
Sit-Up Limited 504 1,535 914 10.8%
Glisten plc * 223 735 246 5.2%
Babel Media Limited 500 655 (96) 4.6%
Computer Software Group plc * 300 605 154 4.3%
Centre Design Limited 600 555 1 3.9%
The Capital Pub Company plc 505 488 (92) 3.4%
Precision Dental Laboratories Group Limited 350 417 - 2.9%
Strainstall Group Limited 302 318 (60) 2.2%
Triaster Ltd 382 311 (10) 2.2%
4,666 7,731 2,169 54.3%
Other venture capital investments
2 Travel Group plc * 750 300 (472) 2.1%
Kids Safetynet Limited 638 281 - 2.0%
IX Holdings plc 250 250 119 1.8%
Protx Group Limited 155 155 - 1.1%
Tellings Golden Millar plc * 75 142 (5) 1.0%
Elam-T Limited 452 127 - 0.9%
Avionic Services plc * 325 105 (12) 0.7%
Art VPS Limited 155 105 50 0.7%
Forward Media Limited 250 65 2 0.5%
Advance Media Information Limited 5 1 - -
First Mortgage Services Limited 680 - (80) -
Jetmask Limited 286 - - -
Shopcreator plc 255 - (113) -
Zorbit Babycare Limited 500 - (337) -
4,776 1,531 (848) 10.8%
Total venture capital investments 9,442 9,262 1,321 65.1%
Listed fixed income securities 4,906 4,910 59 34.5%
Other investments 283 - (283) -
Total 14,631 14,172 1,097 99.6%
Cash at bank and in hand 63 0.4%
14,235 100.0%
All investments are unquoted unless otherwise stated.
* Quoted on the Alternative Investment Market ("AIM")
BALANCE SHEET
at 31 October 2004
31 October 2004 31 October 2003
#'000 #'000 #'000 #'000
Fixed Assets
Venture capital investments 9,262 8,011
Listed fixed income securities 4,910 4,851
14,172 12,862
Current Assets
Debtors 172 202
Cash at bank and in hand 63 663
235 865
Creditors: amounts falling due within one year (187) (286)
Net current assets 48 579
Net assets 14,220 13,441
Capital and reserves
Called up share capital 214 217
Capital redemption reserve 5 2
Special reserve 13,864 12,961
Capital reserve - realised 40 228
Revenue reserve 97 33
Equity shareholders' funds 14,220 13,441
Net asset value per share 66.5p 61.9p
STATEMENT OF TOTAL RETURN (incorporating the revenue Account)
for year ended 31 October 2004
Year ended 31 October 2004 Year ended 31 October 2003
Revenue Capital Total Revenue Capital Total
#'000 #'000 #'000 #'000 #'000 #'000
Gains/(losses) on investments
- Realised - 218 218 - (721) (721)
- Unrealised - 1,097 1,097 - (1,910) (1,910)
Income 475 - 475 524 - 524
475 1,315 1,790 524 (2,631) (2,107)
Investment management fees (45) (136) (181) (71) (214) (285)
Other expenses (314) (11) (325) (235) (9) (244)
Return on ordinary activities before tax 116 1,168 1,284 218 (2,854) (2,636)
Tax on ordinary activities 2 - 2 (3) - (3)
Return on ordinary activities after tax 118 1,168 1,286 215 (2,854) (2,639)
Dividends (54) (270) (324) (217) - (217)
Transfer to/(from) reserves 64 898 962 (2) (2,854) (2,856)
Return per ordinary share 0.5p 5.4p 5.9p 1.0p (13.1p) (12.1p)
The revenue column of this statement is the profit and loss account of the
Company.
All revenue and capital items in the above statement derive from continuing
operations.
CASHFLOW STATEMENT
for year ended 31 October 2004
Year ended Year ended
31 October 2004 31 October 2003
#'000 #'000 #'000 #'000
Net cash inflow from operating activities 32 260
Taxation
Corporation tax received/(paid) 2 (50)
Capital Expenditure
Purchase of listed fixed income securities - (9,534)
Purchase of venture capital investments (454) (4,621)
Purchase of other investments (208) -
(662) (14,155)
Sale of listed fixed income securities - 13,888
Sale of venture capital investments 742 806
Net cash inflow from capital expenditure 80 539
Equity dividends paid (541) (383)
Net cash (outflow)/inflow before financing (427) 366
Financing
Shares repurchased (173) (98)
Net cash outflow from financing (173) (98)
(Decrease)/increase in cash (600) 268
Reconciliation of net cash flow to movement in net funds
(Decrease)/increase in cash during the year (600) 268
Net funds at 1 November 2003 663 395
Net funds at 31 October 2004 63 663
Announcement based on draft accounts (unqualified audit report)
The financial information has been prepared on the basis of the accounting
policies set out in the Company's financial statements for the year ended 31
October 2003.
The financial information set out in the announcement does not constitute the
Company's statutory accounts for the year ended 31 October 2004. The statutory
accounts for the year ended 31 October 2004 will be finalised on the basis of
the financial information presented by the directors in this preliminary
announcement and will be delivered to the Registrar of Companies following the
Company's Annual General Meeting.
The financial information for the year ended 31 October 2003 is derived from the
statutory accounts for that year which have been delivered to the Registrar of
Companies. The auditors reported on those accounts; this report was unqualified
and did not contain a statement under section 237(2) or (3) of the Companies Act
1985.
A copy of the full annual report and financial statements for the year ended 31
October 2004 will be printed and posted to shareholders. Copies will also be
available to the public at the registered office of the Company at 69 Eccleston
Square, London SW1V 1PJ.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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