CYS.L Regulatory News (CYS)

23 Jun 2005 07:00

Chrysalis VCT PLC23 June 2005 CHRYSALIS VCT PLCAND ITS SUBSIDIARIES Interim Statement for the six months ended 30 April 2005 Recent Performance summary 30 April 31 Oct 30 April 2005 2004 2004 pence pence pence Net asset value per share 71.9 66.5 60.7 Cumulative dividends per ordinary share 5.4 5.4 5.4 Total return 77.3 71.9 66.1 CHAIRMAN'S STATEMENT The period since 1 November 2004, has been one of further changes for yourCompany. I am pleased to report that our offer for Chrysalis A VCT plc ,Chrysalis B VCT plc and Chrysalis C VCT plc was hugely successful and, followingacceptances by over 90% of shareholders in each of those VCTs, we are now in theprocess of compulsory acquisition of the shares which we do not already own.This outcome is particularly pleasing for the fact that your Company was thefirst VCT to attempt and achieve a merger. I would like to thank all the advisers who assisted us on the merger and myfellow directors for their hard work and dedication in achieving this goal,which produces a substantially larger VCT than was previously the case and, withthat, the benefit of a significantly lower overhead burden for Shareholders. Annual General Meeting I was pleased to see a higher than usual attendance at the Company's AnnualGeneral Meeting ("AGM") held in April 2005. Shortly before the meeting took place, I became aware that a number ofShareholders had been contacted by Graham Spooner, one of the former investmentmanagers of the Company. Mr Spooner's correspondence urged Shareholders not tore-elect the Directors at the AGM. In the event, all Shareholders in attendance at the meeting, with the exceptionof Mr Spooner, voted in favour on the re-election resolutions. Notably, oneshareholder said that he felt he had been mislead by Mr Spooner's letter andonly became aware of the true state of affairs by attending the meeting. MrSpooner's objectives appear unclear to the Board and it is regrettable that heappears intent on wasting the Company's time and money with his actions. If anyShareholders have any queries regarding this matter I would be happy to discussthem. Format of Accounts For the first time, we are reporting consolidated figures which include the VCTswe have acquired, namely Chrysalis A VCT plc, Chrysalis B VCT plc and ChrysalisC VCT plc. Ownership of all the Group's investments has now been transferred toChrysalis VCT plc and, in due course, the subsidiary undertakings will be woundup and struck off, at which point, we will return to presenting single companyaccounts. Net Asset Value Even more satisfying than the successful mergers is the fact that news from theGroup's investment portfolio has been very positive over the period underreview. At 30 April 2005, the Group's Net Asset Value per share ("NAV") had risen to71.9p, an increase of 5.4p (8.1%) since the previous year end of 31 October2004. In addition, it is worth noting that the NAV has increased by 11.2p(18.5%) since the management of the VCT was changed in April 2004. Venture Capital Investments Excellent progress has been made by a number of investments over the period,with the Group's investment portfolio rising in value by £1.6 million. Shortly after the period end, the investment in sit-up Limited was sold for£5.63 million, a gain against cost of £4.37 million and against the previouscarrying value of £1.95 million. In addition, Ma Potters, the expanding restaurant chain, has continued to makestrong progress, and has attracted a number of approaches from potential tradepurchasers resulting in its valuation being increased from £2.14 million to£2.47 million. With the focus on completing the merger and extracting value from the existingportfolio, the Company has made relatively few new investments. It did,however, make a new investment of £54,000 in YouGov plc, the online marketresearch company, and two follow-on investments, including £150,000 in ComputerSoftware Group plc. Share buybacks As stated in the merger documentation, the Company has undertaken to buy inshares at a 10% discount to NAV (for at least a limited period). The Companyhas been effectively prohibited from buying in shares since last October,however this is now able to resume. Any Shareholders wishing to sell their holding should consult their financialadviser to ensure they understand the potential tax implications of such adisposal. Shares cannot be sold directly back to the Company but must be soldthrough a stockbroker. Board and Management On 1 April 2005, Peter Harkness joined the Board as a non-executive director.Peter is an experienced serial entrepreneur and gives an added dimension to theBoard. Your Board now consists of three non-executive directors, which weconsider an appropriate size for the Company. The investment management activities are now carried out by the Company'sinvestment management subsidiary, Chrysalis VCT Management Limited, which isheaded by Chris Kay. The Board is very satisfied with the current investmentmanagement arrangements and the improved performance and, therefore, do not planto seek an external investment manager for the foreseeable future. Dividend In view of the realisation of the investment in sit-up Limited which took placein May, the Group has now realised a substantial capital gain. As a result, Iam pleased to announce that the Company will pay an interim capital distributionof 3p per share. The distribution will be paid on 15 July 2005 to Shareholderson the register on 1 July 2005. Shareholders should note that the interim capital distribution has not beenprovided in these accounts as it has been declared after the period end. TheCompany's shares will be declared "ex-dividend" on 29 June 2005, at which pointthe NAV will be adjusted to reflect the dividend in calculating the price atwhich the Company buys in shares as described above. Outlook A number of investments within the Company's portfolio are facing thepossibility of successful exits in the short and medium term. The Board isencouraging the investment management team to dedicate a significant level oftheir resources to maximising the return to the Company if these exits can bedelivered. If and when these exits occur, the focus will start to shift towardsmaking new investments. Over the coming six months the Company will also be completing the final partsof the merger process such that we will end up with a VCT of an efficient sizewhich has a portfolio with good prospects. I look forward to reporting progresswith the year end results to 31 October 2005. Robert DrummondChairman 23 June 2005 UNAUDITED GROUP STATEMENT OF TOTAL RETURN(incorporating the revenue account)for the six months ended 30 April 2005 Six months ended Six months ended Year ended 30 April 2005 30 April 2004 31 Oct 2004 Revenue Capital Total Revenue Capital Total Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 Income 255 - 255 182 - 182 475 Gains/(losses) on investments:- Realised - 10 10 - 317 317 218- Unrealised - 1,795 1,795 - (143) (143) 1,097 255 1,805 2,060 182 174 356 1,790 Investment management fees (24) (71) (95) (45) (135) (180) (181) Other expenses (166) - (166) (109) (2) (111) (325) Return on ordinary activities 65 1,654 1,799 28 37 65 1,284before taxation Tax on ordinary activities - - - - - - 2 Return attributable to equity 65 1,654 1,799 28 37 65 1,286shareholders Distributions - - - (54) (269) (323) (324) Transfer to/(from) reserves 65 1,654 1,799 (26) (232) (258) 962 Return per share 0.3p 8.1p 8.4p 0.1p 0.2p 0.3p 5.9p The revenue column of this statement is the profit and loss account of theGroup. All revenue and capital items in the above statement derive from continuingoperations. The Group has only one class of business and derives its income from investmentsmade in shares, securities and bank deposits. The above figures for the period to 30 April 2005 include Chrysalis VCT plc forthe whole period and Chrysalis A VCT plc , Chrysalis B VCT plc and Chrysalis CVCT plc for the period from when the subsidiary undertakings were deemed to beacquired on 1 March 2005 to 30 April 2005. The comparative figures are in respect of the six months ended 30 April 2004 andthe year ended 31 October 2004 respectively and are for Chrysalis VCT plc only. UNAUDITED SUMMARISED GROUP BALANCE SHEETas at 30 April 2005 30 April 30 April 31 Oct 2005 2004 2004 £'000 £'000 £'000Fixed assetsVenture capital investments 21,001 7,927 9,262Listed fixed income 4,569 4,881 4,910investments 25,570 12,808 14,172 Net current assets 1,061 283 48 Net assets 26,631 13,091 14,220 Capital and reservesCalled up share capital 370 215 214Capital redemption reserve 34 4 5Share premium 8,193 - -Special reserve 16,269 12,824 13,864Capital reserve - unrealised 1,360 - -Capital reserve - realised 455 40 40Revenue reserve (50) 8 97 Total equity shareholders' 26,631 13,091 14,220funds Net asset value per share 71.9p 60.7p 66.5p UNAUDITED GROUP CASHFLOW STATEMENTfor the six months ended 30 April 2005 Six Six months months ended ended Year ended 30 Apr 30 Apr 31 Oct 2005 2004 2004 Note £'000 £'000 £'000Cash (outflow)/inflow from operatingactivities and returns on investments 1 (269) (109) 32 Taxation - - 2 Capital expenditure Purchase of listed fixed income (1,262) - -investments Purchase of venture capital (282) (479) (454)investments Purchase of other investments (12) - (208) Proceeds on disposal of listed fixed 1,859 - -income investments Proceeds on disposal of venture capital 7 739 742investments Net cash inflow from capital 310 260 80expenditure Acquisitions and disposals Cash acquired with subsidiaries 2,045 - - Equity dividends paid (1,063) (217) (541) Net cash inflow/(outflow) before 1,023 (66) (427)financing Financing Shares repurchased (11) (92) (173)Net cash outflow from financing (11) (92) (173) Increase/(decrease) in cash 2 1,012 (158) (600) Notes to the cashflow statement:1 Cash outflow from operatingactivities and returns on investments Net revenue return before taxation 65 28 116Expenses charged to capital (71) (137) (223)Merger costs capitalised (409)Decrease in other debtors 13 13 263Increase/(decrease) in other creditors 133 (13) 2 Net cash (outflow)/inflow from (269) (109) 260operating activities 2 Analysis of net fundsBeginning of period 63 663 663Net cash inflow/(outflow) 1,012 (158) (600)End of period 1,075 505 63 SUMMARY OF THE GROUP INVESTMENT PORTFOLIOas at 30 April 2005 Cost Valuation % of portfolio £'000 £'000 by valueTop ten venture capital investmentssit-up Limited 1,260 5,342 20.9%Ma Potter's Limited 1,000 2,470 9.7%Precision Dental Laboratories Limited 1,087 1,996 7.8%Strainstall Group Limited 1,002 1,405 5.5%Babel Media Limited 1,000 1,309 5.1%Centre Design Limited 1,350 1,305 5.1%Computer Software Group plc * 865 1,223 4.8%Wessex Advanced Switching Products Ltd 51 795 3.1%Glisten plc * 223 749 2.9%Triaster Limited 829 686 2.7% 8,667 17,280 67.6% Other venture capital investments 12,224 3,722 14.5% Listed fixed income securities 4,655 4,569 17.9% Total investments 25,546 25,570 100.0% All venture capital investments are unquoted unless otherwise stated. * Quoted on the Alternative Investment Market NOTES TO THE UNAUDITED FINANCIAL STATEMENTS 1. The above financial information has been prepared on the basis of the accounting policies set out on page 9. 2. The calculation of the revenue and capital return per share for the period is based upon the net revenue and capital profit after tax of £65,000 and £1,654,000 respectively, divided by the weighted average number of shares in issue during the period of 21,475,315. 3. The unaudited financial statements set out above do not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985 and have not been delivered to the Registrar of Companies. The figures for the year ended 31 October 2004 have been extracted from the financial statements for that year, which have been delivered to the Registrar of Companies; the auditors' report on those financial statements was unqualified. 4. Copies of the unaudited interim results will be sent to shareholders shortly. Further copies can be obtained from the Company's Registered Office. PRINCIPAL ACCOUNTING POLICIES The financial statements are prepared in accordance with applicable accountingstandards and with the Statement of Recommended Practice "Financial Statementsof Investment Trust Companies" (the "SORP") in all material aspects. Theparticular accounting policies adopted are described below. Accounting convention The financial statements are prepared under the historical cost convention,modified by the revaluation of investments. Group accounts The Group accounts consolidate the accounts of the Company and its wholly ownedsubsidiaries; Chrysalis A VCT plc, Chrysalis B VCT plc and Chrysalis C VCT plcfrom 1 March 2005. Chrysalis VCT Management Limited, another wholly ownedsubsidiary, has not been consolidated as it is not considered material to theGroup. The revenue account is only presented in consolidated form as providedby Section 230 of the Companies Act 1985. Net revenue after taxation of theCompany for the period amounted to £28,000 (period ended 30 April 2004: £28,000,year ended 31 October 2004: £118,000). Investments Unquoted investments are stated at Directors' valuations which are in accordancewith the BVCA guidelines. The unrealised depreciation or appreciation arisingon the valuation of investments and gains and losses arising on the disposal ofinvestments are dealt with in the capital reserve. It is not the Company's policy to exercise controlling influence over investeecompanies. Therefore the results of these companies are not incorporated intothe revenue account except to the extent of any income accrued. Income and expenses All income and expenses are treated on the accruals basis and dividend income isincluded in revenue on a received basis. The fixed returns on non-equity sharesand on debt securities are recognised on a time apportionment basis and onlywhere there is reasonable certainty of collection. The Company has adopted thepolicy of allocating investment managers fees, 75% to the capital reserve and25% to the revenue account as permitted by the SORP. The allocation is in linewith the Board's expectation of long term returns from the Company's investmentsin the form of capital gains and income respectively. Expenses, which areincidental to the acquisition of an investment, are included in the cost of theinvestment. Expenses, which are incidental to the disposal of an investment,are deducted from the proceeds of the investment. Deferred Taxation Deferred taxation is provided in full on timing differences that result in anobligation at the balance sheet date to pay more tax, or a right to pay lesstax, at a future date, at rates expected to apply when they crystallise based oncurrent tax rates and law. Timing differences arise from the inclusion of itemsof income and expenditure in taxation computations in periods different fromthose in which they are included in financial statements. This information is provided by RNS The company news service from the London Stock Exchange