Final Results
(Thomson Reuters ONE) - CHRYSALIS VCT PLCFINAL RESULTS for the year ended 31 OCTOBER 2009FINANCIAL HIGHLIGHTS 2009 2008 Pence Pence Net asset value per share ("NAV") 82.90 88.30 Total distributions paid since inception 24.95 18.95 Total return 107.85 107.25CHAIRMAN'S STATEMENTA year ago we were looking at an uncertain and potentially very difficultbusiness environment. I am pleased to report that, although it was certainly noteasy-going, yourCompany ended the year to 31 October 2009 in good shape. We aretherefore recommending the payment of a final dividend of 2p per share, whichmakes a total dividend for the year under review of 4p, representing a tax-freeyield of approximately 6.5% (based on an estimated share buyback price at a 25%discount to NAV) on for the year as a whole.In addition, we were able to maintain our buy-back policy, and spent in excessof £400,000 acquiring shares which represented more than 2% of those in issue.The proposed dividend, together with the buy-backs and the interim 2p per sharepaid on 31 July 2009, account for in excess of £1.6 million distributed toShareholders during the year.The Company's performance over the past year has been reasonably stable, withincome generated from investments meeting both the running costs of the Companyand negating net capital losses which have arisen on the investment portfolio.'D' and 'E' Share ConversionOn30 April 2009, the 'D' and 'E' Shares were converted into Ordinary Shares atrates shown in the following table: 'D'/'E' New Conversion Share Shares in Ordinary rate per class issue Shares 1,000 'D'/'E' Share 'D' 532,982 411,441 772 'E' 601,376 290,429 483Prior to conversion, 'D' and 'E' Shareholders received total dividends of 20pand 30p respectively, as targeted in the 2006 fundraising prospectus.Following the conversion, the Company now has just one class of shares, whichsimplifies investment management, reporting and administration activities.Net Asset ValueAt 31 October 2009, the Net Asset Value ("NAV") per Ordinary Share was82.9p, anincrease of 0.6p or 0.7% over the year (after adjusting for the dividendstotalling 6.0p per share paid during the year).The Total Return (NAV plus cumulative dividends paid since launch) to OrdinaryShareholders since the Company's launch (when it was known as Downing ClassicVCT 3 plc) now stands at107.85p per Ordinary Share compared to an originalinvestment (net of income tax relief) of 80p per Ordinary Share.Venture capital investmentsThe Board continues to be satisfied that our policy of self-management, whichdistinguishes Chrysalis from the vast majority of VCTs, brings positive benefitsto shareholders. Our costs of operation are very competitive and, as Chris Kay,leader of our investment team explains in more detail elsewhere, your Companycontinues to produce positive returns. I commend Chris and his team for theiractivities during the year. Their focus has inevitably been on portfoliomanagement, rather than new investments, due to the economic climate, but we arebeginning to see more potential investments and believe that the current yearwill see increased investment activity.At the year end, the Company held a portfolio of 30 investments, valued at £15.8million. Unrealised losses arising on the portfolio amounted to £987,000 andrealised gains amounted to £649,000.Further commentary on the portfolio, together with a schedule of the additions,disposals and details of thehighest value investments can be found within theInvestment Management Report and Review of Investments.Listed fixed income securitiesTheCompany continues to hold a portfolio of fixed income securities, which wasvalued at £8.6 million at the year end and comprised almost entirely ofgilt-edged securities.During the year £3.6 million was re-invested from maturing securities, with theportfolio producing an unrealised gain of £113,000, and a realised gain of£7,000.The gilts were purchased during last year's banking crisis, in order to reduceexposure to the banks. The Board recognises that there are now other productsin the market which provide a higher yield and will therefore be diversifyingour fixed interest investments over the forthcoming year.The Company received dividends totalling £290,000 from its two most matureinvestments during the year, Precision Dental Laboratories Group Limited andWessex Advanced Switching Products Limited.The return on activities after taxation for the year was £47,000 (2008:£268,000), comprising a revenue return of £538,000 and a capital loss of£491,000.Dividends paid in respect of the year ended 31 October 2009 were as follows: Pence £ per share Interim dividend Ordinary Share - 31/07/09 2.00 629 Special dividend 'D' Share - 24/04/09 16.75 89 'E' Share - 24/04/09 26.75 161 ------- 879Subject to Shareholder approval at the forthcoming Annual General Meeting("AGM"), your Board is proposing to pay a final dividend of 2.00p per share(split as 0.75p revenue and 1.25p capital) on 16 April 2010 to Shareholders onthe register at 12 March 2010.Following payment of this dividend, Shareholders who invested in the Company atthe outset, will have received dividends totalling 26.95p per Ordinary Share.Share buybacksThe Company continues to operate a share buyback policy in order to provideliquidity in the market. Any Shareholders wishing to sell their holding shouldconsult their financial adviser toensure they understand the potential taximplications of such a disposal. Shares cannot be sold directly to the Companybut must be sold via the Stock Market through a stockbroker. The Company hasmade market purchases of shares from time to time at a 25% discount to the lastpublished NAV. The Board reviews the discount, together with the level of sharebuybacks undertaken, and makes changes as it sees fit.During the year the Company repurchased 654,811 Ordinary Shares of 1p each foran aggregate consideration of £408,000 being an average price of 61.9p perOrdinary Share of 1p each representing 2.1% of the issued Ordinary share capitalheld at 1 November 2008. These shares were subsequently cancelled and at theyear end the Company had 31,175,509 Ordinary shares in issue.VCT ContinuationIn line with the Articles of Association, a resolution that the Companycontinues as a Venture Capital Trust is proposed at the forthcoming AGM. TheDirectors recommend that Shareholders vote for the resolution.Annual General Meeting1.To renew the authority to allow the Company to make market purchases of theCompany's shares.2.To continue as a Venture Capital Trust.OutlookWith £9.7 million of liquid funds available, the Company remains well positionedto support those portfolio companies that are unable to obtain bank finance,whilst retaining the ability to invest in new opportunities that may arise.Finally I would like to place on record my appreciation of the work of my twoBoard colleagues, Julie Baddeley and Martin Knight, whose counsel and supporthas been invaluable in navigating your Company safely through a difficult year.Peter HarknessChairmanINVESTMENT MANAGEMENT REPORTDespite the economy being in recession for the whole of this financial year, itis pleasing to note that the VCT did make a positive return over the year. Thismeans that, in the 5½ years since we took over management of the fund, netassets per share have risen by 36.4%, in addition to the 19.5p of dividends paidout, which overall works out at a tax-free annual IRR of 11.1%.However, in many ways, it has been a surprisingly quiet year for the VCT. Thistime last year we fully expected that, during 2009, we would be faced with alarge number of difficult re-financing/re-structuring decisions for theportfolio. Equally we assumed that there would be opportunities for ourstrongly performing companies to acquire competitors at very attractive prices.In reality neither has happened in any significant way. We have had fewrequests from the portfolio for rescue finance and have only made two smallinvestments in that category, being a £14,000 participation in Planet Sportsrights issue and a £151,000 investment in Optima. This investment, alongsideconsiderably more from our syndicate partners, unfortunately failed toturnaround Optima's fortunes and, in December 2009, it went into administration. Unfortunately it was joined by CPI which also went into administration inJanuary 2010. These two companiesare however the only significant investeecompanies to fail during the last 18 months, which is less than expected giventhe state of the economy and the fact that VCTs have to invest in small,vulnerable, companies..We also have not seen any opportunistic acquisitions. Locale Enterprises(formerly Mentorion Limited) did buy Mentorion 2 but we were already invested inboth companies.It seems to us that whilst the banks are not being very helpful in providing newfinance and are taking every opportunity to increase lending margins and takefees, they seem reluctant to "pull the plug" on companies, perhaps due topolitical pressure now the government has such a major stake in the sector. Equally, HMRC seems very willing to allow companies to defer tax payments. These actions may actually only delay the inevitable outcomes, especially ifthe economy does not pick up quickly, but at present it is restrictingopportunities for successful companies to pick up the viable parts of failedenterprises.Therefore we have yet to significantly use our cash. Liquid funds (cash at bankand fixed interest investments) have reduced from £12.5m at the start of theyear, to £9.7m at the end, largely as a result of the £2.5m returned toshareholders in the form of dividends (physically paid) and share buy-backs. New investments of £1.8m were largely funded by realisations of £1.4m. Apartfrom the Mentorion 2 deal, realisation proceeds were mainly as a result ofdeferred payments from exits in previous years and, as we reported last year,the window of opportunity for small private company exits tends to come late inthe business cycle. Therefore we are not anticipating many exits this year.We are, however, hopeful that the rate of new investment opportunities will pickup this year and, as we continue to return cash to shareholders, the consequenceof a lack of exits means that the VCT is likely to be cash negative again thisyear. Therefore it was pleasing that we entered the recession with a significant"cash" balance.The only new investment made during the year was in Escape Studios, which has anational reputation for training personnel in the expanding computer graphicsindustry. We invested £750,000 in March 2009 to enable the company to expand itsonline teaching facilities. So far we are pleased with progress and sincecomputer graphics is a worldwide industry, the recent weakness of Sterling,which has made London a more attractive place to do business ,should helpEscape.Apart from CPI and Optima mentioned above, there were three other significantvaluation changes. Wessex Advanced Switching Products (up £559,000) and EnsignCommunications (up £578,000) saw valuations increased as a result ofconsiderably improved trading. In contrast Precision Dental Laboratoriesvaluation fell by £1m due to a 35% decline in operating profits. PrecisionDental Laboratories does however remain both profitable and cash generative andwe remain confident about its prospects.With regard to the prospects for the existing portfolio, we are relativelypleased with its overall trading performance and, of the companies that make up88% of the value of the portfolio, only one has significant borrowings (althoughif a proposed land sale goes through even that company will be largely debtfree). The portfolio is almost totally UK based and so is inevitably tied upwith the fortunes of the UK economy, however we are fortunate to have theresources to support our companies through these difficult times.Chrysalis VCT Management LimitedREVIEW OF INVESTMENTSPortfolio of investmentsThe following investments, all of which are incorporated in England and Wales,were held at 31 October 2009: Valuation Movement % of Cost Valuation in year portfolio £'000 £'000 £'000 by value Ten largest venture capital investments (by value) Wessex Advanced Switching Products 704 3,426 559 13.4% Limited Precision Dental Laboratories Group 2,110 2,175 (999) 8.5% Limited Locale Enterprises Limited (formerly Mentorion Limited) 1,500 2,020 212 7.9% Centre Design Limited 1,350 1,572 90 6.2% Ensign Communications Limited 500 1,282 578 5.0% London Italian Restaurants Limited 1,000 1,000 - 3.9% British International Holdings Limited 750 869 16 3.4% Triaster Limited 758 829 (60) 3.3% Escape Studios Limited 750 750 - 2.9% The Capital Pub Company plc * 505 353 116 1.4% --------------------------------------- 9,927 14,276 512 55.9% Other venture capital investments Y88 Product Development Limited (formerly RFTRAQ Limited) 325 270 - 1.1% Gcrypt Limited 208 231 - 0.9% Planet Sport (Holdings) Limited 263 225 (13) 0.8% Rhino Sport and Leisure Limited 166 149 (25) 0.6% BreakingViews Limited - 141 - 0.5% Glisten plc * 149 136 (158) 0.5% CPI Acquisition UK Limited 468 68 (400) 0.3% Global3Digital Limited 67 67 - 0.3% Lifes Kitchen Ltd. 165 65 (100) 0.3% Best of the Best plc * 98 54 15 0.2% The Mission Marketing Group plc * 150 40 (25) 0.2% YouGov plc * 20 38 (22) 0.1% ILX Group plc * 100 38 16 0.1% Cashfac Limited - 22 (61) 0.1% The Kellan Group plc * 320 20 (45) 0.1% Art VPS Limited 358 - - - Heath and Green Limited 30 - (30) - IX Group plc 250 - - - Kids SafteyNet Limited 637 - - - Optima Data Intelligence Limited 651 - (651) - --------------------------------------- 4,425 1,564 (1,499) 6.1% Listed fixed income securities Treasury 2¼% Stock 07/03/2014 2,513 2,508 (5) 9.8% Treasury 4¼% Stock 07/03/2011 1,883 1,986 47 7.8% Treasury 5¼% Stock 2012 1,477 1,553 46 6.1% Treasury 3¼% Stock 07/12/2011 1,293 1,289 (4) 5.1% Treasury 8% Stock 2013 1,163 1,184 30 4.6% Smith & Williamson Cash Trust 57 56 (1) 0.2% --------------------------------------- 8,386 8,576 113 33.6% Total 22,738 24,416 (874) 95.6% Cash at bank and in hand 1,137 4.4% ----------- ------------ Total investments 25,553 100.0%All investments are unquoted unless otherwise stated.* Quoted on AIMInvestment movements for the year ended 31 October 2009ADDITIONS Total £'000 New investments Escape Studios Limited 750 Follow on investments CPI Acquisition UK Limited 102 Gcrypt Limited 39 Locale Enterprises Limited 750 Optima Data Intelligence Limited 151 Planet Sport (Holdings) Limited 14 --------- Total venture capital investment additions 1,806 Listed fixed income securities Treasury 3¼% Stock 07/12/2011 1,293 Treasury 2¼% Stock 07/03/2014 2,513 --------- 3,806 Total investments 5,612DISPOSALS Cost MV at Proceeds Profit/ Realised 31/10/08* (loss) vs gain/ cost (loss) £'000 £'000 £'000 £'000 £'000 Venture Capital disposals Mentorion 2 Limited *** 750 750 778 28 28 CPI Acquisition UK Limited 34 34 37 3 3 Liquidations/ dissolutions Forward Media Limited 440 - 7 (433) 7 Goldstart Limited - - 217 217 217 Hat Pin plc 325 - - (325) - Patterning Technologies Limited 286 - - (286) - Shopcreator Limited 255 - - (255) - Spice Inns Limited 950 - - (950) - Ultralon Holdings Limited 1,028 - - (1,028) - Retention monies from prior disposals Babel Media Limited - - 394 394 394 Listed fixed income securities Smith & Williamson Cash Trust 707 711 703 (4) (8) Treasury 4% Stock 07/03/2009 1,215 1,232 1,228 13 (4) UK THM Treasury 2009 ** 1,546 1,561 1,580 34 19 --------------------------------------------- Total 7,536 4,288 4,944 (2,592) 656*Adjusted for purchases in the year**Gain recognised as revenue incomeSTATEMENT OF DIRECTORS' RESPONSIBILITIESThe Directors are responsible for preparing the Report of the Directors, theDirectors Remuneration Report, and the financial statements in accordance withapplicable law and regulations. They are also responsible for ensuring thatthe Annual Report includes information required by the Listing Rules of theFinancial Services Authority.Company law requires the Directors to prepare financial statements for eachfinancial year. Under that law the Directors have elected to prepare thefinancial statements in accordance with United Kingdom Generally AcceptedAccounting Practice (United Kingdom Accounting Standards and applicable law).Under company law theDirectors must not approve the financial statements unlessthey are satisfied that they give a true and fair view of the state of affairsof the Company and of the profit or loss of the Company for that period. Inpreparing those financial statements, the Directors are required to:?select suitable accounting policies and then apply them consistently;?make judgements and estimates that are reasonable and prudent;?state whether applicable UK Accounting Standards have been followed, subject toany material departures disclosed and explained in the financial statements; and?prepare the financial statements on the going concern basis unless it isinappropriate to presume that the Company will continue in business.The Directors are responsible for keeping accounting records that are sufficientto show and explain the Company's transactions and disclose with reasonableaccuracy at any time the financial position of the Company and to enable them toensure that the financial statements, and the Directors Remuneration Report,comply with the requirements of the Companies Act 2006. They are alsoresponsible for safeguarding the assets of the Company and hence for takingreasonable steps for the prevention and detection of fraud and otherirregularities.The Directors are responsible for the maintenance and integrity of the corporateand financial information relating to the Company included on the Managerswebsites. Legislation in the United Kingdom governing the preparation anddissemination of the financial statements and other information included inannual reports may differ from legislation in other jurisdictions.Directors' statement pursuant to the Disclosure and Transparency RulesEach of the Directors, whose names are listed on the Report of the Directors,confirms that, to the best of each person's knowledge:?the financial statements, prepared in accordance with United Kingdom GenerallyAccepted Accounting Practice, give a true and fair view of the assets,liabilities, financial position and result of the Company; and?the Directors' Report contained in the Annual Report includes a fair review ofthe development and performance of the business and the position of the companytogether with a description of the principal risks and uncertainties that itfaces.Electronic publicationThe financial statements are published on www.chrysalisvct.co.uk (maintained bythe Investment Manager) and on www.downing.co.uk, (maintained by theAdministration Manager).Statement as to disclosure of information to auditorsThe Directors in office at the date of the report have confirmed, as far as theyare aware, that there is no relevant audit information of which the auditors areunaware. Each of the Directors have confirmed that they have taken all the stepsthat they ought to have taken as directors in order to make themselves aware ofany relevant audit information and to establish that it has been communicated tothe auditor.Grant WhitehouseSecretary of Chrysalis VCT plcCompany number: 4095791Registered Office:Kings Scholars House230 Vauxhall Bridge RoadLondon SW1V 1AUINCOME STATEMENTfor the year ended 31 October 2009 Year ended 31 October Year ended 31 October 2009 2008 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Income 1,187 - 1,187 1,602 - 1,602 Losses on investments - (237) (237) - (258) (258) ------------------------ ------------------------- 1,187 (237) 950 1,602 (258) 1,344 Investment management fees (112) (337) (449) (126) (377) (503) Performance incentive fees - (14) (14) - (175) (175) Other expenses (429) (1) (430) (300) (20) (320) ------------------------ ------------------------- Return on ordinary activities before tax 646 (589) 57 1,176 (830) 346 Tax on ordinary activities (108) 98 (10) (237) 159 (78) ------------------------ ------------------------- Returnattributable to equity Shareholders 538 (491) 47 939 (671) 268 Ordinary Share 1.7p (1.6p) 0.1p 2.8p (1.1p) 1.7p 'D' Share N/A N/A N/A 2.8p (25.3p) (22.5p) 'E' Share N/A N/A N/A 2.6p (28.4p) (25.8p)All Revenue and Capital items in the above statement derive from continuingoperations. No operations were acquired or discontinued during the year. Thetotal column within the Income Statement represents the profit and loss accountof the Company.A Statement of Total Recognised Gains and Losses has not been prepared as allgains and losses are recognised in the Income Statement as shown above.Other than revaluation movements arising on investments held at fair valuethrough the Income Statement, there were no differences between thereturn/deficit as stated above and historical cost.RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDSfor the year ended 31 October 2009 2009 2008 £'000 £'000 Opening shareholders' funds 28,342 31,040 Purchase of own shares (408) (1,177) Total recognised gains for the year 47 268 Dividends paid (2,123) (1,789) --------------------- Closing shareholders' funds 25,858 28,342BALANCE SHEETat 31 October 2009 2009 2008 £'000 £'000 £'000 £'000 Fixed assets Investments 24,416 23,966 Current assets Debtors 523 268 Cash at bank and in hand 1,137 4,398 ------- ------- 1,660 4,666 Creditors: amounts falling due within one year (218) (290) ------- ------- Net current assets 1,442 4,376 -------- -------- Net assets 25,858 28,342 Capital and reserves Called up share capital 312 323 Capital redemption reserve 75 64 Share premium 1,064 1,064 Merger reserve 8,694 8,694 Special reserve 1,795 5,554 Capital reserve - realised 11,493 12,196 Investment holding gains/(losses) 1,678 (696) Revenue reserve 747 1,143 -------- -------- Total equity shareholders' funds 25,858 28,342 Basic and diluted net asset value per share Ordinary share 82.9p 88.3p 'D' Share N/A 81.8p 'E' Share N/A 67.5pCASH FLOW STATEMENTfor year ended 31 October 2009 2009 2008 £'000 £'000 Net cash inflow from operating activities 327 609 --------------------- Taxation (78) (64) --------------------- Capital expenditure Purchase of investments (5,612) (8,160) Sale of investments 4,645 10,675 --------------------- Net cash (outflow)/ inflow from capital expenditure (967) 2,515 --------------------- Equity dividends paid (2,121) (1,792) --------------------- Net cash (outflow)/inflow before financing (2,839) 1,268 Financing Purchase of own shares (422) (1,128) --------------------- Net cash outflow from financing (422) (1,128) --------------------- (Decrease)/increase in cash (3,261) 140NOTES ON THE ACCOUNTSfor the year ended 31 October 20091.Accounting policiesBasis of accountingThe Company has prepared its financial statements under UK Generally AcceptedAccounting 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 conventionexcept for certain financial instruments measured at fair value and on the basisthat it is not appropriate to prepare consolidated accounts.The Company implements new Financial Reporting Standards ("FRS") issued by theAccounting Standards Board when required. No new standards were issued forimplementation for the year under review. The Association of InvestmentCompanies issued a new SORP in January 2009 which has been adopted for thesefinancial statements. No comparative restatements have been required as aresult of the implementation of the new SORP.Presentation of Income StatementIn order to better reflect the activities of a venture capital trust and inaccordance with the SORP, supplementary information which analyses the IncomeStatement between items of a revenue and capital nature has been presentedalongside the Income Statement. The net revenue is the measure the directorsbelieve appropriate in assessing the Company's compliance with certainrequirements set out in Part 6 of the Income Tax Act 2007.InvestmentsInvestments are designated as "fair value through profit or loss" assets due toinvestments being managed and performance evaluated on a fair value basis. Afinancial asset is designated within this category if it is both acquired andmanaged, with a view to selling after a period of time, in accordance with theCompany's documented investment policy. The fair value of an investment uponacquisition is deemed to be cost. Thereafter investments are measured at fairvalue in accordance with the International Private Equity and Venture CapitalValuation Guidelines ("IPEV") together with FRS26.Listed fixed income investments and investments quoted on AIM are measured usingbid prices in accordance with the IPEV.For unquoted instruments, fair value is established using the IPEV. Thevaluation methodologies for unquoted entities used by the IPEV to ascertain thefair 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 ofthe individual investment and uses reasonable data, market inputs, assumptionsand estimates in order to ascertain fair value.Where an investee company has gone into receivership or liquidation the loss onthe investment, although not physically disposed of, is treated as beingrealised.Gains and losses arising from changes in fair value are included in the IncomeStatement for the year as a capital item and transaction costs on acquisition ordisposal of the investment expensed.It is not the Company's policy to exercise either significant or controllinginfluence over investee companies. Therefore the results of these companies arenot incorporated into the Income Statement except to the extent of any incomeaccrued. This is in accordance with the SORP that does not require portfolioinvestments to be accounted for using the equity method of accounting.IncomeDividend income from investments is recognised when the shareholders' rights toreceive payment has been established, normally the ex dividend date.Interest income is accrued on a timely basis, by reference to the principaloutstanding and at the effective interest rate applicable and only where thereis reasonable certainty of collection.ExpensesAll expenses are accounted for on an accruals basis. In respect of the analysisbetween revenue and capital items presented within the Income Statement, allexpenses have been presented as revenue items except as follows:?Expenses which are incidental to the acquisition of an investment are deductedas a Capital item.?Expenses which are incidental to the disposal of an investment are deductedfrom the disposal proceeds of the investment.?Expenses are split and presented partly as capital items where a connectionwith the maintenance or enhancement of the value of the investments held can bedemonstrated. The Company has adopted the policy of allocating investmentmanagers fees, 75% to Capital and 25% to Revenue as permitted by the SORP. Theallocation is in line with the Board's expectation of long term returns from theCompany's investments in the form of capital gains and income respectively.?Performance incentive fees arising from the disposal of investments arededucted as a Capital item.TaxationThe tax effects on different items in the Income Statement are allocated betweencapital and revenue on the same basis as the particular item to which theyrelate 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 continuedintention to meet the conditions required to comply with Part 6 of the IncomeTax Act 2007, no provision for taxation is required in respect of any realisedor unrealised appreciation of the Company's investments which arises.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 the accounts.Other debtors and other creditorsOther debtors (including accrued income) and other creditors are included withinthe accounts at amortised cost, equivalent to the fair value of the expectedbalance receivable/payable by the Company.2.Basic and diluted return per share Weighted average number of Revenue shares in return per Capital loss issue share per share £'000 £'000 Return per share is calculated on the following: Year ended31 October 2009 Ordinary Shares 31,183,605 538 (491) Year ended31 October 2008 Ordinary Shares 32,053,843 908 (366) 'D' Shares 533,987 16 (135) 'E' Shares 601,376 15 (170)As the Company has not issued any convertible securities or share options, thereis no dilutive effect on return per share. The return per share disclosedtherefore represents both basic and diluted return per share.3.Basic and diluted net asset value per share 2009 2008 Shares in issue Net Asset Value Net Asset Value 2009 2008 Pence per £'000 Pence per £'000 share share Ordinary Shares 31,175,509 31,128,450 82.9p 25,858 88.3p 27,500 'D' Shares N/A 532,982 N/A - 81.8p 436 'E' Shares N/A 601,376 N/A - 67.5p 406 -------- -------- 25,858 28,342As the Company has not issued any convertible securities or share options, thereis no dilutive effect on net asset per share. The net asset value per sharedisclosed therefore represents both basic and diluted return per share.4.Principal financial risksAs a VCT, the majority of the Company's assets are represented by financialinstruments which are held as part of the investment portfolio. In order toensure continued compliance with relevant VCT regulations and to be in aposition to deliver the long term capital growth, which is part of the Company'sinvestment objective, the Board is very much aware of the need to manage andmitigate the risks associated with these financial instruments.The management of these risks starts with the application of a clear investmentpolicy which has been developed by the Board who are experienced investmentprofessionals. Furthermore, the Board has appointed an experienced InvestmentManager to whom they have communicated the Company's investment objectives andwhose remuneration is linked to the achievement of those objectives. TheInvestment Manager reports regularly to the Board on performance, and tofacilitate the direct Board involvement with key decisions, on whether or not toinvest, disinvest and the nature, terms and the security of investments beingmade.Further information about the VCT's investment policy is set out in the Reportof the Directors.In assessing the risk profile of its investment portfolio, the Board hasidentified three principal classes of financial instrument. Investments are"fair value through the profit and loss account" and are recognised as such oninitial recognition.In addition to its investment portfolio, the VCT holds cash balances with one ofthe main UK banks and the Listed Fixed Income Securities Manager. The Directorsconsider that the risk profile associated with cash deposits is low and thus thecarrying value in the Financial Statements is a close approximation of its fairvalue.The Board has reviewed the Company's financial risk profile and concluded thatthe current sensitivity level remains appropriate.A review of the specific financial risks faced by the Company follows.Market risksThe key market risks to which the Company is exposed are interest rate risk andmarket price risk. The Company has undertaken sensitivity analysis on itsfinancial instruments, split into the relevant component parts, taking intoconsideration the economic climate at the time of review in order to ascertainthe appropriate risk allocation.Interest rate riskBoard decisions in relation to amounts to be retained as cash deposits and heldin fixed interest investments (including yields) are influenced by actual andpotential changes in the Bank of England base rate.Market price riskMarket price risk arises from uncertainty about the future prices of financialinstruments held in accordance with the Company's investment objectives. Itrepresents the potential loss that the Company might suffer through holdingmarket positions in the face of market movements. At 31 October 2009, the netunrealised loss on the quoted portfolios (AIM-quoted and fixed incomeinvestments) was £799,000 (2008: £774,000).The investments the Company holds are (with the exception of listed fixed incomesecurities), in the main, thinly traded (due to the underlying nature of theinvestments) and, as such, the prices are more volatile than those of morewidely traded, full list, securities. In addition, the ability of the Companyto realise the investments at their carrying value may at times not be possibleif there are no willing purchasers. The ability of the Company to purchase orsell investments is also constrained by the requirements set down for VCTs.The Board considers each investment purchase to ensure that an acquisition willenable the Company to continue to have an appropriate spread of market risk andthat an appropriate risk reward profile is maintained.It is not the Company's policy to use derivative instruments to mitigate marketrisk, as the Board believes that the effectiveness of such instruments does notjustify the cost or risk involved.Credit riskCredit risk is the risk that a counterparty to a financial instrument is unableto discharge a commitment to the Company made under that instrument. TheCompany's financial assets that are exposed to credit risk are summarised asfollows: 2009 2008 £'000 £'000 Fair value through profit or loss assets Investments in listed fixed income securities 8,576 8,160 Investments in loan stocks 7,557 7,584 Loans and receivables Cash and cash equivalents 1,137 4,398 Interest and other receivables 207 206 ---------- ---------- 17,477 20,348Investments in loan stocks comprise a fundamental part of the Company's venturecapital investments and are managed within the main investment managementprocedures.Cash is mainly held by Bank of Scotland plc, which is an Aa3 rated financialinstitution (Moody's)and, consequently the Directors consider that the riskprofile associated with cash deposits is low.Interest, dividends and other receivables are predominantly covered within theinvestment management procedures.Liquidity riskLiquidity risk is the risk that the Company encounters difficulties in meetingobligations associated with its financial liabilities. As the Company only everhas a very low level of creditors and has no borrowings, the Board believes thatthe Company's exposure to liquidity risk is minimal.5.Related party transactionsChrysalis VCT Management Limited, a wholly owned subsidiary, is the Company'sInvestment Manager which receives a fee of 1.65% of net assets per annum. During the period £449,000 (2008: £503,000) was paid to Chrysalis VCTManagement Limited in respect of these fees. No amounts were outstanding at theyear end.An exit fee is payable quarterly to Chrysalis VCT Management Limited (witheffect from 1 May 2006) based on cash realisations from all investmentsexcluding quoted loan notes, redemptions of loan notes in the normal course ofbusiness and other treasury functions. The exit fee is the greater of 1% of thecash proceeds of any exit or 5% of the gain to the Company after all exit costsfor investments made after 30 April 2004 reduced to 2½% of investments madeprior to 30 April 2004. During the year exit fees of £14,000 (2008: £175,000)were due to Chrysalis VCT Management Ltd. At the year end £10,000 wasoutstanding (2008: £1,000).Announcement based on audited accountsThe financial information set out in this announcement does not constitute theCompany's statutory financial statements in accordance with section 434Companies Act 2006 for the year ended 31 October 2009, but has been extractedfrom the statutory financial statements for the year ended 31 October 2009,which were approved by the Board of Directors on29 January 2010 and will bedelivered to the Registrar of Companies following the Company's Annual GeneralMeeting. The Independent Auditor's Report on those financial statements wasunqualified 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 2008 have been delivered tothe Registrar of Companies and received an Independent Auditors report which wasunqualified and did not contain any emphasis of matter nor statements underS237(2) or (3) of the Companies Act 1985.A copy of the full annual report and financial statements for the year ended 31October 2009 will be printed and posted to shareholders shortly. Copies willalso be available to the public at the registered office of the Company at KingsScholars House, 230 Vauxhall Bridge Road, London SW1V 1AU and will be availablefor download from www.downing.co.uk and www.chrysalisvct.co.uk.[HUG#1378799]
Datum: 29.01.2010 - 17:52 Uhr
Sprache: Deutsch
News-ID 11895
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