Chrysalis VCT PLC : Final Results

CHRYSALIS VCT PLC

FINAL RESULTS FOR THE YEAR ENDED 31 OCTOBER 2011

FINANCIAL HIGHLIGHTS

CHAIRMAN'S STATEMENT  

After a year in which gloomy headlines have dominated elsewhere, I am delighted to bring you an encouraging Report and Accounts for the year ended 31 October 2011 - and some excellent news on dividends.

Your Company has recorded a solid performance, securing attractive new investments for the portfolio and providing extra funds to existing companies to fuel their growth. We also achieved profitable exits from two of our more mature investments.

The outcome was a return for the year of £1.3 million, up by more than 22% on the previous year.

Against the background of the poor UK economic climate, we believe Shareholders can be satisfied with the performance of the VCT. The Chrysalis team, both Board members and investment managers, are proud that our self-managed structure (almost unique among VCTs) has produced yet another year of value enhancement for Shareholders. I am certain that this structure, where Board members are closely involved in both the search for profitable investments and the monitoring of your portfolio, is key to the year-on-year growth in value which has been achieved by Chrysalis since 2005, when the current VCT emerged from the amalgamation of its predecessor funds. I would like to thank all my colleagues for their input and support.

Increase in dividend

Your Board had already pledged to pay a 3.0p total dividend for this year, but we are delighted to recommend that this should in fact be increased by 33.3%, making 4.0p in total for the year (subject to Shareholder approval). Thanks to the VCT rules this is, of course, tax free to individual Shareholders.

In dividends alone, we will be returning more than £1.2 million to Shareholders for the year. When share buy-backs are taken into account, we will have distributed more than £1.5 million in the year.  

Following payment of the proposed 2.5p dividend, Shareholders who invested in the Company at the outset will have received tax-free dividends totalling 34.0p per Ordinary Share.

The Total Return (NAV plus cumulative dividends paid since launch) to Ordinary Shareholders now stands at 116.4p per Ordinary Share compared to an original investment (net of income tax relief) of 80p per Ordinary Share.  This places us firmly in the top quartile of all VCT funds - an excellent result when compared with our position when a new Board and management team took over six years ago and the Company's performance was in the bottom quartile.

At the end of the 2005 financial year, the first year after the merger which created the current Chrysalis VCT, Total Return was only 84.7p. Interestingly, from total assets of £27.4 million six years ago, we have distributed £14.4 million in dividends and buy-backs and still retain net assets of £25.1 million.

Net asset value

It is pleasing that, despite the recent economic turmoil seen in the stock markets, the Fund's net asset value ("NAV") per share at 31 October 2011 was 84.9p, an increase of 4.9p or 5.9% over the year (after adjusting for dividends paid during the year).

We are pleased that our strong dividend payout has been achieved without weakening the NAV. The Board and managers believe that the VCT's performance is best ensured by maintaining a blend of VCT investments and cash balances which are sufficient to sustain a viable and profitable enterprise. So long as we are able to seek out well-priced acquisitions and achieve profitable exits for our mature investments, the VCT can remain vigorous and produce attractive returns. Obviously, your Board keeps all options under review, but we are satisfied that our current policy is in the best interests of Shareholders and continues to provide an attractive investment.

Management of the Fund

The Board remains satisfied with our policy of being a self-managed Venture Capital Trust ("VCT"). We believe that Shareholders gain both from lower operating costs and from the additional flexibility and greater involvement in the investee companies, which both our dedicated investment team and Board provide.

In these increasingly cost-conscious times, Shareholders will be comforted to know that costs are well under control. Indeed, we have been able to bring down the cost of administrative services by 21% over the last two years. Total running costs for the year under review have been 16% lower than the average for the last five years.

Venture capital investments

At the year end, the Company held a portfolio of 27 investments, valued at £17.9 million.  Our policy is that Chrysalis VCT should be an active and supportive investor - a true partner with shareholders and managers in our investee businesses.

During the year under review, our management team, under Chris Kay, has continued to be positive and diligent, resulting in both new investments and profitable exits. In times like these, a performance like ours is not easy to achieve.

Further commentary on the portfolio, together with a schedule of the additions, disposals and details of the highest value investments can be found within the Investment Management Report and Review of Investments.

Fixed income securities

The Company also holds a portfolio of fixed income securities, which were valued at £3.9 million at the year end and comprised entirely of gilt-edged securities.  Additionally, £2.0 million is held in a fixed rate deposit bank account (shown as a current investment), which matures in 2012.  

Results and dividends

The return on activities after taxation for the year was £1.3 million (2010: £1.0 million), comprising a revenue return of £346,000 and a capital return of £921,000.

The Company paid an interim dividend of 1.5p per share on 29 July 2011.  Subject to Shareholder approval at the forthcoming AGM, your Board is proposing to pay a final dividend of 2.5p per share on 30 March 2012 to Shareholders on the register at 24 February 2012.

Share buybacks

The Company does not operate a fixed-price policy when purchasing its own shares. If shares are offered to the Company via its brokers, Singer Capital Markets, a decision is made on a case-by-case basis whether to buy and at what price. The key criterion will be that the purchase represents good value to remaining Shareholders.  

The Board is proud to have been able to increase the liquidity in Chrysalis VCT shares since the appointment of Singer Capital Markets. It is also pleasing to report that as a direct result of their appointment, Singer Capital Markets have significantly reduced the spread on the Company's shares, and we expect this to be maintained.  During the year, some new Shareholders have joined the register, presumably because of the attractive dividend policy and strength of our performance. Shareholders may also have noticed that the Directors and managers have acquired shares on the open market from time to time, indicating our collective faith in the VCT. Contact details for our brokers appear elsewhere in this document and any Shareholders wishing to sell part or all of their holding, or purchase further shares, should speak to Singer Capital Markets direct.

During the year, the Company repurchased 691,212 Ordinary Shares for an aggregate consideration of £346,000 and these shares were cancelled, thus enhancing the value of the remaining shares.

Directors' remuneration

Now I come to a section of my report in which I declare a personal interest, on my own behalf and on behalf of my fellow directors.

About the only aspect of your Fund which has not shown growth in the last five years is the level of fees paid to Directors. The total for the whole Board has remained at £75,000 per year during that time, while the Fund has moved significantly forward in performance and in the returns it has paid to Shareholders.

The results speak for themselves and I feel that it is reasonable to propose a modest increase in Board fees.

Usually, little is said in these reports about the detailed role of the Directors, but Shareholders should know that the Chrysalis Board is not just a rubber stamp on the Fund's activities. Board members are very active in the Fund, outside Board meetings, developing first-hand knowledge of investee companies and providing guidance and expertise to the investment team. Chrysalis VCT also benefits from potential investment proposals channelled via the Directors. No fees or performance bonuses are paid to Directors in this respect - thus saving the VCT external introduction fees which are sometimes due on investments.

I believe your Directors represent excellent value for money and in my experience receive substantially less than would be paid for similar input and responsibility in a comparable stock-exchange listed business.

At the AGM, the Board is proposing to amend the Articles of Association so that the cap on total Directors' remuneration will be increased to £90,000 per year. Should the resolution be passed, the Directors will increase their remuneration up to the level on the proposed cap from 1 April 2012 (not to be backdated), the split of which is shown within the Directors Remuneration Report.  

This is a modest proposal and I hope Shareholders will take the opportunity to acknowledge the work of the Board by voting in favour.

Annual General Meeting

The forthcoming Annual General Meeting ("AGM") will be held at 10 Lower Grosvenor Place, London SW1W 0EN at 11:30am on 15 March 2012.

Conclusion

Your Fund is in good health and the portfolio is holding up very well. We expect to be able to add attractive new investments in the current financial year.

We feel comfortable about those factors we can influence and are as concerned as all sensible folk about those we cannot. You can be sure we will be working hard to deliver another creditable performance and - unforeseen difficulties apart - we expect to at least match the 2011 dividend next year.

Peter Harkness

Chairman

INVESTMENT MANAGEMENT REPORT

It is pleasing to report that, despite continuing difficult times for the UK economy, the overall return for Shareholders again exceeded £1 million. This year the overall return was 22.5% higher than last year at £1.3 million, virtually all of which was paid out to Shareholders by way of dividends or share buybacks.

Six new investments were made during the year totalling £2.7 million, two of which were further funding to our existing portfolio (VEEMEE and Autocue). Both these investments have enabled those companies to continue to grow and develop at a time when traditional bank funding is largely unavailable.

As mentioned last year, in November we invested £750,000 in a secondary buy-out of MyHobbyStore (MHS), a publisher of niche hobby magazines. MHS has performed strongly since then and has made a number of acquisitions which are already looking successful.

In February we provided £1 million to fund the growth of KnowledgePool Group, which specialises in Managed Learning and has recently won multi-million pound contracts with Lloyds Bank and Ford.

March saw a small investment in property developer Livvakt Limited and in June we provided £300,000 to AerialCell, a company which installs and maintains telecommunication masts. A few years ago both these transactions would probably have been debt financed but we have taken the opportunity of the current banking situation to get an equity position.

The total of these investments of £2.7 million was almost exactly matched by total realisation proceeds of £2.7 million, most of which came from the profitable sale of two companies; Centre Design Limited and The Capital Pub Company. In the current economic circumstances we are only looking to sell investments if we receive a "knockout" bid, as we believe that, generally, prices are depressed and we are not budgeting for any realisations this year.

Turning to the portfolio, overall it is has been a good year which is why valuations have risen. We are particularly pleased by the performance of Escape Studios which has just started trading from its new training school in Los Angeles which caters for the US West Coast computer graphics industry. Trading has also been good at the original Shepherds Bush studio and therefore our valuation has increased by over £600k.

VEEMEE too has had a good year with profits well up on last year. Our additional investment has helped it fund the development of Zappar, a joint venture operating in the augmented reality market. Since our year end, Zappar has been demerged from VEEMEE so Chrysalis VCT now holds a direct equity stake and its product is commanding a lot of attention with an interactive t-shirt being featured on Blue Peter, in December 2011. Our valuation had been increased by £317,000 over the year.

In September 2010 we financed the secondary buyout of Ensign Communications. Since then trading has been good and the company has been able to repay all the debt associated with the buyout and now has net cash. Consequently, we have increased the value of our equity stake by £219,000.

Inevitably, it is not all good news and trading at WASP has suffered due to the downturn in defence spending which has meant a reduction in our valuation of £906,000. However, despite that, our stake is still valued at £1.5 million above cost. WASP's aviation division continues to do well and overall it remains a cash rich, profitable company.

It is worth outlining our strategy regarding our liquid resources, which stands at £7.7 million. As mentioned above, during the year, cash invested was almost exactly matched by proceeds from realisations. This was somewhat a coincidence and currently we have no realisations in the pipeline.  However, the VCT had a reduction of liquid resources during the year by £1.3 million (after accounting for £1.5 million of Treasury Gilt sales undertaken at the end of October 2010 which settled in November 2010) due to the payment of dividends and share buybacks.

The proposed dividend of 2.5p will require cash of £750,000 this effectively means that our current cash balance is £7.0 million.

As has been widely reported, it is currently very difficult for small and medium-sized companies to obtain bank funding and therefore we believe that it is prudent to put aside 20% (£3.6 million) of the value of our portfolio in order that we have sufficient resources to support our companies if they require it.

We clearly wish to continue paying dividends and continue with our limited share buyback programme. We also believe that, during the year, there will be new opportunities to take advantage of the continuing credit crunch to make new investments on advantageous terms. Therefore, we feel that our cash position is just about sufficient for the current economic circumstances.

Looking forward to this year, trading within the portfolio is generally in line with expectations and all of our top 11 investee companies (which account for 93% of our portfolio value) are currently profitable. The performance of the UK economy over the last few years has taught us not to be complacent, but at the moment we are cautiously optimistic about the portfolio for the year ahead, particularly for our restaurant and catering businesses that operate in London which should benefit from the increased tourism brought about by The Queen's Diamond Jubilee and of course, The Olympics.

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 2011:

All investments are unquoted unless otherwise stated.

*   Quoted on AIM      

Investment movements for the year ended 31 October 2011

Additions

Disposals

*

Adjusted for purchases in the year where applicable

Directors' responsibilities statement

The Directors are responsible for preparing the Report of the Directors, 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 Services 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 and 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 and 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.

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.

Statement as to disclosure of information to the Auditor

The Directors in office at the date of this report have confirmed, as far as they are aware, that there is no relevant audit information of which the Auditor is unaware. Each of the Directors has confirmed that they have taken all the steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that it has been communicated to the Auditor.

By order of the Board

Grant Whitehouse

Secretary of Chrysalis VCT plc

INCOME STATEMENT

for the year ended 31 October 2011

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 and 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 2011

BALANCE SHEET

at 31 October 2011

CASH FLOW STATEMENT

for the year ended 31 October 2011

NOTES ON THE ACCOUNTS

for the year ended 31 October 2011

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. The 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.

Listed fixed income investments and investments quoted on AIM are measured using bid prices in accordance with the IPEV.  

For unquoted instruments, 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.

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 either significant or 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.

Current asset investments

Current asset investments comprise amounts held on a fixed term deposit at a banking institution and are valued at par.

Income

Dividend income from investments is recognised when the shareholders' rights to receive payment has 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 manager's 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

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

As the Company has not issued any convertible securities or share options, there is no dilutive effect on net asset per share. The net asset value per share disclosed therefore represents both basic and diluted return per share.

4.

Financial instruments

The Company's financial instruments comprise investments held at fair value through profit and loss, being equity and loan stock investments in quoted companies and unquoted companies; loans and receivables, being cash deposits and short term debtors; and financial liabilities, being creditors arising from its operations.  The main purpose of these financial instruments is to generate cashflow, revenue and capital appreciation for the Company's operations. The Company has no gearing or other financial liabilities apart from short-term creditors and does not use any derivatives.

The fair value of investments is determined using the detailed accounting policy as shown in note 1.   The fair value of cash deposits and short-term debtors and creditors equates to their carrying value in the balance sheet.

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:

* Market 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:

Market risks

As a VCT, the Company is exposed to market 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 market risks is a fundamental part of investment activities undertaken by the Investment Manager 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. Market risk is also mitigated by holding a diversified portfolio spread across various business sectors and asset classes.

The key market risks to which the Company is exposed are:

* Market 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.

Market 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 predominately 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.

It is estimated that an increase of 1.25% in interest rates would increase net assets and total return before taxation for the year by £4,000.  As the Bank of England base rate stood at 0.5% per annum throughout the year, it is not believed that a reduction from this level is likely.

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 Company's financial assets that are exposed to credit risk are summarised as follows:

The Manager manages credit risk in respect of loan stock with a similar approach as described under Market risks above. Similarly the management of credit risk associated interest, dividends and other receivables is covered within the investment management procedures.

Cash is mainly held by Bank of Scotland plc, which is an A-rated financial institution 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 only normally has a relatively low level of creditors (2011: £138,000, 2010: £159,000) 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 the Investment Manager 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, is the Company's Investment Manager which receives a fee of 1.65% of net assets per annum.  During the period, £423,000 (2010: £425,000) 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 quarterly to Chrysalis VCT Management Limited (with effect from 1 May 2006) 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 £27,000 (2010: £8,000) were due to Chrysalis VCT Management Limited. At the year end, £1,000 was outstanding (2010: £4,000).  

During the year the Company invested £750,000 in My HobbyStore Holding Limited, a company of which Peter Harkness is Chairman and a shareholder.

6.

Controlling party

In the opinion of the Directors there is no immediate or ultimate controlling party.

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 2011, but has been extracted from the statutory financial statements for the year ended 31 October 2011, which were approved by the Board of Directors on 2 February 2012 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 s 498(2) and (3) of the Companies Act 2006.

The statutory accounts for the year ended 31 October 2010 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 2011 will be printed and posted to Shareholders shortly. Copies will also be available to the public at the registered office of the Company at 10 Lower Grosvenor Place, London, SW1W 0EN and will be available for download from www.chrysalisvct.co.uk and www.downing.co.uk.  

This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients.

The owner of this announcement warrants that:

(i) the releases contained herein are protected by copyright and other applicable laws; and

(ii) they are solely responsible for the content, accuracy and originality of the

information contained therein.

Source: Chrysalis VCT PLC via Thomson Reuters ONE

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