Chrysalis VCT PLC : Chrysalis VCT PLC : Final Results

            Chrysalis VCT PLC : Chrysalis VCT PLC : Final Results

Chrysalis VCT plc
Final results for the year ended 31 October 2012

FINANCIAL SUMMARY

                                                      31 Oct  31 Oct
                                                        2012    2011
                                                       pence   pence
Ordinary Shares
Net asset value per share ("NAV")                      84.50   84.90
Cumulative dividends paid per share since launch *     35.70   31.45
Total Return                                          120.20  116.35
(Net asset value per share plus cumulative dividends)
Dividends in respect of financial year
Interim dividend per share                              1.75    1.50
Final proposed dividend per share                       3.25    2.50
                                                        5.00    4.00
* Excludes final proposed dividend

CHAIRMAN'S STATEMENT

  oSignificant increase in dividend to 5.0p for 2012
  oReturn for the year tops £1 million for the third year running
  o4.5% increase in net asset value over last year
  oTotal return on 80p investment now at 120.2p
  oTax saving opportunity from S.R.R.P. launch

There is a business axiom which says that the real test of a good business  is 
not how well it performs  in good times, but how  successful it is when  times 
are bad.

If they apply that test to  Chrysalis, I believe our shareholders should  give 
the Fund high marks for the results we have achieved since the economic crisis
set in  -  and  I am  pleased  to  announce we  have  delivered  another  very 
respectable set of numbers for the year ending October 2012.

As result I am delighted to  announce that our already strong dividend  record 
will be further enhanced with  the payment of a  final payment of 3.25p  which 
takes the dividend for the full year  to 5.0p, and taking the total  dividends 
paid since launch to 38.95p.

This dividend exceeds the returns made  during the financial year itself,  but 
the Directors are confident that your  portfolio is strong and set to  deliver 
funds from exits and therefore this level of dividend is justified.

Portfolio
Following the  worsening  news from  the  High Street,  shareholders  will  be 
pleased that our portfolio  includes a new  on-line retail business,  Internet 
Fusion, which has developed a decent track record on the internet since it was
founded a few  years ago by  a group  of young businessmen.  We have  provided 
expansion capital  for  this  profitable,  growing  company  to  increase  its 
stock-holding capacity as it  expands the retail  sectors it covers.  Existing 
portfolio company MyTime  Media Holdings (formerly  MyHobbyStore Holding)  has 
this year significantly  increased its  e-commerce activities  in the  hobbies 
sector using funds we  provided the previous year.  A financial advantage  for 
both these companies  is that  they can base  their web  operations away  from 
high-cost retail premises - in Lincolnshire and Cambridgeshire respectively  - 
to gain extra advantage over shop-based operators.

However, we remain resolutely generalist with our focus firmly on the  quality 
and prospects of each business as well as the calibre of its management.  Thus 
we are pleased to be backing emerging sushi restaurant concept K10 City Sushi,
with proven management and based initially in the City of London.

At the year end,  the Company held  a portfolio of  30 investments, valued  at 
£19.7 million. The Fund made five investments during the period under review -
three of which  were in  portfolio companies  and two in  new ones.  It is  an 
important tenet of our investment policy that we look on each investment as an
on-going relationship and not  just a one-off  transaction. With bank  lending 
still stuck in bottom gear, many  smaller companies find it very difficult  to 
secure debt to expand.  Chrysalis is happy  to step into  this gap, where  the 
transaction makes  sense  for  both parties  and  follow-on  investments  have 
outnumbered new deals.

Much of  the year's  activity  for our  investment  managers has  focussed  on 
possible exits and we had expected some  return of cash from the portfolio  by 
the year end. Like everything in these curious times, the exit process is less
predictable than in the past, but one exit is partly complete and will  return 
funds during 2013.

I would  like to  thank the  executives of  our wholly-owned  Fund  Management 
subsidiary - Managing  Director Chris  Kay and  Director Robert  Wilson -  for 
their hard work on the portfolio during the year.

Further commentary on portfolio activity, together with a detailed schedule of
the investments can be found in the Investment Management report and Review of
Investments.

Cash
We continue to be well funded. In fact, with the lower than usual level of new
investment and the expected in-flow of  funds from potential exits, the  Board 
has decided that we can raid the till  a little to pay out a dividend for  the 
year in excess of our earnings. Shareholders continue to give us good  support 
and we  know they  are  dividend focussed,  particularly  when so  many  other 
investment classes are not producing such  good yields. We believe we will  be 
left with sufficient  funds to continue  to develop the  business and  produce 
good returns.

Our total dividend pay-out for the year will be £1.5 million. On top of  this, 
we have bought in 421,276 shares during the year at cost of £208,000.

Share realisation and reinvestment programme and top up offer
In common  with much  of the  VCT industry,  Chrysalis is  announcing a  Share 
Realisation and Reinvestment Programme ("SRRP") which enables shareholders  to 
take new shares in exchange for their existing holding. This requires no extra
cash commitment from shareholders, but it does create a substantial tax credit
on the  transaction  (30%) which  can  be  off-set against  tax  on  earnings. 
Attractively, our scheme offers two closing dates  - one in this tax year  and 
the other at the start of the next. Shareholders can choose which year to  tax 
the tax credit, or  can split their  acceptance between the  two years in  any 
ratio which gives them the most personal advantage.

You may wish to know that all Chrysalis directors are planning to  participate 
in this programme.

In conjunction with this, the Company is also launching a top-up offer for 2.5
million shares, available to all shareholders and members of the public, again
across the two tax years.

Both share  issues will  be  at a  price of  approximately  103% of  the  most 
recently published net asset value on the  28 March 2013, the closing date  of 
both offers.

The scheme  is  approved  by  HMRC.  Full details  are  being  mailed  to  all 
shareholders. Shares which you wish to  process through the scheme need to  be 
registered in your own name, rather than a nominee.

Management of the Fund
Shareholders will already be  aware that our  Fund Management operating  costs 
are low compared with the VCT industry in general, at 1.6% of net assets. This
is essentially due to the self-managed structure we employ. The Directors keep
this policy under  regular review, but  we remain convinced  that it not  only 
represents exceptional value, but also  gives shareholders access to a  steady 
supply of good investments.

Our wholly-owned Fund Management subsidiary  does not seek profits for  itself 
and has  no interests  other than  managing your  investments efficiently  and 
cost-effectively. It may not be the norm  in the VCT sector, but it works  for 
us - and delivers the result we want.

Fixed income securities
The Company also  holds a  portfolio of  fixed income  securities, which  were 
valued at £1.7  million at  the year end  and comprised  mainly of  gilt-edged 
securities. Additionally, £2.0 million  is held in a  fixed rate deposit  bank 
account (shown as a current investment), which matured in December 2012.

Net asset value, results and dividend
It is pleasing to report that the Company's net asset value ("NAV") per  share 
at 31 October 2012 was 84.5p, an increase of 3.8p or 4.5% over the year (after
adjusting for dividends paid during the year).

The return on activities after taxation  for the year was £1.0 million  (2011: 
£1.3 million), comprising a revenue return of £383,000 and a capital return of
£629,000.

The Company paid  an interim  dividend of  1.75p per  share on  31 July  2012. 
Subject to  Shareholder  approval  at  the  forthcoming  AGM,  your  Board  is 
proposing to pay  a final  dividend of  3.25p per share  on 30  April 2013  to 
Shareholders on the register at 12 April 2013. 

Share buybacks
The Company  has  maintained its  policy  of  making ad  hoc  share  purchases 
occasionally during the year.

If shares are offered  to the Company via  its brokers, Nplus1 Singer  Capital 
Markets, a decision on whether to buy is taken on a case-by-case basis whether
to buy and at what price.

In the past share  purchases by third parties  in the market were  negligible, 
but as  the  attractions  of our  dividend  policy  and the  strength  of  the 
portfolio has become more widely known,  more and more shares are being  taken 
up by secondary investors . We welcome these new shareholders.

Due to  the  "close  period" rules,  which  apply  to Chrysalis  as  a  listed 
investment trust, there are limited occasions on which the Fund can enter  the 
market and buy shares. The Directors feel that, in general, our resources  are 
better applied to the dividend payments - from which all shareholders  benefit 
directly -  than to  share buy-backs.  We  will continue  to consider  ad  hoc 
purchases when shares are offered, but we are pleased that the market is  also 
providing liquidity for those who wish to sell.

During the  year,  the Company  repurchased  421,276 Ordinary  Shares  for  an 
aggregate consideration  of £208,000  and these  shares were  cancelled,  thus 
enhancing the  value of  the  remaining shares.  Shareholders should  also  be 
advised that the  three Board members  purchased, in total,  45,000 shares  in 
July 2012.

Directors
During the year  the Fund  has again  had the  benefit of  wise and  committed 
Directors and  I  have greatly  appreciated  the  support and  counsel  of  my 
colleagues Julie  Baddeley  and Martin  Knight.Atthe  forthcoming AGM  I  am 
delighted  that  Julie  has  agreed  to  stand  again  for  election.  I  hope 
Shareholders recognise, as I certainly do, her considerable knowledge of  both 
the Fund and  of corporate governance  in general  and agree with  me that  it 
would be greatly to our advantage to retain her services.

Annual General Meeting
The forthcoming AGM will be held at 10 Lower Grosvenor Place, London SW1W  0EN 
at 10:00 am on  14 March 2013.  Notice of the  meeting is at  the end of  this 
document.

Immediately afterwards on  the same day  at the  same venue there  will be  an 
additional General  Meeting  to  approve the  Share  Realisation  Reinvestment 
Scheme I mentioned previously.

Conclusion
Good progress has been made  in the year and total  return on an original  80p 
investment (after tax relief) is now 120.2p.

For the coming year I can promise the same degree of enthusiasm and dedication
from the Directors, Executives, support staff  and advisers that the Fund  has 
enjoyed previously.  It  would be  very  welcome  if we  experience  a  kinder 
business environment in the immediate future, but whatever the economy  throws 
our way, I believe we are well placed to cope with it.

Peter Harkness
Chairman

INVESTMENT MANAGEMENT REPORT
It is pleasing to report that despite  operating in a very low growth  economy 
our portfolio has performed sufficiently  well such that total overall  return 
for shareholders is over £1 million  for the third consecutive year. All  that 
profit and more (£1.4  million) has been returned  to Shareholders during  the 
year by way of dividends and share buybacks.

Five investments were  made during  the year  totaling £1.15  million. One  of 
which  was  a   small  (£50,000)  attempted   rescue  into  AerialCell   which 
unfortunately did not survive and one  was a participation in the demerger  of 
Zappar Ltd  from  VEEMEE  Ltd.  So  now we  have  a  direct  investment  in  a 
potentially very exciting  technology company.  We also  provided £300,000  to 
Livvakt Ltd, the  property developer,  to enable it  to continue  to grow  its 
business.

There were two new  companies added to  the portfolio. The  first is K10  City 
Sushi which operates a successful Sushi  restaurant in The City of London  and 
has ambitious expansion plans.  We have invested alongside  Ian Neill who  has 
had a glittering career in  the sector and was described  by The Times as  the 
"godfather of casual dining." K10's second restaurant opens in February.

The second new company  is Internet Fusion Ltd  where we invested £700,000  to 
fund the expansion of this fast growing e-commerce distributor of leisure  and 
sportswear products. Sales at the  company grew by 50%  over the year and  are 
forecast to do the same during 2013.

Due to the continuing retrenchment by the clearing banks transactions seem few
and far between and consequently we have not seen any exits this year with the
only return of cash  coming from some loan  repayments. A number of  portfolio 
companies have  had serious  sale  discussions but  lack  of finance  for  the 
proposed purchaser has meant that an  acceptable price has not been  achieved. 
Two of our companies namely British International Holdings ("BIH") and  Escape 
Studios have however successfully sold operating divisions towards the end  of 
the financial year and  we expect to be  receiving some substantial cash  sums 
when both their reorganizations are completed.

Turning to the operating performance of the portfolio it has generally been  a 
good year. Our top 12 investments account for 90% of the value of the  venture 
capital portfolio and of these  11 are trading profitably  and 9 of those  are 
showing year  on  year improvements.  The  only loss  maker  is BIH  which  as 
mentioned above is effectively  winding itself up by  selling off its  various 
divisions. We reported last year that profits had declined at Wessex  Advanced 
Switching Products our biggest investment. I  am pleased to be able to  report 
that the company has reversed that trend and is confident about prospects  for 
2013.

The lack of exits and  the return of cash to  our Shareholders has meant  that 
despite relatively low levels of investment our overall effective cash balance
(including fixed interest investments)  has fallen from  £7.7 million to  £5.4 
million at the year end. The proposed final dividend will cost nearly  another 
£1.0 million and as previously reported whilst it remains difficult for  small 
and medium sized companies  to obtain bank funding  we consider it prudent  to 
keep aside 20% (£3.9 million) of the value of our venture capital portfolio in
order that we have sufficient resources to support our companies if required.

We do however anticipate  some realisations this year  although now more  than 
ever no deal is certain until it is actually done and looking forward to  this 
year we are  cautiously optimistic that  2013 will  be a better  year for  the 
economy than 2012. Hence hopefully the majority of our investee companies will
continue to  prosper. However  the  recent collapse  of several  high  profile 
retail chains does show that trading is still tough.

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 2012:

                                            Cost Valuation Valuation      % of
                                                            movement portfolio
                                                            in year  by value
                                           £'000     £'000     £'000
Top ten venture capital investments
Wessex   Advanced   Switching    Products    704     2,563       346     10.2%
Limited
Locale Enterprises Limited                 1,338     2,077      (13)      8.3%
British International Holdings Limited       908     1,919      (71)      7.6%
Precision Dental Laboratories Limited      1,910     1,843       206      7.4%
Knowledge Pool Group Limited               1,000     1,614       614      6.4%
Escape Studios Limited                       750     1,605         2      6.4%
MyTime Media Holdings Limited                750     1,482       246      5.9%
(formerly MyHobbyStore Holding Limited)
Ensign Communication Holdings Limited        292     1,296     (349)      5.2%
VEEMEE Limited                               500     1,019       202      4.1%
Triaster Ltd                                 703     1,009       170      4.0%
                                           8,855    16,427     1,353     65.5%
Other venture capital investments
Autocue Group Limited                        500       731       231      2.9%
Internet Fusion Limited                      700       700         -      2.8%
London Italian Restaurants Limited         1,000       547     (328)      2.2%
Livvakt Limited                              550       412     (138)      1.7%
Life's Kitchen Limited                       300       303         3      1.2%
Rhino Sport & Leisure Limited                166       149        74      0.6%
Zappar Limited                                 -       125       125      0.5%
Cashfac plc                                    -       101        51      0.4%
K10 City Sushi Limited                       100       100         -      0.4%
The Mission Marketing Group plc *            150        35        16      0.1%
Best of the Best plc *                        81        26         5      0.1%
Aerialcell Limited                           350        25     (325)      0.1%
ILX Group plc *                              100        16      (16)      0.1%
The Kellan Group plc *                       320         9       (1)         -
Art VPS Limited                              358         -         -         -
G-Crypt Limited                              305         -     (152)         -
IX Group Limited                             250         -         -         -
Kids Safteynet Limited                       637         -         -         -
Planet Sport Holdings Limited                263         -         -         -
Real Time Logistic Solutions Limited          55         -         -         -
                                           6,185     3,279     (455)     13.1%
Fixed income securities
United Kingdom 1% Gilt 07/09/2017          1,235     1,240         5      5.0%
United Kingdom 2.25% Gilt 07/03/2014         415       431       (5)      1.7%
S&W Investment Funds Cash Fund                10        10         -         -
                                           1,660     1,681         -      6.7%
      
                                         16,700    21,387       898     85.3%
      
      Cash at bank and in hand                       1,690                6.7%
      
      Royal Bank of Scotland plc 3.41%               2,000                8.0%
      2012 deposit
      
      Total investments                             25,077              100.0%

All investments are unquoted unless otherwise stated. 
* Quoted on AIM

Investment movements for the year ended 31 October 2012

Additions

                                  £'000
New investments
Internet Fusion Limited             700
K10 City Sushi Limited              100
Follow-on investments
Aerialcell Limited                   50
Livvakt Limited                     300
                                  1,150
Fixed income securities
S&W Investment Funds Cash Fund      150
United Kingdom 1% Gilt 07/09/2017 1,235
                                  1,385
Total investments                 2,535

Disposals

                                      Cost     MV at Proceeds  Profit Realised
                                           01/11/11*          vs cost   gain/
                                                                        (loss)
                                     £'000     £'000    £'000   £'000    £'000
Venture capital disposals
Tender offer
Best of the Best plc                    16         4       16       -       12
Loan note redemptions
Precision Dental Laboratories          200       200      200       -        -
Limited
Triaster Limited                        55        55       55       -        -
                                      271       259      271       -       12
Fixed income securities
S&W Investment Funds Cash Fund         140       140      140       -        -
United Kingdom 2.25% Gilt 07/03/2014 1,412     1,486    1,474      62     (12)
United Kingdom 2.75% Gilt 22/01/2015 1,032     1,043    1,043      11        -
United Kingdom 2% Gilt 22/01/2016      929       994    1,010      81       16
                                    3,513     3,663    3,667     154        4
Total                                3,784     3,922    3,938     154       16

* 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 or loss  of the  Company for  that 
period.

In preparing these financial statements, the Directors are required to:

  oselect suitable accounting policies and then apply them consistently;
  omake judgments and accounting estimates that are reasonable and prudent;
  ostate whether applicable UK Accounting Standards have been followed,
    subject to any material departures disclosed and explained in the
    financial statements; and
  oprepare the financial statements on the going concern basis unless it is
    inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are
sufficient to show and  explain the Company's  transactions, to disclose  with 
reasonable accuracy at any time the  financial position of the Company and  to 
enable them to ensure that the financial statements comply with the  Companies 
Act 2006. They are also responsible for safeguarding the assets of the Company
and hence for  taking reasonable  steps for  the prevention  and detection  of 
fraud and other irregularities.

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.

INCOME STATEMENT for the year ended 31 October 2012

                                                  2012                   2011
                
                                 Revenue Capital Total  Revenue Capital Total
                                   £'000   £'000 £'000    £'000   £'000 £'000
Income                                765       -   765      781       -   781
                            
Gains on investments                    -     914   914        -   1,207 1,207
                                      765     914 1,679      781   1,207 1,988
Investment management fees          (104)   (310) (414)    (106)   (317) (423)
Performance incentive fees              -     (1)   (1)        -    (27)  (27)
Other expenses                      (219)    (33) (252)    (270)     (1) (271)
Return on ordinary activities         442     570 1,012      405     862 1,267
before tax
Tax on ordinary activities           (59)      59     -     (59)      59     -
Return attributable to equity         383     629 1,012      346     921 1,267
shareholders
Basic and diluted return per         1.3p    2.1p  3.4p     1.1p    3.0p  4.1p
share

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 profit or loss account, there  were no differences between the  return 
as stated above and historical cost.

RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the year ended 31 October 2012

                                      2012   2011
                                     £'000  £'000
Opening Shareholders' funds          25,640 25,638
Purchase of own shares                (208)  (346)
Total recognised gains for the year   1,012  1,267
Dividends paid                      (1,276)  (919)
Closing Shareholders' funds          25,168 25,640

BALANCE SHEET at 31 October 2012

                                                       2012         2011
                                               £'000  £'000 £'000  £'000
Fixed assets
Investments                                          21,387       21,876
Current assets
Debtors                                          190          222
Current investments                            2,000        2,000
Cash at bank and in hand                       1,690        1,680
                                               3,880        3,902
Creditors: amounts falling due within one year  (99)        (138)
Net current assets                                    3,781        3,764
Net assets                                           25,168       25,640
    Capital and reserves
Called up share capital                                 298          302
Capital redemption reserve                               89           85
Share premium                                         1,064        1,064
Merger reserve                                        2,104        2,128
Special reserve                                       3,653        6,377
Capital reserve - realised                           10,138       10,897
Capital reserve - unrealised                          7,104        3,927
Revenue reserve                                         718          860
Total equity shareholders' funds                     25,168       25,640
Net asset value per share                             84.5p        84.9p

CASH FLOW STATEMENT for the year ended 31 October 2012

                                                     2012           2011
                                                        
                                                    £'000          £'000
Net cash inflow/(outflow) from operating activities          55     (14)
Taxation                                                      -        -
Capital expenditure
Payments to acquire investments                         (2,535)  (3,579)
Receipts from sale of investments                         3,938    5,063
Net cash inflow from capital expenditure                  1,403    1,484
Equity dividends paid                                   (1,276)    (919)
Net cash inflow before financing                            182      551
Financing
Purchase of own shares                                    (172)    (334)
Net cash outflow from financing                           (172)    (334)
Increase in cash                                             10      217

NOTES TO THE ACCOUNTS for the year ended 31 October 2012
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 as explained in
note 9. 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.

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.
Permanent impairments in the  value of investments are  deemed to be  realised 
losses and held within the Capital Reserve - Realised.

Gains and losses arising from changes in fair value are included in the Income
Statement for the year as a capital item and transaction costs on  acquisition 
or disposal of the investment expensed.

It is not the Company's policy to exercise controlling influence over investee
companies. Therefore, the results of these companies are not incorporated into
the Income Statement except to  the extent of any  income accrued. This is  in 
accordance with the  SORP that does  not require portfolio  investments to  be 
accounted for using the equity method of accounting.

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 have been established, normally the ex-dividend date.

Interest income is accrued  on a timely basis,  by reference to the  principal 
outstanding and at the effective interest rate applicable and only where there
is reasonable certainty of collection.

Expenses
All expenses  are  accounted for  on  an accruals  basis.  In respect  of  the 
analysis between  revenue  and  capital  items  presented  within  the  Income 
Statement, all  expenses  have  been  presented as  revenue  items  except  as 
follows:

* Expenses  which are  incidental  to the  acquisition  of an  investment  are 
deducted as a capital item.
* Expenses which are incidental to the disposal of an investment are  deducted 
from the disposal proceeds of the investment.
* Expenses are split and presented partly as capital items where a  connection 
with the maintenance or enhancement of  the value of the investments held  can 
be demonstrated. The Company has  adopted the policy of allocating  investment 
management fees, 75% to capital and 25%  to revenue as permitted by the  SORP. 
The allocation is in  line with the Board's  expectation of long term  returns 
from the  Company's  investments in  the  form  of capital  gains  and  income 
respectively.
* Performance  incentive fees  arising from  the disposal  of investments  are 
deducted as a capital item.

Taxation
The tax  effects on  different items  in the  Income Statement  are  allocated 
between capital and revenue on the same basis as the particular item to  which 
they relate  using the  Company's effective  rate of  tax for  the  accounting 
period.

Due to the Company's status as a Venture Capital Trust and the continued
intention to meet the conditions required to comply with Part 6 of the Income
Tax Act 2007, no provision for taxation is required in respect of any realised
or unrealised appreciation of the Company's investments which arises.

Deferred taxation is not discounted and is provided in full on timing
differences that result in an obligation at the balance sheet date to pay more
tax, or a right to pay less tax, at a future date, at rates expected to apply
when they crystallise based on current tax rates and law. Timing differences
arise from the inclusion of items of income and expenditure in taxation
computations in periods different from those in which they are included in the
accounts.

Other debtors and other creditors
Other debtors  (including accrued  income) and  other creditors  are  included 
within the accounts at amortised cost.

2. Basic and diluted return per share

                                                        2012        2011
Return per share based on:
Net revenue return for the financial year (£'000)        383         346
Capital return per share based on:
Net capital gain for the financial year (£'000)          629         921
Weighted average number of shares in issue        30,023,505  30,655,950

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

                      Shares in issue               2012                  2011
                                         Net asset value       Net asset value
                      2012       2011      Pence   £'000     Pence per   £'000
                                       per share                 share
Ordinary Shares 29,791,021 30,212,297      84.5p  25,168         84.9p  25,640

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. Principal risks
The Company's investment activities  expose the Company to  a number of  risks 
associated with financial  instruments and  the sectors in  which the  Company 
invests. The principal financial risks  arising from the Company's  operations 
are:

* Investment risks;
* Credit risk; and
* Liquidity risk.

The Board regularly reviews these risks and the policies in place for managing
them. There have been no significant changes  to the nature of the risks  that 
the Company  is  exposed  to  over  the year  and  there  have  also  been  no 
significant changes to the policies for managing those risks during the year.

The risk management policies used by  the Company in respect of the  principal 
financial risks and a review of the financial instruments held at the year-end
are provided below:

Investment risks
As a VCT, the Company is exposed to investment risks in the form of potential
losses and gains that may arise on the investments it holds in accordance with
its investment policy. The management of these investment risks is a
fundamental part of investment activities undertaken by Chrysalis VCT
Management Limited and overseen by the Board. The Manager monitors investments
through regular contact with management of investee companies, regular review
of management accounts and other financial information and attendance at
investee company board meetings. This enables the Manager to manage the
investment risk in respect of individual investments. Investment risk is also
mitigated by holding a diversified portfolio spread across various business
sectors and asset classes.

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

* Investment price risk; and
* Interest rate risk.

The Company has undertaken sensitivity analysis on its financial  instruments, 
split into  the  relevant  component  parts,  taking  into  consideration  the 
economic climate at the time of  review in order to ascertain the  appropriate 
risk allocation.

Investment price risk
Market price risk arises from uncertainty about the future prices and
valuations of financial instruments held in accordance with the Company's
investment objectives. It represents the potential loss that the Company might
suffer through market price movements in respect of quoted investments and
also changes in the fair value of unquoted investments that it holds.



Interest rate risk
The Company accepts exposure to interest rate risk on floating-rate financial
assets through the effect of changes in prevailing interest rates. The Company
receives interest on its cash deposits at a rate agreed with its bankers and
on liquidity funds at rates based on the underlying investments. Investments
in loan stock and fixed interest investments attract interest 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.

Credit risk
Credit risk is the risk that a counterparty to a financial instrument is
unable to discharge a commitment to the Company made under that instrument.
The Company is exposed to credit risk through its holdings of loan stock in
investee companies, investments in liquidity funds, cash deposits and debtors.

The Manager  manages credit  risk in  respect  of loan  stock with  a  similar 
approach as described  under Investment  risks above. In  addition the  credit 
risk is partially mitigated by registering floating charges over the assets of
certain investee companies.  The strength  of this  security in  each case  is 
dependent  on  the  nature  of   the  investee  company's  business  and   its 
identifiable assets. The level of security  is a key means of managing  credit 
risk. Similarly, the management of credit risk associated interest,  dividends 
and other receivables is covered within the investment management procedures.

Cash is mainly held  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 usually has a relatively low level of creditors (2012: £99,000,
2011: £138,000) 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  Chrysalis  VCT  Management 
Limited in line with  guidance agreed with  the Board and  is reviewed by  the 
Board at regular intervals.

5. Related party transactions
Chrysalis  VCT  Management  Limited,  a  wholly  owned  subsidiary,   provides 
investment management services to the Company for a fee of 1.65% of net assets
per annum. During the period, £414,000 (2011: £423,000) 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 £1,000  (2011: £27,000)  were due  to 
Chrysalis VCT Management Limited. At the year end, £Nil was outstanding (2011:
£1,000).

Peter Harkness holds a position  of significant influence within MyTime  Media 
Holdings Limited (formerly MyHobbyStore Holding Limited, an investment held by
the Company, and therefore abstains from discussions surrounding the valuation
of the  company. Details  of  the investment,  including cost,  valuation  and 
income received during the year are shown within the Annual Report.

ANNOUNCEMENT BASED ON AUDITED ACCOUNTS
The financial information set out in this announcement does not constitute the
Company's statutory  financial  statements  in  accordance  with  section  434 
Companies Act 2006 for the year ended 31 October 2012, but has been  extracted 
from the statutory financial  statements for the year  ended 31 October  2012, 
which were approved by the Board of  Directors on 31 January 2013 and will  be 
delivered to the Registrar of Companies following the Company's Annual General
Meeting. The Independent  Auditor's Report on  those financial statements  was 
unqualified and did not  contain any emphasis of  matter nor statements  under 
s498(2) and (3) of the Companies Act 2006.

The statutory accounts for the year ended 31 October 2011 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 2012  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.downing.co.uk.

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information contained therein.

Source: Chrysalis VCT PLC via Thomson Reuters ONE
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