Interim Results
October 23 2003 - 3:01AM
UK Regulatory
RNS Number:2145R
Advent 2 VCT PLC
23 October 2003
Advent 2 VCT plc
23 October 2003
INTERIM REPORT FOR THE HALF YEAR ENDED 31 AUGUST 2003
The Board of Advent 2 VCT plc announces the results of the Company for the half
year ended 31 August 2003
Objective
The objective of Advent 2 VCT is to provide investors with an attractive return,
principally by maximising the stream of dividend distributions from the income
and capital gains generated by a portfolio of investments mainly in established
unquoted companies in the United Kingdom.
Highlights
- During the period, the remaining holding in ADVA AG Optical Networking was
sold for #0.1 million. The aggregate returns from the sale of the holding
represent a total return multiple of 3.8 times the original cost.
- During the period, the Company made follow-on investments totalling #0.5
million in three existing portfolio companies.
- Provisions against two portfolio companies were reduced following an upturn
in their trading performances, however, full provisions were made against the
cost of two investments and a partial provision was introduced against one other
investment.
Half year Year Half year
ended ended ended
31/08/03 28/02/03 31/08/02
(Unaudited) (Audited) (Unaudited)
pence pence pence
- Earnings per ordinary
share (1.7) (15.1) (0.6)
- Net asset value per
share 45.4 51.0 60.9
- Dividends since
inception (gross) 21.8 21.8 21.8
- Net asset value plus
dividends 67.2 72.8 82.7
- An interim dividend is not being recommended.
- The company continues to exceed the 70% requirement for investment
in Qualifying Holdings set by the Inland Revenue.
Venture Capital Trust Status
Advent 2 VCT has been granted approval under section 842AA of the Income and
Corporation Taxes Act 1988 and it is intended that the business of the company
be carried on so as to comply with that section.
Chairman's Statement
The six months to 31 August 2003 has seen a continuation of the challenging
market conditions facing our portfolio companies and has largely been a period
of retrenchment. With continuing constraints on significant capital expenditure
by large companies (the principal customers of our portfolio companies) and a
lack of opportunities to realise investments, the Manager has focussed its
efforts on controlling the portfolio to ensure that investee companies will be
able to take advantage of any recovery, the first signs of which are now
becoming evident. The net asset value per share has suffered a further small
decrease from 51.0p as at 28 February 2003 to 45.4p at 31 August 2003.
Investment Activity
The constraints on available cash resources have limited follow-on investment
activity to #0.5 million in three companies. This activity has been partly
funded by the sale of the remaining holding in ADVA AG. Although the residual
holding in ADVA was sold at a small loss, overall the investment realised a
total return multiple of 3.8 times the original cost of #1.7 million. A number
of investments in the portfolio have shown improved performance during the
period. EnSeal Systems, Footfall, DNA Research Innovations and INCA Digital
Printers continued to make good progress while Elam-T closed a significant
funding round at the same price as our original cost. Advanced Visual Technology
and VectorCommand both increased sales and bottom-line performance and so the
provision against the cost of each investment was reduced from 50% to 25%.
Provisions were made against three investments. A 50% provision was made against
the original cost of the investment in Prism Tech due to its failure to meet
sales budgets and full provisions were made against the cost of the investments
in Radiant Networks and Weston Antennas, which were unable to raise finance to
continue the development of their respective technologies and sales. The general
improvement in stock market sentiment has resulted in an increase in the value
of the quoted shares in the portfolio, with XKO Group in particular benefiting
from its strong trading performance.
Borrowing
As advised in my February 2003 statement, the Company has agreed a borrowing
facility of #1.5 million with its bankers, of which #200,000 was drawn at 31
August 2003.
Balance sheet
The net asset value per share as at 31 August 2003 was 45.4p compared with 51.0p
as at 28 February 2003. The investments in the portfolio have been valued in
accordance with valuation guidelines issued by the British Venture Capital
Association.
Dividend
The Company has made no gains in the period and the limited cash resources have
resulted in minimal income returns. The Board is therefore not recommending an
interim dividend.
Outlook
While market conditions remain difficult generally, there are some signs of an
impending recovery, as evidenced by large companies beginning to reinstate their
capital expenditure plans and a gradual return of merger and acquisition
activity. If these early trends continue, the Board believes that the Company
should be well placed to benefit from such a recovery as the majority of
portfolio investments are now trading at or near cash breakeven or better and
some are already increasing sales. Although it is too early to be optimistic
about prospects, the Board is hopeful that it can report better news to
investors in future.
ROGER BROOKE
Chairman
Profit and Loss Account for the half year ended 31 August 2003
Half year ended Year ended Half year ended
31/08/03 28/02/03 31/08/02
(Unaudited) (Audited) (Unaudited)
#'000 #'000 #'000
Investment income and deposit interest 90 413 307
Investment management fees (177) (423) (368)
Other expenses (108) (218) (175)
------- ------- -------
Operating loss (195) (228) (236)
(Loss)/profit on realisation of (424) (5,184) 23
investments
------- ------- -------
Loss on ordinary activities before (619) (5,412) (213)
taxation
Tax on ordinary activities - - -
------- ------- -------
Loss on ordinary activities after taxation (619) (5,412) (213)
Dividends - - -
------- ------- -------
Balance transferred from reserves (619) (5,412) (213)
------- ------- -------
Earnings per share (1.7)p (15.1)p (0.6)p
------- ------- -------
Statement of Total Recognised Gains and Losses
Half year ended Year ended Half year ended
31/08/03 28/02/03 31/08/02
(Unaudited) (Audited) (Unaudited)
#'000 #'000 #'000
Loss for the period (619) (5,412) (213)
Net unrealised loss on revaluation of (1,415) (6,521) (8,181)
investments
------- ------- -------
Total recognised losses relating to the (2,034) (11,933) (8,394)
period
------- ------- -------
All items in the above statement are derived from continuing operations.
Balance Sheet as at 31 August 2003
31/08/03 28/02/03 31/08/02
(Unaudited) (Audited) (Unaudited)
#'000 #'000 #'000
Fixed assets
Venture capital investments
Listed 733 274 220
Quoted on Deutsche Bourse - 59 47
Unquoted 15,777 17,666 20,985
------- ------- -------
16,510 17,999 21,252
Current assets
Debtors 162 516 226
Cash and money 159 192 490
market deposits
------- ------- -------
321 708 716
Creditors
Amounts falling due within one year
Other creditors (564) (406) (128)
------- ------- -------
(564) (406) (128)
Net current (liabilities)/assets (243) 302 588
------- ------- -------
Net assets 16,267 18,301 21,840
------- ------- -------
Capital and reserves
Called up share capital 1,793 1,793 1,793
Share premium account 23,581 23,581 23,581
Capital redemption reserve 9 9 9
Revaluation reserve (11,123) (9,708) (11,368)
Profit and loss account 2,007 2,626 7,825
------- ------- -------
Equity shareholders' funds 16,267 18,301 21,840
------- ------- -------
Net asset value per ordinary share 45.4p 51.0p 60.9p
------- ------- -------
Cashflow Statement for the half year ended 31 August 2003
31/08/03 28/02/03 31/08/02
(Unaudited) (Audited) (Unaudited)
#'000 #'000 #'000
Reconciliation of operating loss to net
cashflow from operating activities
Operating loss (195) (228) (236)
Increase/(decrease) in creditors 158 251 (27)
Decrease/(increase) in debtors 209 (190) (83)
Amortisation of bonds - 5 5
------- ------- -------
Net cash inflow/(outflow) from operating 172 (162) (341)
activities
------- ------- -------
Taxation - 5 -
Net capital expenditure and financial (205) (879) (583)
investment
Management of liquid resources - 236 53
Financing - 796 796
------- ------- -------
Decrease in cash for the period (33) (4) (75)
------- ------- -------
Reconciliation of net cashflow to movement
in net funds
Decrease in cash for the period (33) (4) (75)
Net funds at start of period 190 194 194
------- ------- -------
Net funds at end of period 157 190 119
------- ------- -------
Reconciliation of movement in shareholders' funds
Half year ended Year ended Half year ended
31/08/03 28/02/03 31/08/02
(Unaudited) (Audited) (Unaudited)
#'000 #'000 #'000
Opening shareholders' funds 18,301 29,438 29,438
Issue of shares - 883 883
Repurchase and cancellation of shares - (87) (87)
Total recognised losses for the period (2,034) (11,933) (8,394)
------- ------- -------
Closing shareholders' funds 16,267 18,301 21,840
------- ------- -------
Contacts for information:
Advent Fund Managers Limited 020 7932 2100
Sir David Cooksey
Les Gabb
Capital MS&L 020 7878 3181
Annabel O'Connor
Teather & Greenwood 020 7426 9000
Jonathan Becher
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