Final Results
23 January 2004 - 11:13PM
UK Regulatory
RNS Number:5735U
AIM VCT2 PLC
23 January 2004
To: Company Announcements
From: AiM VCT2 plc
Date: 23 January 2004
Investment Objective
To provide shareholders with a tax efficient means of gaining long term capital
growth and an attractive dividend stream primarily through investment in a
diversified portfolio of AiM companies and unquoted companies seeking a stock
market listing within 18 months.
* Net asset value per share of 88.59 pence.
* 29 new investments made during the year, taking the total equity portfolio
to 62 companies.
* Total dividends of 1.2 pence per share.
* All VCT tests met by a comfortable margin.
Introduction I AiM VCT2 has weathered one of the most difficult bear markets of
recent times and ends its third year in a strong position to capitalise on the
stock market's recovery. The adverse conditions experienced during the early
part of the year have given way to a feeling of greater confidence in the future
by investors. Against this background, the Investment Managers have made great
strides with the investment programme, taking advantage of a surge in corporate
activity and fundraising by small AiM companies. The Board are pleased to report
that by the Company's critical third anniversary, all VCT qualifying tests have
been met, including the important 70% test.
Results and Dividends I As in previous years the majority of the Company's
earnings have been derived from the income earned on the holding in a government
security. At #522,000 these earnings were less than last year due to this
government security being gradually sold in order to provide funds for the
investment programme. As a result, the proposed final dividend of 0.6 pence per
share is also lower than last year. However, since launch AiM VCT2 will have
paid 5.5 pence per share in income dividends. It is hoped that in future the
income dividend will be supplemented with capital dividends derived from the
profitable sale of investments.
Performance I The FTSE AIM Index ended the twelve months to 30 November 2003 up
35.1%. Even after this strong recovery the FTSE AiM market is still 44.5% below
its level in December 2000, when AiM VCT2 was launched.
In the year to 30 November 2003 AiM VCT2's net asset value (NAV) per Ordinary
Share rose by 14.3% after taking into account the proposed final dividend.
Whilst behind the FTSE AIM Index, this masks robust performance from the
underlying qualifying equity holdings and reflects the cautious approach to
investment taken by the Investment Managers since launch. They have followed a
plan of gradual investment in qualifying companies whilst maintaining a high
level of government security during the difficult market conditions of the past
three years. This undoubtedly resulted in better conservation of shareholder
value than if all those funds had been invested directly in the AiM market since
launch. After two years of outperformance in a deteriorating market it is
inevitable that having such a high proportion of total assets in cash or gilts
in a rising market would hold back AiM VCT2's progress. Nevertheless, the Board
feels this was the correct plan to follow given that since launch the NAV per
share has fallen by just 6.8% against the fall in the FTSE AiM market of 44.5%.
In addition, shareholders will have received dividends of 5.5 pence per share
over the first three years, as well as initial income tax relief of 20 pence per
pound invested. Taken altogether the simple cumulative total return to
shareholders is 114 (an increase of 14% in their initial investment). This
compares favourably with AiM VCT2's peer group of other AiM VCTs launched at or
around December 2000 with AiM VCT2 producing returns at the top end of this
group.
Investment Programme I At 30 November 2003, 78% of the Company's investments
were held in qualifying companies. In order to ensure that the Company exceeded
the requirement of the 70% test by a comfortable margin, #1 million was placed
in a non-interest bearing account (which is not regarded as investments for VCT
purposes) until investments to the equivalent value had been made in qualifying
companies. On 9 January 2004 the non interest bearing account was closed and
this money has been reinvested in a government security. This mechanism is
recognised by the Inland Revenue as an acceptable way of meeting the 70% test
and may be used again in the future should circumstances dictate.
Advisers I The Board has undertaken a thorough review of the Company's advisers
during the year in order to ensure that AiM VCT2 receives the best available
advice at reasonable cost. The Board is pleased to say that as a result of this
review we have appointed PricewaterhouseCoopers (PwC) as adviser on key VCT
related matters, in particular the monitoring of the qualifying investment
portfolio. PwC has built a strong reputation in the VCT sector and currently
advises the majority of VCTs as well as taking a leading role in lobbying the
treasury and Inland Revenue on behalf of the VCT industry.
Shortly after the year-end the Board also appointed new brokers and financial
advisers to AiM VCT2. The brokers are Teather & Greenwood who, over the period
of the past few years, have established a focused commitment to the VCT sector
and are now brokers to a number of VCTs. The Board recognises the importance of
the secondary market for AiM VCT2's shares and shareholders. It is hoped that by
working closely with the new brokers AiM VCT2 might be better able to narrow and
manage the discount to net asset value at which the share price currently
stands.
Managing Shareholder Needs I During the past year the Company's share price has
increased from 57.5 pence to 72.5 pence. However, this is still a substantial
discount to the net asset value of 88.6 pence per share. A number of initiatives
have been put in place in order to help provide better liquidity for investors
in AiM VCT2 shares which, over time, the Board hope will have the effect of
narrowing the discount still further. Each year the Board renews its authority
to buy back a proportion of the Company's share capital. In the past year the
Company bought back for cancellation 143,000 Ordinary Shares at a cost of
#102,000. During the year the Company issued a 10% Offer for Subscription to
shareholders who wished to take the opportunity to 'top up' their investment and
receive the VCT tax reliefs attributable to new shares. During the year some
shareholders took advantage of this Offer and AiM VCT2 issued 295,303 new
Ordinary Shares and raised net proceeds of #236,000. This Offer will close on 7
April 2004. The Board intends to offer shareholders a further opportunity to
"top up" their investment in 2004/2005 once the proposals announced by the
Chancellor in his Pre-Budget Statement on 10 December 2003 are finalised.
Outlook I This has been a very busy year for AiM VCT2 against a volatile but
also steadily improving investment climate. Much of the uncertainty of the last
three years has diminished and investors appear willing to broaden their time
horizons once again. The increase in the level of fund raising opportunities has
enabled AiM VCT2 to make considerable progress with its investment programme.
The portfolio is shaping up well with many of the more recent investments being
held at around cost with everything to go for in the future as their business
plan progresses.
Enquiries:
Robert Mitchell / Bill Brown
Investment Managers
ISIS Asset Management plc Tel: 0207 506 1100
Rhonda Nicoll
Secretary
ISIS Asset Management plc Tel: 0131 465 1074
Audited Statement of Total Return (incorporating the revenue account) of the
Company
Year to 30 November 2003
Revenue Capital Total
#'000 #'000 #'000
Gains on investments - 4,972 4,972
Income 1,187 - 1,187
Investment management fee (194) (580) (774)
Other expenses (292) - (292)
Return on ordinary activities
before taxation 701 4,392 5,093
Tax on ordinary activities (179) 175 (4)
Return attributable to
equity shareholders 522 4,567 5,089
Dividends in respect of equity shares (498) - (498)
Transfer to reserves 24 4,567 4,591
Return per ordinary share: 1.26p 11.03p 12.29p
Audited Statement of Total Return (incorporating the revenue account) of the
Company
Year to 30 November 2002
Revenue Capital Total
#'000 #'000 #'000
Losses on investments - (6,855) (6,855)
Income 1,711 - 1,711
Investment management fee (206) (618) (824)
Other expenses (329) - (329)
Return on ordinary
activities
before taxation 1,176 (7,473) (6,297)
Tax on ordinary activities (286) 151 (135)
Return attributable to
equity shareholders 890 (7,322) (6,432)
Dividends in respect of (871) - (871)
equity shares
Transfer to/(from) reserves 19 (7,322) (7,303)
Return per ordinary share: 2.14p (17.61)p (15.47)p
Audited Balance Sheet
As at As at
30 November 30 November
2003 2002
#'000 #'000
Fixed Assets
Quoted on the Alternative Investment 22,263 7,381
Market
Quoted on OFEX 2,238 1,791
UK government security 7,719 18,385
Unquoted investments 4,714 4,291
36,934 31,848
Net current (liabilities)/assets (179) 182
Net assets 36,755 32,030
Financed by:
Shareholders' funds 36,755 32,030
Net asset value per ordinary share: 88.59p 77.48p
Ordinary shares in issue 41,490,367 41,338,064
Summarised Audited Statement of Cash Flows
Year to Year to
30 November 30 November
2003 2002
#'000 #'000
Net cash flow from operating activities 1,384 1,410
Tax paid (136) (283)
Capital expenditure and financial investment 1,196 (240)
Equity dividends paid (662) (917)
----------- -----------
Net cash inflow/(outflow) before financing 1,782 (30)
Financing 134 (303)
----------- -----------
Increase/(decrease) in cash 1,916 (333)
----------- -----------
Reconciliation of net cash flow to movement
in net cash
Increase/(decrease) in cash 1,916 (333)
Net cash at 1 December 307 640
----------- -----------
Net cash at 30 November 2,223 307
----------- -----------
Reconciliation of operating profit to net
cash flow from activities
Net revenue before taxation 701 1,176
Management fee charged to capital (20) 34
Decrease in debtors 674 259
Increase /(decrease) in creditors 29 (59)
----------- -----------
Net cash flow from operating activities 1,384 1,410
----------- -----------
Notes
1. The audited results which cover the year to 30 November 2003 have been drawn
up in accordance with applicable accounting standards and adopting the
Statement of Recommended Practice for Financial Statements of Investment
Trust Companies and on the assumption that the Company maintains VCT status.
2. There were 41,490,367 ordinary shares in issue at 30 November 2003 (2002:
41,338,064). During the year 143,000 ordinary shares of 10p each were bought
in by the Company for cancellation (2002: 384,269) and 295,303 ordinary
shares of 10p each were issued (2002: nil).
3. Revenue and capital returns for the year to 30 November 2003 are based on a
weighted average of 41,403,710 (2002: 41,579,408) ordinary shares in issue
during the year.
4. Income for the year to 30 November is derived from:
2003 2002
#'000 #'000
Dividend Income 58 43
Fixed interest investment 1,081 1,628
Deposit interest 48 40
1,187 1,711
5. The final proposed dividend of 0.6 pence per ordinary share will be paid on
13 April 2004, subject to shareholder approval, to eligible shareholders on
the register on 6 February 2004.
6. These are not full accounts in terms of Section 240 of the Companies Act
1985. Full audited accounts for the year to 30 November 2002 have been
lodged with the Registrar of Companies. The annual report for the year to 30
November 2003 will be sent to shareholders shortly and will then be
available for inspection at 100 Wood Street, London, the registered office
of the Company. Both the audited accounts for the year to 30 November 2003
and 2002 contain unqualified audit reports.
7. The Annual General Meeting will be held on 8 April 2004 at 11.00am.
This information is provided by RNS
The company news service from the London Stock Exchange
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