15th Nov 2005 16:49
Murray VCT 2 PLC15 November 2005 November 2005 MURRAY VCT 2 PLC Interim results for the six months ended 31 August 2005 Murray VCT 2 PLC ("the Company"), managed by Close Venture Management Limited,today announces interim results for the six months ended 31 August 2005. Key Facts 31 August 2005 28 February % change 2005 (restated)* Assets Net Assets £12,671,000 £12,595,000 0.6% Cumulative returns to Shareholderssince launchBasic and dilutedtotal return(without taxreliefs) note 1 66.6p 66.4pBasic and dilutedtotal return (withtax reliefs) notes 1and 2 86.6p 86.4p Ordinary shares Net Asset Value 35.7p 35.5p 0.6%Share price 26.5p 32.0p (17.2)%Discount to NetAsset Value 25.8% 9.9%Ordinary shares inissue at period end 35,497,136 35,497,136 Note 1: Sum of current Net Asset Value and dividends approved to date.Note 2: Income tax relief at 20%. * Comparative figures have been adjusted and restated as disclosed in note 1 and2. For further information, please contact: Patrick Reeve/ Emil Gigov John West/ Clemmie CarrClose Venture Management Limited Tavistock CommunicationsTel: 020 7422 7830 Tel: 020 7920 3150 www.closeventures.co.uk Notes to Editors: 1) Murray VCT 2 PLC is managed by Close Venture Management Limited which is a subsidiary of Close Brothers Group plc and is authorised and regulated by the FSA. 2) The financial information set out in the announcement does not constitute the Company's statutory accounts for the six months ended 31 August 2005. The financial information for the year ended 28 February 2005 is extracted from the statutory accounts delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified and did not contain a statement under s237 (2) or (3) of the Companies Act 1985. Chairman's statement The board of Murray VCT2 reports that the Company's net asset value was 35.7pence per share at 31 August 2005, broadly unchanged from 35.5 pence per shareat 28 February 2005, as restated in accordance with revised UK GAAP. Inaddition, the Company reports a revenue profit for the period of £203,000 beforethe exceptional operating costs. Such costs include those in relation to theshareholder action, the cost of the proposed merger with Murray VCT PLC andMurray VCT3 PLC, a bad debt provision in respect of income from investeecompanies previously recognised where the board is no longer confident that itcan be recovered and a provision against income tax recoverable. The operatingrevenue loss for the year is £228,000. As required by revised UK GAAP therealised and unrealised gains and losses of the investment portfolio have beenrecognised through the Profit and Loss Account, resulting in a total profit forthe period of £130,000. The board does not propose to declare an interimdividend. The past six months have been a period of considerable change for the Company.The management agreement with the previous manager, Murray Johnstone Limited,was terminated in April and the board appointed a new manager, Close VentureManagement Limited ("Close"). Following this, a shareholder action instigated byMr Clark to remove your board was roundly defeated by shareholders at the EGMheld in September of this year. The cost that the board had to incur in respectof this shareholder action is fully reflected in the loss for the half year.During the period the Company made significant progress towards a merger withMurray VCT PLC and Murray VCT3 PLC. These proposals are now being finalised andshareholder support will be sought at the forthcoming EGM on 12th December. Theoverall cost of the merger is expected to be circa £230,000 of which £46,000 hasbeen recognised in the interim accounts. We believe that a merger of the threetrusts should have considerable benefits for shareholders, as set out in themerger documents which will be sent to shareholders shortly. Since Close was appointed in April, there have been a significant number ofchanges in the make-up of the investment portfolio. Close has undertaken anintensive review of the portfolio and has been actively engaging with investeecompanies in efforts to restore and develop shareholder value. In the six monthsto 31 August we have exited in whole or in part from 5 investee companiesrealising proceeds of £1.4 million. Since the period end we achieved a full orpartial exit from a further 5 investments realising total proceeds of £0.8m. Certain companies in the portfolio have been performing strongly, in particularSynexus, the recruiter of patients for clinical trials, which floated on AIMearlier this month resulting in a strong uplift in value. In addition,disappointments in the performance of some companies have been balanced bystrong trading performances in companies such as ELE Advanced Technology, amanufacturer of engineering components and Unique Communications, a marketingcommunications and media company. Close's strategy for new investments, meanwhile, is to build up a portfolio thatconcentrates on two complimentary areas; the first is lower risk, often propertybased investments that provide a strong income stream combined with a protectionof capital. Such investments have constituted the majority of new investments byvalue. These are balanced by a smaller number of higher risk companies withgreater growth prospects. Together, it is intended that these two categories ofinvestment, which are common to the majority of Close's VCTs, will enable thecompany to produce a predicable dividend stream with the prospect of gradualrecovery in capital value. With this in mind, Close has invested in a total of 10 businesses since becomingthe manager of the company, with a total investment of £1.4 million. AcrossMurray VCT PLC, Murray VCT2 PLC and Murray VCT3 PLC Close has invested £3.2million since April. The new investments range from a healthcare servicebusiness to a provider of internet services to the travel industry to freeholdcinemas, pubs and hotels. It is Close's policy to have a first charge whereverpossible on any underlying freehold and other assets in order to reduceinvestment risk and in any event, the majority of new investee companies have noexternal borrowings, again a characteristic of the Close philosophy. Prospects The next key step for the Company is to complete the proposed merger with MurrayVCT PLC and Murray VCT3 PLC. This will have a variety of benefits forshareholders, including a broadening of the investment portfolio, a reduction inrunning costs, and a higher degree of liquidity in the Company's shares. It isalso intended that, following the merger, the enlarged company will have apolicy of ensuring, so far as is practicable, a regular and predictable dividendflow to shareholders, as the board believes that this is an important part inrestoring shareholders' confidence in the Company. Together with the merger proposals the shareholders will have the opportunity tovote for a tender offer which will enable those shareholders who wish to realisesome or all of their shareholdings to do so. Following completion of the merger,the enlarged company will be undertaking a strict policy of limiting thediscount at which the shares trade to net asset value through an active sharebuy-back programme. Lastly, and most importantly, Close continues to seek toturn round the existing investments and to transform the investment portfoliointo a broadly based portfolio that combines a strong income stream withprotection of capital and offers the prospect of a recovery in capital value. ChairmanMaxwell Packe14 November 2005 Investment Portfolio Summary As at 31 August 2005 Unlisted Nature of Business Valuation % of Investments as at 31 August net assets 2005 £'000s------------------ --------------------- -------- ------------ UnquotedInvestmentsSynexus Patient recruitment for clinical trials. 920 7.3ELE AdvancedTechnologies Manufacturer of precision engineering 765 6.0 components for the industrial gas turbine, Aerospace and Automotive markets.RMS Europe Port operator 456 3.6Clamonta Manufacturer of aircraft engine components. 431 3.4J&S Marine Acoustic, electromechanical and data network 367 2.9 systemsPalgrave Brown Manufacturer of specialist timber products 298 2.4 including roof trusses, windows and doors.Link Up Mitaka Translation services. 227 1.8 Unique Comms Communications and media consultancy 219 1.7PLM Dollar On-shore helicopter services. 153 1.2Sanastro B2B financial publishing. 146 1.2City ScreenBrixton Cinema owner and operator 145 1.2Working People Supplier of temporary drivers. 139 1.1GB Pub Co Freehold pub owner 100 0.8AberdeenFootball Club Football Club 80 0.6IndependentBeer Freehold pub owner 80 0.6GrosvenorHealthcare Healthcare services 73 0.6Bold Pub Co Freehold pub owner 70 0.5Conveco Investment sold. Valuation represents future 48 0.4 expected distributions.First Line Distributor of automotive products 42 0.3William Clowes Printing services 36 0.3Carmichael Valuation represents expected recovery from 31 0.2 receivership ------- ------- 4,826 38.1 ------- -------AIM QuotedInvestmentsTanfield GroupPlc Supplier of engineering services and electric 341 2.7 vehicles.Cello GroupPlc Market research, brand advertising, direct 339 2.7 marketing and database management.Avanti ScreenMedia Plc Suppliers of retail television services 258 2.1CareforceGroup Plc A group providing home care services to the 256 2.0 elderly, principally on behalf of local authorities.Augean GroupPlc Waste Management 193 1.5Zetar Plc Manafacturer of confectionery and snack 154 1.2 foodsTalarius Plc Operator of high street and online gaming 132 1.0 sites ----------------- --------------------- -------- ------- 1,673 13.2 -------- -------GiltsTreasury 8.5%12/05 2,310 18.2Treasury 4.5%2007 241 1.9------------------ --------------------- -------- ------ 2,551 20.1------------------ --------------------- -------- ------Totalinvestments 9,050 71.4------------------ --------------------- -------- ------ Profit and Loss Account For the six months ended 31 August 2005 Six months to Six months to Year to 31 August 2005 31 August 2004 28 February 2005 (unaudited) (unaudited and restated)* (audited and restated)* ------- ------ ------ ------- ------ ------ ------- ------ ------ Revenue Capital Total Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 ------- ------ ------ ------- ------ ------ ------- ------ ------Investment anddeposit income 359 - 359 364 - 364 825 - 825 Investmentmanagementfees (26) (76) (102) (66) (99) (165) (84) (254) (338) Other expenses (130) - (130) (104) - (104) (429) - (429)--------------- ------- ------ ------ ------- ------ ------ ------- ------ ------ 203 (76) 127 194 (99) 95 312 (254) 58 Exceptional operatingexpenses Provisionagainst IncomeTaxrecoverable (88) - (88) - - - - Bad debtprovision (142) - (142) - - - - InvestmentManagementterminationfees - - - - - - (95) (287) (382) Other expensesin respect oftermination (11) - (11) - - - (103) - (103) Merger costs (46) - (46) - - - - - - Shareholderaction costs (144) - (144) - - - - - ------------------- ------- ------ ------ ------- ------ ------ ------- ------ ------ (431) - (431) - - - (198) (287) (485)------------------ ------- ------ ------ ------- ------ ------ ------- ------ ------Operating(loss)/profit (228) (76) (304) 194 (99) 95 114 (541) (427) (Loss)/profiton realisationof investments - (501) (501) - 537 537 - 830 830 Unrealisedgains oninvestments - 935 935 - 806 806 - (569) (569)------------------ ------- ------ ------ ------- ------ ------ ------- ------ ------(Loss)/profiton ordinaryactivitiesbeforetaxation (228) 358 130 194 1,244 1,438 114 (280) (166) Tax onordinaryactivities - - - (33) 33 - (14) 14 ------------------- ------- ------ ------ ------- ------ ------ ------- ------ ------(Loss)/profiton ordinaryactivitiesafter taxation (228) 358 130 161 1,277 1,438 100 (266) (166) Ordinary dividends onequity shares Capitaldividends nil(2005: 1.8p) - - - - (660) (660) - (652) (652) Final dividendnil(2005:0.7p) - - - (256) - (256) (256) - (256)------------------ ------- ------ ------ ------- ------ ------ ------- ------ ------ Balancetransferred (from)/to reserves (228) 358 130 (95) 617 522 (156) (918) (1,074)------------------ ------- ------ ------ ------- ------ ------ ------- ------ ------Basic and dilutedEarnings pershare (pence) (0.6) 1.0 0.4 0.4 3.5 3.9 0.2 (0.7) (0.5)------------------ ------- ------ ------ ------- ------ ------ ------- ------ ------ * Comparative figures have been extracted from the unaudited interim accountsfor the period ended 31 August 2004 and the statutory accounts for the yearended 28 February 2005, and have been restated in accordance with FRS21. Statement of Total Recognised Gains and Losses For the six months ended 31 August 2005 Six months to Six months to Year to 31 August 2005 31 August 2004 28 February 2005 (unaudited) (unaudited) (audited) Revenue Capital Total Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000------------------- ------ ------ ------ ------ ------ ------ ------ ------ ------ (Loss)/profiton ordinaryactivitiesafter taxation (228) 358 130 161 1,277 1,438 100 (266) (166) Unrealisedloss onrevaluation ofinvestments - - - - (622) (622) - (2,837) (2,837)------------------- ------ ------ ------ ------ ------ ------ ------ ------ ------Totalrecognised(losses)/gainsrelating tothe period (228) 358 130 161 655 816 100 (3,103) (3,003)------------------- ------ ------ ------ ------ ------ ------ ------ ------ ------ Balance sheet As at 31 August 2005 31 August 2005 31 August 2004 28 February 2005 (unaudited) (unaudited and restated)* (audited and restated)* £'000 £'000 £'000 FixedassetsInvestments 9,050 15,849 11,924 Current assetsDebtors 720 1,109 1,099Cash andovernight deposits 3,407 480 485 -------- ------ ----- 4,127 1,589 1,584 Creditors:Amounts falling due within one year (304) (803) (711) -------- ------ ----- Net currentassets 3,823 786 873 -------- ------ ----- Total assetsless currentliabilities 12,873 16,635 12,797 -------- ------ ----- Provisionsfor liabilities and charges (202) - (202) -------- ------ ----- Net assets 12,671 16,635 12,595 -------- ------ ----- Capital andreservesCalled upshare capital 8,874 9,049 8,874Share premiumaccount 99 99 99Revaluationreserve - (9,126) (10,840)Capitalredemptionreserve 764 590 764Profit andloss account 2,934 16,023 13,698 -------- ------ -----Equityshareholders'funds 12,671 16,635 12,595 -------- ------ ----- Net assetvalue perordinaryshare 35.7 46.0 35.5(pence) * Comparative figures have been extracted from the unaudited interim accounts for the period ended 31 August 2004 and the statutory accounts for the year ended 28 February 2005, and have been restated in accordance with FRS21. This interim report was approved by the Board of Directors on 14 November 2005. Signed on behalf of the Board of Directors by R Hollidge Director Cash flow statement for the six months ended 31 August 2005 Six months to Six months to Year to 31 August 2005 31 August 2004 28 February 2005 (unaudited) (unaudited) (audited) £'000 £'000 £'000 ------------ ----------- ------------ Operating activitiesInvestment incomereceived 254 378 949Deposit interest received 7 8 14Investment managementfees paid (106) (167) (337)Secretarial fees paid (17) (29) (58) Cash paid to and onbehalf of Directors (32) (32) (64)Other cash payments (487) (47) (97) ----- ---- -----Net cash (outflow)/inflowfrom operating activities (381) 111 407 Taxation recovered 78 - - Financial investmentPurchase of investments (780) (5,790) (7,939)Sale of investments 4,082 6,337 9,008 ----- ----- -----Net cash inflow fromfinancial investment 3,302 547 1,069Equity dividends paid - (256) (908) ----- ----- -----Net cash inflow beforefinancing 2,999 402 568 FinancingRepurchase of Ordinary shares (77) (140) (301) ------------ ----------- ------------Net cash outflow fromfinancing (77) (140) (301)---------------------- ------------ ----------- ------------Increase in cash 2,922 262 267---------------------- ------------ ----------- ------------ Notes to the Financial Statements 1. Accounting policies The financial information for the six months ended 31 August 2005 and the sixmonths ended 31 August 2004 comprises non-statutory accounts within the meaningof Section 240 of the Companies Act 1985. The financial information contained inthis report has been prepared on the basis of the accounting policies set out inthe Annual Report for the year ended 28 February 2005, with the exception of thechanges stated in the notes below. The results for the year ended 28 February2005 have been extracted from the full accounts for that year, which received anunqualified report from the auditors and have been filed with the Registrar ofCompanies. The Company is no longer an investment company within the meaning of S266 of theCompanies Act 1985, as investment company status was revoked in order to permitthe distribution of capital profits, the Directors believe that the presentationof the Profit and Loss Account and the Statement of Total Recognised Gains andLosses is enhanced by showing the returns attributable to revenue and tocapital. The Profit and Loss Account and the Statement of Total Recognised Gains andLosses have been prepared in accordance with Schedule 4 of the Companies Act1985 and Financial Reporting Standard No.3: "Reporting Financial Information".As mentioned above, for illustrative purposes non-statutory informationcomprising revenue and capital accounts has also been presented. This financial information has been prepared using new UK accounting standards,which have been issued to begin the process of converging UK standards withInternational Financial Reporting Standards. The first change, which is inaccordance with Financial Reporting Standard (FRS) 21, is to recognise anydividend payable as a liability only after it has been approved. The second,which is in accordance with FRS 26, is to value the listed part of the portfolioat bid prices rather than mid prices, whilst loan stock is designated as loansand receivables and is valued at amortised cost. With effect from 1 March 2005,the Company has adopted the following Financial Reporting Standards: FRS 21 Events after the balance sheet dateDividends paid by the Company are accounted for in the period in which thedividend has been approved. Previously, the Company recognised dividends in theperiod in which net revenue, to which those dividends related, was accountedfor: FRS 25 Financial Instruments: Disclosure and Presentation and FRS 26 FinancialInstruments: MeasurementEquity investments held by the Company are classified as 'fair value throughprofit or loss'. For investments actively traded in organised financial markets,fair value is generally determined by reference to Stock Exchange quoted marketbid prices at the close of business on the balance sheet date. Previously alllisted investments were valued using closing mid market prices at the balancesheet date. For unquoted investments, fair value is determined by the Directorsin accordance with the British Venture Capital Association ("BVCA") guidelines. Loan stock is designated as loans and receivables and valued at amortised cost. In accordance with the transition provisions included within FRS 26, comparativefigures have not been restated. However the opening balances of the Profit andLoss Account and the Revaluation reserve as at 1 March 2005 have been adjustedin order to reflect the impact of the new treatment under FRS 26. 2. Adjustment and Restatement to Profit and Loss Account and RevaluationReserve as at 28 February 2005. Under the terms of the transitional provisions contained within FRS 26 comparatives for the Profit and Loss Account and the Revaluation reserve at 28 February 2005 in relation to movements in amortised cost of loans and receivables and equity investment valuations have not been restated but adjusted to reflect the impact of the adoption of FRS 26. In accordance with FRS 21, comparatives for the periods ended 31 August 2004 and28 February 2005, have been restated in recognition of the change in accountingpolicy. Reconciliations of the Profit and Loss Account and Revaluation reserve incorporating the adjustments and restatements required by the adoption of FRS 21 and FRS 26 are shown below: 28 February 2005 £'000 Reconciliation of Profit and Loss Account Profit and Loss Account as previously reported 13,343Adjustment as required by FRS 21 change in accounting fordividends 355 --------Restated Profit and Loss Account at period end 13,698 Adjustment as required by FRS 26 change in valuation ofloan stock investments to amortised cost (21)Reclassify Revaluation reserve as profit or loss asrequired by FRS 26 (10,873) ---------Profit and Loss Account at 1 March 2005 as adjusted 2,804 --------- Reconciliation of Revaluation Reserve 28 February 2005 £'000Revaluation reserve as previously reported (10,840)Adjustment as required by FRS 26 change in valuation ofquoted investments to bid price (33)Reclassify Revaluation reserve as profit or loss asrequired by FRS 26 10,873 ---------Revaluation reserve at 1 March 2005 as adjusted - --------- 3. Movement in reserves Share premium Capital Profit and loss account redemption account reserve £'000 £'000 £'000As at 1 March2005(adjusted) 99 764 2,804Retained profitfor the period - - 130 -------- -------- ----------As at 31August 2005 99 764 2,934 -------- -------- ---------- This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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