Half-yearly Report
Keydata Income VCT 2
KEYDATA INCOME VCT 2 plc
Unaudited Interim Results for the six month period ending 31 August 2007
Chairman's Statement
I am pleased to report that your company made good progress in the six month
period ended 31 August 2007.
Investment Update
On 27 June 2007, Keydata Income VCT 2 ('the company') invested £6,227,000 in a
series of renewable energy power generation projects based on the technology of
the gasification of recycled wood. The Company's principal partners in these
projects are Biomass Engineering Limited ('Biomass') a leading company in the
field of sustainable energy (see www.biomass-uk.com) and Centralgrange
Environmental Waste Limited ('CEW') a business based in St Helens, Lancashire
specialising in waste reclamation. Advance tax clearance has been obtained from
HMRC to confirm that these investments will be qualifying investments for VCT
purposes. We are also in consultation with HMRC regarding an inadvertent breach
of VCT regulations with respect to the proportion of the fund`s income in its
second financial year that was derived from bank deposits rather than from
shares and securities. This breach was the unintended consequence of the failure
to complete earlier wind farm investments that did not, as previously reported,
meet our financial criteria.
The investments made in the period represent 88% of total funds raised,
comfortably ahead of the required 70% investment within 3 years. The other 12%
of funds (amounting to £783,000 at 31 August 2007) are invested in short-dated
Treasury stock or held on bank deposit.
The Company invested an aggregate of £4,248,000 in five newly formed renewable
energy companies (RECs). It is intended that each REC will build, own and
operate either a 1 megawatt (MW) or 0.5 MW Gasification Unit in St Helens,
Merseyside, to be fuelled by clean recycled wood provided by CEW which operates
a waste reclamation station on the site. The total annual operating capacity of
the 5 RECs will be 4.5 MW of electricity, four companies producing 1MW and one
company producing 0.5MW. Biomass will provide the Gasification Units and
construction is underway with completion and grid connection scheduled for
October 2008 although it is anticipated that completion and grid connection
could occur earlier. Planning permission has been granted in respect of the
Gasification Units.
Under the terms of their investments, the RECs have each entered into a long
term contract to supply all their electricity and heat to a newly formed
company, Docherty Heat and Energy Distributor Limited and have agreed tolling
fees. The effect of this arrangement will be to reduce the financial risk of the
REC investments that would otherwise arise from potentially volatile feedstock
and electricity prices.
The company has also invested an aggregate of £1,979,000 in two newly formed
RECs set up to supply various support services (eg fuel feed system, condensate
filter and cooling tower and the plant required to connect to grid) to the five
operating companies detailed above.
Finally, at the same time, the company has made a small non-qualifying
investment in Docherty Heat and Energy Distributor Limited for a 5% equity
interest. This will provide the opportunity for the company to benefit directly
in the event of sustained high electricity prices.
Results
The net asset value per share at 31 August 2007 was 96.53 pence, an increase of
0.8% in the period. Adjusted for dividends paid of 1.33p, the total return is
97.86 pence, a 3% uplift since launch.
Earnings per share for the period were 1.76 pence per share (comprising revenue
earnings of 1.64 pence and capital earnings of 0.12 pence).
The directors do not propose to recommend an interim dividend for the period. A
final dividend is anticipated based on the profit for the full year.
Shareholder Communication
I look forward to reporting further progress in the Annual Report and Accounts
that will be sent to you in May 2008.
The Company's daily share price can be found on various financial websites under
the EPIC code 'KIV2' or on our own dedicated website at
www.keydataincomevct.co.uk
Stephen Oxenbridge
Chairman
30 October 2007
Consolidated income statement for the six month period ending 31 August 2007
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For the six month period
to 31 August 2007
(unaudited)
Revenue Capital Total
£000 £000 £000
Realised losses on investments - (16) (16)
Unrealised losses on investments - (3) (3)
Investment income 222 - 222
-------- ------- --------
222 (19) (203)
Management fees - - -
Other expenses (74) - (74)
-------- -------- --------
Profit before taxation 148 (19) 129
Taxation (28) 28 -
-------- -------- --------
Profit after taxation 120 9 129
-------- -------- --------
Earnings per share (Note 2) 1.64p 0.12p 1.76p
*T
The total column of this statement is the income statement of the Group. All
revenue and capital items in the above statement derive from continuing
operations. No operations were acquired or discontinued in the period
Consolidated income statement for the six month period ending 31 August 2006
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For the six month period
to 31 August 2006
(unaudited)
Revenue Capital Total
£000 £000 £000
Investment Income 110 - 110
Management fees - - -
Other expenses (73) - (73)
-------- ------- --------
Profit before taxation 37 - 37
Taxation (7) - (7)
-------- ------- --------
Profit after taxation 30 30
-------- ------- --------
Earnings per share (Note 2) 0.44p - 0.44p
*T
The total column of this statement is the income statement of the Group. All
revenue and capital items in the above statement derive from continuing
operations. No operations were acquired or discontinued in the period
Balance sheet as at 31 August 2007
Group and Company
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31 August 31 August
2007 2006
(unaudited) (unaudited)
£000 £000
Fixed assets
Investments 6,832 -
Current assets
Prepayments and accrued income 120 60
Cash 181 6,928
------- --------
301 6,988
Creditors: amounts falling due within one
year
Accruals and deferred income (80) (38)
------- --------
Net current assets 221 6,950
------- --------
Net assets 7,053 6,950
------- --------
Capital and Reserves
Called up share capital 73 73
Share premium 6,847 6,847
Capital reserve - realised 12 -
Capital reserve - unrealised (3) -
Revenue reserve 124 30
------- --------
Equity shareholders' funds 7,053 6,950
------- --------
Net asset value per share (Note 4) 96.53p 95.12p
*T
Cash flow statement for the six month period ending 31 August 2007
Group and Company
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For the six For the six
month month
period to period to
31 August 31 August
2007 2006
(unaudited) (unaudited)
£000 £000
Profit before taxation 148 37
Equity dividends paid (73) (15)
Increase in debtors (52) (35)
Increase in creditors 17 8
------- --------
Net cash from operating activities
Financial investment: 40 (5)
Purchase of investments (10,871) -
Sale of investments 4,020 -
Financing:
Net proceeds from issue of ordinary share 2,632
capital --------- --------
(Decrease)/ increase in cash (6,811) 2,627
Opening cash 6,992 4,301
------- --------
Closing cash 181 6,928
------- --------
*T
Statement of changes in equity
for the six month period ending 31 August 2007
Group and Company
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Share Capital Capital Revenue
Premium Reserve Reserve Reserve
Realised Unrealised
£000 £000 £000 £000
At 1 March 2006 6,847 - - 77
Profit before taxation for period - - - 148
Taxation - 28 - (28)
Realised losses on investments - (16) - -
Unrealised losses on investments - - (3) -
Dividends paid (73)
------- -------- --------- --------
At 31 August 2007 6,847 12 (3) 124
------- ------- ------- --------
*T
Investment portfolio summary as at 31 August 2007
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Qualifying investments Equity Loan Book Valuation % net
Note cost assets
£000 £000 £000 £000 %
Nevin Energy Resources Ltd 283 660 943 943 13.8
Cooke Generation Ltd 283 660 943 943 13.8
Burley Energy Ltd 283 660 943 943 13.8
Boyle Electrical
Generation Ltd 283 660 943 943 13.8
Hughes Power Ltd 143 333 476 476 7.0
Clarke Power Services Ltd 302 704 1,006 1,006 14.7
Spencer Energy Services 292 681 973 973 14.2
Ltd ------- ------- -------- -------- --------
Total qualifying
investments 1,869 4,358 6,227 6,227 91.1
Non-qualifying investments
Treasury 7.25% Stock 2006 N/A N/A
Docherty Heat & Energy 3 - 605 602 8.8
Distributor Ltd 3 3 0.1
-------- ------- --------
Total non-qualifying 608 605 8.9
investments -------- ------- --------
Total investments 6,835 6,832 100.0
-------- -------- --------
*T
Notes to the interim report
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1 The group's interim accounts have been prepared in accordance
with International Financial Reporting Standards (IFRSs). The
accounting policies used in preparing this report are
consistent with those which will be adopted at the year end.
2 The earnings per share of 1.76 pence (2006: 0.44 pence) is
based on the profit after tax for the period of £129,002
(2006: £30,184) and the weighted average number of shares in
issue over the period to 31 August 2007 of 7,306,320 (2006:
6,832,435).
3 The results should not be taken as a guide to the results for
the year ending 28 February 2008.
4 The net asset value per ordinary share of 96.53 pence (2006:
95.12 pence) is based on net assets of £7,052,808 (2005:
£6,949,982) and on 7,306,320 (2005: 7,306,320) shares, being
the number of shares in issue as at 31 August 2007.
5 The financial information contained in the 31 August 2007
consolidated income statement, balance sheet, cash flow
statement and statement of changes in equity does not
constitute full financial statements and has not been audited.
*T
For further information please contact:
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Craig McNeil
Company Secretary
Keydata Income VCT 2 plc
0141 572 2300
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