Interim Results

MATRIX INCOME & GROWTH 2 VCT PLC Interim results for the six months ended 31 October 2006 Financial highlights Ordinary Shares (listed on 11 July 2000) Initial net asset value per Ordinary 94.00 pence Share Initial net assets Â£12,388,236 31 October 30 April 31 October 2006 2006 2005 Net assets Â£12,622,286 Â£10,938,976 Â£11,075,033 Net asset value per Ordinary Share 102.28 pence 87.05 pence 87.30 pence Total dividends per Ordinary Share paid 14.79 pence 14.79 pence 8.79 pence to date Total return to shareholders since 117.07 pence 101.84 pence 96.09 pence launch per share* Earnings per Ordinary Share 14.87 pence 6.91 pence 1.26 pence Total dividends per Ordinary Share for 0.00 pence 12.00 pence 6.00 pence the period C Shares (listed on 21 December 2005) Initial net asset value per C Share 94.50 pence Initial net assets Â£8,648,486 31 October 30 April 2006 2006 Net assets Â£8,681,654 Â£8,626,295 Net asset value per C Share 94.92 pence 94.32 pence Total return to shareholders since 94.92 pence 94.32 pence launch per share* Earnings/(loss) per C Share 0.61 pence (0.56) pence * Net asset value per share plus cumulative dividends per share. This compares to an original investment cost of 80 pence per share for the Ordinary Share Fund and 60 pence per share for the C Share Fund after allowing for income tax relief of 20 pence and 40 pence per share respectively. Chairman's Statement I am pleased to announce the Interim Results of Matrix Income & Growth 2 VCT plc (the "Company") for the period from 1 May 2006 to 31 October 2006. Overview Your Company is benefiting from a solid performance by Matrix Private Equity Partners, the Investment Manager. Since April, the Ordinary and C Share Funds have made investments together in three further companies, totalling Â£1.2 million and Â£400,000 respectively. The Board is encouraged by the satisfactory early performance of these investments. Your Board was also pleased to hear that your Investment Manager successfully retained the award for Venture Capital Trust Manager of the Year at the Investor AllStars 2006 Awards ceremony held in September 2006. Ordinary Share Fund I am satisfied to report another period of strong performance. The NAV per Ordinary Share at 31 October 2006 was 102.28 pence, a 17% increase when compared with 87.30 pence per share as at 31 October 2005, or 26% after adjusting for the 6 pence capital dividend referred to in my Statement in respect of the period ended 31 October 2005. When adjusted for all dividends paid since the Company's formation, the Fund's total return has increased by 22% from 96.09 pence at 31 October 2005 to 117.07 pence per share at 31 October 2006. With a full year having passed since the implementation of the change in investment strategy, the Fund now more fully reflects the Investment Manager's focus on management-buy-outs ("MBOs"), which now account for seven of the Fund's sixteen investments. During August the decision was taken to complete the exit from Miva Inc generating a positive return of Â£145,000 above original cost of Â£612,000. Of the more recent investments, Youngman Group in particular, has demonstrated strong performance which has been reflected in a material uplift in its valuation. A number of other newer investments are also trading encouragingly. During the period, 225,000 Ordinary Shares were bought back for cancellation at an average price of 74.50 pence per share. C Share Fund The NAV per C Share at 31 October 2006 stood at 94.92p, a 0.4% increase on the NAV at the close of the Offer for Subscription in April 2006. Since April the Fund has invested in five companies, all but one reflecting the Investment Manager's MBO focus. Given the short time since investment all remain held at cost with the exception of BBI Holdings, am AIM quoted investment whose share price has increased by 38.50 pence (40.90%) since the Fund invested in May. Return to Shareholders The results for this period are set out on the following pages and show a revenue profit (after tax) attributable to Ordinary Fund Shareholders of 0.83 of a penny per Ordinary Share (31 October 2005: loss of 0.32 of a penny). The total profit (after tax) attributable to Ordinary Fund Shareholders was 14.87 pence per Ordinary Share (31 October 2005: 1.26 pence). The revenue profit (after tax) attributable to C Share Fund Shareholders was 0.91 of a penny. The total profit (after tax) attributable to C Share Fund Shareholders was 0.61 of a penny. Dividend The Board is not recommending the payment of an interim dividend in respect of the six months ended 31 October 2006 to either Ordinary Shareholders or C Shareholders. The Directors will consider the payment of final dividends in respect of the year ending 30 April 2007 when they review the full year results. The Board This is my first report as Chairman of the Company, following the retirement of Michael Cumming in September 2006. I would like to place on record my appreciation for his contribution since the Company's formation and also that of Fredrik Adams, who did not stand for re-election in September as a result of his increased other commitments. I am delighted to report the appointment of Adam Kingdon to the Board. Adam joined us as a Non-Executive director on 29 September 2006 and brings with him a wealth of UK and European commercial experience across a range of sectors accumulated over more than 20 years. We look forward very much to working with him. The Board intends to make a further appointment in due course. Nigel Melville Chairman Investment Manager's Review The Company's focus remains on investing primarily in profitable, established unquoted companies, by way of MBOs operating across a wide range of sectors. Typically these investee companies will be cash-generative and therefore capable of producing dividend income, as well as capital returns to Shareholders on their ultimate sale or flotation. The Ordinary Share Fund comprises investments in 16 companies and now better reflects the Investment Manager's strategy. Nine new investments have been completed in total since the change in investment strategy last year. Most continue to be held at cost, in accordance with the International Private Equity & Venture Capital Valuation ("IPEVCV") guidelines, but the Fund's two AIM quoted investments, BBI Holdings and SectorGuard, are valued at market prices in excess of cost. Further, the first MBO investment, Youngman Group, has seen a significant uplift following very strong trading during the latter part of 2005 which has continued during the current year. During August the decision was taken to complete the exit from Miva Inc. The proceeds from the disposal of Â£175,000 contributed to a total return of Â£ 757,000 from this Â£612,000 investment made in 2003. The C Share Fund now has five investments, all made alongside the Ordinary Share Fund since April of this year. These all remain valued at cost, apart from BBI Holdings whose market price has increased by 40.90% since investment. Your Investment Manager is encouraged by the performance of its Ordinary and C Share Fund investments and is committed to actively sourcing appropriate investment opportunities to develop the portfolio further. Investment Portfolio Summary As at 31 October 2006 Ordinary Share Fund Date of first Total book Valuation % of net investment cost assets by value Â£ Â£ Â£ Â£ Qualifying investments AIM quoted investments Clarity Commerce Solutions July 2000 510,000 417,600 3.3% plc Customer relationship management software BBI Holdings plc May 2006 118,738 167,254 1.3% Develpoment and manufacture of rapid test diagnostic products SectorGuard plc August 2005 150,000 160,714 1.3% Provision of manned guarding, mobile patrolling and alarm response services Flightstore Group plc March 2001 254,586 1,584 0.0% In-flight retail services ----- ----- ----- 1,033,324 747,152 5.9% ------ ------ ------ Unquoted investments Youngman Group Limited October 2005 1,000,000 2,526,964 20.0% Manufacturer of ladders and access towers Gyro International Limited February 2005 750,000 1,283,646 10.2% Brand Communications agency Campden Media Limited January 2006 975,000 975,000 7.7% Magazine publisher and conference organiser British International June 2006 832,827 832,827 6.6% Holdings Limited Supplier of helicopter services Recite Limited August 2003 1,000,000 750,000 5.9% Sales support software VSI Limited April 2006 365,764 365,764 2.9% Developer and marketer of 3D software Blaze Signs Holdings Limited April 2006 339,545 339,545 2.7% Signwriter PastaKing Holdings Limited June 2006 274,624 274,624 2.2% Supplier to the educational and food service market Vectair Holdings Limited January 2006 243,784 243,784 1.9% A provider of air care and sanitary washroom products Callserve Communications October 2000 300,000 - 0.0% Limited Voice over Internet Protocol Monactive Limited March 2001 642,857 - 0.0% Software asset management tools and services Award International Holdings March 2004 250,000 - 0.0% plc Sales promotion activities ------ ----- ----- 6,974,401 7,592,154 60.2% ----- ----- ----- Total qualifying investments 8,007,725 8,339,306 66.1% ----- ----- ----- Non-qualifying investments Money market funds1 2,193,780 2,193,780 17.4% AIM quoted investments 908 759 0.0% ------ ----- ------ Total non-qualifying 2,194,688 2,194,539 17.4% investments ==== ==== ==== Total investments 10,202,413 10,533,845 83.4% ==== ==== ==== Other assets 2,306,872 18.3% Current liabilities (218,431) (1.7%) ------ ------ Net assets 12,622,286 100.0% ==== ==== 1 Disclosed within Current assets (Investments at fair value) in the Balance Sheet C Share Fund Date of first Total book Valuation % of net investment cost assets by value Â£ Â£ Â£ Â£ Qualifying investments AIM quoted investments BBI Holdings plc May 2006 82,893 116,763 1.3% Develpoment and manufacture of rapid test diagnostic products ------ ------ ------ 82,893 116,763 1.3% ------ ------ ------ Unquoted investments PastaKing Holdings Limited June 2006 191,720 191,720 2.2% Supplier to the educational and food service market British International Holdings June 2006 167,173 167,173 1.9% Limited Supplier of helicopter services VSI Limited April 2006 122,897 122,897 1.4% Developer and marketer of 3D software Blaze Signs Holdings Limited April 2006 58,953 58,953 0.7% Signwriter ------ ------ ------ 540,743 540,743 6.2% ------- ------ ------ Total qualifying investments 623,636 657,506 7.5% ==== ==== ==== Non-qualifying investments Money market funds1 7,540,458 7,540,458 86.9% AIM quoted investments - - 0.0% ----- ----- ----- Total non qualifying 7,540,458 7,540,458 86.9% investments ==== ==== ==== Total investments 8,164,094 8,197,964 94.4% ==== ==== ==== Other assets 690,335 8.0% Current liabilities (206,645) (2.4%) ------ ------ Net assets 8,681,654 100.0% ==== ==== 1 Disclosed within Current assets (Investments at fair value) in the Balance Sheet Unaudited Profit and Loss account (by Fund) Profit and Loss Account for the six months ended 31 October 2006 Ordinary Share Fund C Share Fund Revenue Capital Total Revenue Capital Total Â£ Â£ Â£ Â£ Â£ Â£ Unrealised gains on - 2,025,772 2,025,772 - 33,870 33,870 investments Realised losses on - (204,938) (204,938) - - - investments Transaction costs - (610) (610) - - - Income 240,763 - 240,763 213,608 - 213,608 Management fees (32,121) (96,364) (128,485) (25,404) (76,210) (101,614) Other expenses (89,320) - (89,320) (82,785) - (82,785) ----- ---- ---- ---- ----- ---- Profit/(loss) on 119,322 1,723,860 1,843,182 105,419 (42,340) 63,079 ordinary activities before taxation Tax on ordinary (15,863) 23,583 7,720 (22,200) 14,480 (7,720) activities ------ ----- ----- ----- ----- ----- Retained profit/ 103,459 1,747,443 1,850,902 83,219 (27,860) 55,359 (loss) ==== ==== ==== ==== ==== ==== Return per share 0.83p 14.04p 14.87 0.91p (0.30)p 0.61p Average number of 12,445,223 9,145,990 shares in issue Total of both Funds Revenue Capital Total Â£ Â£ Â£ Unrealised gains on - 2,059,642 2,059,642 investments Realised losses on - (204,938) (204,938) investments Transaction costs - (610) (610) Income 454,371 - 454,371 Management fees (57,525) (172,574) (230,099) Other expenses (172,105) - (172,105) ----- ---- ---- Profit/(loss) on 224,741 1,681,520 1,906,261 ordinary activities before taxation Tax on ordinary (38,063) 38,063 - activities ------ ----- ----- Retained profit/ 186,678 1,719,583 1,906,261 (loss) ==== ==== ==== Balance Sheet for each Fund as at 31 October 2006 Ordinary C Share Fund Adjustments Total of both Share Fund (see note funds below) Â£ Â£ Â£ Â£ Non-current assets Assets held at fair 8,340,065 657,506 8,997,571 value through profit and loss investments Monies held pending 2,193,780 7,540,458 9,734,238 investments ------ ------ ------ 10,533,845 8,197,964 18,731,809 Current assets Debtors and prepayments 750,074 427,136 (75,743) 1,101,467 Cash at bank 1,556,798 263,199 1,819,997 ------ ------ ------ ------ 2,306,872 690,335 (75,743) 2,921,464 Creditors: amounts (218,431) (206,645) 75,743 (349,333) falling due within one year ------ ------ ------ ------ Net current assets 2,088,441 483,690 2,572,131 ------ ------ ------ ------ Net assets 12,622,286 8,681,654 - 21,303,940 ==== ==== ==== ==== Capital and reserves Called up share capital 123,411 91,460 214,871 Capital redemption 8,3985 - 8,395 reserve Capital reserve 2,581,427 33,870 2,615,297 Cancelled share premium 5,991,306 8,471,015 14,462,321 account Profit and loss account 3,917,747 85,309 4,003,056 ------ ------ ------ ------ 12,622,286 8,681,654 - 21,303,940 ==== ==== ==== ==== Number of shares in 12,341,147 9,145,990 issue Net asset value per 102.28p 94.92p share Note: The adjustment above nets off the inter-fund debtor and creditor balances so that the "Total of both funds" balance sheet agrees to the interim Balance Sheet. Unaudited Profit and Loss account For the six months ended 31 October 2006 6 months ended 31 October 2006 Year ended 30 April 2006 (Unaudited) (audited) Revenue Capital Total Revenue Capital Total Â£ Â£ Â£ Â£ Â£ Â£ Unrealised - 2,059,642 2,059,642 - (1,458,362) (1,458,362) gains/(losses) on investments Realised - (204,938) (204,938) - 2,588,791 2,588,791 (losses)/gains on investments Income 454,371 - 454,371 311,585 - 311,585 Management fees (57,525) (172,574) (230,099) (72,107) (216,322) (288,429) Other expenses (172,105) - (172,105) (299,800) - (299,800) ----- ---- ---- ---- ----- ---- Profit/(loss) 224,741 1,681,520 1,906,261 (60,322) 914,107 853,785 on ordinary activities before taxation Tax on ordinary (38,063) 38,063 - - - - activities ------ ----- ----- ----- ----- ----- Profit/(loss) 186,678 1,719,583 1,906,261 (60,322) 914,107 853,785 on ordinary activities after taxation ==== ==== ==== ==== ==== ==== Dividend per 0.00p 0.00p 0.00p 0.00p 0.00p 0.00p share Basic earnings 0.83p 14.04p 14.87p (0.49)p 7.40p 6.91p and return per ordinary share Basic earnings 0.91p (0.30)p 0.61p 0.05p (0.61)p (0.56)p and return per C share 6 months ended 31 October 2005 (Unaudited) Revenue Capital Total Â£ Â£ Â£ Unrealised gains/ - 295,647 295,647 (losses) on investments Realised (losses) - 5,838 5,838 /gains on investments Income 139,982 - - Management fees (33,056) (99,169) (132,225) Other expenses (147,459) - (147,459) ----- ---- ---- Profit/(loss) on (40,533) 202,316 161,783 ordinary activities before taxation Tax on ordinary - - - activities ------ ----- ----- Profit/(loss) on (40,533) 202,316 161,783 ordinary activities after taxation ==== ==== ==== Dividend per 0.00p 6.00p 6.00p share Basic earnings (0.32)p 1.58p 1.26p and return per ordinary share Basic earnings - - - and return per C share Unaudited Balance Sheet as at 31 October 2006 31 October 30 April 31 October 2006 2006 2005 (Unaudited) (audited) (Unaudited) Â£ Â£ Â£ Non-current assets Assets held at fair value through 8,997,571 5,643,559 7,173,378 profit and loss - investments Monies held pending investments 9,734,238 9,751,436 3,966,958 ------ ------ ------ 18,731,809 15,394,995 11,140,336 Current assets Debtors and prepayments 1,101,467 1,936,269 133,793 Cash at bank 1,819,997 2,462,495 6,613 ------ ------ ------ 2,921,464 4,398,764 140,406 Creditors: amounts falling due within one year Other creditors 147,371 64,520 41,644 Accruals 201,962 163,968 164,065 ------ ------ ------ (349,333) (228,488) (205,709) ------ ------ ------ Net current assets/(liabilities) 2,572,131 4,170,276 (65,303) ------ ------ ------ Net assets 21,303,940 19,565,271 11,075,033 ==== ==== ==== Capital and reserves Called up share capital 214,871 217,121 126,861 Capital redemption reserve 8,3985 6,145 4,945 Share premium account - 8,557,026 - Cancelled share premium account - 14,462,321 8,034,754 8,313,114 distributable reserve Capital reserve 2,615,297 (1,041,174) 1,319,635 Profit and loss account 4,003,056 3,791,399 1,310,478 ------ ------ ------ 21,303,940 19,565,271 11,075,033 ==== ==== ==== Net asset value per share Ordinary share 102.28p 87.05p 87.30p C share 94.92p 94.32p - Unaudited Reconciliation of Movements in Shareholders' Funds For the six months ended 31 October 2006 31 October 30 April 2006 31 October 2006 (audited) 2005 (Unaudited) (Unaudited) Â£ Â£ Â£ Opening shareholders funds 19,565,271 11,780,212 11,808,068 Restated for application of new - - (27,856) accounting policies ------ ------ ------ 19,565,271 11,780,212 11,780,212 Net share capital (bought back)/ (167,592) 8,467,397 (97,708) subscribed during the year Profit for the year 1,906,261 853,785 161,783 Dividends paid in the year - (1,536,123) (769,254) ------ ------ ------ Closing shareholders' funds 21,303,940 19,565,271 11,075,033 ===== ===== ===== Unaudited Cash Flow Statement For the six months ended 31 October 2006 Six months Year ended Six months ended 31 30 April ended 31 October 2006 2006 October 2006 (Unaudited) (audited) (Unaudited) Â£ Â£ Â£ Operating activities Net investment interest - 332,149 301,551 119,813 non-qualifying Investment management fees paid (74,552) (249,360) (127,377) Other cash payments (168,986) (279,394) (144,029) ------ ------ ------ Net cash (outflow)/inflow from 88,611 (227,203) (151,593) operating activities Investing activities Acquisition of investments (2,597,061) (3,286,309) (1,180,365) Disposal of investments 2,016,346 5,462,960 2,846,350 ------ ------ ----- Net cash (outflow)/inflow from (580,715) 2,176,561 1,665,985 investing activities ==== ==== ==== Dividends Dividends paid - (1,536,123) (776,322) ------ ------ ------ Net cash (outflow)/inflow (492,104) 413,325 738,070 before liquid resource management Management of liquid resources Movement in money market and 17,198 (7,892,613) (2,108,135) other deposits Financing Purchase of own shares (167,592) (181,089) (97,708) Share capital raised - 8,648,486 - ------ ------ ------ Net cash (outflow)/inflow from (167,592) 8,467,397 (97,708) financing ------ ------ ------ (Decrease)/increase in cash (642,498) 988,109 (1,467,773) ==== ==== ==== NOTES 1. The accounts have been prepared under the fair value rules of the Companies Act 1985 and in accordance with applicable accounting standards in the United Kingdom and with the Statement of Recommended Practice, `Financial Statements of Investment Trust Companies', revised December 2005. 2. In accordance with the Company's Prospectus dated 10 May 2000, the Directors have charged 75% of the investment management expenses to the capital element of the Profit and Loss Account. 3. Investments are stated at fair value, in accordance with applicable accounting standards and with reference to the International Private Equity and Venture Capital Valuation (IPEVCV) guidelines published in 2005, which are similar to the BVCA (British Venture Capital Association) guidelines followed in previous years. The fair value of quoted investments is the bid value of those investments at the close of business on 31 October 2006. Unquoted investments are stated at fair value by the Directors in accordance with the following rules, which are consistent with the IPEVCV guidelines: i. Recent investments which have been made in the last 12 months are at fair value which, unless another methodology gives a better indication of fair value, will be at cost. ii. Investments in companies at an early stage of their development are also valued at fair value which, unless another methodology gives a better indication of fair value, will be at cost. iii. Where investments have gone beyond the stage in their development in (ii) above, the shares may be valued, in the absence of overriding factors, by applying a suitable price-earnings ratio to that company's historic, current or forecast earnings (the ratio used being based on a comparable listed company or sector but the resulting value being discounted to reflect lack of marketability). Where overriding factors apply, alternative methods of valuation will be used. These will include the application of a material arms length transaction by an independent third party, cost, cost less provision for impairment, discounted cash flow, or a net asset basis; iv. Where a value is indicated by a material arms-length transaction by a third party in the shares of a company, this value will be used. v. Where a company's underperformance against plan indicates a permanent diminution in the value of the investment, provision against cost is made and charged to the realised reserve. Capital gains and losses on investments, whether realised or unrealised, are dealt with in the capital reserve - realised and unrealised respectively, and shown in the Income Statement. Although the Company holds more than 20% of the equity of certain companies, it is considered that the investments are held as part of an investment portfolio. Accordingly and as permitted by FRS 9 `Associate and Joint Ventures', their value to the Company lies in their marketable value as part of that portfolio. It is not considered that any of our holdings represents investments in associated companies. 4. The revenue return per Ordinary Share is based on the net revenue on ordinary activities after taxation of Â£103,459 and is based on 12,445,223 Ordinary Shares, being the weighted average number of Ordinary Shares in issue during this period. The capital return per Ordinary Share is based on ordinary activities after taxation of Â£1,747,443 and is based on 12,445,223 Ordinary Shares, being the weighted average number of Ordinary Shares in issue during the period. The revenue return per C Share is based on the net revenue on ordinary activities after taxation of Â£83,219 and is based on 9,145,990 C Shares, being the weighted average number of C Shares in issue during this period. The capital loss per Ordinary Share is based on ordinary activities after taxation of (Â£27,860) and is based on 9,145,990 C Shares, being the weighted average number of C Shares in issue during the period. 5. The net asset value per Ordinary share is based upon total net assets at 31 October 2006 of Â£12,622,286 (30 April 2006:Â£10,938,976; 31 October 2005: Â£ 11,075,033) and on 12,341,147 Ordinary Shares (30 April 2006 12,566,147; 31 October 2005: 12,686,147) being the number of Ordinary Shares in issue at that date. The net asset value per C share is based upon total net assets at 31 October 2006 of Â£8,681,654 (30 April 2006:Â£8,626,295; 31 October 2005: nil) and on 9,145,990 C Shares (30 April 2006 9,145,990; 31 October 2005: nil) being the number of C Shares in issue at that date. 6. Copies of the Interim Report for the six months ended 31 October 2006 are being sent to all Shareholders. Further copies are available free of charge from the Company's registered office, One Jermyn Street, London SW1Y 4UH or can be downloaded via the Company Secretary's web site at www.matrixgroup.co.uk Contact details for further enquiries: Sarah Penfold of Matrix-Securities Limited (the Company Secretary) on 020 7925 3300 or by e-mail on MIG2@matrixgroup.co.uk Matrix Private Equity Partners LLP (the Investment Manager), on 020 7925 3300 or by e-mail on info@matrixpep.co.uk

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Mobeus Income & Growth 2 Vct (MIG)

Wednesday, 3rd July 2024

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Topps Tiles quarterly trading update shows broader economic woes dragging, Equals Group impresses with revenues but shares fall, whilst Cairn Homes maintains FY guidance and announces €45m share buyback.

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