Interim Management Statement

RNS Number : 1950B

Baronsmead VCT 2 PLC

13 August 2008

 



Baronsmead VCT 2 plc

Interim management statement

For the three month period from 1 April 2008 to 30 June 2008

Financial Highlights

1.6p (1.6%) decrease in NAV per share excluding the effect of the 3.0p interim dividend

3.0p interim dividend paid on 20 June 2008

£3.6m profits realised from the sale of two unquoted investments at an average multiple of 5.4 times cost

£0.4m invested in 1 unquoted and 5 AiM-traded companies

Performance Summary

Capital return	As at  30 June 2008	As at  31 March 2008	Movement %
Ordinary shares
Total net assets	£59.9m	£63.7m
Net asset value per share	99.49p	104.08p	(4.4%)
Share price	91.50p	94.00p	(2.7%)
Premium/(Discount) to NAV	(8.0%)	(9.2)%
Total return	3 months to 30 June 2008	1 year to  30 June 2008	5 years to  30 June 2008	10 years to 30 June 2008
Ordinary shares
Net asset value 1	(1.6%)	(8.8%)	55.7%	87.9%
Share price2	1.5%	(3.1%)	55.6%	79.8%
FTSE All-share3	(1.5%)	(13.0%)	71.0%	40.5%

1NAV Total return = NAV + reinvested dividends; Source: ISIS EP LLP 

2Share price Total return = Mid to mid share price + reinvested dividends; Source: AIC

3Source: AIC

Investment Performance 

The decline in smaller company Stock Market ratings levelled off and the main reason for the fall in NAV per share came from the full provision against the Art Group equivalent to 2p per share following a sharp deterioration in retail sales in April and May 2008. Subsequent to the quarter end this business was sold for a nominal sum. 

The sale of kidsunlimited and SLR at 4.8 times and 6.0 times (respectively) of their original cost demonstrates that focussed well-managed companies can generate good value for their shareholders.  Realised profits were £1.4m and £2.2m, which increase the capital reserves from which future capital dividends can be paid.

Investment Activity

Company	Date	Cost (£'000)	VCT status
New Investment
Kidsunlimited Group Ltd	April 08	113	Non qualifying
Silverdell plc	May 08	14	Non qualifying
Total new investment		127
Follow on Investments
Character Group plc	April 08	62	Non qualifying
Electric Word plc	April 08	10	Non qualifying
Essentially Group plc	April 08	240	Qualifying
Independent Media Distribution	April 08	9	Non qualifying
Total follow on investment		321

Investment Realisations

Kidsunlimited was sold at an enterprise value of £45m in April 2008. Since first investment in 2001, kidsunlimited has successfully rolled out new nurseries to 50 locations with over 4,500 registered places offering premium care in purpose built or designed settings, including gardening club, 'Soccer Tots' and baby yoga. The business which was transitioned from its founders to a professional management team operates a scalable nursery model in a changing marketplace and has become 'the stand out asset' in the sector.

The investment in SLR was sold in May 2008 valuing the company in the region of £100m. SLR is an international environmental consultancy with offices in the UK, US and Canada.  Since investment in September 2004, the business has delivered substantial organic and acquisitive growth in the UK and North America, opening new offices and expanding its range of services. As a result, employee numbers in SLR increased from 168 in 2004 to 650 at May 2008.

Investments in three AiM investees with a market value at 31 March of £66,000 were sold in the quarter realising £72,000 with an overall net realised loss of £476,000.  The fully listed investment in Ardana reduced in value by £63,000 when the company went into administration.

Top ten investment holdings

Position as at  30 June 2008	Position as at  31 March 2008	Company	Percentage of net assets as at 30 June 2008
1	1	Reed and Mackay	4.24%
2	3	Independent Living Services	3.71%
3	5	Scriptswitch	3.47%
4	8	CSC (World) Ltd	2.68%
5	9	Cablecom	2.68%
6	7	Kafevend	2.58%
7	10	Jelf Group	2.51%
8	11	Carnell Contractors	2.50%
9	6	Credit Solutions	2.47%
10	12	Fisher	2.44%
Total			29.28%

Sector breakdown

(excluding cash and interest bearing securities)

	Percentage of total investments at  30 June 2008	Percentage of total investments at  31 March 2008
Business Services	43	51
Consumer Markets	13	12
IT Support Services	26	18
Healthcare	12	11
Media	6	8
Total	100	100

Future share issues

The current market conditions for new investment are more attractive in terms of pricing than for some years and as a consequence the Board has been considering how best to take advantage of this.  On 31 July 2008 the shareholders gave approval at an EGM authorising the Board to raise up to £12m.  The intention is that shareholders will be sent the Securities Note in September 2008.

Daily and key information 

Further information regarding the Company, including latest financial statements or quarterly factsheets, can be found at the Company's website www.baronsmeadvct2.co.uk

Investment objective

Baronsmead VCT 2 plc is a tax efficient listed company which aims to achieve long-term capital growth and generate tax-free dividends for private investors.

The Board is not aware of any significant events or transactions which have occurred between 30 June 2008 and the date of publication of this statement, save as stated above,   which would have a material impact on the financial position of the Company.

Future contact

For further information please contact:

Michael Probin   020 7506 5796  [e-mail]

Paul Forster       020 7506 5652  [e-mail]

 

END

 

 

IMSGUUWPRUPRGQP