Final Results

Marwyn Value Investors II Limited 11 March 2008 Marwyn Value Investors II Limited (the 'Company') Final Results Financial Period ended 31 December 2007 The Company was admitted to trading on the AIM market of the London Stock Exchange plc ('AIM') on 6 October 2006 raising Â£33,000,000 from the issue of 33 million ordinary shares at 100p together with the issue of 16.5 million Series One Warrants and 16.5 million Series Two Warrants. During the period the Company sought to achieve its investment objective to maximise its total return through the capital appreciation of its investments through taking a partnership interest in the Marwyn Neptune Fund LP (the 'Master Fund') using all its available assets. As at 31 December 2007 the net asset value per Ordinary Share (disregarding any potential dilution from the exercise of any warrants) was 125.1p, a 31.0 per cent. increase on the opening balance per Ordinary Share of 95.5p, taking into account the costs of the placing and admission to AIM of the Ordinary Shares and the Series One Warrants and Series Two Warrants. At 31 December 2007 the price of an Ordinary Share was 102.5p and the price of a Series One Warrant was 5.5p and the price of a Series Two Warrant was 4p. The increase in the net asset value reflects the robust performance of the Master Fund during the period and the Board continues to be optimistic that a satisfactory return will be achieved in 2008. Enquiries: Collins Stewart Europe Limited 020 7523 8350 Seema Paterson MARWYN VALUE INVESTORS II LIMITED INCOME STATEMENT FOR THE PERIOD 5 SEPTEMBER 2006 TO 31 DECEMBER 2007 Note Revenue Capital Total Â£ Â£ Â£ INCOME 1 Bank interest 30,383 - 30,383 Gains on investments - 9,909,330 9,909,330 held at fair value through profit or loss 30,383 9,909,330 9,939,713 EXPENSES 1 Directors' fees 39,699 - 39,699 Administration fees 27,257 - 27,257 Legal and professional 12,566 - 12,566 fees Regulatory expenses 7,445 - 7,445 Audit fees 8,500 - 8,500 Registrars fees 8,859 - 8,859 Exempt fee 2 1,200 - 1,200 Other expenses 44,348 - 44,348 149,874 - 149,874 PROFIT FOR THE PERIOD (119,491) 9,909,330 9,789,839 Return per Ordinary 4 (0.36) 30.03 29.67 Share - basic and diluted (pence per share) The total column of this statement represents the Income Statement of the Company, prepared in accordance with IFRS. The revenue and capital columns represent supplementary information prepared under guidance published by the Association of Investment Companies. All items in the above statement derive from continuing operations. MARWYN VALUE INVESTORS II LIMITED BALANCE SHEET 31 DECEMBER 2007 31 December 2007 Notes Â£ NON CURRENT ASSETS Unquoted investments held at fair value 3 41,069,330 through profit or loss CURRENT ASSETS Cash and cash equivalents 273,834 TOTAL ASSETS 41,343,164 CURRENT LIABILITIES Accruals (38,463) NET ASSETS 41,304,701 EQUITY Called up share capital 8 3,300,000 Special distributable reserve 26,346,979 Series One Warrant reserve 1,015,866 Series Two Warrant reserve 852,017 Capital reserve - Unrealised 9,909,330 Revenue reserve (119,491) TOTAL EQUITY 41,304,701 Net asset value per Ordinary share - 5 125.17 basic and diluted (pence per share) MARWYN VALUE INVESTORS II LIMITED STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD 5 SEPTEMBER 2006 TO 31 DECEMBER 2007 Called up Special Series Two share distributable Series One Warrant Revenue capital Share reserve Warrant reserve Capital reserve Total premium reserve reserve Â£ Â£ Â£ Â£ Â£ Â£ Â£ Â£ Issue of 3,300,000 27,733,798 - 1,069,338 896,864 - - 33,000,000 Ordinary shares and warrants Profit for - - - - - 9,909,330 (119,491) 9,789,839 the period Share and - (1,386,819) - (53,472) (44,847) - - (1,485,138) warrant issue costs Transfer to - (26,346,979) 26,346,979 - - - - - Special Distributable Reserves 3,300,000 - 26,346,979 1,015,866 852,017 9,909,330 (119,491) 41,304,701 MARWYN VALUE INVESTORS II LIMITED CASH FLOW STATEMENT FOR THE PERIOD 5 SEPTEMBER 2006 TO 31 DECEMBER 2007 Notes Period to 31 December 2007 Cash flows from operating activities Â£ Interest received 30,383 Operating expenses paid (111,411) Net cash outflow from operating activities 6 (81,028) Cash flows from operating activities Acquisition of investments (31,160,000) Cash flows from financing activities Issue of own shares and warrants 33,000,000 Payment of share and warrant issue costs (1,485,138) Net increase in cash and cash equivalents 273,834 Cash and cash equivalents at beginning of - period Cash and cash equivalents at end of period 273,834 MARWYN VALUE INVESTORS II LIMITED NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2007 1. ACCOUNTING POLICIES The financial statements have been prepared in accordance with IFRS, which comprise standards and interpretations approved by the IASB, and Standing Interpretations approved by the IASC that remain in effect, together with the applicable legal and regulatory requirements of The Companies (Guernsey) Law, 1994 and the AIM rules published by the London Stock Exchange. The principal accounting policies are set out below. (a) Convention The financial statements have been prepared under the historical cost convention, except for the measurement at fair value of financial assets held at fair value through the profit or loss. The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of revision and future periods if the revision affects both current and future periods. (b) Income Interest receivable on cash deposits is accounted for on an accruals basis. (c) Unquoted investments held at fair value through profit or loss The Fund classifies its investment into the Marwyn Neptune Fund L.P. as a financial asset at fair value through profit or loss. This financial asset is designated by the Board of Directors at fair value through Profit or Loss at inception. The designation results in more relevant information as the investment is evaluated on a fair value basis in accordance with its investment strategy. Financial assets designated at fair value through profit or loss at inception are those that are managed and their performance evaluated on a fair basis in accordance with the Company's documented investment strategy. Unquoted investments are stated at fair value as determined by the Directors using appropriate valuation techniques. Changes in the fair value of investments held at fair value through the profit or loss are recognised in the Income Statement. On disposal realised gains and losses are also recognised in the Income Statement. Unrealised gain and losses on the disposal of investments are taken to the capital reserve - unrealised. The Company recognises unquoted investments held at fair value through profit and loss on the date it commits to purchase the instruments. Derecognition of investments occurs when the rights to receive cash flows from the investments expire or are transferred and substantially all of the risks and rewards of ownership have been transferred. The Company's interest in the Master Fund will be valued by the Directors on the basis of the NAV of the Master Fund as provided by the Master Fund Administrator at the period end. The NAV of the Master Fund, Marwyn Neptune Fund LP, will be determined by the Master Fund Administrator by deducting the fair value of the liabilities of the Master Fund from the fair value of the Master Fund's assets. The Master Fund is unquoted and accordingly the fair value of the investment is determined using a valuation technique based on assumptions that are not supported by prices from observable current market transactions in the same instrument (i.e. without modification or repackaging) and not based on available market data. (d) Expenditure All expenses are accounted for on an accruals basis and are charged through the Income Statement. The Manager will not receive a management or performance fee from the Company in respect of funds invested by the Company in the Master Fund. The Manager will be entitled to fees and expenses from the Master Fund. The Company will pay brokers' commissions (if any) and any issue or transfer taxes chargeable in connection with its investment transactions. Transaction costs incurred on the acquisition or disposal of an investment are charged to capital through the Income Statement in the period in which they are incurred. (e) Cash and cash equivalents Cash and cash equivalents comprise bank balances held by the Company including short-term bank deposits with an original maturity of three months or less. The carrying value of these assets approximates to their fair value. (f) Share and warrant issue costs Share and warrant issue costs are placing expenses directly relating to the issue of the Company's shares. These expenses include fees payable under the Placing Agreement, printing, advertising and distribution costs and legal fees and any other applicable expenses. (g) Functional and presentation currency Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The financial statements are presented in pounds sterling, which is the Company's functional and presentation currency. (h) Liabilities Financial liabilities are recognised when the Company becomes a party to the contractual agreements of the instrument. Financial liabilities are derecognised from the balance sheet only when the obligations are extinguished either through discharge, cancellation or expiration. (i) Equity Called up share capital is determined using the nominal value of shares that have been issued. Special distributable reserve is a reserve to allow, amongst other things, the buy-back and cancellation of up to 14.99% of ordinary shares. Capital reserve comprises gains and losses due to the revaluation of unquoted investments held at fair value through profit or loss. Revenue reserve includes all current and prior period results of operations as disclosed in the income statement excluding any gains and losses due to revaluation of investments held at fair value. Warrant Reserves pertains to proceeds allocated to the warrants. Any transaction costs associated with the issuance of warrants are deducted from Warrant Reserve (j) Segment reporting The Directors are of the opinion that the Company is engaged in a single geographic and economic business segment. The Company holds one investment in a Cayman Island Limited Partnership. (k) Presentation of information In order to better reflect the activities of an investment company in accordance with the guidance issued by the Association of Investment Companies ('AIC'), supplementary information which analyses the Income Statement between items of a revenue and capital nature has been presented alongside the Income Statement. On the basis that the financial statements have been prepared in accordance with IFRS, the directors have not sought to prepare the financial statements on a basis compliant with the recommendations of the Statement of Recommended Practice ('SORP') for investment trusts issued by the Association of Investment Companies ('AIC'), except for the Income Statement presentation discussed above. These are the inaugural financial statements for the Company and therefore there are no comparative figures available 2. TAXATION The company has been granted exempt status under the Income Tax (Exempt Bodies) (Guernsey) Ordinance 1989, and is therefore subject to the payment of an annual fee which is currently Â£600. 3. UNQUOTED INVESTMENTS 31 December 2007 At cost Â£ Marwyn Neptune Fund L.P. Class A GBP 31,160,000 Unrealised gain 9,909,330 At fair value 41,069,330 The Company invests only in the Marwyn Neptune Fund, a Caymans-based hedge fund. For example the Company's only investment is Â£31,160,000 class A GBP shares of the Marwyn Neptune Fund LP. The Neptune Fund is managed by Marwyn Investment Managers LLP, the active hedge fund investor specialising in establishing and investing in experienced management teams with buyout and consolidation strategies through public and private special purpose acquisition platforms. The Company's investment in Class A of the Marwyn Neptune Fund L.P. ('Master Fund') represents 39.68% of the Class A net assets and 28.87% of the Master Fund. Objective of Marwyn Neptune Fund Offering exposure to early-stage primarily UK and European companies of up to Â£500,000 Enterprise Value. Preference for investments in companies operating in regulated sectors or those impacted by changing regulation e.g. waste, utilities, leisure and financial services. Accelerated call feature If the mid-market closing price on AIM as shown by Bloomberg shall be 130 pence or more in the case of the Series One Warrants or 150 pence or more in the case of the Series Two Warrants for any 20 or more trading days out of a period of 30 consecutive trading days, the Company shall become entitled at the close of AIM on the 30th consecutive trading day to give notice to the relevant holders of Series One Warrants or Series Two Warrants as applicable. The notice referred to in the paragraph above must be sent in writing by the Company to the relevant holders within two trading days of the thirtieth consecutive Trading Day, stating that the Company will treat the Series Two Warrants as exercised at the relevant subscription price on the date falling 21 days from the date of the notice. On exercise of the Warrants, the Company will sell any shares that would have been issued on exercise and (after deducting the costs of exercise), remit the proceeds to the holder and after this time all rights under those Warrants will cease. For full details of the rights of the Warrants, please see the Admission Document or contact the Administrator. Strategy of Marwyn Neptune Fund - To fill the funding gap between private equity and conventional public market investors; - To focus on recruiting and supporting experienced and proven management teams in developing and executing their strategies; - To focus on sectors where regulatory change provides opportunities to leverage new or unrecognised capital value; - To provide companies and management teams with 'hands on' execution capability that enables them to deliver on their organic and acquisition-led strategies; - To provide investee companies and management teams with the benefit of Marwyn team's relationships with providers of leverage finance and institutional equity finance, together with our advisory support network. 4. EARNINGS PER SHARE The calculation of basic earnings per share is based on the net revenue deficit of Â£119,491, and net capital gain of Â£9,909,330, on ordinary activities for the period and on 33,000,000 Ordinary Shares in issue throughout the period. As at 31 December 2007 the price of the Ordinary Shares was 100p and at no point during the period did the share price reach the exercise price of the Series One Warrants (115p) or the Series Two Warrants (130p). As the average price of the Ordinary Shares during the period was less than the exercise price of both classes of warrants there was no dilution in the Earnings per Ordinary Share. 5. NET ASSET VALUE The calculation of net asset value is based on the net assets of Â£41,304,701 and on the ordinary shares in issue of 33,000,000 at the balance sheet date. As the price of the Ordinary Shares (100p) was below the exercise price of the Series One Warrants (115p) and the Series Two Warrants (130p) there was no dilution in the net asset value per ordinary share. 6. RECONCILIATION OF NET PROFIT FOR THE PERIOD TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES 2007 Â£ Net profit for the period 9,789,839 Gains on investments held at fair value through (9,909,330) profit or loss Increase in creditors 38,463 Net cash outflow from operating activities (81,028) 7. WARRANTS At the placing on 6 October 2006, for each Ordinary Share the subscriber also received one half Series One Warrant and one half Series Two Warrant. Exercise price pence End of subscription period Allotted Series One Warrants 115 05 October 2008 16,500,000 Series Two Warrants 130 05 October 2009 16,500,000 8. CALLED UP SHARE CAPITAL Â£ Authorised 200,000,000 ordinary shares of Â£0.10 each 20,000,000 Allotted and fully paid 33,000,000 ordinary shares of Â£0.10 each 3,300,000 Premium on new share issues 27,733,798 Share issue costs (1,386,819) Transfer to special distributable reserve (26,346,979) Balance as at 31 December 2007 - Each member of the Company, on a poll, shall have one vote for each share of which he is the holder. On a show of hands, every member present at General Meeting shall have one vote. On a winding up or return of capital, prior to conversion in each case, shall be applied as follows: (a) the Ordinary Share Surplus shall be divided amongst the Ordinary Shareholders pro rata according to their holdings of Ordinary Shares. (b) the balance of the capital and assets of the Company, (if any) shall be divided amongst the Ordinary Shareholders pro rata according to their holdings of Ordinary Shares. 9. SPECIAL DISTRIBUTABLE RESERVE A special distributable reserve was created when, as stated in the Admission Document, the company cancelled all of its share premium account (as approved in the Royal Court of Guernsey on 26 January 2007), transferring it to a distributable reserve to allow, amongst other things, the buy-back and cancellation of up to 14.99% of the Ordinary Shares. 10. WARRANT RESERVES The proceeds from the issue of the placing were split between the Ordinary Shares (share capital and share premium account), the Series One Warrant reserve and the Series Two Warrant reserve based on the weighted average value of the Ordinary Shares and Warrants in issue at the close of business on the first day of trading. The weighted average value was calculated using the mid prices of the Ordinary Shares and Warrants as quoted on AIM. 11. RISK PROFILE OF FINANCIAL ASSETS AND LIABILITIES The main risks arising from the Company's financial instruments are Market Risk and Liquidity Risk. Market Risk The Company's exposure to market risk consists of Interest Rate Risk and Other Price Risk. Interest Rate Risk The Company finances its operations through a mixture of shareholders' capital and retained returns. With the exception of cash at bank, which receives interest at a floating rate, all assets and liabilities of the Company are non-interest bearing. No further interest rate risk disclosure has been provided as all material amounts, with the exception of cash at bank, are non-interest bearing. The following table details the Company's exposure to Interest Rate Risk.: Less than 1 month Non - interest bearing Total 31-Dec-07 Â£ Â£ Â£ Assets Unquoted investments at fair value - 41,069,330 41,069,330 through profit or loss Cash and cash equivalents 273,834 - 273,834 Total assets 273,834 41,069,330 41,343,164 Liabilities Payables and accruals - 38,463 38,463 Total liabilities - 38,463 38,463 Total interest sensitivity gap 273,834 Other Price Risk The main price risks arising from the Company's financial instruments are movements in the value of the investment in the Master Fund. The Company's investment portfolio complies with the investment parameters as disclosed in its Admission document. The board manages the market price risks inherent in the investment portfolio by ensuring full and timely access to relevant information from the Investment Manager. The board receives monthly reports from the Administrator of the Master Fund. The board meets regularly and at each meeting review investment performance. A 10% increase/decrease in the market price of the Master Fund would result in a 9.9 % increase/decrease in the basic net asset value per Ordinary Share as at the balance sheet date. The company's exposure to other changes in market prices at 31 December 2007 on its unquoted equity investments were as follows; 2007 Â£ Unquoted investments at fair value through profit or loss 41,069,330 The impact on net income and equity of price volatility as of 31 December 2007 is as follows Observed Volatility Rates Impact of Increase Impact of Decrease (monthly) Increase (%) Decrease (%) Net Income Â£ Equity Â£ Net Income Â£ Equity Â£ Investment in 2.70 (3.25 1,107,640 1,107,640 (1,332,700) (1,332,700) Master Fund This level of change is considered to be reasonably possible based on observation of current market conditions. The Company's investment in the Master Fund is relatively illiquid as it invests a significant part of its assets in illiquid investments. The Master Fund and/or Company may not be able to readily dispose of such illiquid investments and, in some cases, may be contractually prohibited from disposing of such investments for a specified period of time. The board manages the liquidity risks inherent in the investment portfolio by ensuring full and timely access to relevant information from the Investment Manager and Administrator to the Company. The board meets regularly and at each meeting review the company's short term cash requirements and contractual financial liabilities. The Company's investment is realisable only on the monthly trading date. As stated in the Admission Document, the Board has permitted the Company to invest in a single holding, being the Master Fund, a Caymans-based hedge fund. The policy is that the Company should remain fully invested in normal market conditions and that shares in the investment should be sold to manage short-term cash requirements. The following table shows the contractual, undiscounted cash flows of the Company's financial liabilities: 31-Dec-07 Less than 1 month 1-3 months Total Â£ Â£ Â£ Payables and accruals 29,963 8,500 38,463 12. MATERIAL CONTRACTS Manager Under the Management Agreement dated 20 February 2006. If, and to the extent that the Fund invests its assets only in the Master Fund, the Manager shall not receive any fees. In respect of any assets of the Fund not invested in the Master Fund, the Manager shall receive aggregate performance and management fees on the same basis as those to which it would have been entitled if such assets had been those of the Master Fund. Under the master Fund Management Agreement, the Manager will receive monthly management fees from the Master Fund not exceeding 2% per annum of the net asset value of each class of share in the Master Fund, payable monthly in arrears. In addition, the Master Fund also pays the Manager performance and incentive fees equal to 20% of the increase in the net asset value of each class of share in the Master Fund over and above a reference net asset value, with performance and incentive fees only therefore paid where the net asset value Is above a 'high watermark' for the relevant class of share. The Manger does not receive a performance fee in relation to its investments which are categorised as Special Situation Investments. Investment Manager Under the Investment Management Agreement dated 20 February 2006. If, and to the extent that the Fund invests its assets only in the Master Fund, the Manager shall not receive any fees. In respect of the assets of the Fund which are not invested in the Master Fund, the Manager shall pay the Investment Manager aggregate performance and management fees on the same basis as those to which it would have been entitled if such assets had been those of the Master Fund. Collins Stewart Europe Limited ('Collins Stewart') Under an engagement letter dated 13 September 2006 from Collins Stewart to the Company, Collins Stewart has agreed to act as nominated adviser and broker to the Company for the purposes of the AIM Rules for no fee. The appointment may be terminated at any time by either party immediately on written notice being received and the letter contains certain indemnities given by the Company in favour of Collins Stewart. Directors David Williams and Robert Ware will not receive a fee and both David Warr and Ian Clarke will receive a fee of Â£15,000 per annum for their role as director. All Directors are entitled to receive reimbursement for all travel and other costs incurred as a direct result of carrying out their duties as Directors. Administrator The Administrator performs the necessary secretarial and administrative services for the Company under the Administration Agreement. The Administrator is paid an annual fee of Â£20,000. The Administrator is also entitled to reimbursement of certain expenses incurred by it in connection with its duties. 13. RELATED PARTIES During the period fees of Â£27,257 were payable to the Administrator, Fortis Fund Services (Guernsey) Limited, with Â£10,000 outstanding at the period end. Ian Clarke is a Director of both the Company and the Administrator. 14. CAPITAL MANAGEMENT POLICIES AND PROCEDURES The Company's capital management objectives are; - to ensure that it will be able to continue as a going concern, and - to maximise the income and capital return to its equity shareholders The Company's capital at 31 December comprises: Â£ Called up share capital 3,300,000 Special distributable reserve 26,346,979 Series One Warrant reserve 1,015,866 Series Two Warrant reserve 852,017 Capital reserve - Unrealised 9,909,330 Revenue reserve (119,491) TOTAL CAPITAL 41,304,701 The Board, with the assistance of the Investment Manager monitors and reviews the broad structure of the Company's capital on an ongoing basis The Company is subject to externally imposed capital requirements which are as follows; - As an AIM listed company, the Company has to have a minimum share capital of Â£50,000. - In order to be able to pay dividends out of profits available for distribution by way of dividends, the Company has to be able to meet one of the two capital restriction tests imposed on investment companies by company law. These requirements are unchanged since inception, and the Company has complied with them. MARWYN VALUE INVESTORS II LIMITED ADVISERS Registered office PO Box 119 Martello Court Admiral Park St. Peter Port Guernsey GY1 3HB Nominated Adviser and Broker Investment Manager to the Master Fund Collins Stewart Europe Limited and the Company 9th Floor Marwyn Investment Management LLP 88 Wood Street 11 Buckingham Street London EC2V 7QR London WC2N 6DF Administrator to the Company Legal Advisers to the Company as Fortis Fund Services (Guernsey) Limited to Guernsey Law PO Box 119 Carey Olsen Martello Court 7 New Street Admiral Park St Peter Port St Peter Port Guernsey GY1 4BZ Guernsey GY1 3HB Manager to the Master Fund and Registrar the Company Capita IRG (CI) Limited Marwyn Capital Management Limited 2nd Floor PO Box 309GT, Ugland House 1 Le Truchot South Church Street, George Town St Peter Port Grand Cayman, Cayman Islands Guernsey GY1 4AE Auditors Grant Thornton Limited PO Box 313 Anson Court Le Route des Camp St Martin Guernsey GY1 3TF This information is provided by RNS The company news service from the London Stock Exchange

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