Final Results

AIM VCT2 PLC
24 January 2002

To:          Company Announcements

From:          AiM VCT2 plc

Date:          24 January 2002



Audited Results - Period Ended 30 November 2001

  • £41.8 million subscribed in total since inception.

  • Net asset value per share of 95.0 pence.

  • Eighteen investments made, totalling £10.6 million.

  • Total dividends of 2.2 pence per share.


Introduction

Since launch, the Company has raised a total of £ 41.8 million from subscribers.
Of this total, £37.2 million was raised as part of the initial offer for tax
year 1999/2000 and £4.6 million in tax year 2000/2001. This report covers the
period from 3 October 2000 when the Company was first incorporated to 30
November 2001.


Objective

The Company's objective is to provide shareholders with a tax efficient means of
growing long-term capital growth and an attractive dividend stream primarily
through investment in a diversified portfolio of AiM companies and unquoted
companies which anticipate a stock market listing within 18 months. The Company
will also consider investment in OFEX companies. Prior to investment in
qualifying companies, the assets of AiM VCT2 are held in a short dated
government security and bank deposits with the objective of creating an income
stream and preserving capital. Despite adverse market conditions to date the
Company is making good progress towards achieving its objective.

Performance

2001 has been a difficult and unrewarding year for equity investments in
general. World stock markets continued to deteriorate against a background of
worsening economic conditions with the downturn experienced in technology
related sectors spreading to manufacturing and latterly the service sectors.
This downward trend in market valuations was exacerbated by the terrorist
atrocities of September 11, which led to further widespread falls in share
prices. On the AiM market a severe lack of liquidity has resulted in a number of
precipitous falls in the valuations of individual companies on any selling
pressure or sign of difficult trading patterns.


Against this background the Managers have made a significant start to the
investment programme by investing 26% of net funds raised across 18 individual
holdings. After launch costs of 5%, the Company had an initial net asset value
(NAV) of 95 pence per share. The NAV per share remained unchanged at 95 pence on
30 November 2001 despite the severe deterioration suffered by the market during
this period. This was due in part to the steady relative performance of the
initial investments but was also due to the Company holding the majority of
shareholders' funds in a short dated government security and cash in order to
preserve capital whilst suitable qualifying investments were sought.




Results and Dividend

In the interim report to shareholders it was highlighted that AiM VCT2 will tend
to invest in companies that are generally in the early stages of their growth
plans, investing heavily and not yet in a position to be making returns to their
shareholders. As a result the company does not expect to receive significant
dividends from investee companies for a while. Revenue earned during the period
therefore came predominantly from fixed interest government securities and
amounted to £1.2 million. This revenue has enabled the Board to declare a final
dividend of 1.1 pence per share which, when added to the interim dividend of 1.1
pence per share, makes a total dividend for the year of 2.2 pence per share.
This is marginally above the anticipated dividend for the Company's first year
made in the prospectus. The final dividend will be paid to shareholders on 15
March 2002.


Investment Programme

Despite difficult markets throughout the year it is perhaps surprising that AiM
continued to attract companies looking to raise development capital. In fact
most of the new issue activity on the London Stock Market occurred on AiM in
2001 with over 140 companies joining and more than £1 billion of funds being
raised. The Managers, Friends Ivory and Sime, are one of the largest
institutional investors in AiM and their strong market presence meant that they
saw a steady flow of new issues and fund raisings throughout the year. However,
they have been highly selective when choosing suitable investment opportunities
and have taken a cautious approach to the investment programme backing just
three new AiM companies where their flotation valuations appeared sensible. The
valuations of new issues generally remained unrealistically high and the
Managers found better value in backing seven existing AiM companies looking for
further capital and also two OFEX and six unquoted investment opportunities. In
total £10.6 million had been invested across eighteen companies by 30 November
2001. A further £2.1 million has been either invested or committed to five more
companies since that date.


To achieve VCT qualifying status, 70% of the net proceeds raised in any one
accounting period must be invested in qualifying investments within three years
and on this basis £27.8 million has to be invested by 30 November 2003. The
investment progress to date gives the Board confidence that this requirement
will be achieved.




Outlook

It seems likely that world stock markets will remain volatile until there is
greater certainty that positive economic trends can be sustained. To this end it
is hoped that the co-ordinated loosening of monetary policy around the world
will have the desired economic impact and provide the catalyst for a more
sustained upward trend in markets. Furthermore, low levels of interest rates
have often resulted in the out performance of smaller company shares in the
past. Against this uncertain background companies looking to raise development
capital have to be more realistic about their own valuations and the investor
finds himself with a stronger hand in any price negotiation. The Managers are
actively taking advantage of this opportunity to invest at sensible valuations.
The Board is pleased with the progress achieved to date and is confident that
given the Managers' presence in the market the Company will continue to attract
a healthy flow of investment opportunities in the future.


Enquiries:


                Robert Mitchell / Bill Brown

                Investment Managers

                Friends Ivory & Sime plc          Tel: [phone]


                Rhonda Nicoll

                Secretary

                Friends Ivory & Sime plc          Tel: [phone]




Audited Statement of Total Return (incorporating the revenue account) of the
Company








                                                          Period from 3 October 2000 to 30 November 2001



                                                                             Revenue         Capital        Total
                                                                               £'000           £'000        £'000
Gains on investments                                                               -             200          200
Income                                                                         2,154               -        2,154
Investment management fee                                                      (224)           (671)        (895)
Other expenses                                                                 (279)               -        (279)
Return on ordinary activities before tax
                                                                               1,651           (471)        1,180
Tax on ordinary activities                                                     (473)             192        (281)
Return attributable to equity shareholders                                     1,178           (279)          899
Dividends in respect of equity shares                                          (919)               -        (919)
Transfer to / (from) reserves                                                    259           (279)         (20)
Return per ordinary share:                                                     2.96p         (0.70)p        2.26p



Audited Balance Sheet
                                                                                                                 As at
                                                                                                       30 November
                                                                                                              2001
                                                                                                             £'000
Fixed Assets
     Quoted on the Alternative Investment Market                                                             6,885
        Quoted on OFEX                                                                                         676

     UK government security                                                                                 28,253
     Unquoted investments                                                                                    3,556
                                                                                                            39,370
Net current assets                                                                                             266
Net assets                                                                                                  39,636
Financed by:
     Shareholders' funds                                                                                    39,636
Net asset value per ordinary share:                                                                         95.00p
Ordinary shares in issue                                                                                41,722,333







Summarised Audited Statement of Cash Flows




                                                                                                       Period from
                                                                                                         3 October
                                                                                                           2000 to

                                                                                                       30 November

                                                                                                              2001
                                                                                                             £'000


Net cash flow from operating activities                                                                        855
Equity dividends paid                                                                                        (460)
Capital expenditure and financial investment                                                              (39,411)

Net cash flow before financing                                                                            (39,016)
Financing                                                                                                   39,656

Increase in cash                                                                                               640

Reconciliation of net cash flow to movement in net cash

Increase in cash                                                                                               640

Net cash at 30 November 2001                                                                                   640


Reconciliation of operating profit to net cash flow from activities

Net return before taxation                                                                                   1,651
Management fee charged to capital                                                                            (175)
(Increase) in debtors                                                                                        (946)
Increase in creditors                                                                                          325

Net cash flow from operating activities                                                                        855







Notes


 1. The audited results which cover the period from incorporation on 3 October
    2000 to 30 November 2001 have been drawn up in accordance with applicable
    accounting standards and adopting the Statement of Recommended Practice for
    Financial Statements of Investment Trust Companies and on the assumption
    that the Company maintains VCT status.


 2. The Company was launched on 1 December 2000 at which date 37,182,533 ordinary
    shares were issued. A further 4,653,550 ordinary shares were issued during
    the period to 30 November 2001. The Company bought back 113,750 ordinary
    shares for cancellation during the same period.


 3. Revenue and capital returns for the period from incorporation on 3 October
    2000 to 30 November 2001 are based on a weighted average of 39,726,696
    ordinary shares in issue during the period.


 4. Income for the period from incorporation on 3 October 2000 to 30 November
    2001 is derived from:


                                                                                                         2001
                                                                                                        £'000

    Fixed interest investment                                                                           2,027
    Deposit interest                                                                                      121
    Underwriting commission                                                                                 6

                                                                                                        2,154


 5. The final proposed dividend of 1.10 pence per ordinary share will be paid on
    15 March 2002, subject to shareholder approval, to eligible shareholders on
    the register on 1 February 2002.


 6. These are not full accounts in terms of Section 240 of the Companies Act
    1985; the statutory accounts for the period to 30 November 2001 contain an
    unqualified auditors' report. Initial accounts for the period to 31 May
    2001, which were unqualified, have been lodged with the Registrar of
    Companies in connection with the payment of the interim dividend. The annual
    report for the period to 30 November 2001 will be sent to shareholders
    shortly and will then be available for inspection at 100 Wood Street,
    London, the registered office of the Company.




 7. The Annual General Meeting will be held on 14 March 2001.




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