TRNS Number:5424Y
Electra Kingsway VCT 2 PLC
18 June 2007
Electra Kingsway VCT 2 Plc ("the Company" or "the Fund")
Interim Results for the six months ended 31 March 2007
Financial Highlights (Unaudited)
Six months ended 31 March 2007 2006
Net Assets #41.0m #34.4m
Net Asset Value per share 120.59p 100.70p
Cumulative Return to Shareholders since Launch
Dividends paid per share 1.00p -
Net Asset Value plus dividends paid per share 121.59p 100.7p
Percentage uplift since inception 28.7% 6.6%
An interim dividend of 1.5p per share will be paid on 7 August 2007, to
shareholders on the Company's Register of Members at close of business on 6 July
2007.
A copy of the Chairman's Statement, Investment Manager's Report and Preliminary
Announcement are attached.
These unaudited interim results for the period ended 31 March 2007 do not
constitute the Statutory Financial Statements of the Company for the period
ended 31 March 2007 within the meaning of Section 240 of the Companies Act 1985.
The figures and financial information in respect of the period ended 30
September 2006 have been delivered to the Registrar of Companies and included
the Auditors' Report which was unqualified and did not contain a statement under
either Section 237(2) or Section 237(3) of the Companies Act 1985.
Copies of the Interim Accounts to 31 March 2007 will be sent to shareholders
shortly and will thereafter be available from the Company's registered office.
For further information:
Nick Ross, Electra Kingsway VCT 2 Plc: 0207 214 4200
Chairman's Statement
Results
The Fund has continued to perform well, with the Net Asset Value ('NAV') per
share rising to 120.6p at the end of March, giving a total return (including
dividends paid to date) of 28.7% since inception. This compares with the
September year end NAV of 108.0p per share, an uplift of 11.6%. Given that the
Fund is not yet fully invested, the early performance is particularly
encouraging. The Fund has been one of the best performing generalist VCTs
launched in the 2005/6 tax year. The portfolio continues to make good progress
on all fronts.
Dividend
The Board has approved the payment of an interim dividend of 1.5p per share.
This will be paid on 7 August 2007 to shareholders on the Register of Members at
the close of business on 6 July 2007, and will increase the total dividend
payout since inception to 2.5p per share.
VCT Qualifying Status
The Fund is on track to meet the key test for VCT status, which is to have 70%
of its assets invested in qualifying companies by 30 September 2007. The current
pipeline of potential transactions is good, with a number of unquoted companies
in various stages of due diligence.
Share Buyback Policy
The Company operates a share buyback policy at a 10% discount to the last
published NAV, thus offering shareholders the opportunity to sell their shares
if they need to. During the period the Company bought back 179,275 shares for
cancellation, at an average price of 97p per share.
March 2007 Budget
The 2007 Budget contained further changes to the VCT regulations, which will
have some impact on the industry from now on. The two principal changes were the
introduction of two new conditions for investment in qualifying companies.
First, an investee company may receive no more than #2 million from VCTs in a 12
month period. Secondly, investee companies or groups may have no more than 50
full-time employees at the date of investment. These changes were implemented to
bring the industry into line with EU legislation on state aid. The changes
affect only new money raised after 6 April 2007, and will have no impact on your
Fund.
Outlook
The Fund has performed well to date, and is in a good position to deliver
further capital growth to shareholders. The portfolio is not yet fully invested,
and I look forward to providing further details on the latest investments at the
year end.
Rupert Pennant-Rea, Chairman
18 June 2007
Investment Manager's Review
Performance
The Fund has performed well in the period with the Net Asset Value ("NAV") per
ordinary share rising by 11.6% since the final results. This is a particularly
pleasing result given that the Fund is not fully invested and that #11.4m is
still held pending investment in qualifying companies. The Fund benefits from
its ability to co-invest with Electra Kingsway VCT Plc and Electra Kingsway VCT
3 Plc. This enables investment in larger transactions, which, by definition, are
lower risk than most traditional venture capital investments. In the period, the
three key performance drivers were Worthington Nicholls, Gyro International and
Electra Private Equity, although the portfolio continues to make good progress
on a broader front. Worthington Nicholls has risen by 244% since its flotation
on AIM. The company is growing fast due to good market dynamics and synergistic
acquisitions. Gyro International is an unquoted investment that was increased in
value by 41.9% after the funding of a synergistic acquisition. Electra Private
Equity rose 18.6% after reporting strong results. The only disappointment in the
portfolio was Hill Station, where the AIM price fell in response to slower
trading and the requirement for additional funding.
Portfolio Activity
Five new investments have been added since 30 September 2006, four of which were
unquoted and one was AIM listed. Gyro International, is a brand management
company and an original investment in Electra Kingsway VCT. The company was
seeking finance for an acquisition. Action Sports Media specialises in action
sports magazines and is seeking to bolt-on further titles and to enhance its
digital platform. Emote is a publisher of games content and is working closely
with Sony to establish a broad gaming platform. Munro Global, a market research
company, acquired a smaller competitor. Zamano operates a text messaging
platform, over which it seeks to sell content for mobile phones. It floated on
AIM in 2006 and recently reported encouraging results.
Deal Flow
The key focus of our investment activity is to find profitable unquoted and AIM
listed companies which either have good growth potential and/or offer
opportunities for corporate development. A good example of the latter would be
Munro Global, where we have just completed a bolt-on acquisition with a further
acquisition being targeted. These acquisitions are significantly value enhancing
as they create scale in a fragmented market and generate significant cost
synergies. Given the long gestation period of unquoted transactions, it is
important to maintain an active deal pipeline of potential investments.
Portfolio Summary
(Unaudited)
Performance in % of Portfolio
Cost at Valuation at period ended by Value
31 March 2007 31 March 2007 31 March 2007 %
#'000 #'000 #'000
Qualifying Investments:
Defaqto (Find Portal) 2,150 4,275 - 14.52
Gyro International 1,375 3,328 983 11.30
Worthington Nicholls 888 3,053 1,819 10.37
Factory Media 1,925 1,925 - 6.54
Munro Global (FDS) 875 1,225 350 4.16
Conquest Business Media 975 1,026 51 3.48
Zamano 750 898 148 3.05
Hill Station 1,133 778 (418) 2.64
Amber Taverns 750 750 - 2.55
Ma Hubbards 750 750 - 2.55
Jelf 250 614 189 2.08
Sanastro 600 600 - 2.04
Keycom 296 176 - 0.60
Emote Games 114 114 - 0.39
12,831 19,512 3,122 66.27
Non-Qualifying Investments:
Electra Private Equity 3,550 6,164 966 20.93
Electra Active Management 4,000 3,770 93 12.80
7,550 9,934 1,059 33.73
20,381 29,446 4,181 100.00
Other Assets:
Liquidity Funds 11,295
Cash 120
11,415
Total 40,861
Income Statement
For the six months ended For the six months ended For the year ended
31 March 2007 31 March 2006 30 September 2006
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
#'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000
Realised gains on - 196 196 - - - - - -
investments
Unrealised gains on - 4,181 4,181 - 1,324 1,324 - 3,936 3,936
investments
Income 684 - 684 520 - 520 1,324 - 1,324
684 4,377 5,061 520 1,324 1,844 1,324 3,936 5,260
Investment management (136) (409) (545) (100) (300) (400) (209) (626) (835)
fees
Other expenses (266) - (266) (168) - (168) (309) - (309)
(402) (409) (811) 268 (300) (568) (518) (626) (1,144)
Return on Ordinary 282 3,968 4,250 252 1,024 1,276 806 3,310 4,116
Activities before
Taxation
Tax on ordinary - - - - - - - - -
activities
Return on Ordinary 282 3,968 4,250 252 1,024 1,276 806 3,310 4,116
Activities after
Taxation
Dividend per share: - - - - - - (342) - (342)
nil (31.03.06: nil,
30.09.06: 1p)
Transfer to reserves 282 3,968 4,250 252 1,024 1,276 464 3,310 3,774
Basic and diluted 0.83p 11.62p 12.45p 0.74p 2.99p 3.73p 2.36p 9.68p 12.04p
return to
Shareholders per
share
The amounts dealt with in the Income Statement are all derived from continuing
activities.
No operations were acquired or discontinued in the period.
Reconciliation of Total Shareholders' Funds
For the six months ended For the six months ended
31 March 2007 31 March 2006 For the year ended
30 September 2006
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Total Return on Ordinary Activities after 4,250 1,276 4,116
Taxation
Repurchase of shares (174) (11) (29)
Dividends - - (342)
Movements in Total Shareholders' Funds 4,076 1,265 3,745
Total Shareholders' Funds at start of 36,891 33,146 33,146
period
Total Shareholders' Funds 40,967 34,411 36,891
Balance Sheet
As at 30 September 2006
As at 31 March 2007 As at 31 March 2006 (audited)
(unaudited) (unaudited)
#'000 #'000 #'000 #'000 #'000 #'000
Fixed Assets
Investments held at fair value 29,446 15,394 21,031
Current Assets
Debtors 560 45 397
Cash at bank 120 140 157
Other investments 11,295 19,600 15,695
11,975 19,785 16,249
Current Liabilities
Creditors: amounts falling due
within one year 433 747 368
433 747 368
Net Current Assets 11,542 19,038 15,881
Total assets less current 40,988 34,432 36,912
liabilities
Creditors: amounts falling due
after more than one year 21 21 21
Net Assets 40,967 34,411 36,891
Capital and Reserves
Called-up share capital 340 342 342
Share premium - 31,977 -
Special reserve 31,785 - 31,958
Capital redemption reserve 2 - -
Realised capital reserve (1,094) (599) (925)
Revenue reserve 870 377 589
Unrealised capital reserve 9,064 2,314 4,927
Total Equity Shareholders' Funds 40,967 34,411 36,891
Net Asset Value per share 120.59p 100.70p 108.02p
As at 31 March 2007 As at 31 March 2006 As at 30 September 2006
Number of Shares in issue at end 33,973,546 34,172,821 34,152,821
of Period
Cash Flow Statement
For the six months ended For the six months ended
31 March 2007 31 March 2006 For the year ended
(unaudited) (unaudited) 30 September 2006
(audited)
#'000 #'000 #'000 #'000 #'000 #'000
Operating Activities
Investment income received 444 521 1,001
Bank deposit interest received 3 4 6
Investment management fees paid (504) (392) (790)
Other cash payments (213) (157) (273)
Net Cash Outflow from Operating (270) (24) (56)
Activities
Investing Activities
Purchases of investments (4,389) (1,854) (5,340)
Sales of investments 352 - -
Net Cash Outflow from Investing (4,037) (1,854) (5,340)
Activities
Equity Dividends Paid - - (342)
Cash Outflow before Financing and
Management of Liquid Resources
(4,307) (1,878) (5,738)
Management of Liquid Resources
Sales of current asset investments 4,400 1,700 5,605
Net Cash Inflow from Management of
Liquid Resources 4,400 1,700 5,605
Financing
Repurchase of shares (130) (12) (41)
Net Cash Outflow from Financing (130) (12) (41)
Decrease in Cash for the Period (37) (190) (174)
This information is provided by RNS
The company news service from the London Stock Exchange
END
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