Final Results

Advent 2 VCT PLC 18 March 2002 Advent 2 VCT plc 19 March 2002 RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2002 The Board of Advent 2 VCT plc announces the results of the company for the year ended 28 February 2002. Highlights - The company invested £5.6 million in the year, £5.0 million towards development of the existing portfolio and £0.6 million in new investments in EnSeal Systems Ltd and Snell & Wilcox Ltd. - During the year, Intersolar Group Ltd and Inca Digital Printers Ltd, were revalued upwards as a result of third party transactions. The resulting valuations represent a multiple of 1.9 and 3.1 times cost respectively. - Provisions made in the year amounted to £3.9 million against the cost of seven investments. Year ended Year ended 28 February 2002 28 February 2001 Earnings per ordinary share (1.4)p 15.1p Net asset value per ordinary share 84.3p 95.3p Net asset value per ordinary share (includes all dividends paid and proposed) 106.1p 117.1p - A final dividend is not being recommended. - The company continues to exceed the 70% requirement for investment in Qualifying Holdings set by the Inland Revenue. Chairman's Statement It has been a particularly difficult year for the portfolio, which has suffered from the change in market sentiments towards the technology sector. Accordingly, this has resulted in a decline in the net asset value of the company in the current year from 95.3p per share at 28 February 2001 to 84.3p per share at 28 February 2002. Capital increase As a consequence of the current market environment, it is taking significantly longer to realise investments and this means that companies within the portfolio are requiring venture capital funding for longer than was anticipated at the outset of the Fund. The Manager, Advent Limited, is working hard to build value. It plays an active role in the portfolio investments and is endeavouring to ensure that companies are focused on containing costs and maximising revenue potential. Whilst the current investment environment is difficult, the Board is nonetheless confident that the Fund will be well placed to take advantage of any upturn in the market when that occurs. However, we are aware that an inability to provide follow-on funding when required could result in the dilution of our holdings with an adverse impact on the returns that we will ultimately be able to realise. As you will be aware, the Board has therefore decided to increase the share capital of the Company and to offer shareholders the opportunity to subscribe for additional shares up to 9.95% of the existing issued share capital. This will enable the Company to increase its investment capacity and allow it to provide further support to existing portfolio companies. Details and timetable of the Offer have been distributed to all shareholders, and the Board encourages all shareholders to participate. Investment activity and developments During the year £5.6 million was invested in fourteen portfolio companies where further investment was considered appropriate to enable them to realise their full potential. This included investments in two new companies, EnSeal Systems Ltd, which was a spinout established to exploit a particular technology from an existing portfolio company, Signum Technologies Ltd, and loan funding to Snell & Wilcox Ltd, following that company's acquisition of the fund's holding in Post Impressions (Systems) Ltd. Provisions totalling £3.9 million in total were made against the valuation of seven investments. At the end of the year, there were 27 companies in the portfolio compared with 26 at the end of the previous year. The company continues to exceed comfortably the 70% minimum requirement set by the Inland Revenue for qualifying holdings within the portfolio ensuring continued Venture Capital Trust status. Balance Sheet The net asset value per share at 28 February 2002 was 84.3p (net of dividends declared in prior periods), compared with 95.3p at 28 February 2001. The unquoted investments have been valued in accordance with the British Venture Capital Association guidelines. Dividend The fixed interest portfolio has largely been realised to fund follow-on investment. Income is therefore lower than in the early years of the company and, as a result, the Board is not recommending a final dividend. The gross cumulative total dividends paid since the inception of the company is 21.8p. Purchase of Own Shares In August 2001, the company repurchased and cancelled 44,148 shares. Occasional market purchases by the company of its own shares provide an additional measure of liquidity in the market for the company's shares and enhance the net asset value per share for the company's remaining shareholders. It continues to be a policy of the company to consider the repurchase of shares when they become available. Management Team The continued growth of the Manager, Advent Limited, has led to the reorganisation of the investment team. As a result, a team dedicated to the management of the venture capital trust business has been created and two senior level appointments have been made with David Hughes and Jeryl Andrew joining the VCT unit in 2001. David Hughes has assumed the role of Fund Manager for Advent 2 VCT plc taking over from Peter Davies, who remains the fund manager of Advent VCT plc. Outlook The Board believes that there are a number of portfolio companies that are developing well and should be in a strong position to take advantage of any upturn in the market when that occurs. The Board takes the view that further investment should be made in the portfolio where appropriate and the increase in the company's share capital should provide the additional funding that is required. The Company's links with the larger institutional fund, Advent Private Equity Fund II, and the 'hands-on' approach of the experienced management team are proving to be important strengths in a testing market. Roger Brooke Chairman PROFIT AND LOSS ACCOUNT for the year ended 28 February 2002 YEAR ENDED YEAR ENDED 28 FEBRUARY 28 FEBRUARY 2002 2001 £'000 £'000 Investment income and deposit interest 497 1,106 Investment management fees (815) (902) Other expenses (211) (258) -------- ------- Operating loss (529) (54) Profit on realisation of investments 50 5,325 -------- ------- (Loss)/profit on ordinary activities before taxation (479) 5,271 Tax on ordinary activities - - -------- ------- (Loss)/profit on ordinary activities after taxation (479) 5,271 Dividends - (4,861) -------- ------- Balance transferred (from)/to reserves (479) 410 ======== ======= Earnings per share (1.4)p 15.1p ======== ======= STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES YEAR ENDED YEAR ENDED 28 FEBRUARY 2002 28 FEBRUARY 2001 £'000 £'000 (Loss)/profit for the year (479) 5,271 Unrealised loss on revaluation of investments (3,374) (1,672) -------- -------- Total recognised gains and losses relating to the year (3,853) 3,599 -------- -------- BALANCE SHEET as at 28 February 2002 2002 2001 £'000 £'000 FIXED ASSETS Investments 28,830 28,076 CURRENT ASSETS Debtors 331 1,045 Money market and other deposits 238 4,425 Cash 194 139 -------- -------- 763 5,609 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR (155) (363) --------- -------- NET CURRENT ASSETS 608 5,246 TOTAL ASSETS LESS CURRENT LIABILITIES 29,438 33,322 ======== ======== CAPITAL AND RESERVES Called-up share capital 1,746 1,748 Share premium account 22,750 22,750 Capital redemption reserve 4 2 Revaluation reserve (3,187) 187 Profit and loss account 8,125 8,635 -------- -------- Equity shareholders' funds 29,438 33,322 ======== ======== Net asset value per ordinary share 84.3p 95.3p -------- -------- CASH FLOW STATEMENT for the year ended 28 February 2002 2002 2001 £'000 £'000 CASH FLOW FROM OPERATING ACTIVITES AND RETURNS ON INVESTMENTS: Investment income received 219 1,282 Deposit and similar interest received 204 132 Investment management fees paid (815) (902) Secretarial fees paid (63) (61) Other cash payments (94) (280) -------- ------- NET CASH (OUTFLOW)/INFLOW FROM OPERATING ACTIVITES AND RETURNS ON INVESTMENT (549) 171 -------- ------- TAXATION 440 (36) FINANCIAL INVESTMENT: Purchase of listed fixed income investments - (6,119) Purchase of unquoted investments and investments quoted on AIM (5,605) (16,920) Net proceeds on sale of quoted investments 4 6,223 Redemption and sale of listed fixed income investments 1,609 21,042 -------- -------- NET CASH (OUTLFOW)/INFLOW FROM FINANCIAL INVESTMENT (3,992) 4,226 -------- -------- EQUITY DIVIDENDS PAID: Dividends paid on ordinary shares - (5,316) Tax credits paid to shareholders - (2) Tax credits recovered on behalf of shareholders - 2 -------- -------- NET CASH OUTFLOW FROM PAYMENT OF EQUITY DIVIDENDS - (5,316) -------- -------- NET CASH OUTFLOW BEFORE FINANCING AND LIQUID RESOURCE MANAGEMENT (4,101) (955) -------- ------- MANAGEMENT OF LIQUID RESOURCES: Movement in money market and other deposits 4,187 877 -------- ------- FINANCING: Repurchase and cancellation of shares (31) (32) ------- ------- NET CASH OUTFLOW FROM FINANCING (31) (32) ------- ------- INCREASE/(DECREASE) IN CASH 55 (110) ======== ======== RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS YEAR ENDED YEAR ENDED 28 FEBRUARY 28 FEBRUARY 2002 2001 £'000 £'000 Opening shareholders' funds 33,322 34,616 Total recognised gains and losses for year (3,853) 3,599 Repurchase and cancellation of shares (31) (32) Dividends appropriated - (4,861) -------- -------- Closing shareholders' funds 29,438 33,322 -------- -------- Contacts for information: Advent Limited: Sir David Cooksey 020 7630 9811 Les Gabb GCI Financial: Annabel O'Connor 020 7398 0800 Teather & Greenwood Jonathan Becher 020 7426 9000 This information is provided by RNS The company news service from the London Stock Exchange

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