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: 0207 506 1100 Rhonda Nicoll Secretary Friends Ivory & Sime plc Tel: 0131 465 1074 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. This information is provided by RNS The company news service from the London Stock Exchange

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