Interim Results

Second Advance Value Realisation Co 17 November 2003 FOR IMMEDIATE RELEASE 17 NOVEMBER 2003 Second Advance Value Realisation Company Limited The investment trust that specialises in providing investors with liquidity and value from holdings in listed UK smaller companies Interim results For the period 21 March to 30 September 2003 Key Points • £22.5 million cash returned to shareholders by 30 September 2003. A further £4.1 m returned to shareholders in current period to date. • 138 holdings reduced to 44 in 6 months. • Weighted average net asset value of 124.16p compared with 97.30p (net of expenses) at the commencement of the Fund, up 28 %. • NAV of Ordinary Shares increased by 100% from 90.99p (net of expenses) to 182.48p. • Confident that the final outstanding 5.2 million Preference Shares will be redeemed or re-purchased by 31 March 2004. Robert Norbury, chairman of Second Advance Value Realisation Company Limited ('SAVR'), commented: 'I am pleased to report that SAVR has performed well since its launch. The Manager has been very active and during the reporting period SAVR realised £26.7 million from the sale of portfolio holdings.' For further information, please contact: The Manager, Progressive Value Management Limited Simon Toynbee Robert Legget Tel: 020 7253 9104 CHAIRMAN'S STATEMENT Second Advance Value Realisation Company Limited ('SAVR' or 'the Company') was incorporated on 21 March 2003 to provide a service for institutions wishing to rationalise their portfolios of smaller listed company shares. The Company's shares were admitted to the Official List on 25 April 2003, with a further tranche from a supplemental placing being admitted on 14 May 2003. SAVR is managed by Progressive Value Management Limited ('PVML') which has expertise in achieving value and liquidity from such stocks. PVML was formerly the manager of Advance Value Realisation Company Limited ('ADVARC') and two of ADVARC's former directors, Philip Okell and David Kempton, are directors of SAVR. ADVARC entered into members' voluntary liquidation in September 2003, having liquidated its portfolio and returned cash to its shareholders ahead of schedule. SAVR has been established on similar lines and with similar objectives to those of ADVARC. The launch of SAVR was effected by means of a 'stock swap' whereby the Company issued Ordinary Shares at 100p each and Redeemable Preference Shares at 100p each, in the ratio 30/70, as consideration for the acquisition, at mid-market value, of holdings in 138 smaller listed companies. At launch the portfolio of qualifying companies established in this way was valued at £45.8 million. I am pleased to report that SAVR has performed well since its launch. The Manager has been very active and during the reporting period SAVR realised £26.7 million from the sale of portfolio holdings. During the period the Company bought in 10.6 million of its Preference Shares at a small discount to par value and redeemed a further 12.1 million Preference Shares at par. The net asset value, excluding revenue reserves, attributable to each Ordinary Share increased over the period from 90.99p (net of the expenses of the flotation which were borne entirely by the Ordinary Shares) to 182.48p. The weighted average NAV, which takes account of the Preference Shares and cash returned to investors, improved by 28 per cent. from 97.30p (net of expenses) to 124.16p as at 30 September 2003. SAVR has benefited from improved market sentiment towards smaller cap stocks, but business conditions for small companies remain difficult, with concerns that higher interest rates will increase costs and competitive pressures on margins will continue. In these circumstances the Board and the Manager had no hesitation in implementing the stock realisation programme wherever the Manager was able to create or identify opportunities to do so, thus protecting gains by de-gearing the balance sheet through reduction of the Preference Share capital as described above. This process has continued and since the end of the reporting period the Company has realised a further £9.4 million from disposals and has bought in a further 4.2 million Preference Shares for cancellation. There are 5.2 million Preference Shares still outstanding and it is the Manager's objective to buy in or redeem these shares by the end of March 2004. The net revenue return per Ordinary Share for the period to 30 September 2003 was 5.1p. As stated in the prospectus the Company intends to pay its first dividend in August 2004 and accordingly the directors are not declaring an interim dividend. ROBERT NORBURY 17 November 2003 STATEMENT OF TOTAL RETURN 21 March to 21 March to 21 March to 30 September 2003 30 September 2003 30 September 2003 Revenue Capital Total £'000 £'000 £'000 Gains on investments Realised - 6,040 6,040 Unrealised - 8,029 8,029 - 14,069 14,069 Income - from investments 995 - 995 - bank interest 125 - 125 1,120 - 1,120 Investment management fees (250) (1,760) (2,010) Other expenses (173) - (173) Return on Ordinary activities before tax 697 12,309 13,006 Taxation - - - Return after taxation 697 12,309 13,006 Dividends - - - Transfers to reserves 697 12,309 13,006 Return per Ordinary Share 5.08p 89.73p 94.81p The revenue column of the statement of total return is the profit and loss account of the company. All capital and revenue items in the above statement derive from continuing operations. No operations were acquired or discontinued during the period. Return per Ordinary Share is based on the weighted average number of 13,717,450 Ordinary Shares in issue from the Company's launch on 25 April 2003 to 30 September 2003. There are no comparatives as this is the Company's first period of operations. BALANCE SHEET At 30 September 2003 £'000 FIXED ASSETS Investments at market value 33,200 CURRENT ASSETS Sales for future settlement 2 Other debtors 291 Cash at bank and in hand 15,508 15,801 CURRENT LIABILITIES Preference Share redemption (see note 4) (12,100) Accrued liabilities (259) (12,359) NET CURRENT ASSETS 3,442 EQUITY APPRECIATION FEE PROVISION (see note 7) (1,510) TOTAL NET ASSETS 35,132 CAPITAL AND RESERVES Share capital 3 Capital redemption reserve 2 Share premium account 9,570 Special reserve for purchase of own shares (see note 12) 12,551 Capital reserves 12,309 Revenue reserve 697 EQUITY SHAREHOLDERS' FUNDS 35,132 Net asset value per Ordinary Share 187.55p Net asset value excluding revenue reserves per Ordinary Share 182.48p Net asset value per Redeemable Preference Share 100.00p No. of Ordinary Shares in issue 13,745,997 No. of Redeemable Preference Shares in issue 9,351,717 CASH FLOW STATEMENT 21 March to 30 September 2003 £'000 OPERATING ACTIVITIES Net Cash Inflow from Operating Activities 414 FINANCIAL INVESTMENT Receipts on disposal of fixed asset investments 26,688 NET CASH INFLOW BEFORE FINANCING 27,102 FINANCING Expenses of issue of share capital (1,238) Payments to purchase own shares (10,356) NET CASH OUTFLOW FROM FINANCING (11,594) INCREASE IN CASH 15,508 NOTES 1 Comparatives There are no comparatives as this is the Company's first reporting period. 2 Investments Investments are listed on the London Stock Exchange. These have been valued at mid market prices at the period end. Two small holdings, one of which was suspended at the period end, have been valued at directors' valuation. 3 Investment management fees One half of the basic and capital return fees payable is charged to capital. The entire equity appreciation fee is charged to capital. 4 Redemption of Preference Shares On 30 September 2003 the first redemption of Preference Shares took place and 12,100,000 shares were redeemed at £1 per share. 5 Purchase of own shares During the period, the Company purchased 10,622,276 of its own Redeemable Preference Shares for cancellation, at an aggregate cost of £10,356,418. Since the end of the period, the Company has purchased a further 4,191,007 at an aggregate cost of £4,115,405. 6 Net assets per Ordinary Share Net assets per Ordinary Share are based on the number of Ordinary Shares in issue at the end of the period after attributing a net asset value of £1 to each Preference Share in issue at the end of the period. 7 Equity appreciation fee An accrual of £1,509,519 (including VAT) has been made on the basis that this sum would become payable to the Manager if the net asset value attributable to the Ordinary Shares as at 30 September 2003 represented the actual capital amount returned to Ordinary Shareholders during the life of the Company. 8 Dividend In accordance with the Company's stated policy, the directors do not recommend an interim dividend. 9 Investment company status The Company is incorporated in Guernsey and tax resident in the United Kingdom. It manages its affairs to enable it to qualify as an investment trust for taxation purposes under section 842 of the Income and Corporation Taxes Act. The Company therefore presents its accounts in accordance with the Statement of Recommended Practice for Investment Companies, with the Statement of Total Return as its first primary statement. 10 Status of this report These financial statements are not the Company's statutory accounts. They are unaudited. The interim report will be sent to shareholders and copies will be made available to the public at the office of the Secretary and the UK Administration Agent of the Company. 11 Reconciliation of movements in shareholders' funds 21 March to 30 September 2003 £'000 DISTRIBUTABLE PROFITS Revenue available for distribution 697 NON-DISTRIBUTABLE PROFITS Recognised gains and losses 14,069 Expenses attributable to capital (1,760) TOTAL PROFITS AND GAINS 13,006 Purchase of the Company's own Preference Shares (10,356) Redemption of the Company's own Preference Shares (12,100) (9,450) Net proceeds of placing 44,582 Opening shareholders' funds - Closing shareholders' funds 35,132 At 30 September 2003 CLOSING SHAREHOLDERS' FUNDS £'000 Ordinary Shares 25,780 Redeemable Preference Shares 9,352 35,132 12 Special reserve for purchase of own shares At 30 September 2003 £'000 Redesignation from share premium account 22,908 Cost of purchase of Preference Shares (10,356) Nominal value of Preference Shares redeemed (1) 12,551 On 13 June 2003, an application to the Royal Court of Guernsey to reduce the share premium account by £22,908,000 was approved. The reserve created by cancelling that amount is used to redeem the nominal value of Redeemable Preference Shares and to repurchase both Redeemable Preference Shares and Ordinary Shares. Registered office: 1 Le Marchant Street St Peter Port Guernsey GY1 4HP UK office: Crusader House 145-157 St John Street London EC1V 4RU This information is provided by RNS The company news service from the London Stock Exchange

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