Interim Results

Second Advance Value Realisation Co 16 November 2004 Second Advance Value Realisation Company Limited ('SAVR') The investment trust specialising in providing investors with liquidity and value from holdings in listed UK smaller companies Interim results For the six months to 30 September 2004 Key Points • £12.66 million returned to shareholders in the period. • £51.1 million of capital returned in cash to date since launch(111% of original value of stock swap). • NAV of 202.6p per share at 30 September 2004. • NAV per share up 122.7% from 91.0p since launch. • 17 holdings remaining Robert Norbury, chairman of Second Advance Value Realisation Company Limited, commented: 'SAVR has continued to deliver good results for its investors in terms of both value and liquidity and remains on target to achieve full realisation of the portfolio by 30 June 2005.' CHAIRMAN'S STATEMENT I am pleased to report further substantial progress at your Company, Second Advance Value Realisation Company Limited ('SAVR'), towards achieving its twin objectives of liquidity and value for its investors. I wrote to you on 2 June 2004 setting out proposals to return in excess of £8 million to shareholders by means of a tender offer and to adjust the Manager's terms of engagement to recognise the reduction in the size and expected life of the Company. These proposals were overwhelmingly supported by shareholders at an Extraordinary General Meeting held on 23 June 2004 and the tender offer was implemented the following day. Since then tangible progress has been made towards reaching the revised target date of June 2005 for full liquidation of the portfolio. SAVR was launched in April 2003 with 138 holdings valued at £45.8 million. Subsequently, and up to 30 September 2004, £51.1 million of capital had been returned in cash to shareholders, representing 111 per cent of the original amount subscribed by stock swap. During the six months to 30 September 2004 £12.7 million, including £10 million via the tender offer, was returned to shareholders. At 30 September 2004 there remained 17 holdings valued at £7.5 million. The Manager, Progressive Value Management Limited, continues to be extremely active in addressing exit strategies for these holdings. The net asset value ('NAV') of the Ordinary Shares was 202.64p at 30 September 2004, having fallen from 216.16p at 31 March 2004 but having increased from 90.99p at launch (net of the expenses of flotation which were borne entirely by the Ordinary Shares). The weighted average NAV, which takes account of the Preference Share capital and cash returned, has risen from 97.30p (net of expenses) at launch to 127.75p at 30 September 2004. As at the close of business on 15 November 2004, the Company's NAV had increased to 217.34p per share. The Board remains confident that, barring unforeseen circumstances, the Manager will succeed in its efforts to liquidate the entire portfolio by the target date. ROBERT NORBURY 16 November 2004 STATEMENT OF TOTAL RETURN Six months to 21 March to 30 Sep 2004 30 Sep 2004 30 Sep 2004 30 Sep 2003 30 Sep 2003 30 Sep 2003 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Gains/(losses) on investments - realised - 2,691 2,691 - 6,040 6,040 - unrealised - (3,917) (3,917) - 8,029 8,029 - (1,226) (1,226) - 14,069 14,069 Income - from investments 170 - 170 995 - 995 - bank interest 50 - 50 125 - 125 220 - 220 1,120 - 1,120 Investment management fees (99) (143) (242) (250) (1,760) (2,010) Other expenses (156) (64) (220) (173) - (173) (255) (207) (462) (423) (1,760) (2,183) Return on Ordinary activities before tax (35) (1,433) (1,468) 697 12,309 13,006 Taxation - - - - - - Return after taxation (35) (1,433) (1,468) 697 12,309 13,006 Dividends - - - - - - Transfers to reserves (35) (1,433) (1,468) 697 12,309 13,006 Return per Ordinary Share (0.50)p (20.75)p (21.25)p 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 6,907,570 (2003 - 13,717,450) Ordinary Shares in issue during the period. The comparatives relate to the period from the Company's incorporation on 21 March 2003 to 30 September 2003. The Company listed on the London Stock Exchange on 25 April 2003. BALANCE SHEET At 30 At 30 At 31 September September 2004 2003 March £'000 £'000 2004 £'000 FIXED ASSETS Investments at market value 7,542 33,200 16,169 CURRENT ASSETS Sales for future settlement 382 2 - Other debtors 25 291 19 Cash at bank and in hand 434 15,508 7,905 841 15,801 7,924 CURRENT LIABILITIES Preference Share redemption - (12,100) - Accrued liabilities (86) (259) (269) Equity appreciation fee provision (503) (1,510) (1,539) Early termination fee provision (335) - - Dividends payable - - (699) (924) (13,869) (2,507) NET CURRENT ASSETS / (LIABILITIES) (83) 1,932 5,417 TOTAL NET ASSETS 7,459 35,132 21,586 CAPITAL AND RESERVES Share capital 1 3 1 Capital redemption reserve 4 2 4 Share premium account 4,410 9,570 4,410 Share purchase reserve - 12,551 1,750 Other capital reserves 3,040 12,309 15,382 Revenue reserve 4 697 39 EQUITY SHAREHOLDERS' FUNDS 7,459 35,132 21,586 Net asset value per Ordinary Share 202.64p 187.55p 216.16p Net asset value per Redeemable Preference Share - 100.00p - No. of Ordinary Shares in issue 3,680,875 13,745,997 9,985,997 No. of Redeemable Preference Shares in issue - 9,351,717 - CASH FLOW STATEMENT Six months to 30 21 March to 30 September 2004 September 2003 £'000 £'000 OPERATING ACTIVITIES Net Cash Inflow from Operating Activities (1,131) 414 FINANCIAL INVESTMENT Receipts on disposal of fixed asset investments 14,027 26,688 Payments to acquire fixed asset investments (7,009) - 7,018 27,102 EQUITY DIVIDENDS PAID (699) - NET CASH INFLOW BEFORE FINANCING 5,188 27,102 FINANCING Expenses of issue of share capital - (1,238) Payments to purchase own shares (12,659) (10,356) NET CASH OUTFLOW FROM FINANCING (12,659) (11,594) (DECREASE) / INCREASE IN CASH (7,471) 15,508 NOTES 1 Comparatives The comparatives relate to the period from the Company's incorporation on 21 March 2003 to 30 September 2003. The Company listed on the London Stock Exchange on 25 April 2003. 2 Investments Investments are listed on the London Stock Exchange. These have been valued at mid market prices at the period end. Suspended securities are valued at directors' valuation. 3 Investment management fees One half of the basic and capital return fees payable are charged to capital. The entire equity appreciation fee and early termination fee are charged to capital. 4 Purchase of own shares During the period, the Company held a tender offer for its own ordinary shares and 4,910,122 ordinary shares were cancelled and £10 million returned to shareholders. Costs associated with the tender totalled £64,000. In addition to the above, a further 1,395,000 Ordinary Shares were purchased in the market for cancellation at an aggregate cost of £2,659,000. 5 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. No preference shares were in issue as at 30 September 2004. 6 Equity appreciation fee An accrual of £503,000 (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 2004 represented the actual capital amount returned to Ordinary Shareholders during the remainder of the life of the Company. Equity appreciation fees, relating to returns of capital to shareholders in the six months ended 30 September 2004, totalling £746,410 were invoiced and paid during the six months to 30 September 2004. 7 Early termination fee The early termination fee described in the circular dated 2 June 2004 was accrued from the passing of the resolution to approve the tender offer at the Extraordinary General Meeting held on 23 June 2004. A fee of £334,875 (including VAT) will be payable to the Manager prior to the appointment of a liquidator or implementation of an equivalent final exit strategy, provided such occurs by 30 June 2005. The Company has accrued for this fee at the period end. 8 Dividend The directors do not recommend an interim dividend. 9 VAT on investment management fees The Board are aware of the legal test case that JP Morgan Fleming Claverhouse Investment Trust plc have initiated in conjunction with the AITC against HM Customs & Excise and are aware of the potential consequences of the case. A contingent gain exists in the form of a possible VAT repayment from the Company's investment manager. At the present time there is no certainty regarding the outcome of the case, the size of the gain (if any at all) and when it would be received. Therefore the Company has not recognised any such gain in its accounts. The total VAT that the Company has suffered on investment management fees from the Company's launch to 30 September 2004 is £319,165 but it is not clear how much of this sum, if any, may become recoverable. 10 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. 11 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. 12 Reconciliation of movements in shareholders' funds Six months to 21 March to 30 September 2004 30 September 2003 £'000 £'000 DISTRIBUTABLE PROFITS Revenue available for distribution (35) 697 NON-DISTRIBUTABLE PROFITS Recognised gains and losses (1,226) 14,069 Expenses attributable to capital (207) (1,760) TOTAL PROFITS AND GAINS (1,468) 13,006 Purchase of the Company's own Ordinary Shares (12,659) - Purchase of the Company's own Preference Shares - (10,356) Redemption of the Company's own Preference Shares - (12,100) (14,127) (9,450) Net proceeds of placing - 44,582 Opening shareholders' funds 21,586 - Closing shareholders' funds 7,459 35,132 At At 30 September 30 September 2004 2003 CLOSING SHAREHOLDERS' FUNDS £'000 £'000 Ordinary Shares 7,459 25,780 Redeemable Preference Shares - 9,352 7,459 35,132 Registered office: 1 Le Marchant Street St Peter Port Guernsey Channel Islands 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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