TIDMKIV2
Chairman's Statement
Introduction
As I have previously communicated, the last six months has been a transitional period for the Company. Keydata Investment Services was placed into administration on 9 June 2009 and Foresight Group ('Foresight') was appointed as investment adviser to the Board in their place on 11 June 2009. Since then, the Board and Foresight have been working extensively on extracting value from the Company's existing investments, namely the constituent parts of the St Helens renewable energy project.
Against this background, the Company's net asset value has remained stable and as at 31 August 2009 was 50.8p per share compared to 51.5p per share as at 28 February 2009. The Board is encouraged by the independent valuation of the underlying assets of the investee companies in Keydata Income VCT 2 but is cognisant that securing the optimal value for the assets will only be achieved through successfully utilising the Company's biomass assets for their originally intended purpose.
Of the current net assets of GBP3.7m, over 30% is currently held in cash (or near cash) by either the VCT or its underlying investee companies.
Despite the progress that has been made over the last few months, the Board is not recommending an interim dividend at this time.
Portfolio Review
In my last statement in the annual report and accounts, it was disclosed that the main contractor had notified the Company that it was not able to complete the construction of the project due to funding problems and that the Board was reviewing various options including terminating contracts with the contractor, pursuing a legal claim for damages, the use of an alternative contractor and the sale of the investments.
Working closely with Foresight and benefiting from its experience in environmental infrastructure, and specifically its involvement in investments in generating heat and power from biomass plants, the Board and Foresight have instigated a course of action that has addressed the above unresolved issues extant at the time Keydata Investment Services was placed into administration.
In summary the Company has:
-- Terminated all contracts involved with the renewable energy project in
St Helens, including that of the main contractor;
-- Removed all of the assets, to which the Company now holds absolute
title, and delivered them to a secure off-site location;
-- Received independent confirmation of the underlying values of the
assets held by the Company; and
-- Implemented a plan that should preserve the ongoing VCT tax status of
the Company.
Outlook
In addition to the actions referred to above, discussions are progressing with respect to a possible merger of the Company with an existing Foresight VCT. The progress of the merger is likely to accelerate in the coming weeks. As previously disclosed such a merger would be subject to the approval of the shareholders of Keydata Income VCT 2 plc and the relevant Foresight VCT and would assist the Company's shareholders in obtaining greater exposure to a wider range of unquoted investments, generate additional cost savings and result in greater liquidity in the Company's shares.
Discussions are also taking place with various parties about the location and construction of biomass plants that could be used to redeploy the assets held by Keydata Income VCT 2's investee companies. The Board and Foresight consider that the successful implementation of this strategy is still the best route to maximising shareholder value in the longer term and hope to be able to provide a further update to shareholders on the progress of this strategy in the near future.
Stephen OxenbridgeChairman30 October 2009
For further information please contact:Gary Fraser, Foresight Fund Managers Limited Tel: 01732 471800
Unaudited Interim Results and Responsibility Statements
Principal Risks and Uncertainties
The principal risks faced by the Company can be divided into various areas as follows:
-- Market price;
-- Interest rate;
-- Liquidity;
-- Discount volatility; and
-- Regulatory risk.
The Board reported on the principal risks and uncertainties faced by the Company in the Annual Report and Accounts for the year ended 28 February 2009. A detailed explanation can be found on page 7 of the Annual Report and Accounts which is available on www.foresightgroup.eu or by writing to Foresight Group at ECA Court, South Park, Sevenoaks, Kent, TN13 1DU.
In the view of the Board, there have not been any changes to the fundamental nature of these risks since the previous report and these principal risks and uncertainties are equally applicable to the remaining six months of the financial year as they were to the six months under review.
Directors' Responsibility Statement:
The Disclosure and Transparency Rules ("DTR") of the UK Listing Authority require the Directors to confirm their responsibilities in relation to the preparation and publication of the Interim Report and financial statements.
The Directors confirm to the best of their knowledge that:
(a) the summarised set of financial statements have been prepared in accordance with IAS34;
(b) the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year);
(c) the summarised set of financial statements give a true and fair view in accordance with IFRS of the state of affairs of the Company and of the profit and loss of the Company for that period and comply with IFRS as adopted for use in the European Union and as applied in accordance with the provisions of the Companies Act 2006; and
(d) the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein).
The half-yearly Financial Report has not been audited or reviewed by the auditors.
By order of the Board
Stephen OxenbridgeChairman30 October 2009
Consolidated Statement of Comprehensive Income
for the six months ended 31 August 2009
6 months ended 6 months ended Year ended
31 August 2009 31 August 2008 28 February 2009
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Unrealised - 62 62 - - - - (2,803) (2,803)
gains/(losses)
on
investments
Realised - (1) (1) - - - - - -
losses
on
securities
Unrealised - 2 2 - - - - - -
gains
on
securities
Revenue 3 - 3 279 - 279 546 - 546
Operating 3 63 66 279 - 279 546 (2,803) (2,257)
profit/(loss)
Management (4) (12) (16) - - - - - -
fees
Other (102) - (102) (73) - (73) (79) - (79)
expenses
Impairment - - - - - - (844) (844)
charge
(106) (12) (118) (73) - (73) (923) - (923)
(Loss)/profit (103) 51 (52) 206 - 206 (377) (2,803) (3,180)
before
taxation
Tax - - - (43) - (43) - - -
on
ordinary
activities
(Loss)/profit (103) 51 (52) 163 - 163 (377) (2,803) (3,180)
for the
period
attributable
to owners
of
the parent
Other - - - - - - - - -
comprehensive
income
Total (103) 51 (52) 163 - 163 (377) (2,803) (3,180)
comprehensive
income
attributable
to owners
of
the parent
(Loss)/earnings (1.4)p 0.7p (0.7)p 2.2p 0.0p 2.2p (5.1)p (38.4)p (43.5)p
per
ordinary
share
- basic
and
diluted
The total column of this statement is the Statement of Comprehensive Income of the Group. All revenue and capital items in the above statement derive from continuing operations.
Statement of Changes in EquityGroup and Companyfor the six months ended 31 August 2009
Share Capital Capital Special Revenue Total
capital reserve reserve reserve reserve
- realised -
unrealised
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 73 - (2,803) 6,847 (356) 3,761
1
March
2009
Unrealised - - 62 - - 62
gains
on
investments
Realised - (1) - - - (1)
losses
on
securities
Unrealised - - 2 - - 2
gains
on
securities
Management - (12) - - - (12)
fees
charged
to
capital
Revenue - - - - (103) (103)
loss
for
the
year
At 73 (13) (2,739) 6,847 (459) 3,709
31
August
2009
Statement of Financial PositionGroup and Companyat 31 August 2009
31 August 2009 31 August 2008 28 February 2009
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
ASSETS
Non-current assets
Investments 3,691 6,230 3,427
Current assets
Receivables 18 592 2
Cash and cash 45 439 345
equivalents
63 1,031 347
Total assets 3,754 7,261 3,774
EQUITY
AND LIABILITIES
Equity attributable
to
owners of the
parent
Called-up share 73 73 73
capital
Capital reserve (13) - -
- realised
Capital reserve (2,739) - (2,803)
- unrealised
Special reserve 6,847 6,847 6,847
Revenue reserve (459) 184 (356)
Total equity 3,709 7,104 3,761
Current
liabilities
Payables 45 157 13
Total current 45 157 13
liabilities
Total equity and 3,754 7,261 3,774
liabilities
NET ASSETS 3,709 7,104 3,761
Net asset value 50.8p 97.2p 51.5p
per share
Statement of Cash FlowsGroup and Companyfor the six months ended 31 August 2009
6 months ended 6 months ended Year ended
31 August 2009 31 August 2008 28 February 2009
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
(Loss)/profit before (52) 206 (3,180)
taxation
(Increase)/decrease (16) (273) 316
in receivables
Increase/(decrease) 32 32 (9)
in payables
Unrealised (62) - 2,803
(gains)/losses
on investments
Realised losses 1 - -
on securities
Unrealised gains (2) - -
on securities
Taxation paid - - (59)
Net cash outflow from (99) (35) (129)
operating activities
Financial investment:
Purchase of gilts (293) - -
Disposal of gilts 92 - -
(201) - -
Financing activities:
Dividends paid - (219) (219)
Decrease in cash (300) (254) (348)
Opening cash 345 693 693
Closing cash 45 439 345
Notes to the Interim Report
1. The group's interim financial report has been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted for use in the European Union and as applied in accordance with the provision of the Companies Act 2006. The accounting policies used in preparing this report are consistent with those used to prepare the 28 February 2009 annual financial statements except for the following:
- The adoption of IAS 1 (Revised 2007) Presentation of Financial Statements. The revised standard has introduced a number of terminology changes (including revised titles for the condensed financial statements) and has resulted in a number of changes in presentation and disclosure. There has been no effect on the reported results or previous financial position of the group;
- Amendments to IFRS 7 (improving disclosures about financial instruments). This amendment requires the analysis of each class of financial asset and financial liability into a three level fair value measurement hierarchy. It requires additional disclosures in respect of those financial instruments classified as Level Three (namely those that are measured using a valuation technique which uses inputs that are not based on observable market data). It also implements some changes to the definition of and disclosures associated with liquidity risk. This standard will lead to a change in disclosures relating primarily to the group's investments in the 2010 financial statements; and
- The adoption of IFRS 8 Operating Segments. This is a disclosure standard only and therefore there has been no effect on the reported results or previous financial position of the group following the adoption of this standard. The Directors are of the opinion that the Group is engaged in a single segment of business being the investment business in one geographical area, the United Kingdom.
The interim financial information contained within this report does not constitute statutory accounts as defined by Section 435 of the Companies Act 2006. The group's statutory financial statements for the year ended 28 February 2009 have been filed with the Registrar of Companies. The auditor's report on these financial statements was unqualified and did not contain a statement under Section 237 (2) or (3) of the Companies Act 1985.
These interim financial statements have neither been audited nor reviewed pursuant to guidance issued by the Auditing Practices Board by the group's external auditors.
2. Earnings per share
6 months ended 6 months ended Year ended
31 August 2009 31 August 2008 28 February 2009
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Total return (52) 163 (3,180)
after
taxation
Basic return per (0.7)p 2.2p (43.5)p
share(note a)
Revenue return (103) 163 (377)
from ordinary
activities after
taxation
Revenue return (1.4)p 2.2p (5.1)p
per
share(note b)
Capital return 51 - (2,803)
from ordinary
shares after
taxation
Capital return 0.7p 0.0p (38.4)p
per
share(note c)
Weighted average 7,306,320 7,306,320 7,306,320
number of shares
in issue in
the period
Notes:
a) Total return per share is total return after taxation divided by the weighted average number of shares in issue during the period.b) Revenue return per share is net revenue after taxation divided by the weighted average number of shares in issue during the period.c) Capital return per share is total capital return after taxation divided by the weighted average number of shares in issue during the period.
3. The results should not be taken as a guide to the results for the year ending 28 February 2010.
4. Revenue
6 months ended 6 months ended Year ended
31 August 2009 31 August 2008 28 February 2009
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Interest on loans - 267 529
and receivables
Deposit interest - 12 17
Interest on gilts 3 - -
3 279 546
5. Investments
UK Gilts Equity Loan notes Total
GBP'000 GBP'000 GBP'000 GBP'000
Book cost as at 1 March 2009 - 1,872 4,358 6,230
Unrealised losses - (842) (1,961) (2,803)
Valuation at 1 March 2009 - 1,030 2,397 3,427
Purchases at cost 293 - - 293
Disposals (92) - - (92)
Realised losses (1) - - (1)
Unrealised gains 2 62 - 64
Valuation at 31 August 2009 202 1,092 2,397 3,691
Book cost at 31 August 2009 200 1,872 4,358 6,430
Unrealised losses 2 (780) (1,961) (2,739)
Valuation at 31 August 2009 202 1,092 2,397 3,691
6. Net asset value per share
The net asset value
per ordinary
share is based on:
31 August 2009 31 August 2008 28 February 2009
(unaudited) (unaudited) (audited)
Net asset value per 50.8 p 97.2 p 51.5 p
ordinary share
Net assets GBP3,709,000 GBP7,104,000 GBP3,761,000
Number of shares 7,306,320 7,306,320 7,306,320
in issue
7. There have been no material or disclosure events subsequent to the end of the interim period.
8. Related parties
Foresight Group, which acts as investment manager to the Company in respect of its venture capital investments received fees of GBP16,536 during the period (12 months to 28 February 2009: GBPnil; 6 months to 31 August 2008: GBPnil). Foresight Fund Managers Limited, a subsidiary of Foresight Group, received GBP267 excluding VAT during the period in respect of accounting and secretarial services (12 months to 28 February 2009: GBPnil; 6 months to 31 August 2008: GBPnil).
Keydata Investment Services Limited acted as Promoter and Administrator to the Company until 9 June 2009 when they went into administration, but they did not receive fees for their services (12 months to 28 February 2009: GBPnil; 6 months to 31 August 2008; GBPnil).
END
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