Last checked at 
20 Dec 2007 13:59
MATRIX INCOME & GROWTH 2 VCT PLC
Half-yearly results for the six months ended 31 October 2007
Financial highlights
Ordinary Shares (listed on 11 July 2000)
Initial net asset value per Ordinary 94.00 pence Share Initial net assets ‚£12,388,236 31 October 30 April 31 October 2007 2006 2007 Net assets ‚£12,263,403 ‚£12,912,394 ‚£12,622,286
Net asset value per Ordinary Share 104.71 pence 107.24 pence 102.28 pence
Total dividends per Ordinary Share paid 20.79 pence 14.79 pence 14.79 pence to date
Total return to shareholders since 125.50 pence 122.03 pence 117.07 pence launch per share*
Earnings per Ordinary Share 2.68 pence 19.20 pence 14.87 pence
Total dividends per Ordinary Share paid 6.00 pence 0.00 pence 0.00 pence in the period
C Shares (listed on 21 December 2005)
Initial net asset value per C Share 94.50 pence Initial net assets ‚£8,648,486 31 October 30 April 31 October 2007 2007 2006 Net assets ‚£9,006,727 ‚£8,885,025 ‚£8,681,654 Net asset value per C Share 98.48 pence 97.15 pence 94.92 pence
Total dividends per C Share paid to date 1.50 pence 0.00 pence 0.00 pence
Total return to shareholders since 99.98 pence 97.15 pence 94.92 pence launch per share*
Earnings per C Share 2.83 pence 2.83 pence 0.61 pence
Total dividends per C Share paid in the 1.50 pence 0.00 pence 0.00 pence period
* Net asset value per share plus cumulative dividends per share. This compares to an original investment cost of 80.00 pence per share for
the Ordinary Share Fund and 60.00 pence per share for the C Share Fund after allowing for income tax relief of 20.00 pence and 40.00 pence
per share respectively.
Chairman's Statement and Management Report
I am pleased to present the Half-Yearly results of Matrix Income & Growth 2 VCT plc (the "Company") for the period from 1 May 2007 to 31 October 2007.
Overview
Your Company continues to benefit from the strong market position of Matrix Private Equity Partners, the Investment Manager. Since April, the Ordinary and C Share Funds have made investments together in two companies, for ‚£1 million each. The first of these was to support the MBO of DiGiCo Europe, the second a follow-on investment into Blaze Signs Holdings at an uplifted value. In October, the Board having decided that the Ordinary Share Fund was fully invested, the C Share Fund invested ‚£660,000 into the MBO of Focus Pharma Holdings. Shortly after the end of the period, the C Share Fund invested ‚£ 769,000 into the MBO of Monsal.
There were no realisations to report during the period, although proceeds of ‚£ 26,000 were received from the administration of Monactive, which had been fully provided for. The performance of the portfolio investments made over the last two years is generally encouraging, with a number of companies producing results in line with or better than those anticipated at investment. This performance is beginning to show more clearly as these investments move from being valued at cost to the discounted earnings method of valuation.
Ordinary Share Fund
I am pleased to report another period of strong performance. The Net Asset Value ("NAV") per Ordinary Share at 31 October 2007 was 104.71 pence, a 2.4% increase when compared with 102.28 pence per share as at 31 October 2006, or 8% after adjusting for the 6 pence dividend paid in this period. When adjusted for all dividends paid since the Company's formation the Fund's total return has increased by 34% from 94.00 to 125.50 pence per share.
Further details of the performance of the Ordinary Share Fund investments are set out below in the Investment Manager's Review .
C Share Fund
The NAV per C Share at 31 October 2007 stood at 98.48p, a 4% increase on the NAV when compared with 94.92 pence per share as at 31 October 2006, or 5.3% after adjusting for the 1.5 pence dividend paid in this period.
Further details of the performance of the C Share Fund investments are set out below in the Investment Manager's Review.
Return to Shareholders
The results for this period are set out below and show a revenue profit (after tax) attributable to Ordinary Fund Shareholders of 0.87 of a penny per Ordinary Share (31 October 2006: 0.83 of a penny). The total profit (after tax) attributable to Ordinary Fund Shareholders was 2.68 pence per Ordinary Share (31 October 2006: 14.87 pence).
The revenue profit (after tax) attributable to C Fund Shareholders was 1.25 pence per C share (31 October 2006: 0.91 of a penny). The total profit (after tax) attributable to C Fund Shareholders was 2.83 pence per C share (31 October 2006: 0.61 of a penny).
Dividend
The Board's objective is, subject to the availability of sufficient reserves and liquidity, to distribute regular and consistent dividends. Since the change in investment strategy in September 2005, three Ordinary Share Fund dividends have been paid out, each of 6 pence per share. The Board intends to review the level of dividends to be paid at the year-end and this is expected to include an income dividend for both the Ordinary and C Share Funds.
Outlook
Your Board and Investment Manager are paying close attention to current economic indicators which clearly pose some risk to many sectors, including smaller companies. However, the Investment Manager's strategy of investing in MBOs and evidence of performance to date suggest the portfolio is not disproportionately exposed to any prospective downturn in the UK economy. The Board continues to be encouraged by the evidence of value creation within the current portfolio and with it the potential for future profitable exit opportunities.
I would like to thank all our Shareholders for their continuing support.
Nigel MelvilleChairmanResponsibility Statement
The Directors confirm that to the best of their knowledge:
(a) the condensed set of financial statements, which has been prepared in accordance with applicable accounting standards in the United Kingdom, gives a true and fair view of the assets, liabilities, financial position and profit of the Company, as required by Disclosure & Transparency Rule 4.2.4; and (b) the interim management report includes a fair review of the information required by Disclosure & Transparency Rule 4.2.7 and in accordance with Disclosure & Transparency Rule 4.2.10
Investment Manager's Review
Strategy
Throughout the period Matrix Private Equity Partners LLP ("MPEP") has continued to pursue its strategy of investing in established, profitable, unquoted companies with its primary focus on investments in MBOs. This was recognised by MPEP being short listed for the third year running for the award for the Small Buyout House of the Year by the UK Private Equity journal of record, unquote".
New Investment Activity
The first half of 2007 was characterised by a shortage of high quality investment opportunities and a sharp increase in acquisition prices, in the face of which your Investment Manager adopted a highly selective approach to new investment. These conditions proved temporary and four investments have been completed since July. We are encouraged that more realistic pricing has returned to the market.
The Ordinary Share Fund made two new investments in the period. The first was an investment of ‚£588,886 to support the MBO of DIGiCo Europe, the global market leading manufacturer of digital sound mixing consoles for the live performance, theatre, post-production and broadcast markets. This was followed in September by an additional investment of ‚£452,063 in Blaze Signs Holdings, the manufacturer of signage for major multiple retailers. The Fund first invested ‚£339,545 in Blaze in April 2006 and the additional investment enabled it to complete the acquisition of Active Sign Maintenance, a complementary maintenance business. This has broadened Blaze's capabilities and will offer considerable cross-selling opportunities and operating synergies.
The C Share Fund made three investments during the period. In addition to investing ‚£411,114 and ‚£547,937 alongside the Ordinary Share Fund in DiGiCo Europe and in Blaze Signs Holdings respectively, an investment of ‚£660,238 was made in October to support the MBO of Focus Pharmaceuticals, which specialises in the licensing and distribution of generic pharmaceuticals. Shortly after the end of the period, a further new investment of ‚£769,000 was completed to finance the MBO of Monsal, a specialist environmental technology company providing advanced solutions for the water and waste sectors.
Ordinary Share Fund Portfolio Highlights
The Ordinary Share Fund now holds investments in 18 companies at cost of ‚£9.5 million and current valuation of ‚£11.3 million, overall an encouraging uplift of 19%. The investments made since the change of strategy in 2005 are showing a very pleasing uplift of 49%. Two newer investments, British International Holdings and PastaKing Holdings, now show an increase above cost after moving to an earnings basis of valuation during the period. A number of others, including BBI Holdings, Youngman Group, Gyro International, VSI and Vectair Holdings have continued to grow earnings strongly and their higher valuations generally reflect this progress. The portfolio is not without some disappointments. Trading at Racoon has fallen behind plan and a provision has been made against the equity portion of the investment. A number of initiatives are in hand to develop additional product lines. The share prices of AIM-listed SectorGuard and Clarity Commerce Solutions have shown falls, the latter following a profit warning and subsequent shareholder dissatisfaction leading to an EGM which resulted in Board changes and a strategic review of the business. Campden Media's valuation also shows a small reduction as a consequence of a slowing down in earnings growth.
An amount of ‚£26,436 was received in September from the proceeds of the Administration of the Fund's investment in Monactive, which had been fully provided previously. The investment in Recite had also been fully provided for and this company entered Administration in May; no proceeds are anticipated.
The Ordinary Share Fund is now fully invested and accordingly will make no new investments until portfolio divestments occur. This is likely to be before the Company's year-end, because a number of investee companies are currently formally planning to realise capital back to the Fund.
C Share Fund Portfolio Highlights
The C Share Fund now holds investments in 9 companies at a total cost of ‚£3.0 million and a current valuation of ‚£3.4 million, an uplift of 13% on cost. Both British International Holdings and PastaKing Holdings show an increase above cost after moving to an earnings basis of valuation during the period. A provision of the equity portion of the investment in Racoon has been made. Four investments remain valued at cost, being less than one year old, whilst all the others are now valued at above cost, reflecting trading performances in line with or better than expectation at investment.
Outlook
The summer's liquidity crunch and subsequent forecasts of a slowdown in economic growth inform more challenging investment conditions ahead. However, we believe our focus on investing in MBOs of profitable companies is an attractive and resilient strategy, well-suited to this point in the cycle. Companies are fully financed upon investment and generally not reliant on the availability of further external lending or other investor support to achieve their plans to grow and realise capital.
Whilst, inevitably, unquoted companies are not immune from the wider economic environment, the two portfolios are continuing to show encouraging progress. We remain positive in our expectations for both Funds, based on good early performance and the potential for realisations which is already becoming apparent.
Investment Portfolio Summary
as at 31 October 2007Ordinary Share Fund Date of Total % of net first book cost Valuation assets by investment ‚£ ‚£ value Qualifying investments Unquoted investments Youngman Group Limited October 2005 1,000,052 3,087,018 25.2% Manufacturer of ladders and access towers
Gyro International Limited February 2005 750,013 1,443,619 11.8%
Brand Communications agency
Blaze Signs Holdings Limited April 2006 791,608 1,136,072 9.3%
Signwriter Campden Media Limited January 2006 975,000 953,791 7.8% Magazine publisher and conference organiser
British International Holdings June 2006 832,827 950,954 7.7% Limited
Supplier of helicopter services VSI Limited April 2006 365,775 680,705 5.5% Developer and marketer of 3D software PastaKing Holdings Limited June 2006 274,624 622,443 5.1% Supplier to the educational and food service market DiGiCo Europe Limited July 2007 588,886 588,886 4.8% Design and manufacture of audio mixing desks PXP Holdings (Pinewood December 2006 588,886 588,886 4.8%Structures) Designer, manufacturer and supplier of timber frames for housing Racoon International Holdings December 2006 517,350 362,147 3.0% Supplier of hair extensions, hair care products and training Vectair Holdings Limited January 2006 243,784 347,900 2.8% A provider of air care and sanitary washroom products Other investments 2 1,554,586 - 0.0% ------ ------ ------ 8,483,391 10,762,421 87.8% AIM/PLUS quoted investments
Clarity Commerce Solutions plc July 2000 510,000 216,000 1.7%
Customer relationship management software BBI Holdings plc May 2006 118,738 200,450 1.6% Development and manufacture of rapid test diagnostic products SectorGuard plc August 2005 150,000 96,428 0.8% Provision of manned guarding, mobile patrolling, and alarm response services Award International Holdings March 2004 250,000 - 0.0%plc Sales promotion activities ------ ------ ------ 1,028,738 512,878 4.1% ------ ------ ------ Total qualifying investments 9,512,129 11,275,299 91.9% Non-qualifying investments Money market funds 1 897,495 897,495 7.3% AIM quoted investments 908 579 0.0% ------ ------ ------ Total non-qualifying 898,403 898,074 7.3%investments ------ ------ ------ Total investments 10,410,532 12,173,373 99.2% ------ ------ ------ Other assets 165,002 1.3% Current liabilities (74,972) (0.5%) ====== ====== ====== Net assets 12,263,403 100.0% ====== ====== ======
1 Disclosed within 'Monies held pending investment' in the Balance Sheet.
2 Other investments include Recite Limited, Callserve Communications Limitedand Flightstore Group plc.C Share Fund Date of Total % of net first book cost Valuation assets investment ‚£ ‚£ by value Qualifying investments Unquoted investments Blaze Signs Holdings Limited April 2006 606,890 666,686 7.4% Signwriter Focus Pharma Holdings Limited September 2007 660,238 660,238 7.3% Licensing and distribution of generic pharmaceuticals PastaKing Holdings Limited June 2006 191,720 434,540 4.8% Supplier to the educational and food service market PXP Holdings (Pinewood December 2006 411,114 411,114 4.6%Structures) Designer, manufacturer and supplier of timber frames for housing DiGiCo Europe Limited July 2007 411,114 411,114 4.6% Design and manufacture of audio mixing desks Racoon International Holdings December 2006 361,177 252,822 2.8% Supplier of hair extensions, hair care products and training VSI Limited April 2006 122,901 228,718 2.5% Developer and marketer of 3D software
British International Holdings June 2006 167,173 190,956 2.1% Limited
Supplier of helicopter services ------ ------ ------ 2,932,327 3,256,188 36.1% AIM quoted investments BBI Holdings plc May 2006 82,893 139,937 1.5% Development and manufacture of rapid test diagnostic products ------ ------ ------ 82,893 139,937 1.5% ------ ------ ------ Total qualifying investments 3,015,220 396,125 37.6% Non-qualifying investments Money market funds 1 5,324,924 5,324,924 59.1% ------ ------ ------ Total non-qualifying 5,324,924 5,324,924 59.1%investments ------ ------ ------ Total investments 8,340,144 8,721,049 96.7% ------ ------ ------ Other assets 323,173 3.7% Current liabilities (37,495) (0.4%) ====== ====== ====== Net assets 9,006,727 100.0% ====== ====== ======
1 Disclosed within 'Monies held pending investment' in the Balance Sheet.
Unaudited Profit and Loss Account (by Fund)
Profit and Loss account for the six months ended 31 October 2007
Ordinary Share Fund C Share Fund Revenue Capital Total Revenue Capital Total ‚£ ‚£ ‚£ ‚£ ‚£ ‚£ Unrealised gains on - 273,973 273,973 - 208,734 208,734investments held at fair value Realised gains/ - 26,436 26,436 - - -(losses) on investments held at fair value Income 260,952 - 260,952 240,405 - 240,405 Investment management (38,595) (115,785) (154,380) (26,652) (79,957) (106,609)fees Other expenses (98,503) - (98,503) (72,983) - (72,983) ------ ------ ------ ------ ------ ------ Profit on ordinary 123,854 184,624 308,478 140,770 128,777 269,547activities before taxation
Taxation on ordinary (19,797) 30,451 10,654 (26,645) 15,991 (10,654) activities
------ ------ ------ ------ ------ ------
Profit on ordinary 104,057 215,075 319,132 114,125 144,768 258,893 activities after
taxation ====== ====== ====== ====== ====== ======
Return per Share 0.87p 1.81p 2.68p 1.25p 1.58p 2.83p
Average number of 11,919,317 9,145,990shares in issue Total of both Funds (per Half-Yearly Profit and Loss Account) Revenue Capital Total ‚£ ‚£ ‚£ Unrealised gains on - 482,707 482,707investments held at fair value Realised gains/(losses) - 26,436 26,436on investments held at fair value Income 501,357 - 501,357 Investment management (65,247) (195,742) (260,989)fees Other expenses (171,486) - (171,486) ------ ------ ------ Profit on ordinary 264,624 313,401 578,025activities before taxation Taxation on ordinary (46,442) 46,442 -activities ------ ------ ------
Profit on ordinary 218,182 359,843 578,025 activities after taxation
====== ====== ======
Balance Sheet for each Fund as at 31 October 2007
Ordinary C Share Adjustments Total of Share Fund Fund both Funds (see note below) (per Half-Yearly Balance Sheet) ‚£ ‚£ ‚£ ‚£ Fixed assets Assets held at fair value 11,275,878 3,396,125 14,672,003through profit and loss - investments Monies held pending investment 897,495 5,324,924 6,222,419 ------ ------ ------ ------ 12,173,373 8,721,049 20,894,422 Current assets Debtors and prepayments 130,703 54,581 (28,065) 157,219 Cash at bank 34,299 268,592 302,891 ------ ------ ------ ------ 165,002 323,173 (28,065) 460,110 Creditors: amounts falling (74,972) (37,495) 28,065 (84,402)due within one year ------ ------ ------ ------ Net current assets 90,030 285,678 375,708 ====== ====== ====== ====== Net assets 12,263,403 9,006,727 - 21,270,130 ====== ====== ====== ====== Capital and reserves Called up share capital 117,115 91,460 208,575 Capital redemption reserve 14,691 - 14,691 Capital reserve 2,662,841 380,905 3,043,746 Cancelled share premium account 4,733,201 8,345,201 13,078,402 Profit and loss account 4,735,555 189,161 4,924,716 ====== ====== ====== ====== 12,263,403 9,006,727 - 21,270,130 ====== ====== ====== ====== Number of shares in issue 11,711,489 9,145,990 Net asset value per share 104.71 p 98.48 p
Note: The adjustment above nets off the inter-fund debtor and creditor balances, so that the "Total of both Funds" balance sheet agrees to the Half-Yearly Balance Sheet below.
Unaudited Profit and Loss Account
for the six months ended 31 October 2007
Six months ended 31 October Year ended 30 April 2007 2007 (unaudited) (audited) Revenue Capital Total Revenue Capital Total ‚£ ‚£ ‚£ ‚£ ‚£ ‚£ Unrealised gains on - 482,707 482,707 - 2,712,523 2,712,523investments held at fair value Realised gains/ - 26,436 26,436 - (205,547) (205,547)(losses) on investments held at fair value Income 501,357 - 501,357 906,689 - 906,689 Investment (65,247) (195,742) (260,989) (119,557) (358,668) (478,225)management fees Other expenses (171,486) - (171,486) (298,265) - (298,265) ------ ------ ------ ------ ------ ------
Profit on ordinary 264,624 313,401 578,025 488,867 2,148,308 2,637,175 activities before
taxation
Taxation on ordinary (46,442) 46,442 - (88,351) 88,351 - activities
------ ------ ------ ------ ------ ------ Profit on ordinary 218,182 359,843 578,025 400,516 2,236,659 2,637,175activities after taxation ------ ------ ------ ------ ------ ------ Dividend paid 0.00p 6.00p 6.00p 0.00p 0.00p 0.00pper Ordinary Share
Dividend paid per C 1.50p 0.00p 1.50p 0.00p 0.00p 0.00p Share
Basic and diluted 0.87p 1.81p 2.68p 1.54p 17.66p 19.20p earnings
per Ordinary Share Basic and diluted 1.25p 1.58p 2.83p 2.30p 0.53p 2.83pearnings per C Share Six months ended 31 0ctober 2006 (unaudited) Revenue Capital Total ‚£ ‚£ ‚£ Unrealised gains on - 2,059,642 2,059,642investments held at fair value Realised gains/ - (205,548) (205,548)(losses) on investments held at fair value Income 454,371 - 454,371 Investment management ( 57,525) (172,574) (230,099)fees Other expenses (172,105) - (172,105) ------ ------ ------ Profit on ordinary 224,741 1,681,520 1,906,261activities before taxation
Taxation on ordinary (38,063) 38,063 - activities
------ ------ ------
Profit on ordinary 186,678 1,719,583 1,906,261 activities after
taxation ------ ------ ------
Dividend paid per 0.00p 0.00p 0.00p Ordinary Share
Dividend paid per C 0.00p 0.00p 0.00p share
Basic and diluted 0.83p 14.04p 14.87p earnings per Ordinary
share
Basic and diluted 0.91p (0.30)p 0.61p earnings per C Share
These accounts are unaudited and are not the Company's statutory accounts.
The accounts have been prepared using accounting standards and policies adopted at the previous year-end.
All revenue and capital items in the above statement are derived from continuing operations.
No operations were discontinued in the period.
There were no other gains or losses in the period.
Unaudited Balance Sheetas at 31 October 2007 31 October 2007 30 April 2007 31 October 2006 (unaudited) (audited) (unaudited) ‚£ ‚£ ‚£ Non-current assets Assets held at fair value 14,672,003 11,529,046 8,997,571through profit and loss - investments Monies held pending 6,222,419 10,289,021 9,734,238investment ------ ------ ------ 20,894,422 21,818,067 18,731,809 Current assets Debtors and prepayments 157,219 147,304 1,101,467 Cash at bank 302,891 327,479 1,819,997 ------ ------ ------ 460,110 474,783 2,921,464 Creditors: amounts falling due within one year Other creditors 18,856 276,827 147,371 Accruals 65,546 218,804 201,962 ------ ------ ------ (84,402) (495,631) (349,333) Net current assets/ 375,708 (20,848) 2,572,131(liabilities) ====== ====== ====== Net assets 21,270,130 21,797,219 21,303,940 ====== ====== ====== Capital and reserves Called up share capital 208,575 211,871 214,871 Capital redemption reserve 14,691 11,395 8,395 Share premium account - 0 - Capital reserve - 3,043,746 3,268,178 2,615,297unrealised Special distributable 13,078,402 14,089,778 14,462,321reserve Profit and loss account 4,924,716 4,216,197 4,003,056 ====== ====== ====== Equity Shareholders' Funds 21,270,130 21,797,419 21,303,940 ====== ====== ====== Net asset value per share Ordinary Shares 104.71p 107.24p 102.28p C Shares 98.48p 97.15p 94.92p
Unaudited Reconciliation of Movements in Shareholders' Funds
for the 6 months ended 31 October 2007
Six months ended Year ended Six months ended 31 October 2007 30 April 2007 31 October 2006 (unaudited) (audited) (unaudited) ‚£ ‚£ ‚£ Opening shareholders' funds 21,797,419 19,565,271 19,565,271 Net share capital bought (245,655) (405,027) (167,592)back in the year Profit for the year 578,025 2,637,175 1,906,261 Dividends paid in year (859,659) - - ====== ====== ====== Closing shareholders' funds 21,270,130 21,797,419 21,303,940 ====== ====== ======
Unaudited Cash Flow Statement
For the six months ended 31 October 2007
Six months Year ended Six months ended ended 31 October 2007 30 April 2007 31 October 2006 (unaudited) (audited) (unaudited) ‚£ ‚£ ‚£ Operating activities Net investment interest - 628,472 806,195 332,149non-qualifying Investment management fees (303,556) (74,552) (74,552)paid Other cash payments (439,542) (630,903) (168,986) ------ ------ ------ Net cash (outflow)/inflow from (114,626) 100,740 88,611operating activities Taxation UK corporation tax paid - - - Investing activities Acquisition of investments (2,660,250) (3,546,925) (2,597,061) Disposal of investments 26,436 2,016,346 2,016,346 ------ ------ ------ Net cash outflow from (2,633,814) (1,530,579) (580,715)investing activities ------ ------ ------ Dividends Dividends paid (859,659) - - ------ ------ ------
Net cash outflow before liquid (3,608,099) (1,429,839) (492,104) resource management
Management of liquid resources Movement in money market and 4,066,602 (537,585) 17,198other deposits Financing Purchase of own shares (483,091) (167,592) (167,592) Share capital raised - - - ------ ------ ------ Net cash outflow from (483,091) (167,592) (167,592)financing ------ ------ ------ Decrease in cash (24,588) (2,135,016) (642,498) ====== ====== ======Notes
1. The accounts have been prepared under the fair value rules of the Companies
Act 1985 and in accordance with applicable accounting standards in the
United Kingdom and with the Statement of Recommended Practice, `Financial
Statements of Investment Trust Companies', revised December 2005.
2. In accordance with the Company's Prospectus dated 10 May 2000, the
Directors have charged 75% of the investment management expenses to the
capital element of the Profit and Loss Account.
3. Investments are stated at fair value, in accordance with applicable accounting standards and with reference to the International Private Equity and Venture Capital Valuation (IPEVCV) guidelines published in 2005.
The fair value of quoted investments is the bid value of those investments at the close of business on 31 October 2007.
Unquoted investments are stated at fair value by the Directors in accordance with the following rules, which are consistent with the IPEVCV guidelines:
(i) Recent investments which have been made in the last 12 months are at fair value which, unless another methodology gives a better indication of fair value, will be at cost.
(ii) Investments in companies at an early stage of their development are also valued at fair value which, unless another methodology gives a better indication of fair value, will be at cost.
(iii) Where investments have gone beyond the stage in their development in (ii) above, the shares may be valued, in the absence of overriding factors, by applying a suitable price-earnings ratio to that company's historic, current or forecast earnings (the ratio used being based on a comparable listed company or sector but the resulting value being discounted to reflect lack of marketability). Where overriding factors apply, alternative methods of valuation will be used. These will include the application of a material arms length transaction by an independent third party, cost, cost less provision for impairment, discounted cash flow, or a net asset basis;
(iv) Where a value is indicated by a material arms-length transaction by a third party in the shares of a company, this value will be used.
(v) Where a company's underperformance against plan indicates a permanent diminution in the value of the investment, provision against cost is made and charged to the realised reserve
Capital gains and losses on investments, whether realised or unrealised, are dealt with in the capital reserve - realised and unrealised respectively, and shown in the Profit and Loss Account.
Although the Company holds more than 20% of the equity of certain companies, it is considered that the investments are held as part of an investment portfolio. Accordingly, and as permitted by FRS 9 `Associate and Joint Ventures', their value to the Company lies in their marketable value as part of that portfolio. It is not considered that any of our holdings represents investments in associated companies.
3. The revenue return per Ordinary Share is based on the net revenue on
ordinary activities after taxation of ‚£104,057 and is based on 11,919,317 Ordinary Shares, being the weighted average number of Ordinary Shares in issue during this period. The capital return per Ordinary Share is based on ordinary activities after taxation of ‚£215,075 and is based on 11,919,317 Ordinary Shares, being the weighted average number of Ordinary Shares in issue during the period.
The revenue return per C Share is based on the net revenue on ordinary activities after taxation of ‚£114,125 and is based on 9,145,990 C Shares, being the weighted average number of C Shares in issue during this period. The capital return per Ordinary Share is based on ordinary activities after taxation of ‚£144,768 and is based on 9,145,990 C Shares, being the weighted average number of C Shares in issue during the period.
4. The net asset value per Ordinary Share is based upon total net assets at 31 October 2007 of 12,263,403 (30 April 2007: ‚£12,912,394; 31 October 2006: ‚£ 12,622,286) and on 11,711,489 Ordinary Shares (30 April 2007 12,041,147; 31 October 2006: 12,341,147) being the number of Ordinary Shares in issue at that date.
The net asset value per C Share is based upon total net assets at 31 October 2007 of ‚£9,006,727 (30 April 2007: ‚£8,885,025; 31 October 2006: ‚£8,681,654) and on 9,145,990 C Shares (30 April 2007 9,145,990; 31 October 2006: 9,145,990) being the number of C Shares in issue at that date.
5. Copies of the Interim Report for the six months ended 31 October 2007 are
being sent to all Shareholders. Further copies are available free of charge from the Company's registered office, One Jermyn Street, London SW1Y 4UH or can be downloaded via the Company Secretary's web site at www.matrixgroup.co.uk
Contact details for further enquiries:
Robert Brittain of Matrix-Securities Limited (the Company Secretary) on 020 7925 3300 or by e-mail on MIG2@matrixgroup.co.uk
Matrix Private Equity Partners LLP (the Investment Manager), on 020 7925 3300 or by e-mail on info@matrixpep.co.uk
MATRIX INCOME & GROWTH 2 VCT PLC