REG-Keydata Income VCT 2 Half-yearly Report

http://www.businesswire.com/news/home/20091030005601/en

LONDON--(Business Wire)--

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 £3.7m, 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 Oxenbridge
Chairman
30 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 Oxenbridge
Chairman
30 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)
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000

Unrealised gains/(losses) on investments - 62 62 - - - - (2,803) (2,803)
Realised losses on securities - (1) (1) - - - - - -
Unrealised gains on securities - 2 2 - - - - - -
Revenue 3 - 3 279 - 279 546 - 546
Operating profit/(loss) 3 63 66 279 - 279 546 (2,803) (2,257)

Management fees (4) (12) (16) - - - - - -
Other expenses (102) - (102) (73) - (73) (79) - (79)
Impairment charge - - - - - - (844) (844)
(106) (12) (118) (73) - (73) (923) - (923)

(Loss)/profit before taxation (103) 51 (52) 206 - 206 (377) (2,803) (3,180)

Tax on ordinary activities - - - (43) - (43) - - -

(Loss)/profit for the period attributable to owners of the parent (103) 51 (52) 163 - 163 (377) (2,803) (3,180)

Other comprehensive income - - - - - - - - -

Total comprehensive income attributable to owners of the parent (103) 51 (52) 163 - 163 (377) (2,803) (3,180)

(Loss)/earnings per ordinary share (1.4)p 0.7p (0.7)p 2.2p 0.0p 2.2p (5.1)p (38.4)p (43.5)p
- 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 Equity
Group and Company
for the six months ended 31 August 2009

Share capital Capital Capital reserve Special reserve Revenue reserve Total
reserve - unrealised

- realised
£'000 £'000 £'000 £'000 £'000 £'000
At 1 March 2009 73 - (2,803) 6,847 (356) 3,761
Unrealised gains on investments - - 62 - - 62
Realised losses on securities - (1) - - - (1)
Unrealised gains on securities - - 2 - - 2
Management fees charged to capital - (12) - - - (12)
Revenue loss for the year - - - - (103) (103)
At 31 August 2009 73 (13) (2,739) 6,847 (459) 3,709

Statement of Financial Position
Group and Company
at 31 August 2009

31 August 2009 31 August 2008 28 February 2009
(unaudited) (unaudited) (audited)
£'000 £'000 £'000

ASSETS
Non-current assets
Investments 3,691 6,230 3,427

Current assets
Receivables 18 592 2
Cash and cash equivalents 45 439 345
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 capital 73 73 73
Capital reserve - realised (13) - -
Capital reserve - unrealised (2,739) - (2,803)
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 liabilities 45 157 13

Total equity and liabilities 3,754 7,261 3,774

NET ASSETS 3,709 7,104 3,761

Net asset value per share 50.8p 97.2p 51.5p

Statement of Cash Flows
Group and Company
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)
£'000 £'000 £'000

(Loss)/profit before taxation (52) 206 (3,180)
(Increase)/decrease in receivables (16) (273) 316
Increase/(decrease) in payables 32 32 (9)
Unrealised (gains)/losses on investments (62) - 2,803
Realised losses on securities 1 - -
Unrealised gains on securities (2) - -
Taxation paid - - (59)
Net cash outflow from operating activities (99) (35) (129)

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)
£'000 £'000 £'000

Total return after taxation (52) 163 (3,180)
Basic return per share (note a) (0.7)p 2.2p (43.5)p

Revenue return from ordinary activities after taxation (103) 163 (377)
Revenue return per share (note b) (1.4)p 2.2p (5.1)p

Capital return from ordinary shares after taxation 51 - (2,803)
Capital return per share (note c) 0.7p 0.0p (38.4)p

Weighted average number of shares in issue in the period 7,306,320 7,306,320 7,306,320

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)
£'000 £'000 £'000
Interest on loans and receivables - 267 529
Deposit interest - 12 17
Interest on gilts 3 - -
3 279 546

5. Investments

UK Gilts Equity Loan notes Total
£'000 £'000 £'000 £'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 ordinary share 50.8 p 97.2 p 51.5 p
Net assets £3,709,000 £7,104,000 £3,761,000
Number of shares in issue 7,306,320 7,306,320 7,306,320

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 £16,536 during the period (12
months to 28 February 2009: £nil; 6 months to 31 August 2008: £nil). Foresight
Fund Managers Limited, a subsidiary of Foresight Group, received £267 excluding
VAT during the period in respect of accounting and secretarial services (12
months to 28 February 2009: £nil; 6 months to 31 August 2008: £nil).

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: £nil; 6 months
to 31 August 2008; £nil).

END

Keydata Income VCT 2

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