RNS Number:1180I
Advance Value Realisation Co Ld
28 February 2003
FOR IMMEDIATE RELEASE
28 FEBRUARY 2003
Advance Value Realisation Company Limited ("ADVARC")
The investment trust that specialises in providing investors with liquidity and value from holdings in listed UK
smaller companies
Interim results
For the six months to 31 December 2002
Key points
* #1.1 million cash returned to shareholders through ordinary share buyback.
* Net asset value per ordinary share of 56.00p at 31 December 2002.
* Number of holdings reduced to 13. Total as at 28 February 2003 is now 9.
* Best performing small company investment trust in 2002.
* Weighted average NAV only down 12.5% since July 2000 against 38.2% fall in FTSE-100 share index and 25.3% fall
in FTSE Fledgling index.
* #0.77 million cash returned to shareholders through ordinary share buyback after 1 January 2003.
Michael Mills, chairman of ADVARC , commented.
"The Board are confident that despite the continuing deterioration in the economy and the uncertain outlook for all
stock markets, all of ADVARC's investments will be realised in the coming months, ahead of our original schedule".
CHAIRMAN'S STATEMENT
When I last reported to shareholders on 26 September 2002, I believed that the next 12 month period would be an
uncertain one for global stock markets. Nearly five months on from that date I have no reason to change my mind, as
there are many more negative factors at work.
The most worrying situation is the threat of war with Iraq. All markets hate uncertainty and an outbreak of hostilities
could have a major destabilising effect on the Middle East. The outlook has not been improved by dissent amongst some
NATO countries.
Even before the threat of war, stock markets had continued their downward spiral due to the general global slowdown.
The number of British manufacturers operating below capacity has hit a 20 year high. At present external demand shows
no sign of a pick up and the German economy is worsening. Rising oil prices have been exacerbated by problems in
Venezuela and uncertainties in the Middle East. While the recent fall of sterling against the Euro might help some
manufacturers, economic weakness in the euro zone means an improvement in orders remains unlikely.
This has not helped the fortunes of most of the remaining stocks in the Advance Value Realisation Company Limited ("
ADVARC") portfolio, with three of the four major holdings having severe profit warnings.
Over the six months to 31 December 2002 the FTSE-100 share index fell 15.4%, the Small Cap index fell 21.3% and the
Fledgling Index 13.5%. The Company's net asset value (NAV) per ordinary share was 56.00p at 31 December 2002, having
fallen from 66.77p at 30 June 2002. The Board believes that a more realistic measure of performance is to calculate the
weighted average NAV. The weighted average NAV at 31 December 2002 was 85.50p as opposed to 88.31p as at 30 June 2002,
a decline of 3.2%. Since the launch of the Company on 24 July 2000, the weighted average NAV has declined by 12.5%
(97.69p to 85.50p per share), whilst the FTSE-100 share index has fallen by 38.2%. The FTSE Small Cap index and
Fledgling index fell by 46.5% and 25.3% respectively.
The number of stocks in ADVARC was down to 13 (including one suspended share) at 31 December 2002 and has now fallen to
nine. Of these, four represented 73% of the total by value as at the period end.
The Manager continues to have in depth discussions with most of the remaining companies in the portfolio. With two
other institutions, ADVARC requisitioned an Extraordinary General Meeting at Lupus Capital, where we were concerned at
management inaction over their main disposal, poor performance of most of their quoted investments and continuing
excessive head office costs. This EGM was successful for the requisitionists and the Board was replaced by three new
independent non-executive directors. This action by ADVARC created liquidity and value and the holding was subsequently
sold.
During the period the Company realised investments to the value of #2.1 million and purchased 2,042,469 ordinary shares
of ADVARC at a cost of #1.1 million.
Since 1 January 2003 investments totalling #490,000 have been sold and 1,562,912 ordinary ADVARC shares purchased for
cancellation at a cost of #771,259.
It is the Board's intention to call another EGM, to take place in early April 2003, to approve a further purchase of
14.99% of ADVARC's ordinary shares.
During the period under review the Company incurred a revenue loss of #76,000. In line with the dividend policy
outlined in the prospectus, the Board does not propose an interim dividend.
As the Company is in the latter stages of its life, the Board has served notice to the Manager, to terminate the
management agreement on 31 December 2003. Following negotiations, the Manager has agreed to a substantial reduction in
fees from 1 July 2003.
The Manager is to be congratulated on the performance of ADVARC during 2002, which resulted in it winning the award
from the magazine Investment Trusts for the best performing small company investment trust of the year. Shareholders
will be aware that the Manager did not select any of the shares when ADVARC was launched in July 2000, but nevertheless
this award is a most welcome endorsement of the Company's ability to preserve and enhance value through pro-active
attention to investments.
The Board are confident that despite the continuing deterioration in the economy and the uncertain outlook for all
stock markets, all of ADVARC's investments will be realised in the coming months, ahead of our original schedule.
MICHAEL MILLS
28 February 2003
STATEMENT OF TOTAL RETURN
6 months 6 months 6 months 6 months 6 months 6 months
to 31 Dec to 31 Dec to 31 Dec to 31 Dec to 31 Dec to 31 Dec
2002 2002 2002 2001 2001 2001
Revenue Capital Total Revenue Capital Total
#'000 #'000 #'000 #'000 #'000 #'000
Loss on investments
Realised - (53) (53) - (1,938) (1,938)
Unrealised - (1,197) (1,197) - (1,690) (1,690)
(1,250) (1,250) - (3,628) (3,628)
Income - from investments 196 196 422 - 422
- bank interest 20 - 20 62 - 62
216 - 216 484 - 484
Investment management fees (155) (155) (310) (174) (174) (348)
Other expenses (137) - (137) (140) - (140)
Return on ordinary
Activities before tax (76) (1,405) (1,481) 170 (3,802) (3,632)
Taxation - - - - - -
Return after taxation (76) (1,405) (1,481) 170 (3,802) (3,632)
Dividends - - - - - -
Transfers to/(from) reserves (76) (1,405) (1,481) 170 (3,802) (3,632)
Return per Ordinary Share (0.58)p (10.78)p (11.36)p 1.08p (24.06)p (22.98)p
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 for the 6 months to 31 December 2002 is based on the weighted average of 13,040,140 Ordinary
Shares (period to 31 December 2001 - weighted average of 15,801,702) in issue during the period.
BALANCE SHEET
At 31 Dec At 31 Dec At 30 June
2002 2001 2002
#'000 #'000 #'000
FIXED ASSETS
Investments at market value 4,537 15,442 7,904
CURRENT ASSETS
Sales for future settlement - 62 -
Other debtors 30 21 11
Cash at bank and in hand 2,017 7,301 1,566
2,047 7,384 1,577
CURRENT LIABILITIES
Preference Share redemption - 6,031 -
Accrued liabilities 97 157 109
Dividends Payable - - 273
97 6,188 382
NET CURRENT ASSETS 1,950 1,196 1,195
TOTAL NET ASSETS 6,487 16,638 9,099
CAPITAL AND RESERVES
Share capital 1 2 1
Capital redemption reserve 3 3 4
Share premium account - 5,284 -
Special reserve for purchase of own shares 12,902 16,791 14,032
Capital reserves (6,487) (5,899) (5,081)
Revenue reserve 68 457 143
SHAREHOLDERS' FUNDS 6,487 16,638 9,099
Net asset value per Ordinary Share 56.00p 62.64p 66.77p
Net asset value per Redeemable Preference Share - 100.00p -
Weighted average net asset value* 85.50p 87.35p 88.31p
No. of Ordinary Shares in issue 11,584,951 15,801,702 13,627,420
No. of Redeemable Preference Shares in issue - 6,739,383 -
* = Shareholders' funds + capital returned to shareholders since launch
Total number of Ordinary and Redeemable Preference Shares issued pursuant
to the Placing
CASH FLOW STATEMENT
6 months 6 months
to 31 Dec to 31 Dec
2002 2001
#'000 #'000
NET CASH FLOW FROM OPERATING ACTIVITIES (262) 47
FINANCIAL INVESTMENT
Payments to acquire fixed asset investments (1,994) -
Receipts on disposal of fixed asset investments 4,111 6,551
NET CASH INFLOW FROM INVESTING ACTIVITIES 2,117 6,551
EQUITY DIVIDENDS PAID (273) (1,106)
NET CASH INFLOW BEFORE FINANCING 1,582 5,492
FINANCING
Payments to purchase own shares (1,131) (6,864)
NET CASH OUTFLOW FROM FINANCING (1,131) (6,864)
INCREASE / (DECREASE) IN CASH 451 (1,372)
NOTES
Redemption of Preference Shares
There were no preference shares still in issue at the start of the period.
Purchase of own shares
During the period the Company purchased 2,042,469 of its own Ordinary Shares for cancellation, at a cost of #1,130,955.
Since the period end the Company has purchased 1,562,912 of its own Ordinary Shares for cancellation, at a cost of
#771,259.
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.
Dividend
In accordance with the Company's stated policy, the directors do not recommend an interim dividend.
Investment company status
The Company is incorporated in Guernsey and Guernsey Company Law does not distinguish the status of an investment
company. However the Company 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.
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 of the Company.
Reconciliation of movements in shareholders' funds
6 Months 6 months
to 31 Dec to 31 Dec
2002 2001
#'000 #'000
DISTRIBUTABLE PROFITS
Revenue available for distribution (76) 170
NON-DISTRIBUTABLE PROFITS
Recognised gains and losses (1,405) (3,802)
TOTAL PROFITS AND GAINS (1,481) (3,632)
Purchase of the Company's own ordinary shares (1,131) (229)
Redemption of the Company's own preference shares - (6,032)
Net change in shareholders' funds (2,612) (9,893)
Opening shareholders' funds 9,099 26,531
Closing shareholders' funds 6,487 16,638
At 31 Dec At 31 Dec
2002 2001
CLOSING SHAREHOLDERS' FUNDS #'000 #'000
Ordinary Shares 6,487 9,899
Redeemable Preference Shares - 6,739
6,487 16,638
SECRETARY & UK ADMINISTRATOR
Cavendish Administration Limited
Crusader House
145-157 St. John Street
London EC1 4RU
REGISTERED OFFICE
1 Le Marchant Street
St Peter Port
Guernsey
GY1 4HP
Channel Islands
This information is provided by RNS
The company news service from the London Stock Exchange
END
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