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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
British Smaller Companies Vct2 Plc | LSE:BSC | London | Ordinary Share | GB0005001796 | ORD 10P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 56.50 | 55.50 | 57.50 | 56.50 | 56.50 | 56.50 | 3,564 | 00:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Investors, Nec | 8.95M | 6.25M | 0.0272 | 20.77 | 129.78M |
TIDMBSC
RNS Number : 9609G
British Smaller Companies VCT2 Plc
11 August 2016
British Smaller Companies VCT2 plc
Unaudited Interim Results and Interim Management Report
For the 6 months ended 30 June 2016
British Smaller Companies VCT2 plc ("the Company") today announces its unaudited interim results for the six months to 30 June 2016.
Financial Highlights
-- Increase in total return of 0.6 pence per ordinary share to 111.5 pence per ordinary share (110.9 pence per ordinary share as at 31 December 2015).
-- Increase in net asset value per share ("NAV") to 63.5 pence per ordinary share prior to the payment of dividends during the period totalling 2.5 pence per ordinary share. This growth was 1.0 per cent of the opening NAV of 62.9 pence per ordinary share.
-- GBP2.4 million generated from realisation of investments. -- Total cumulative dividends paid since inception of 50.5 pence per ordinary share. -- Completion of the first investment under the new VCT rules.
Chairman's Statement
Your Company's portfolio delivered a total return of 2.1 per cent of its opening value, with income from investments 10.8 per cent higher than the same period last year.
Net asset value increased by 0.6 pence per ordinary share to 63.5 pence per ordinary share, prior to the payment of the final dividend of 2.5 pence per ordinary share for the year ended 31 December 2015 and your Company's total return increased to 111.5 pence per ordinary share.
Investment rate
Following the publication of HMRC's guidance notes in May 2016 the flow of advance approvals from HMRC for new investments increased towards the end of the period. One investment of GBP0.9 million was completed into Sipsynergy, a market-leading cloud collaboration solutions provider, and a further two potential investments have subsequently received advance assurance.
Financial Results and Dividends
The movement in net asset value per ordinary share and the dividends paid are set out in the table below:
Pence per GBP000 ordinary share -------------------------------------- ------------------ ----------------- NAV at 1 January 2016 62.9 54,850 Net underlying increase in portfolio 0.5 448 Net income 0.3 310 Purchase of own shares - (138) Issue of new shares (0.2) 3,906 -------------------------------------- -------- -------- -------- ------- 0.6 4,526 Dividends paid (2.5) (2,322) (1.9) 2,204 -------------------------------------- -------- -------- -------- ------- NAV at 30 June 2016 61.0 57,054 Cumulative dividends paid 50.5 -------------------------------------- -------- -------- -------- ------- Total Return: at 30 June 2016 111.5 at 31 December 2015 110.9 -------------------------------------- -------- -------- -------- -------
The portfolio produced a value gain of GBP0.4 million, representing a 1.2 per cent increase over the opening value and equivalent to an increase in value for shareholders of 0.5 pence per ordinary share.
During the period a final dividend in respect of the year ended 31 December 2015 of 2.5 pence per ordinary share was paid, bringing the cumulative dividends paid to date to 50.5 pence per ordinary share.
The longer-term objective is to produce a consistent and, where possible, increasing dividend stream while maintaining capital value. Your Board has proposed an interim dividend of 2.0 pence per ordinary share for the period to 30 June 2016. When combined with the final dividend in respect of the year ended 31 December 2015, dividends paid in the current financial year total 4.5 pence per ordinary share (2015: 4.5 pence per share). The interim dividend will be paid on 26 September 2016 to shareholders on the register at 26 August 2016.
Shareholder Relations
As part of the Board's continuing dialogue with shareholders, the 21st shareholder workshop was held in conjunction with British Smaller Companies VCT plc at the British Library on 17 May 2016, with over 200 attendees. There were presentations from the managing directors of two of our newest investments, Ness (Holdings) Limited and KeTech Enterprises Limited, David Hall and David Bell from the Investment Adviser, as well as Wyndham North of HM Treasury.
Your Company's electronic communications policy, whereby documents such as the annual report are disseminated via the website www.bscfunds.com rather than by post, has saved on printing costs as well as being more environmentally friendly. I am pleased to report that this policy has been well received, with 83 per cent of shareholders now receiving communications in this way.
The website www.bscfunds.com is refreshed on a regular basis, with the emphasis on providing a comprehensive level of information in a user friendly format.
Outlook
Although the medium to long-term impact of the UK's decision to leave the European Union remains unclear, we are confident that the businesses in which your Company has invested will maintain or adapt their growth strategies as appropriate, with many exporters seeing a potential short-term benefit from the devaluation of sterling against several major currencies.
Whilst the introduction of the new VCT rules has imposed a number of restrictions on the types of companies and transactions in which your Company can invest, we remain positive that the Investment Adviser will continue to be able to source high quality opportunities across its office network which comply with these rules.
Notwithstanding the recent changes in legislation, your Board remains committed to continuing to build and further diversify its portfolio of private company investments, and pursuing an objective of paying a regular dividend.
Objectives and Strategy
The Company's objective is to provide investors with an attractive long-term tax free dividend yield whilst seeking to maintain and build the capital value of their investment and maintain the Company's status as a venture capital trust.
The investment strategy of the Company is to create a portfolio with a mix of companies operating in traditional industries and those that offer opportunities in the development and application of innovation.
The Company invests in UK businesses across a broad range of sectors including but not limited to Software, IT & Telecommunications, Business Services, Manufacturing & Industrial Services, Retail & Brands and Healthcare in VCT qualifying and non-qualifying securities.
Investment Review
The Company's portfolio at 30 June 2016 had a value of GBP35.8 million consisting of GBP34.0 million (95 per cent) in unquoted investments and GBP1.8 million (5 per cent) in quoted investments. The strategy to increase the portfolio diversity is signified insofar as the largest single investment represents just 5.7 per cent of the net asset value.
Over the six months to 30 June 2016 the portfolio saw an underlying value gain of GBP0.4 million with good progress being made across a number of companies. The most significant movements in valuations during the period were:
-- ACC Aviation GBP0.5 million -- GTK (Holdco) Limited GBP0.3 million
These gains were partially offset by companies which saw profits impacted by difficult trading conditions:
-- Seven Technologies Holdings down GBP0.3 million Limited -- Ness (Holdings) Limited down GBP0.3 million
New and Follow-on Investments
In the six months to June 2016 the Company has made a new investment of GBP0.9 million into Sipsynergy (via Hosted Network Services Limited), and a follow-on investment of GBP0.2 million into Immunobiology Limited.
Realisation of Investments
During the six months to 30 June 2016 the Company received GBP2.4 million from disposals and repayments of loans. This included the full exit from its investment in Callstream Group Limited and the sale or reduction of a number of AIM holdings following a period of strong share price performance.
A detailed analysis of all investments realised in the period to 30 June 2016 can be found in note 6 to this interim report.
Investment Portfolio
The top ten investments had a combined value of GBP19.8 million, 55.4 per cent of the total portfolio.
Sector Name of Company Date Current Realised Investment Valuation of initial cost proceeds Valuation plus investment GBP000 to date at 30 June proceeds GBP000 2016 to date GBP000 GBP000 Intelligent Office (via IO Business Services Outsourcing Limited) May 14 1,956 - 3,264 3,264 ACC Aviation (via Newacc Business Services (2014) Limited) Nov 14 1,379 - 2,274 2,274 Healthcare Mangar Health Limited Jan 14 1,640 - 2,273 2,273 Software KeTech Enterprises Limited Nov 15 2,000 - 2,000 2,000 Manufacturing GTK (Holdco) Limited Oct 13 813 337 1,845 2,182
Business Services DisplayPlan Holdings Limited Jan 12 70 820 1,830 2,650 Retail Gill Marine Holdings Limited Sep 13 1,870 - 1,717 1,717 Springboard Research Business Services Holdings Limited Oct 14 1,646 - 1,646 1,646 Business Collaborator Software Limited Nov 14 1,340 - 1,501 1,501 Healthcare Immunobiology Limited Jun 03 2,382 - 1,486 1,486 ------------------------ ----------------------------- ------------- -------- ---------- ------------ ---------- Top Ten Investments 15,096 1,157 19,836 20,993 Remaining Unquoted Portfolio Manufacturing Leengate Holdings Limited Dec 13 934 - 1,372 1,372 Cambrian Park & Leisure Homes Limited (via Cambrian Manufacturing Lodges Holdings Limited) Oct 14 1,100 100 1,078 1,178 The Heritage Window Company Manufacturing Holdco Limited Sep 14 1,468 - 954 954 Sipsynergy (via Hosted Network Software Services Ltd) Jun 16 900 - 900 900 Seven Technologies Holdings Software Limited Apr 12 1,238 762 899 1,661 Software Intamac Systems Limited Jun 14 828 - 828 828 Business Services Macro Art Holdings Limited Jun 14 679 160 809 969 Wakefield Acoustics (via Malvar Engineering Manufacturing Limited) Dec 14 730 31 750 781 Harvey Jones Holdings Retail Limited May 07 442 751 617 1,368 Software PowerOasis Limited Nov 11 594 - 594 594 Retail & Manufacturing Bagel Nash Group Limited Jul 11 629 200 539 739 Retail Ness (Holdings) Limited Mar 15 1,031 - 516 516 Software Selima Holding Company Ltd Mar 12 300 - 509 509 Other investments GBP0.5 million and below 3,493 349 3,760 4,109 ------------------------ -------------------------------------------- -------- ---------- ------------ ---------- Total unquoted investments 29,462 3,510 33,961 37,471 ------------------------------------------------------- ------------- -------- ---------- ------------ ---------- Quoted Portfolio Manufacturing Gooch & Housego plc Jan 15 397 - 510 510 Other investments GBP0.5 million and below 1,124 881 1,321 2,202 ------------------------ -------------------------------------------- -------- ---------- ------------ ---------- Total quoted investments 1,521 881 1,831 2,712 ------------------------------------------------------- ------------- -------- ---------- ------------ ---------- Total Portfolio 30,983 4,391 35,792 40,183 Full disposals to date 18,810 25,613 - 25,613 ------------------------------------------------------- ------------- -------- ---------- ------------ ---------- Total Investment portfolio 49,793 30,004 35,792 65,796 ------------------------------------------------------- ------------- -------- ---------- ------------ ----------
The charts on page 12 of the interim report show the composition of the portfolio as at 30 June 2016 by industry sector, age of investment, investment instrument and the value compared to cost and shows diversity across a wide range of industry sectors.
Principal Risks and Uncertainties
In accordance with DTR 4.2.7, the Board confirms that the principal risks and uncertainties facing the Company have not materially changed from those identified in the Annual Report and Accounts for the year ended 31 December 2015. The Board acknowledges that there is regulatory risk and continues to manage the Company's affairs in such a manner as to comply with section 274 Income Tax Act 2007.
In summary, the principal risks are:
-- Loss of approval as a Venture Capital Trust; -- Economic; -- Investment and strategic; -- Regulatory; -- Reputational; -- Operational; -- Financial; and -- Market/liquidity.
Full details of the principal risks can be found in the financial statements for the year ended 31 December 2015 on pages 30 and 31, a copy of which is available at www.bscfunds.com.
Directors' Responsibilities Statement
The directors of British Smaller Companies VCT2 plc confirm that, to the best of their knowledge, the condensed set of financial statements in this interim report have been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" as adopted by the EU, and give a fair view of the assets, liabilities, financial position and profit and loss of British Smaller Companies VCT2 plc, and that the interim management report includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R.
The directors of British Smaller Companies VCT2 plc are listed in note 9.
By order of the Board
Richard Last
Chairman
11 August 2016
Unaudited Statement of Comprehensive Income
for the six months ended 30 June 2016
Unaudited 6 months ended Unaudited 6 months ended 30 June 2016 30 June 2015 Notes Revenue Capital Total Revenue Capital Total GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 Gain on investments held at fair value - 262 262 - 1,709 1,709 Gain (loss) on disposal of investments - 186 186 - (53) (53) Income 2 1,083 - 1,083 965 - 965 ----------------------------------------------- ------ --------- --------- ------- --------- --------- ------- Total income 1,083 448 1,531 965 1,656 2,621 Administrative expenses: --------- --------- ------- --------- --------- ------- Investment Adviser's fee (136) (412) (548) (98) (295) (393) Other expenses (225) - (225) (222) - (222) --------- --------- ------- --------- --------- ------- (361) (412) (773) (320) (295) (615) ----------------------------------------------- ------ --------- --------- ------- --------- --------- ------- Profit before taxation 722 36 758 645 1,361 2,006 Taxation 3 (75) 75 - (76) 76 - ----------------------------------------------- ------ --------- --------- ------- --------- --------- ------- Profit for the period 647 111 758 569 1,437 2,006 ----------------------------------------------- ------ --------- --------- ------- --------- --------- ------- Total comprehensive income for the period 647 111 758 569 1,437 2,006 ----------------------------------------------- ------ --------- --------- ------- --------- --------- ------- Basic and diluted earnings per ordinary share 5 0.70p 0.12p 0.82p 0.72p 1.81p 2.53p ----------------------------------------------- ------ --------- --------- ------- --------- --------- -------
The Total column of this statement represents the Company's Statement of Comprehensive Income, prepared in accordance with International Financial Reporting Standards as adopted by the European Union ('IFRSs'). The supplementary Revenue and Capital columns are prepared under the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' ('SORP') 2014 published by the Association of Investment Companies.
Unaudited Balance Sheet
as at 30 June 2016
Notes Unaudited Unaudited Audited 30 June 30 June 31 December 2016 2015 2015 GBP000 GBP000 GBP000 Assets Non-current assets Financial assets at fair value through profit or loss 6 35,792 33,202 36,652 Trade and other receivables 687 572 678 ------------------------------------------------------- ------ ---------- ---------- ------------- 36,479 33,774 37,330 ------------------------------------------------------- ------ ---------- ---------- ------------- Current assets Trade and other receivables 757 467 368 Cash on fixed term deposit 3,016 6,000 1,992 Cash and cash equivalents 16,990 14,078 15,444 ------------------------------------------------------- ------ ---------- ---------- ------------- 20,763 20,545 17,804 ------------------------------------------------------- ------ ---------- ---------- ------------- Liabilities Current liabilities Trade and other payables (188) (179) (284) ------------------------------------------------------- ------ ---------- ---------- ------------- Net current assets 20,575 20,366 17,520 ------------------------------------------------------- ------ ---------- ---------- ------------- Net assets 57,054 54,140 54,850 Shareholders' equity Share capital 9,584 8,881 8,939 Share premium account 16,598 13,079 13,337 Capital redemption reserve 88 88 88 Other reserve 2 2 2 Merger reserve 5,525 5,525 5,525 Capital reserve 18,997 22,324 20,781 Investment holding gains and losses 4,839 3,340 5,127 Revenue reserve 1,421 901 1,051 ------------------------------------------------------- ------ ---------- ---------- ------------- Total shareholders' equity 57,054 54,140 54,850 ------------------------------------------------------- ------ ---------- ---------- ------------- Net asset value per ordinary share 7 61.0p 62.5p 62.9p ------------------------------------------------------- ------ ---------- ---------- -------------
Unaudited Statement of Changes in Equity
for the six months ended 30 June 2016
Share Share Other Merger Capital Investment Revenue Total capital premium reserves* reserve reserve holding reserve equity account gains and losses GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 At 31 December 2014 6,447 342 90 5,525 24,822 1,507 600 39,333 --------------------------- --------- --------- ----------- --------- --------- ----------- --------- -------- Revenue profit before taxation - - - - - - 645 645 Capital expenses - - - - (295) - - (295) Investment holding gain on investments held at fair value - - - - 1,709 - 1,709 Realisation of investments - - - - (53) - - (53) Taxation - - - - 76 - (76) - --------------------------- --------- --------- ----------- --------- --------- ----------- --------- -------- Total comprehensive (expense) income for the period - - - - (272) 1,709 569 2,006 --------------------------- --------- --------- ----------- --------- --------- ----------- --------- -------- Issue of ordinary share capital 2,366 13,056 - - - - - 15,422 Issue of shares - DRIS 68 329 - - - - - 397 Issue costs of ordinary shares - (648) - - (94) - - (742) Purchase of own shares - - - - (123) - - (123) Dividends - - - - (1,885) - (268) (2,153) --------------------------- --------- --------- ----------- --------- --------- ----------- --------- -------- Total transactions with owners 2,434 12,737 - - (2,102) - (268) 12,801 Realisation of prior year investment holding losses - - - - (124) 124 - - At 30 June 2015 8,881 13,079 90 5,525 22,324 3,340 901 54,140 --------------------------- --------- --------- ----------- --------- --------- ----------- --------- -------- Revenue profit before taxation - - - - - - 640 640 Capital expenses - - - - (406) - - (406) Investment holding gain on investments held at fair value - - - - - 1,607 - 1,607 Realisation of investments - - - - 285 - - 285 Taxation - - - - 76 - (76) - --------------------------- --------- --------- ----------- --------- --------- ----------- --------- -------- Total comprehensive (expense) income for the period - - - - (45) 1,607 564 2,126 --------------------------- --------- --------- ----------- --------- --------- ----------- --------- -------- Issue of shares - DRIS 58 277 - - - - - 335 Issue costs of ordinary shares - (19) - - 2 - - (17) Dividends - - - - (1,320) - (414) (1,734) --------------------------- --------- --------- ----------- --------- --------- ----------- --------- -------- Total transactions with owners 58 258 - - (1,318) - (414) (1,416) Realisation of prior year investment holding losses - - - - (180) 180 - - --------------------------- --------- --------- ----------- --------- --------- ----------- --------- -------- At 31 December 2015 8,939 13,337 90 5,525 20,781 5,127 1,051 54,850 --------------------------- --------- --------- ----------- --------- --------- ----------- --------- -------- Revenue profit before taxation - - - - - - 722 722 Capital expenses - - - - (412) - - (412) Investment holding gain on investments held at fair value - - - - - 262 - 262 Realisation of investments - - - - 186 - - 186 Taxation - - - - 75 - (75) - --------------------------- --------- --------- ----------- --------- --------- ----------- --------- -------- Total comprehensive (expense) income for the period - - - - (151) 262 647 758
--------------------------- --------- --------- ----------- --------- --------- ----------- --------- -------- Issue of ordinary share capital 568 3,030 - - - - - 3,598 Issue of shares - DRIS 77 366 - - - - - 443 Issue costs of ordinary shares - (135) - - - - - (135) Purchase of own shares - - - - (138) - - (138) Dividends - - - - (2,045) - (277) (2,322) --------------------------- --------- --------- ----------- --------- --------- ----------- --------- -------- Total transactions with owners 645 3,261 - - (2,183) - (277) 1,446 Realisation of prior year investment holding gains - - - - 550 (550) - - --------------------------- --------- --------- ----------- --------- --------- ----------- --------- -------- At 30 June 2016 9,584 16,598 90 5,525 18,997 4,839 1,421 57,054 --------------------------- --------- --------- ----------- --------- --------- ----------- --------- --------
*Other reserves include the capital redemption reserve and the other reserve
Reserves available for distribution
Under the Companies Act 2006 the capital reserve and the revenue reserve are distributable reserves. The table below shows amounts that are available for distribution.
Capital Revenue Total reserve reserve GBP000 GBP000 GBP000 Distributable reserves as above 18,997 1,421 20,418 ---------------------------------------------------- --------- --------- -------- Less: Interest and dividends not yet distributable - (828) (828) : Deferred proceeds (105) - (105) : Cancelled share premium not yet distributable (1,343) - (1,343) ---------------------------------------------------- --------- --------- -------- Reserves available for distribution** 17,549 593 18,142 ---------------------------------------------------- --------- --------- --------
** The revenue reserve of GBP593,000 is only distributable once the interim financial statements are filed at Companies House.
The capital reserve (GBP18,997,000) and the revenue reserve (GBP1,421,000) are both distributable reserves. These reserves total GBP20,418,000, representing a decrease of GBP1,414,000 in the period since 31 December 2015. The directors also take into account the level of investment holding gains (losses) reserve and the future requirements of the Company when determining the level of dividend payments.
Of the potentially distributable reserves of GBP20,418,000 shown above, GBP828,000 relates to interest and dividends receivable from 2018 onwards, GBP105,000 of deferred proceeds receivable in 2016, and GBP1,343,000 of share premium which becomes distributable from 1 January 2018.
On filing the interim financial statements at Companies House, the reserves available for distribution will be GBP18,142,000.
Unaudited Statement of Cash Flows
for the six months ended 30 June 2016
Note Unaudited Unaudited Audited 6 months 6 months year ended ended ended 30 June 30 June 31 December 2016 2015 2015 GBP000 GBP000 GBP000 Profit before taxation 758 2,006 4,132 (Decrease) increase in trade and other payables (96) (26) 24 Increase in trade and other receivables (122) (116) (345) (Gains) / losses on disposal of investments (186) 53 (232) Profit on investments held at fair value (262) (1,709) (3,316) Capitalised interest and dividends (20) (1) (116) ------------------------------------------------------------------------ ----- ---------- ---------- ------------- Net cash inflow from operating activities 72 207 147 ------------------------------------------------------------------------ ----- ---------- ---------- ------------- Cash flows from investing activities Purchase of financial assets at fair value through profit or loss (1,050) (4,161) (7,239) Proceeds from sale of financial assets at fair value through profit or loss 2,099 582 2,458 Deferred consideration 2 14 13 Cash placed on fixed term deposit (1,024) (6,000) (1,992) Net cash inflow (outflow) from investing activities 27 (9,565) (6,760) ------------------------------------------------------------------------ ----- ---------- ---------- ------------- Cash flows from financing activities Issue of ordinary shares 3,598 15,126 15,422 Costs of ordinary share issues (135) (446) (733) Purchase of own shares (138) (123) (123) Dividends paid 4 (2,321) (2,151) (3,874) Shares issued under DRIS 443 397 732 Net cash inflow from financing activities 1,447 12,803 11,424 ------------------------------------------------------------------------ ----- ---------- ---------- ------------- Net increase in cash and cash equivalents 1,546 3,445 4,811 ------------------------------------------------------------------------ ----- ---------- ---------- ------------- Cash and cash equivalents at the beginning of the period 15,444 10,633 10,633 ------------------------------------------------------------------------ ----- ---------- ---------- ------------- Cash and cash equivalents at the end of the period 16,990 14,078 15,444 ------------------------------------------------------------------------ ----- ---------- ---------- -------------
Explanatory Notes to the Unaudited Condensed Financial Statements
1 General information, basis of preparation and principal accounting policies
These half year statements have been approved by the directors whose names appear at note 9, each of whom has confirmed that to the best of his knowledge:
-- The interim management report includes a fair review of the information required by rules 4.2.7 and 4.2.8 of the Disclosure Rules and the Transparency Rules.
-- The half year statements have been prepared in accordance with IAS 34 'Interim financial reporting' and the Disclosure and Transparency Rules of the Financial Conduct Authority.
The half year statements are unaudited and have not been reviewed by the auditors pursuant to the Auditing Practices Board (APB) guidance on Review of Interim Financial Information. They do not constitute full financial statements as defined in section 435 of the Companies Act 2006. The comparative figures for the year ended 31 December 2015 do not constitute full financial statements and have been extracted from the Company's financial statements for the year ended 31 December 2015. Those accounts were reported upon without qualification by the auditors and have been delivered to the Registrar of Companies.
The accounting policies and methods of computation followed in the half year statements are the same as those adopted in the preparation of the audited financial statements for the year ended 31 December 2015.
The financial statements for the year ended 31 December 2015 were prepared in accordance with the International Financial Reporting Standards (IFRSs) as adopted by the European Union and those parts of the Companies Act 2006 applicable to companies reporting under IFRS. Where guidance set out in the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' issued by the Association of Investment Companies in November 2014 ("SORP") is consistent with the requirements of IFRS, the financial statements have been prepared in compliance with the recommendations of the SORP.
Standards and interpretations have been issued which will be effective for future reporting periods but have not been adopted early in these financial statements. These include amendments to IFRS 9, 10 and 15, and amendments to IAS 27 and 28. A full assessment of the impact of the new accounting standards and amendments applicable to the Company has not been carried out, but is not expected to be material to the financial statements.
The financial statements are presented in sterling and all values are rounded to the nearest thousand (GBP000), except where stated.
Going Concern: The directors have carefully considered the issue of going concern and are satisfied that the Company has sufficient resources to meet its obligations as they fall due for a period of at least twelve months from the date these half year statements were approved. As at 30 June 2016 the Company held cash balances and fixed term deposits with a combined value of GBP20,006,000. Cash flow projections show the Company has sufficient funds to meet both its contracted expenditure and its discretionary cash outflows in the form of share buy-backs and the dividend policy. The directors therefore believe that it is appropriate to continue to apply the going concern basis of accounting in preparing these half year statements.
2 Income Unaudited Unaudited 6 months 6 months ended ended 30 June 30 June 2016 2015 GBP000 GBP000 Income from investments - Dividends from unquoted companies 340 240 - Dividends from AIM quoted companies 7 24 ------------------------------------------------------------------- ---------- ---------- 347 264 - Interest on loans to unquoted companies 640 627 ------------------------------------------------------------------- ---------- ---------- Income from investments held at fair value through profit or loss 987 891 Interest on bank deposits 96 74 ------------------------------------------------------------------- ---------- ---------- 1,083 965 ------------------------------------------------------------------- ---------- ---------- 3 Taxation Unaudited 6 months ended Unaudited 6 months ended 30 June 2016 30 June 2015 ----------------------------- ----------------------------- Revenue Capital Total Revenue Capital Total GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 Profit before taxation 722 36 758 645 1,361 2,006 -------------------------------------------------------- --------- --------- ------- --------- --------- ------- Profit before taxation multiplied by standard small company rate of corporation tax in UK of 20% (2015: 20%) 144 7 151 129 272 401 Effect of: UK dividends received (69) - (69) (53) - (53) Non-taxable profits on investments - (90) (90) - (331) (331) Excess expenses - 8 8 - (17) (17) -------------------------------------------------------- --------- --------- ------- --------- --------- ------- Tax charge (credit) 75 (75) - 76 (76) - -------------------------------------------------------- --------- --------- ------- --------- --------- -------
The Company has no provided, or unprovided, deferred tax liability in either period.
Deferred tax assets in respect of losses have not been recognised as the directors do not currently believe that it is probable that sufficient taxable profits will be available against which the assets can be recovered.
Due to the Company's status as a venture capital trust, and the continued intention to meet the conditions required to comply with Chapter 3 Part 6 of the Income Tax Act 2007, the Company has not provided deferred tax on any capital gains or losses arising on the revaluation or realisation of investments.
4 Dividends
Amounts recognised as distributions to equity holders in the period:
Unaudited Unaudited Audited 6 months ended 6 months ended Year ended 30 June 2016 30 June 2015 31 December 2015 --------------------------- --------------------------- --------------------------- Revenue Capital Total Revenue Capital Total Revenue Capital Total GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 Final dividend for the year ended 31 December 2015 of 2.5p (2014 year end 2.5p) per ordinary share 277 2,045 2,322 268 1,885 2,153 268 1,885 2,153 Interim dividend for the year ended 31 December 2015 of 2.0p per ordinary share - - - - - - 414 1,320 1,734 ------------------------------- -------- -------- ------- -------- -------- ------- -------- -------- ------- 277 2,045 2,322 268 1,885 2,153 682 3,205 3,887 Unclaimed dividends (1) (2) (13) ------------------------------- -------- -------- ------- -------- -------- ------- -------- -------- ------- Dividends paid in the Statement of Cash Flows 2,321 2,151 3,874 ------------------------------- -------- -------- ------- -------- -------- ------- -------- -------- -------
An interim dividend of 2.0 pence per ordinary share, amounting to approximately GBP1.87 million is proposed. The dividend has not been recognised in these half year financial statements as the obligation did not exist at the balance sheet date.
5 Basic and Diluted Earnings per Ordinary Share
The basic and diluted earnings per ordinary share is based on the profit after tax attributable to equity shareholders of GBP758,000 (30 June 2015: GBP2,006,000) and 92,656,544 (30 June 2015: 79,407,872) ordinary shares being the weighted average number of ordinary shares in issue during the period.
The basic and diluted revenue earnings per ordinary share is based on the revenue profit attributable to equity shareholders of GBP647,000 (30 June 2015: GBP569,000) and 92,656,544 (30 June 2015: 79,407,872) ordinary shares being the weighted average number of ordinary shares in issue during the period.
The basic and diluted capital earnings per ordinary share is based on the capital profit attributable to equity shareholders of GBP111,000 (30 June 2015: GBP1,437,000) and 92,656,544 (30 June 2015: 79,407,872) ordinary shares being the weighted average number of ordinary shares in issue during the period.
During the period the Company allotted 763,247 new ordinary shares in respect of its dividend re-investment scheme and 5,683,709 ordinary shares of 10 pence each under the Offer for Subscription launched on 8 December 2015, raising gross proceeds of GBP3.6 million.
The Company has repurchased 239,530 of its own shares in the period and these shares are held in the capital reserve. The total of 2,367,533 treasury shares has been excluded in calculating the weighted average number of ordinary shares during the period. The Company has no securities that would have a dilutive effect and hence basic and diluted earnings per ordinary share are the same.
The only potentially dilutive shares are those shares which, subject to certain criteria, being achieved in the future, may be issued by the Company to meet its obligations under the Investment Advisor Agreement. No such shares have been issued or are currently expected to be issued. There are, therefore, considered to be no potentially dilutive shares in issue at 30 June 2016, 31 December 2015 or 30 June 2015.
6 Financial Assets at Fair Value through Profit or Loss
IFRS 13, in respect of financial instruments that are measured in the balance sheet at fair value, requires disclosure of fair value measurements by level within the following fair value measurement hierarchy:
-- Level 1: quoted prices in active markets for identical assets or liabilities. The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is defined as a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The quoted market price used for financial assets held by the Company is the current bid price. These instruments are included in Level 1 and comprise AIM quoted investments or government securities and other fixed income securities classified as held at fair value through profit or loss.
-- Level 2: the fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2. The Company held no such instruments in the current or prior year.
-- Level 3: the fair value of financial instruments that are not traded in an active market (for example, investments in unquoted companies) is determined by using valuation techniques such as earnings multiples. If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.
Each investment is reviewed at least quarterly to ensure that it has not ceased to meet the criteria of the level in which it was included at the beginning of each accounting period. There have been no transfers between these classifications in the period (2015: none). The change in fair value for the current and previous year is recognised through profit or loss.
All items held at fair value through profit or loss were designated as such upon initial recognition.
Valuation of Investments
Initial Measurement: Financial assets are initially measured at fair value. The best estimate of the initial fair value of a financial asset that is either quoted or not quoted in an active market is the transaction price (i.e. cost).
Subsequent Measurement: The International Private Equity and Venture Capital (IPEVC) Valuation Guidelines ("the Guidelines") identify six of the most widely used valuation methodologies for unquoted investments. The Guidelines advocate that the best valuation methodologies are those that draw on external, objective market based data in order to derive a fair value.
Full details of the methods used by the Company were set out on pages 55 and 56 of the financial statements for the year ended 31 December 2015, a copy of which can be found at www.bscfunds.com. Where investments are in quoted stocks, fair value is set at the market price.
The primary methods used for valuing non-quoted investments, and the key assumptions relating to them are:
-- Price of recent investment, reviewed for change in fair value. This represents the cost of the investment or the price at which a significant amount of new investment has been made by an independent third party adjusted, if necessary, for factors relevant to the background of the specific investment. The value of the investment is assessed for changes or events that would imply either a reduction or increase to its fair value through comparison of financial, technical and marketing milestones set at the time of investment. Where it is considered that the fair value no longer approximates to the cost of the recent investment an estimated adjustment to the cost, based on objective data, will be made to the investment's carrying value.
-- Earnings multiple. A multiple that is appropriate and reasonable, given the risk profile and earnings growth prospects of the underlying company, is applied to the maintainable earnings of that company. The multiple is adjusted to reflect any risk associated with lack of marketability and to take account of the differences between the investee company and the benchmark company or companies.
Movements in investments at fair value through profit or loss during the six months to 30 June 2016 are summarised as follows:
IFRS 13 measurement classification Level 3 Level 1 Total Unquoted Quoted Investments Investments Equity GBP000 GBP000 Investments GBP000 Opening cost 29,332 2,223 31,555 Opening investment holding gain 4,636 461 5,097 -------------------------------------- ------------- ------------- ------------- Opening fair value at 1 January 2016 33,968 2,684 36,652 Additions at cost 1,050 - 1,050 Capitalised interest and dividends 20 - 20 Disposal proceeds (1,363) (992) (2,355) Net profit on disposal * 72 91 163 Change in fair value 214 48 262 -------------------------------------- ------------- ------------- ------------- Closing fair value at 30 June 2016 33,961 1,831 35,792 -------------------------------------- ------------- ------------- ------------- Closing cost 29,462 1,521 30,983 Closing investment holding gain ** 4,499 310 4,809 -------------------------------------- ------------- ------------- ------------- Closing fair value at 30 June 2016 33,961 1,831 35,792 -------------------------------------- ------------- ------------- -------------
* The net profit on disposal in the table above is GBP163,000 whereas that shown in the Statement of Comprehensive Income is GBP186,000. The difference comprises the gain of GBP23,000 arising on deferred proceeds in respect of assets which have been disposed and are not included within the investment portfolio at the period end.
** Following the merger between the Company and British Smaller Technology Companies VCT plc, a total of GBP975,000 of negative goodwill was recognised in the investment holding gains and losses reserve in respect of investments acquired. The relevant amount per investment is released at the point of disposal to the capital reserve, At 30 June 2016, a total of GBP30,000 was held on investments yet to be realised in the investment holding gains and losses reserve.
Level 3 valuations include assumptions based on non-observable data, such as discounts applied either to reflect changes in fair value of financial assets held at the price of recent investment, or to adjust earnings multiples.
IFRS13 requires disclosure, by class of financial instruments, if the effect of changing one or more inputs to reasonably possible alternative assumptions would result in a significant change to fair value measurement. Each unquoted portfolio company has been reviewed and both downside and upside alternative assumptions have been identified and applied to the valuation of each of the unquoted investments. Applying the downside alternative the value of the unquoted investments would be GBP2,840,000 (8.4 per cent) lower. Using the upside alternative the value would be increased by GBP2,907,000 (8.6 per cent).
Of the Company's equity investments 95 per cent are in unquoted companies held at fair value (31 December 2015: 93 per cent). The valuation methodology for these investments includes the application of externally produced FTSE(R) PE multiples. Therefore the value of the unquoted element of the portfolio is also indirectly affected by price movements on the listed market. Those using an earnings multiple methodology include judgements regarding the level of discount applied to that multiple. A 10 per cent decrease in the discount applied would have increased the net assets attributable to the Company's shareholders and the total profit by GBP1,531,000 (2.7 per cent of net assets). An equal change in the opposite direction would have decreased net assets attributable to the Company's shareholders and the total profit by GBP1,443,000 (2.5 per cent of net assets).
Of the Company's equity investments, 5 per cent are quoted on AIM (31 December 2015: 7 per cent). A five per cent increase in stock prices as at 30 June 2016 would have increased the net assets attributable to the Company's shareholders and the total profit for the year by GBP92,000 (31 December 2015: GBP134,000). An equal change in the opposite direction would have decreased the net assets attributable to the Company's shareholders and the total profit for the period by an equal amount.
There have been no individual reductions in fair value during the period that exceeded five per cent of the total assets of the Company (31 December 2015: none).
The following disposals took place during the period (all companies are unquoted unless otherwise stated).
Net Cost Opening Gain (loss) Profit proceeds carrying over (loss) from sale value as at opening on 1 January carrying original 2016 value cost GBP000 GBP000 GBP000 GBP000 GBP000 Loan repayments Bagel Nash Group Limited 27 27 27 - - Cambrian Park & Leisure Homes Limited 33 33 33 - - Harvey Jones Holdings Limited 469 469 469 - - Macro Art Holdings Limited 52 52 52 - - Wakefield Acoustics 31 31 31 - - 612 612 612 - - --------------------------------------- ----------- ------- ------------- ------------ ---------- Equity disposals AB Dynamics plc* 503 130 416 87 373 Brady plc* 320 498 314 6 (178) Callstream Group Limited 742 329 679 63 413 Ellfin Home Care Limited 1 - - 1 1 Gamma Communications plc* 169 73 171 (2) 96 Silistix Limited 6 - - 6 6 1,741 1,030 1,580 161 711 --------------------------------------- ----------- ------- ------------- ------------ ---------- Total proceeds from disposals 2,353 1,642 2,192 161 711 --------------------------------------- ----------- ------- ------------- ------------ ---------- Deferred consideration Primal Pictures Limited 2 - - 2 2 --------------------------------------- ----------- ------- ------------- ------------ ---------- Deferred consideration received 2 - - 2 2 --------------------------------------- ----------- ------- ------------- ------------ ---------- Revaluation of deferred consideration Callstream Group Limited 11 - - 11 11 Sirigen Group Limited 12 - - 12 12 --------------------------------------- ----------- ------- ------------- ------------ ---------- Total proceeds 2,378 1,642 2,192 186 736 --------------------------------------- ----------- ------- ------------- ------------ ---------- * Designates AIM quoted investments
The total proceeds in the table above is GBP2,378,000, whereas that shown in the Statement of Cash Flows is GBP2,099,000. The difference comprises deferred consideration and cash received after 30 June 2016.
7 Basic and Diluted Net Asset Value per Ordinary Share
The basic and diluted net asset value per ordinary share is calculated on attributable assets of GBP57,054,000 (30 June 2015 and 31 December 2015: GBP54,140,000 and GBP54,850,000 respectively) and 93,470,001 (30 June 2015 and 31 December 2015: 86,681,566 and 87,262,575 respectively) ordinary shares in issue at 30 June 2016.
The 2,367,533 (30 June 2015 and 31 December 2015: 2,128,003) treasury shares have been excluded in calculating the number of ordinary shares in issue at 30 June 2016. The Company has no securities that would have a dilutive effect and hence basic and diluted net asset value per ordinary share are the same.
The only potentially dilutive shares are those shares which, subject to certain criteria being achieved in the future, may be issued by the Company to meet its obligations under the Investment Advisor Agreement. No such shares have been issued or are currently expected to be issued. There are, therefore, considered to be no potentially dilutive shares in issue at 30 June 2016, 31 December 2015 or 30 June 2015.
8 Total Return
Total return per share is calculated on cumulative dividends paid of 50.5 pence per ordinary share (30 June 2015: 46.0 pence per ordinary share and 31 December 2015: 48.0 pence per ordinary share) plus the net asset value as calculated in note 7.
9 Directors
The directors of the Company are: Richard Last, Robert Martin Pettigrew, and Peter Charles Waller.
10 Other Information
Copies of the interim report can be obtained from the Company's registered office: 5th Floor, Valiant Building, 14 South Parade, Leeds, LS1 5QS or from www.bscfunds.com.
11 Interim Dividend for the six months ended 30 June 2016
Further to the announcement of its interim results for the 6 months to 30 June 2016, the Company confirms that an interim dividend of 2.0 pence per ordinary share ("Interim Dividend") will be paid on 26 September 2016 to those shareholders on the Company's register at the close of business on 26 August 2016. The ex-dividend date for the Interim Dividend will be 25 August 2016.
12 Dividend Re-investment Scheme ("DRIS")
The Company offers a dividend re-investment scheme ("DRIS"). The latest date for receipt of DRIS elections so as to participate in the DRIS in respect of the Interim Dividend is the close of business on 12 September 2016.
For further information, please contact:
David Hall YFM Equity Partners Limited Tel 0113 244 1000 Gillian Martin Nplus1 Singer Advisory LLP Tel 0207 496 3000
This information is provided by RNS
The company news service from the London Stock Exchange
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IR XFLFFQVFBBBX
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August 11, 2016 09:06 ET (13:06 GMT)
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