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BSC British Smaller Companies Vct2 Plc

56.50
0.00 (0.00%)
28 Mar 2024 - Closed
Delayed by 15 minutes
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

British Smaller Companies VCT2 Plc Half-year Report (9609G)

11/08/2016 2:06pm

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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

END

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