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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 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Investors, Nec | 8.95M | 6.25M | 0.0272 | 20.77 | 129.78M |
From Apr 2019 to Apr 2024
TIDMBSC
RNS Number : 7771O
British Smaller Companies VCT2 Plc
23 August 2017
British Smaller Companies VCT2 plc
Unaudited Interim Results and Interim Management Report
For the six months ended 30 June 2017
British Smaller Companies VCT2 plc ("the Company") today announces its unaudited interim results for the six months to 30 June 2017.
Financial Highlights
-- Increase in total return of 0.8 pence per ordinary share to 113.0 pence per ordinary share (112.2 pence per ordinary share as at 31 December 2016), which includes cumulative dividends paid since inception of 54.0 pence per ordinary share.
-- The sale of Selima Holding Company Ltd delivered proceeds of GBP1.0 million, achieving a multiple of 3.7x original cost, with the potential for further contingent consideration.
-- Offer for subscription fully subscribed and closed within a week of launch, raising GBP4.25 million.
-- Proposed interim dividend of 1.5 pence per ordinary share in respect of the year ending 31 December 2017.
Chairman's Statement
Your Company's portfolio delivered a steady performance, with a return of 2.1 per cent of its opening value.
Net asset value increased by 0.8 pence per ordinary share to 60.5 pence per ordinary share, prior to the payment of the final dividend of 1.5 pence per ordinary share for the year ended 31 December 2016 and your Company's total return increased to 113.0 pence per ordinary share.
New Investment
There were no new investments in the period to 30 June 2017 while GBP0.6 million was provided to existing portfolio companies. In July 2017 a new investment of GBP1.2 million was completed into Friska Limited to fund the rollout of its restaurants into new cities. In addition two further potential investments totalling GBP1.4 million have been approved by the Board, and have recently received HMRC advance assurance.
Disposal
In May the Company realised its investment in Selima Holding Company Ltd generating initial proceeds of GBP1.0 million. The total return from this investment to date is GBP1.1 million, a multiple of 3.7x cost. There is also the possibility of further contingent returns of up to GBP0.7 million subject to the achievement of milestones over the period to November 2019.
Financial Results and Dividends
The movement in net asset value per ordinary share and the dividends paid are set out in the table below:
Hot Features
Premium
Pence per GBP000
Net Asset Value ordinary share
-------------------------------------- ------------------ -----------------
NAV at 1 January 2017 59.7 56,109
Net underlying increase in portfolio 0.8 821
Net (loss) after expenses - (49)
Issue/buy-back of new shares - 4,005
-------------------------------------- -------- -------- -------- -------
0.8 4,777
Dividends paid (1.5) (1,511)
(0.7) 3,266
-------------------------------------- -------- -------- -------- -------
NAV at 30 June 2017 59.0 59,375
Cumulative dividends paid 54.0
Total Return at 30 June 2017 113.0
Total Return at 31 December 2016 112.2
-------------------------------------- -------- -------- -------- -------
The portfolio produced a value gain of GBP0.8 million, representing a 2.1 per cent increase over the opening value and equivalent to an increase in value for shareholders of 0.8 pence per ordinary share.
As highlighted previously the new VCT rules will lead to more investments in earlier stage businesses. While the existing portfolio will provide an element of stable returns in the short term, future returns are expected to have a higher degree of volatility.
Nonetheless, your Board remains committed to maintaining a sustainable level of dividends and a final dividend of 1.5 pence per ordinary share in respect of the year ended 31 December 2016 was paid in the period, bringing the cumulative dividends paid to date to 54.0 pence per ordinary share.
In addition to this your Board has proposed an interim dividend of 1.5 pence per ordinary share for the period to 30 June 2017. When combined with the final dividend in respect of the year ended 31 December 2016, dividends paid in the current financial year will total 3.0 pence per ordinary share (2016: 4.5 pence per share). The interim dividend will be paid on 29 September 2017 to shareholders on the register on 1 September 2017.
Shareholder Relations
As part of the Board's continuing dialogue with shareholders, the 22nd shareholder workshop was held in conjunction with British Smaller Companies VCT plc at the Connaught Rooms on 3 May 2017, with approaching 200 attendees. There were presentations from senior executives from two of our newest investments: Sipsynergy Limited and Matillion Limited alongside short videos about our other new portfolio companies. The Company's performance, portfolio and outlook were discussed in talks given by the Investment Adviser, followed by a question and answer session.
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, which has recently been updated, is refreshed on a regular basis, with the emphasis on providing a comprehensive level of information in a user friendly format.
Outlook
Your Board remains encouraged by the increase in investment opportunities that it is seeing. Despite the slowdown that has been seen in gaining advance assurances we remain optimistic that this enquiry rate will continue to translate into increasing the size and diversity of the investment portfolio. We also note the launch of the Patient Capital Review by the Government and will be responding to the calls for consultation and await its outcome, expected later this year, with interest.
Objectives and STRATEGY
The Company's objective is to provide investors with an attractive long-term tax free dividend whilst maintaining 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, Healthcare and Retail & Brands in VCT qualifying and non-qualifying securities.
Investment REVIEW
The Company's portfolio at 30 June 2017 had a value of GBP38.69 million consisting of GBP36.48 million (94 per cent) in unquoted investments and GBP2.21 million (6 per cent) in quoted investments. The largest single investment represents 6.0 per cent of the net asset value.
Over the six months to 30 June 2017 the portfolio saw an underlying value gain of GBP0.82 million from both the ongoing and realised portfolio, consisting of GBP0.60 million from realisations and an overall valuation gain of GBP0.22 million.
There was a value gain of GBP0.37 million from the quoted portfolio which was offset by an overall loss of GBP0.15 million from the unquoted portfolio where, notwithstanding difficult trading conditions experienced by three companies, steady progress has been made by other investee companies. The most significant upward movements in the period were:
GBP0.31 million
* Mangar Health Limited GBP0.24 million
GBP0.18 million
* Deep-Secure Limited
* Springboard Research Holdings Limited
These gains were offset by companies which saw profits impacted by difficult trading conditions:
down GBP0.59
* The Heritage Windows Holdco Limited million
down GBP0.46
million
* Displayplan Holdings Limited down GBP0.30
million
* PowerOasis Limited
New and Follow-on Investments
In the six months to June 2017 the Company has invested a further GBP0.57 million into its existing portfolio; the two largest follow-on investments are as follows:
* GBP0.41 million into Sipsynergy (via Hosted Network
Services Limited); and
* GBP0.10 million into Immunobiology Limited.
Realisation of Investments
During the six months to 30 June 2017 the Company generated GBP2.00 million from disposals and repayments of loans. This included the full exit from its investment in Selima Holding Company Ltd and the 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 2017 can be found in note 6.
Investment Portfolio
The top 10 investments had a combined value of GBP21.7 million, 56.0 per cent of the total portfolio.
Name of Company Date Current Investment Proceeds Realised and
of initial cost Valuation to date unrealised value
investment at 30 June to date
2017 GBP000
GBP000 GBP000 GBP000
ACC Aviation (via Newacc
Business Services (2014) Limited) Nov 14 1,379 3,564 - 3,564
Intelligent Office (via
Business Services IO Outsourcing Limited) May 14 1,956 3,090 - 3,090
Healthcare Mangar Health Limited Jan 14 1,640 2,791 - 2,791
KeTech Enterprises
Software Limited Nov 15 2,000 2,019 - 2,019
Springboard Research
Business Services Holdings Limited Oct 14 1,706 1,890 - 1,890
Business Collaborator
Software Limited Nov 14 1,340 1,810 - 1,810
Gill Marine Holdings
Retail Limited Sep 13 1,870 1,685 - 1,685
Manufacturing GTK (Holdco) Limited Oct 13 592 1,664 758 2,422
Healthcare Immunobiology Limited Jun 03 2,482 1,612 - 1,612
DisplayPlan Holdings
Business Services Limited Jan 12 70 1,558 820 2,378
-------------------- ------------------------- ------------- -------- ------------ --------- -------------------
Total top 10 Investments 15,035 21,683 1,578 23,261
Remaining Unquoted Portfolio
Leengate Holdings
Manufacturing Limited Dec 13 934 1,492 - 1,492
Software Matillion Limited Nov 16 1,400 1,400 - 1,400
Sipsynergy
(via Hosted Network
Software Services Limited) Jun 16 1,309 1,219 - 1,219
Software Biz2Mobile Limited Oct 16 1,000 1,000 - 1,000
Traveltek Group Holdings
Software Limited Oct 16 980 980 - 980
Wakefield Acoustics
(via Malvar Engineering
Manufacturing Limited) Dec 14 720 980 41 1,021
Macro Art Holdings
Business Services Limited Jun 14 575 942 264 1,206
Software Deep-Secure Limited Dec 09 500 869 - 869
Seven Technologies
Software Holdings Limited Apr 12 1,238 619 762 1,381
Software TeraView Limited Dec 11 377 557 - 557
Retail &
Manufacture Bagel Nash Group Limited Jul 11 630 555 200 755
Other investments GBP0.5 million and below 5,682 4,184 1,503 5,687
-------------------- ---------------------------------------- -------- ------------ --------- -------------------
Total unquoted investments 30,380 36,480 4,348 40,828
----------------------------------------------- ------------- -------- ------------ --------- -------------------
Quoted Portfolio
Manufacturing AB Dynamics plc May 13 99 537 628 1,165
Other investments GBP0.5 million and below 1,222 1,675 681 2,356
-------------------- ---------------------------------------- -------- ------------ --------- -------------------
Total quoted investments 1,321 2,212 1,309 3,521
----------------------------------------------- ------------- -------- ------------ --------- -------------------
Total Portfolio 31,701 38,692 5,657 44,349
Full disposals to date 21,255 - 26,941 26,941
----------------------------------------------- ------------- -------- ------------ --------- -------------------
Total investment portfolio 52,956 38,692 32,598 71,290
----------------------------------------------- ------------- -------- ------------ --------- -------------------
The charts on page 13 of the interim report show the composition of the portfolio as at 30 June 2017 by industry sector, age of investment, investment instrument and the value compared to cost and show 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 2016. 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 of the 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; -- Market/liquidity.
Full details of the principal risks can be found in the financial statements for the year ended 31 December 2016 on pages 29 and 30, 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
23 August 2017
unaudited Statement of Comprehensive Income
for the six months ended 30 June 2017
Unaudited 6 months Unaudited 6 months
ended 30 June 2017 ended 30 June 2016
Notes
Revenue Capital Total Revenue Capital Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Income 2 741 - 741 1,083 - 1,083
Gain on disposal of investments - 600 600 - 186 186
Gains on investments held
at fair value - 221 221 - 262 262
Total income 741 821 1,562 1,083 448 1,531
Administrative expenses:
---------- ---------- --------- ---------- ---------- ---------
Investment Adviser's fee (140) (421) (561) (136) (412) (548)
Other expenses (229) - (229) (225) - (225)
---------- ---------- --------- ---------- ---------- ---------
(369) (421) (790) (361) (412) (773)
Profit before taxation 372 400 772 722 36 758
Taxation 3 (42) 42 - (75) 75 -
--------------------------------- ------ ---------- ---------- --------- ---------- ---------- ---------
Profit for the period 330 442 772 647 111 758
--------------------------------- ------ ---------- ---------- --------- ---------- ---------- ---------
Total comprehensive income
for the period 330 442 772 647 111 758
--------------------------------- ------ ---------- ---------- --------- ---------- ---------- --------- Basic and diluted earnings per ordinary share 5 0.33p 0.45p 0.78p 0.70p 0.12p 0.82p --------------------------------- ------ ---------- ---------- --------- ---------- ---------- ---------
The Total column of this statement represents the Company's Unaudited 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' (issued in November 2014 and updated in January 2017 with consequential amendments - "SORP") published by the Association of Investment Companies.
unaudited Balance Sheet
as at 30 June 2017
Notes Unaudited Unaudited Audited
30 June 30 June 31 December
2017 2016 2016
GBP000 GBP000 GBP000
Assets
Non-current assets
Financial assets at fair value through profit or loss 6 38,692 35,792 39,319
Trade and other receivables 863 687 837
------------------------------------------------------- ------ ---------- ---------- -------------
39,555 36,479 40,156
------------------------------------------------------- ------ ---------- ---------- -------------
Current assets
Trade and other receivables 531 757 391
Cash on fixed term deposit 1,987 3,016 3,037
Cash and cash equivalents 17,508 16,990 12,826
------------------------------------------------------- ------ ---------- ---------- -------------
20,026 20,763 16,254
------------------------------------------------------- ------ ---------- ---------- -------------
Liabilities
Current liabilities
Trade and other payables (206) (188) (301)
------------------------------------------------------- ------ ---------- ---------- -------------
Net current assets 19,820 20,575 15,953
------------------------------------------------------- ------ ---------- ---------- -------------
Net assets 59,375 57,054 56,109
Shareholders' equity
Share capital 10,389 9,584 9,652
Share premium account 20,579 16,598 16,902
Capital redemption reserve 88 88 88
Other reserve 2 2 2
Merger reserve 5,525 5,525 5,525
Capital reserve 14,376 18,997 15,621
Investment holding gains and losses 7,021 4,839 7,077
Revenue reserve 1,395 1,421 1,242
------------------------------------------------------- ------ ---------- ---------- -------------
Total shareholders' equity 59,375 57,054 56,109
------------------------------------------------------- ------ ---------- ---------- -------------
Net asset value per ordinary share 7 59.0p 61.0p 59.7p
------------------------------------------------------- ------ ---------- ---------- -------------
unaudited Statement of Changes in Equity
for the six months ended 30 June 2017
Share Share Other Capital Investment Revenue Total
capital premium reserves* reserve holding reserve equity
account gains
and
losses
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------- --------- --------- ----------- --------- ----------- --------- --------
At 31 December 2015 8,939 13,337 5,615 20,781 5,127 1,051 54,850
------------------------------- --------- --------- ----------- --------- ----------- --------- --------
Revenue return for the
period - - - - - 722 722
Capital expenses - - - (412) - - (412)
Investment holding gain
on investments held at
fair value - - - - 262 - 262
Realisation of investments
in the period - - - 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 5,615 18,997 4,839 1,421 57,054
------------------------------- --------- --------- ----------- --------- ----------- --------- --------
Revenue return for the
period - - - - - 486 486
Capital expenses - - - (427) - - (427)
Investment holding gain
on investments held at
fair value - - - - 442 - 442
Realisation of investments
in the period - - - 153 - - 153
Taxation - - - 41 - (41) -
------------------------------- --------- --------- ----------- --------- ----------- --------- --------
Total comprehensive (expense)
income for the period - - - (233) 442 445 654
------------------------------- --------- --------- ----------- --------- ----------- --------- --------
Issue of shares - DRIS 68 315 - - - - 383
Issue costs of ordinary
shares** - (11) - - - - (11)
Purchase of own shares - - - (102) - - (102)
Dividends - - - (1,276) - (593) (1,869)
------------------------------- --------- --------- ----------- --------- ----------- --------- --------
Total transactions with
owners 68 304 - (1,378) - (593) (1,599)
Transfer between reserves - - - (1,933) 1,964 (31) -
Realisation of prior year
investment holding gains - - - 168 (168) - -
------------------------------- --------- --------- ----------- --------- ----------- --------- --------
At 31 December 2016 9,652 16,902 5,615 15,621 7,077 1,242 56,109 ------------------------------- --------- --------- ----------- --------- ----------- --------- -------- Revenue return for the period - - - - - 372 372 Capital expenses - - - (421) - - (421) Investment holding gain on investments held at fair value - - - - 221 - 221 Realisation of investments in the period - - - 600 - - 600 Taxation - - - 42 - (42) - ---------------------------- ------- ------- ------ -------- ------ ------ -------- Total comprehensive income for the period - - - 221 221 330 772 ---------------------------- ------- ------- ------ -------- ------ ------ -------- Issue of ordinary share capital 679 3,571 - - - - 4,250 Issue of shares - DRIS 58 268 - - - - 326 Issue costs of ordinary shares** - (162) - (10) - - (172) Purchase of own shares - - - (399) - - (399) Dividends - - - (1,334) - (177) (1,511) ---------------------------- ------- ------- ------ -------- ------ ------ -------- Total transactions with owners 737 3,677 - (1,743) - (177) 2,494 Realisation of prior year investment holding gains - - - 277 (277) - - ---------------------------- ------- ------- ------ -------- ------ ------ -------- At 30 June 2017 10,389 20,579 5,615 14,376 7,021 1,395 59,375 ---------------------------- ------- ------- ------ -------- ------ ------ --------
* Other reserves include the capital redemption reserve, the merger reserve and the other reserve, which are non-distributable.
** Issue costs include both fundraising costs (where applicable) and costs incurred from the Company's DRIS.
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 14,376 1,395 15,771
--------------------------------------------------------- ---------- ---------- --------
Less : Interest and dividends not yet distributable - (1,163) (1,163)
: Cancelled share premium not yet distributable (1,343) - (1,343)
--------------------------------------------------------- ---------- ---------- --------
Reserves available for distribution* 13,033 232 13,265
* Subject to filing these financial statements at Companies House.
The capital reserve (GBP14,376,000) and the revenue reserve (GBP1,395,000) are both distributable reserves. These reserves total GBP15,771,000, representing a decrease of GBP1,092,000 in the period since 31 December 2016. The directors also take into account the level of the investment holding gains and losses reserve and the future requirements of the Company when determining the level of dividend payments.
Of the potentially distributable reserves of GBP15,771,000 shown above, GBP1,163,000 relates to interest and dividends receivable from 2018 onwards and GBP1,343,000 of cancelled share premium which becomes distributable from 1 January 2018.
On filing these interim financial statements at Companies House, the reserves available for distribution will be GBP13,265,000.
The Company has applied to the High Court to cancel the amount standing to the credit of the share premium account at the date that the court order is made. The total amount of share premium to be cancelled includes:
-- GBP342,000 which, if cancelled prior to 31 December 2017, will become distributable once the annual accounts for the year ending 31 December 2017 have been filed at Companies House; and
-- GBP12,995,000 which, if cancelled prior to 30 September 2018, will become distributable from 1 January 2019.
unaudited Statement of Cash Flows
for the six months ended 30 June 2017
Note Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP000 GBP000 GBP000
Profit before taxation 772 758 1,412
(Decrease) increase in trade and other payables (95) (96) 6
Increase (decrease) in trade and other receivables 83 (122) (275)
Gains on disposal of investments (600) (186) (339)
Profit on investments held at fair value (221) (262) (704)
Capitalised interest and dividends - (20) (80)
------------------------------------------------------------------------ ----- ---------- ---------- -------------
Net cash (outflow) inflow from operating activities (61) 72 20
------------------------------------------------------------------------ ----- ---------- ---------- -------------
Cash flows from investing activities
Purchase of financial assets at fair value through profit or loss (571) (1,050) (4,508)
Proceeds from sale of financial assets at fair value through profit or
loss 6 1,770 2,099 2,874
Deferred consideration - 2 183
Cash maturing from fixed term deposit 1,052 - -
Cash placed on fixed term deposit - (1,024) (1,045)
Net cash inflow (outflow) from investing activities 2,251 27 (2,496)
------------------------------------------------------------------------ ----- ---------- ---------- -------------
Cash flows from financing activities
Issue of ordinary shares 4,230 3,598 3,598
Costs of ordinary share issues* (153) (135) (146)
Purchase of own shares (399) (138) (240)
Dividends paid 4 (1,186) (1,878) (3,354)
Net cash inflow (outflow) from financing activities 2,492 1,447 (142)
------------------------------------------------------------------------ ----- ---------- ---------- -------------
Net increase (decrease) in cash and cash equivalents 4,682 1,546 (2,618)
------------------------------------------------------------------------ ----- ---------- ---------- -------------
Cash and cash equivalents at the beginning of the period 12,826 15,444 15,444
------------------------------------------------------------------------ ----- ---------- ---------- -------------
Cash and cash equivalents at the end of the period 17,508 16,990 12,826
------------------------------------------------------------------------ ----- ---------- ---------- -------------
*Issue costs include both fundraising costs and expenses incurred from the Company's DRIS.
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; and
-- 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 2016 do not constitute full financial statements and have been extracted from the Company's financial statements for the year ended 31 December 2016. 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 2016. New standards coming into force during the period have not had a material impact on these interim financial statements.
The financial statements for the year ended 31 December 2016 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 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 interim financial statements. These include IFRS 9, IFRS 15, IFRS 16, IFRIC 22 and amendments to IFRS 1, IFRS 2, IFRS 4, IFRS 15, IFRS 17, IAS 28, IAS 40 and IFRIC 23. Following an initial assessment, the Company does not expect that these standards, amendments, interpretations, issued but not yet effective, will have a material impact on its results or net assets.
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 2017 the Company held cash balances and fixed term deposits with a combined value of GBP19,495,000. 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
2017 2016
GBP000 GBP000
Income from investments
- Dividends from unquoted companies 151 340
- Dividends from AIM quoted companies 6 7
------------------------------------------------------------------- ---------- ----------
157 347
- Interest on loans to unquoted companies 525 640
------------------------------------------------------------------- ---------- ----------
Income from investments held at fair value through profit or loss 682 987
Interest on bank deposits 59 96
------------------------------------------------------------------- ---------- ----------
741 1,083
------------------------------------------------------------------- ---------- ----------
3. Taxation
Unaudited 6 months ended Unaudited 6 months ended
30 June 2017 30 June 2016
----------------------------- -----------------------------
Revenue Capital Total Revenue Capital Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Profit before taxation 372 400 772 722 36 758
-------------------------------------------------------- --------- --------- ------- --------- --------- -------
Profit before taxation multiplied by the blended
standard small company rate of corporation
tax in UK of 19.25% (2016: 20%) 72 77 149 144 7 151
Effect of:
UK dividends received (30) - (30) (69) - (69)
Non-taxable profits on investments - (158) (158) - (90) (90)
Excess expenses - 39 39 - 8 8
-------------------------------------------------------- --------- --------- ------- --------- --------- -------
Tax charge (credit) 42 (42) - 75 (75) -
-------------------------------------------------------- --------- --------- ------- --------- --------- -------
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 2017 30 June 2016 31 December 2016
--------------------------- --------------------------- ---------------------------
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 2016 of
1.5p (2015: 2.5p) per
ordinary share 177 1,334 1,511 277 2,045 2,322 277 2,045 2,322
Interim dividend for the year
ended 31 December 2016 of
2.0p per ordinary share - - - - - - 593 1,276 1,869
------------------------------- -------- -------- ------- -------- -------- ------- -------- -------- -------
177 1,334 1,511 277 2,045 2,322 870 3,321 4,191
------------------------------- -------- -------- ------- -------- -------- ------- -------- -------- -------
Shares allotted under DRIS (326) (443) (826)
Unclaimed dividends 1 (1) (11)
------------------------------- -------- -------- ------- -------- -------- ------- -------- -------- -------
Dividends paid in the
Statement of Cash Flows 1,186 1,878 3,354
------------------------------- -------- -------- ------- -------- -------- ------- -------- -------- -------
An interim dividend of 1.5 pence per ordinary share, amounting to approximately GBP1.51 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 GBP772,000 (30 June 2016: GBP758,000) and 99,223,205 (30 June 2016: 92,656,544) 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 GBP330,000 (30 June 2016: GBP647,000) and 99,223,205 (30 June 2016: 92,656,544) 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 GBP442,000 (30 June 2016: GBP111,000) and 99,223,205 (30 June 2016: 92,656,544) ordinary shares being the weighted average number of ordinary shares in issue during the period.
During the period the Company allotted 583,201 new ordinary shares in respect of its dividend re-investment scheme and 6,787,231 ordinary shares of 10 pence each under the offer for subscription launched on 3 January 2017, raising gross proceeds of GBP4.25 million.
The Company has repurchased 710,000 of its own shares in the period and these shares are held in the capital reserve. The total of 3,255,746 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 Adviser 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 2017, 31 December 2016 or 30 June 2016.
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 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. The majority of the Company's investments fall into this category.
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 (2016: 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 page 55 of the financial statements for the year ended 31 December 2016, 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 changes 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 2017 are summarised as follows:
IFRS 13 measurement classification Level 3 Level 1 Total
Unquoted Quoted Investments
Investments Equity
Investments
GBP000 GBP000 GBP000
Opening cost 30,853 1,419 32,272
Opening valuation gain 6,394 653 7,047
-------------------------------------- ------------- ------------- -------------
Opening fair value at 1 January 2017 37,247 2,072 39,319
Additions at cost 571 - 571
Disposal proceeds (1,730) (272) (2,002)
Net profit on disposal * 542 41 583
Change in fair value (150) 371 221
-------------------------------------- ------------- ------------- -------------
Closing fair value at 30 June 2017 36,480 2,212 38,692
-------------------------------------- ------------- ------------- -------------
Closing cost 30,380 1,321 31,701
Closing valuation gain ** 6,100 891 6,991
-------------------------------------- ------------- ------------- -------------
Closing fair value at 30 June 2017 36,480 2,212 38,692
-------------------------------------- ------------- ------------- -------------
* The net profit on disposal in the table above is GBP583,000 whereas that shown in the Statement of Comprehensive Income is GBP600,000. The difference comprises the gain of GBP17,000 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 2017, 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 GBP3,037,000 (8.3 per cent) lower. Using the upside alternative the value would be increased by GBP3,301,000 (9.0 per cent).
Of the Company's investments, 94 per cent are in unquoted companies held at fair value (31 December 2016: 95 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 GBP2,818,000 (4.7 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 GBP2,653,000 (4.5 per cent of net assets).
Of the Company's equity investments, 6 per cent are quoted on AIM (31 December 2016: 5 per cent). A five per cent increase in stock prices as at 30 June 2017 would have increased the net assets attributable to the Company's shareholders and the total profit for the year by GBP111,000 (31 December 2016: GBP104,000). 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 fair value adjustments downwards during the period that exceeded five per cent of the total assets of the Company (31 December 2016: none).
The following disposals and loan repayments took place during the period (all companies are unquoted unless otherwise stated).
Net Cost Opening Gain Profit
proceeds carrying over (loss)
from sale value as at opening on
1 January carrying original
2017 value cost
GBP000 GBP000 GBP000 GBP000 GBP000
Unquoted investments
GTK (Holdco) Limited 149 149 149 - -
Ness (Holdings) Limited 130 1,012 - 130 (882)
Harvey Jones Holdings Limited 403 403 401 2 -
Macro Art Holdings Limited 52 52 52 - -
Selima Holding Company Ltd 996 300 586 410 696
Cambrian Park & Leisure Homes Limited (via Cambrian
Lodges Holdings Limited) - 1,133 - - (1,133)
1,730 3,049 1,188 542 (1,319)
--------------------------------------------------------- ----------- ------- ------------- ---------- ----------
Quoted investments
AB Dynamics plc 125 24 125 - 101
Gooch & Housego plc 147 74 106 41 73
272 98 231 41 174
--------------------------------------------------------- ----------- ------- ------------- ---------- ----------
Total from disposals in the period 2,002 3,147 1,419 583 (1,145)
--------------------------------------------------------- ----------- ------- ------------- ---------- ----------
Revaluation of deferred consideration:
Callstream Group Limited 17 - - 17 17
--------------------------------------------------------- ----------- ------- ------------- ---------- ----------
Total from quoted and unquoted investments 2,019 3,147 1,419 600 (1,128)
--------------------------------------------------------- ----------- ------- ------------- ---------- ----------
The proceeds in the table above total GBP2,019,000, whereas that shown in the Statement of Cash Flows is GBP1,770,000. The difference comprises deferred consideration which is expected to be received after 30 June 2017.
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 GBP59,375,000 (30 June 2016 and 31 December 2016: GBP57,054,000 and GBP56,109,000 respectively) and 100,634,746 (30 June 2016 and 31 December 2016: 93,470,001 and 93,974,314 respectively) ordinary shares in issue at 30 June 2017.
The 3,255,746 (30 June 2016 and 31 December 2016: 2,367,533 and 2,545,746) treasury shares have been excluded in calculating the number of ordinary shares in issue at 30 June 2017. 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 Adviser 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 2017, 31 December 2016 or 30 June 2016.
8. Total Return
Total return per share is calculated on cumulative dividends paid of 54.0 pence per ordinary share (30 June 2016: 50.5 pence per ordinary share and 31 December 2016: 52.5 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 2017
Further to the announcement of its interim results for the 6 months to 30 June 2017, the Company confirms that an interim dividend of 1.5 pence per ordinary share ("Interim Dividend") will be paid on 29 September 2017 to those shareholders on the Company's register at the close of business on 1 September 2017. The ex-dividend date for these dividends will be 31 August 2017.
12. Dividend Re-investment Scheme ("DRIS")
The Company operates 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 15 September 2017.
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU No. 596/2014). Upon the publication of this announcement via Regulatory Information Service this inside information is now considered to be in the public domain.
For further information, please contact:
David Hall YFM Equity Partners Limited Tel: 0113 244 1000 Jonathan Becher Panmure Gordon (UK) Limited Tel: 0207 886 2715
This information is provided by RNS
The company news service from the London Stock Exchange
END
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