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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 : 0114J
British Smaller Companies VCT2 Plc
14 August 2019
British Smaller Companies VCT2 plc
Unaudited Interim Results and Interim Management Report
For the six months ended 30 June 2019
British Smaller Companies VCT2 plc (the "Company") today announces its unaudited interim results for the six months to 30 June 2019.
HIGHLIGHTS
-- Investment of GBP6.9 million into four new and five follow-on investments during the period.
-- Offer for subscription alongside British Smaller Companies VCT plc fully subscribed, raising net funds of GBP12.7 million.
-- A special dividend of 5.0 pence per ordinary share in respect of the year ending 31 December 2019 was paid on 15 February 2019 and a final dividend of 1.5 pence per ordinary share in respect of the year ended 31 December 2018 was paid on 10 May 2019. As a result cumulative dividends paid since your Company's inception increased to 65.0 pence per ordinary share.
-- Proposed interim dividend of 1.5 pence per ordinary share in respect of the year ending 31 December 2019.
-- Total Return unchanged at 118.4 pence per ordinary share at 30 June 2019.
CHAIRMAN'S STATEMENT
Total Return for the six months was unchanged at 118.4 pence per ordinary share. There was a positive gain from the portfolio of 0.3 pence per ordinary share which was offset by the impact of the fundraising and net income after expenses.
New Investment
As previously reported your Company has begun to self-assure on selected new investments and this has had a positive impact on the level of investment so far this year. Consequently, in the first six months of 2019, your Company completed new and follow-on investments totalling GBP6.9 million comprising four new investments and five follow-on investments. These were:
In March 2019 GBP1.2 million was invested into Frescobol Carioca Ltd, the luxury men's resort wear and lifestyle brand.
In May 2019 your Company invested GBP1.4 million into Wooshii Limited, a disruptive video agency.
Also in May 2019 your Company made a new investment of GBP1.4 million into Elucidat Limited, an e-learning software business.
During June 2019 GBP1.6 million was invested into Tonkotsu Limited, a ramen restaurant group.
Follow-on investments totalling GBP1.3 million were made into five existing portfolio companies, including an additional investment of GBP0.75 million into Arcus Global Limited.
Financial Results and Dividends
The movement in Total Return is set out in the table below:
Hot Features
Premium
Pence per
Total Return ordinary share
Total Return at 1 January 2019 118.4
Net underlying increase in portfolio 0.3
Net income after expenses (0.2)
Issue/buy-back of shares (0.1)
Movement in Total Return -
-------------------------------------- --- -------- --------
Total Return at 30 June 2019 118.4
-------------------------------------------- -------- --------
The portfolio produced a value gain of GBP0.4 million, representing a 1.0 per cent increase over the opening value and equivalent to an increase in value for shareholders of 0.3 pence per ordinary share.
Investments made since the changes to the VCT rules in November 2015 now comprise GBP19.8 million (46 per cent) of the unquoted portfolio as at 30 June 2019, with GBP23.0 million (54 per cent) of investments made prior to the rule changes. In general, the more recent additions to the portfolio are re-investing their profits for growth, which means that the investments comprise mainly equity instruments.
The resultant movements in net asset value ("NAV") per ordinary share and the dividends paid are set out in the table below:
GBP000 Pence per
Net Asset Value ordinary share
NAV at 1 January 2019 64,054 59.9
Net underlying increase in portfolio 385 0.3
Net income after expenses (244) (0.2)
Issue/buy-back of shares 13,307 (0.1)
NAV before the payment of dividends 77,502 59.9
Dividends paid (7,326) (6.5)
-------------------------------------- ------- -------- -------- --------
NAV at 30 June 2019 70,176 53.4
-------------------------------------- ------- -------- -------- --------
Dividends
Following the three realisations in December 2018 the Company paid a special dividend of 5.0 pence per ordinary share in respect of the year ending 31 December 2019 on 15 February 2019.
A final dividend of 1.5 pence per ordinary share in respect of the year ended 31 December 2018 was paid on 10 May 2019, bringing the cumulative dividends paid to date to 65.0 pence per ordinary share.
Your Board has proposed an interim dividend of 1.5 pence per ordinary share for the year ending 31 December 2019 which, when combined with the above dividends paid in the period will bring total dividends paid in the current financial year to 8.0 pence per ordinary share (2018: 3.0 pence per ordinary share). The interim dividend will be paid on 23 September 2019 to shareholders on the register on 23 August 2019.
Future performance is becoming more reliant on investments made since the VCT rule changes in November 2015. These businesses tend to be re-investing profits for growth and in many cases are expected to require multiple funding rounds. The Company's cash returns will therefore become more reliant on successful exits. In light of this your Board will continue to monitor the Company's dividend policy.
Shareholder Relations
As part of the Board's continuing communication with shareholders, the 24th shareholder workshop was held in conjunction with British Smaller Companies VCT plc at Gibson Hall on 20 June 2019. Shareholders saw presentations from Friska Limited, Matillion Limited and Frescobol Carioca Ltd. The Company's performance, portfolio and outlook were discussed in talks given by the Investment Adviser, followed by a question and answer session.
A large number of shareholders (83 percent) now receive documents such as the annual report via the website, www.bscfunds.com, rather than by post. This meets the Board's impact objectives as well as reducing printing costs. Your Board continues to encourage all shareholders to take up this option.
Your Company's website www.bscfunds.com, provides a comprehensive level of information in what I hope is a user-friendly format and is refreshed on a regular basis.
Regulatory Developments
As noted above the Company has begun to self-assure new investments on a case-by-case basis and only where professional advice confirms that they can easily be defined as a Qualifying Investment. Advance assurance is sought where there is an element of uncertainty over the application of the rules.
Fundraising
The new share offer launched on 28 November 2018 with British Smaller Companies VCT plc closed on 11 February 2019 raising total gross proceeds across both VCTs of GBP35 million. The related allotment of 23,205,679 ordinary shares took place on 1 April 2019 following which your Company received net proceeds of GBP12.7 million.
Board Composition
Following completion of the 2019 Annual General Meeting, Richard Last stepped down as Chairman and Director and I am delighted to have taken on the role of Chairman at an exciting time for your Company.
Outlook
Given the short time available before 31 October, the recent appointment of a new Prime Minister and the subsequent changes to the Cabinet have made a no-deal Brexit more likely. While the businesses in the portfolio believe they are as prepared as they can be for such an event there is no doubt that any economic slowdown in the UK could have an impact on some performances over the medium term. There may well be an offsetting effect for the net exporters, of which there are a number, but the overall impact remains a little uncertain. We continue to implement as much risk mitigation as possible into the strategies of the individual investments.
The investment rate has been strong so far this year and there are a number of attractive opportunities in the current pipeline which should help us to maintain this momentum.
OBJECTIVES AND STRATEGY
The Company's objective is to maximise Total Return and provide investors with an attractive long-term tax-free dividend yield while maintaining the Company's status as a venture capital trust.
The investment strategy of the Company is to invest in UK businesses across a broad range of sectors to create a portfolio that blends a mix of businesses operating in established and emerging industries that offer opportunities in the application and development of innovation in their products and services.
These investments will all meet the definition of a Qualifying Investment and be primarily in unquoted UK companies. It is anticipated that the majority of these businesses will be re-investing their profits for growth and the investments will, therefore, comprise mainly equity instruments.
INVESTMENT REVIEW
The Company's portfolio at 30 June 2019 had a value of GBP43.73 million consisting of GBP42.83 million (98 per cent) in unquoted investments and GBP0.90 million (2 per cent) in quoted investments. The largest single investment represents 8.8 per cent of the net asset value.
Over the six months to 30 June 2019 the portfolio saw an underlying value gain of GBP0.26 million from the ongoing portfolio comprising GBP0.19 million from the unquoted portfolio and GBP0.07 million from the quoted portfolio.
The most significant upward movements in the period were:
GBP0.93 million
* ACC Aviation GBP0.34 million
GBP0.31 million
* Business Collaborator
* Matillion
These gains were offset by companies which saw profits impacted by difficult trading conditions resulting in downward movements:
GBP0.37 million
* Arcus Global GBP0.36 million
GBP0.36 million
* Macro Art
* KeTech Enterprises
New and Follow-on Investments
In the six months to 30 June 2019 the Company has invested GBP5.63 million into four new investments and GBP1.24 million into five follow-on investments, including GBP0.75 million into Arcus Global Limited.
The new investments comprise:
-- GBP1.59 million into Tonkotsu Limited -- GBP1.44 million into Wooshii Limited -- GBP1.40 million into Elucidat Limited and -- GBP1.20 million into Frescobol Carioca Ltd.
Realisation of Investments
During the six months to 30 June 2019 the Company generated GBP1.75 million from disposals and repayments of loans. This included the full exit from its investment in Leengate Holdings Limited.
A detailed analysis of all investments realised in the period to 30 June 2019 can be found in note 6 to this interim report.
INVESTMENT PORTFOLIO
The top 10 investments had a combined value of GBP28.2 million, 64.5 per cent of the total portfolio.
Name of Company Sector First Current Value at Proceeds Capital
investment cost 30 June to date return to
2019 date
GBP000 GBP000 GBP000 GBP000
ACC Aviation Group Business
Limited Services Nov 14 145 6,178 1,233 7,411
Matillion Limited Software Nov 16 1,778 5,489 - 5,489
Intelligent Office UK
(IO Outsourcing Limited Business
t/a Intelligent Office) Services May 17 1,956 2,970 - 2,970
Business Collaborator
Limited Software Nov 14 1,340 2,627 - 2,627
Eikon Holdco Limited Software Mar 18 2,000 2,342 - 2,342
KeTech Enterprises
Limited Software Nov 15 1,500 1,971 500 2,471
Deep-Secure Ltd Software Dec 09 500 1,786 - 1,786
Springboard Research Business
Holdings Limited Services Oct 14 1,824 1,675 - 1,675
Tonkotsu Limited Retail Jun 19 1,592 1,592 - 1,592
Arcus Global Limited Software May 18 1,950 1,585 - 1,585
Total top 10 investments 14,585 28,215 1,733 29,948
Remaining unquoted portfolio
Business
Wooshii Limited Services May 19 1,440 1,440 - 1,440
Elucidat Limited Software May 19 1,400 1,400 - 1,400
Frescobol Carioca Ltd Retail Mar 19 1,200 1,200 - 1,200
Sipsynergy
(via Hosted Network
Services Limited) Software Jun 16 1,309 1,141 - 1,141
Friska Limited Retail Jul 17 1,200 1,116 - 1,116
Ncam Technologies
Limited Software Mar 18 1,268 985 - 985
Traveltek Group Holdings
Limited Software Oct 16 1,114 802 - 802
Wakefield Acoustics
(via Malvar Engineering
Limited) Manufacturing Dec 14 720 750 41 791
Biz2Mobile Limited Software Oct 16 1,106 748 - 748
DisplayPlan Holdings Business
Limited Services Jan 12 70 648 820 1,468
Other
GBP0.5 million and below investments 9,888 4,386 1,683 6,069
------------------------- ---------------- ------------ -------- --------- --------- -------------
Total unquoted investments 35,300 42,831 4,277 47,108
------------------------------------------- ------------ -------- --------- --------- -------------
Quoted portfolio investments GBP0.5
million and below 586 894 673 1,567
35,886 43,725 4,950 48,675
Full disposals to date 30,905 - 43,762 43,762
------------------------------------------- ------------ -------- --------- --------- -------------
Total portfolio 66,791 43,725 48,712 92,437
------------------------------------------- ------------ -------- --------- --------- -------------
The charts on page 12 of the interim report show the composition of the portfolio as at 30 June 2019 by age of investment, industry sector, investment instrument and period of investment in relation to VCT rule changes.
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 2018. 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; and -- Market/liquidity.
Full details of the principal risks can be found in the financial statements for the year ended 31 December 2018 on pages 28 and 29, 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 true and 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 true and 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 of these interim financial statements.
By order of the Board
Peter Waller
Chairman
14 August 2019
UNAUDITED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 June 2019
Unaudited 6 months ended Unaudited 6 months ended
30 June 2019 30 June 2018
Notes Revenue Capital Total Revenue Capital Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Income 2 552 - 552 859 - 859
Gains on investments held at fair value 6 - 255 255 - 1,616 1,616
Gains on disposal of investments 6 - 130 130 - 65 65
Total income 552 385 937 859 1,681 2,540
Administrative expenses:
--------- --------- ------- --------- --------- -------
Investment Adviser's fee (141) (424) (565) (147) (444) (591)
Other expenses (231) - (231) (228) - (228)
--------- --------- ------- --------- --------- -------
(372) (424) (796) (375) (444) (819)
------------------------------------------------ ------ --------- --------- ------- --------- --------- -------
Profit (loss) before taxation 180 (39) 141 484 1,237 1,721
Taxation 3 (5) 5 - (41) 41 -
------------------------------------------------ ------ --------- --------- ------- --------- --------- -------
Profit (loss) for the period 175 (34) 141 443 1,278 1,721
------------------------------------------------ ------ --------- --------- ------- --------- --------- ------- Total comprehensive income (expense) for the period 175 (34) 141 443 1,278 1,721 ------------------------------------------------ ------ --------- --------- ------- --------- --------- ------- Basic and diluted earnings (loss) per ordinary share 5 0.15p (0.03p) 0.12p 0.42p 1.21p 1.63p ------------------------------------------------ ------ --------- --------- ------- --------- --------- -------
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 February 2018 with consequential amendments - "SORP") published by the Association of Investment Companies.
UNAUDITED BALANCE SHEET
as at 30 June 2019
Notes Unaudited Unaudited Audited
30 June 30 June 31 December
2019 2018 2018
GBP000 GBP000 GBP000
Assets
Non-current assets at fair value through profit and loss
Financial assets 6 43,725 46,634 38,102
Accrued income and other assets 504 1,004 467
--------------------------------------------- ------ ---------- ---------- -------------
44,229 47,638 38,569
Current assets
Accrued income and other assets 505 462 552
Cash on fixed term deposit 1,988 1,988 1,988
Cash and cash equivalents 23,534 13,318 23,115
--------------------------------------------- ------ ---------- ---------- -------------
26,027 15,768 25,655
Liabilities
Current liabilities
Trade and other payables (80) (172) (170)
--------------------------------------------- ------ ---------- ---------- -------------
Net current assets 25,947 15,596 25,485
--------------------------------------------- ------ ---------- ---------- -------------
Net assets 70,176 63,234 64,054
Shareholders' equity
Share capital 13,949 11,252 11,318
Share premium account 16,105 4,073 4,351
Capital redemption reserve 88 88 88
Other reserve 2 2 2
Merger reserve 5,525 5,525 5,525
Capital reserve 25,586 29,745 33,694
Investment holding gains and losses reserve 7,868 10,925 7,335
Revenue reserve 1,053 1,624 1,741
--------------------------------------------- ------ ---------- ---------- -------------
Total shareholders' equity 70,176 63,234 64,054
--------------------------------------------- ------ ---------- ---------- -------------
Net asset value per ordinary share 7 53.4p 58.8p 59.9p
--------------------------------------------- ------ ---------- ---------- -------------
UNAUDITED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2019
Share Share Other Capital Investment Revenue Total
capital premium reserves* reserve holding reserve equity
account gains
and
losses
reserve
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------------- --------- --------- ----------- --------- ----------- --------- --------
At 31 December 2017 10,450 257 5,615 32,198 9,090 1,446 59,056
-------------------------- --------- --------- ----------- --------- ----------- --------- --------
Revenue return for
the period - - - - - 484 484
Capital expenses - - - (444) - - (444)
Investment holding
gain on investments
held at fair value - - - - 1,616 - 1,616
Realisation of
investments
in the period - - - 65 - - 65
Taxation - - - 41 - (41) -
-------------------------- --------- --------- ----------- --------- ----------- --------- --------
Total comprehensive
(expense) income
for the period - - - (338) 1,616 443 1,721
-------------------------- --------- --------- ----------- --------- ----------- --------- --------
Issue of ordinary
share capital 737 3,663 - - - - 4,400
Issue of shares -
DRIS 65 294 - - - - 359
Issue costs of ordinary
shares** - (141) - (5) - - (146)
Purchase of own shares - - - (544) - - (544)
Dividends - - - (1,347) - (265) (1,612)
-------------------------- --------- --------- ----------- --------- ----------- --------- --------
Total transactions
with owners 802 3,816 - (1,896) - (265) 2,457
Realisation of prior
year investment holding
losses - - - (219) 219 - -
-------------------------- --------- --------- ----------- --------- ----------- --------- --------
At 30 June 2018 11,252 4,073 5,615 29,745 10,925 1,624 63,234
-------------------------- --------- --------- ----------- --------- ----------- --------- --------
Revenue return for
the period - - - - - 334 334
Capital expenses - - - (399) - - (399)
Investment holding
loss on investments
held at fair value - - - - (240) - (240)
Realisation of
investments
in the period - - - 3,038 - - 3,038
Taxation - - - 16 - (16) -
-------------------------- --------- --------- ----------- --------- ----------- --------- --------
Total comprehensive
income (expense)
for the period - - - 2,655 (240) 318 2,733
-------------------------- --------- --------- ----------- --------- ----------- --------- --------
Issue of shares -
DRIS 66 293 - - - - 359
Issue costs of ordinary
shares** - (15) - (1) - - (16)
Unclaimed dividends - - - 7 - - 7
Purchase of own shares - - - (650) - - (650)
Dividends - - - (1,412) - (201) (1,613)
-------------------------- --------- --------- ----------- --------- ----------- --------- --------
Total transactions
with owners 66 278 - (2,056) - (201) (1,913)
Realisation of prior
year investment holding
gains - - - 3,350 (3,350) - -
-------------------------- --------- --------- ----------- --------- ----------- --------- --------
At 31 December 2018 11,318 4,351 5,615 33,694 7,335 1,741 64,054
-------------------------- --------- --------- ----------- --------- ----------- --------- --------
Revenue return
for the period - - - - - 180 180 Capital expenses - - - (424) - - (424) Investment holding gain on investments held at fair value - - - - 255 - 255 Realisation of investments in the period - - - 130 - - 130 Taxation - - - 5 - (5) - -------------------------- --------- --------- ----------- --------- ----------- --------- -------- Total comprehensive (expense) income for the period - - - (289) 255 175 141 -------------------------- --------- --------- ----------- --------- ----------- --------- -------- Issue of ordinary share capital 2,321 10,959 - - - - 13,280 Issue of shares - DRIS 310 1,259 - - - - 1,569 Issue costs of ordinary shares** - (464) - (136) - - (600) Purchase of own shares - - - (942) - - (942) Dividends - - - (6,463) - (863) (7,326) -------------------------- --------- --------- ----------- --------- ----------- --------- -------- Total transactions with owners 2,631 11,754 - (7,541) - (863) 5,981 Realisation of prior year investment holding losses - - - (278) 278 - - -------------------------- --------- --------- ----------- --------- ----------- --------- -------- At 30 June 2019 13,949 16,105 5,615 25,586 7,868 1,053 70,176 -------------------------- --------- --------- ----------- --------- ----------- --------- --------
*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 reserve Revenue reserve Total
GBP000 GBP000 GBP000
Distributable reserves as before 25,586 1,053 26,639
----------------------------------------------------------- ---------------- ---------------- ---------------
Less : Income and proceeds not yet distributable (388) (1,008) (1,396)
: Revaluation losses (410) - (410)
: Cancelled share premium not yet distributable (7,242) - (7,242)
----------------------------------------------------------- ---------------- ---------------- ---------------
Reserves available for distribution* 17,546 45 17,591
----------------------------------------------------------- ---------------- ---------------- ---------------
* subject to filing these interim financial statements at Companies House.
The capital reserve and the revenue reserve are both distributable reserves. These reserves total GBP26,639,000, representing a decrease of GBP8,796,000 in the period since 31 December 2018. 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 GBP26,639,000 shown above, GBP1,396,000 relates to income and proceeds not yet receivable and GBP7,242,000 to cancelled share premium which becomes distributable from 1 January 2020 onwards (see below). In addition revaluation losses of GBP410,000 included within the investment holding gains and losses reserve are not considered to be recoverable.
Total share premium previously cancelled will be available for distribution from the following dates.
GBP000
1 January 2020 3,565
1 January 2021 3,677
------------------------------------------------- -------
Cancelled share premium not yet distributable 7,242
------------------------------------------------- -------
UNAUDITED STATEMENT OF CASH FLOWS
for the six months ended 30 June 2019
Notes Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 June 30 June 31 December
2019 2018 2018
GBP000 GBP000 GBP000
Profit before taxation 141 1,721 4,454
(Decrease) increase in trade and other payables (90) (176) 14
(Increase) decrease in accrued income and other assets (96) (81) 366
Gains on disposal of investments (130) (65) (3,103)
Gains on investments held at fair value (255) (1,616) (1,376)
Capitalised interest and dividends - - (133)
----------------------------------------------------------------------- ------ ---------- ---------- -------------
Net cash (outflow) inflow from operating activities (430) (217) 222
----------------------------------------------------------------------- ------ ---------- ---------- -------------
Cash flows from investing activities
Purchase of financial assets at fair value through profit or loss 6 (6,867) (5,534) (5,647)
Proceeds from sale of financial assets at fair value through profit or
loss 6 1,612 931 12,224
Deferred consideration 6 123 - 189
Net cash (outflow) inflow from investing activities (5,132) (4,603) 6,766
----------------------------------------------------------------------- ------ ---------- ---------- -------------
Cash flows from financing activities
Issue of ordinary shares 13,280 4,380 4,379
Costs of ordinary share issues* (600) (126) (141)
Purchase of own shares (942) (544) (1,194)
Dividends paid 4 (5,757) (1,253) (2,598)
Net cash inflow from financing activities 5,981 2,457 446
----------------------------------------------------------------------- ------ ---------- ---------- -------------
Net increase (decrease) in cash and cash equivalents 419 (2,363) 7,434
----------------------------------------------------------------------- ------ ---------- ---------- -------------
Cash and cash equivalents at the beginning of the period 23,115 15,681 15,681
----------------------------------------------------------------------- ------ ---------- ---------- -------------
Cash and cash equivalents at the end of the period 23,534 13,318 23,115
----------------------------------------------------------------------- ------ ---------- ---------- -------------
*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 2018 do not constitute full financial statements and have been extracted from the Company's financial statements for the year ended 31 December 2018. 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 2018. 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 2018 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, amendments to standards and interpretations have been issued which are effective for the current reporting period. The Company has carried out an assessment and considers that these standards, amendments and interpretations do not affect the Company's accounting policies, 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 2019 the Company held cash balances and fixed term deposits with a combined value of GBP25,522,000. 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
2019 2018
GBP000 GBP000
Income from investments
- Dividends from unquoted companies 149 263
- Dividends from AIM quoted companies 2 8
------------------------------------------------------------------- ---------- ----------
151 271
- Interest on loans to unquoted companies 289 527
------------------------------------------------------------------- ---------- ----------
Income from investments held at fair value through profit or loss 440 798
Interest on bank deposits 112 61
------------------------------------------------------------------- ---------- ----------
552 859
------------------------------------------------------------------- ---------- ----------
3 Taxation
Unaudited 6 months ended Unaudited 6 months ended
30 June 2019 30 June 2018
----------------------------- -----------------------------
Revenue Capital Total Revenue Capital Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Profit (loss) before taxation 180 (39) 141 484 1,237 1,721
-------------------------------------------------------- --------- --------- ------- --------- --------- -------
Profit (loss) before taxation multiplied by the
standard small company rate of corporation
tax in UK of 19.0% (2018: 19.0%) 34 (7) 27 92 235 327
Effect of:
UK dividends received (29) - (29) (51) - (51)
Non-taxable profits on investments - (73) (73) - (319) (319)
Excess expenses - 75 75 - 43 43
-------------------------------------------------------- --------- --------- ------- --------- --------- -------
Tax charge (credit) 5 (5) - 41 (41) -
-------------------------------------------------------- --------- --------- ------- --------- --------- -------
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 2019 30 June 2018 31 December 2018
--------------------------------------------------------- --------------------------- ---------------------------
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 2018 of 1.5p
(2017: 1.5p) per ordinary
share 785 1,190 1,975 265 1,347 1,612 265 1,347 1,612
Interim dividend for the year
ended 31 December 2019 of 5.0p
(2018 1.5p) per ordinary share 78 5,273 5,351 - - - 201 1,412 1,613
-------------------------------- ---- -------- -------- -------- -------- ------- -------- -------- -------
863 6,463 7,326 265 1,347 1,612 466 2,759 3,225
-------------------------------- ---- -------- -------- -------- -------- ------- -------- -------- -------
Shares allotted under DRIS (1,569) (359) (718)
Unclaimed dividends - - 91
-------------------------------- ---- -------- -------- -------- -------- ------- -------- -------- -------
Dividends paid in the Statement
of Cash Flows 5,757 1,253 2,598
-------------------------------- ---- -------- -------- -------- -------- ------- -------- -------- -------
An interim dividend of 1.5 pence per ordinary share, amounting to approximately GBP2.0 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 (Loss) per Ordinary Share
The basic and diluted earnings per ordinary share is based on the profit after tax attributable to equity shareholders of GBP141,000 (30 June 2018: GBP1,721,000) and 120,024,534 (30 June 2018: 105,882,952) 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 GBP175,000 (30 June 2018: GBP443,000) and 120,024,534 (30 June 2018: 105,882,952) 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 loss attributable to equity shareholders of GBP34,000 (30 June 2018: profit GBP1,278,000) and 120,024,534 (30 June 2018: 105,882,952) ordinary shares being the weighted average number of ordinary shares in issue during the period.
During the period the Company allotted 3,103,427 new ordinary shares in respect of its dividend re-investment scheme and 23,205,679 new ordinary shares of 10 pence each under the offer for subscription launched on 28 November 2018, which raised gross proceeds of GBP13.3 million.
The Company has repurchased 1,815,531 of its own shares in the period and these shares are held in the capital reserve. The total of 7,974,092 treasury shares has been excluded in calculating the weighted average number of ordinary shares during the period.
The Company has no dilutive shares and consequently, basic and diluted earnings per ordinary share are equivalent at 30 June 2019, 31 December 2018 and 30 June 2018.
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 or sales 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 (2018: 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 (IPEV) 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 57 of the financial statements for the year ended 31 December 2018, 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.
-- Sales multiples and industry valuation benchmarks: Where appropriate comparator companies can be identified, multiples of revenues may be used as a valuation benchmark.
Movements in investments at fair value through profit or loss during the six months to 30 June 2019 are summarised as follows:
IFRS 13 measurement classification Level 3 Level 1 Total
Unquoted Quoted Investments
Investments Equity
Investments
GBP000 GBP000 GBP000
--------------------------------------
Opening cost 30,042 754 30,796
Opening valuation gain 6,977 329 7,306
-------------------------------------- ------------- ------------- -------------
Opening fair value at 1 January 2019 37,019 1,083 38,102
Additions at cost 6,867 - 6,867
Disposal proceeds (1,304) (308) (1,612)
Net profit on disposal 59 54 113
Change in fair value 190 65 255
-------------------------------------- ------------- ------------- -------------
Closing fair value at 30 June 2019 42,831 894 43,725
-------------------------------------- ------------- ------------- -------------
Closing cost 35,300 586 35,886
Closing valuation gain 7,531 308 7,839
-------------------------------------- ------------- ------------- -------------
Closing fair value at 30 June 2019 42,831 894 43,725
-------------------------------------- ------------- ------------- -------------
The net profit on disposal in the table above is GBP113,000 whereas that shown in the Statement of Comprehensive Income is GBP130,000. The difference comprises the gain of GBP17,000 arising on deferred proceeds in respect of assets which have been disposed of and are not included within the investment portfolio at the period end.
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 GBP2,423,000 (5.7 per cent) lower. Using the upside alternative the value would be increased by GBP2,610,000 (6.1 per cent).
Of the Company's investments, 98 per cent are in unquoted companies held at fair value (31 December 2018: 97 per cent). The valuation methodology for these investments includes the application of externally produced sales multiples and 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 earnings and sales multiple methodologies 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 GBP3,271,000 (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 an equal amount.
Of the Company's equity investments, 2 per cent are quoted on AIM (31 December 2018: 3 per cent). A 5 per cent increase in stock prices as at 30 June 2019 would have increased the net assets attributable to the Company's shareholders and the total profit for the period by GBP45,000 (31 December 2018: GBP54,000). 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 5 per cent of the total assets of the Company (31 December 2018: none).
The following disposals and loan repayments took place during the period (all companies are unquoted unless otherwise stated).
Net Cost Opening Gain
proceeds carrying over
from sale value as at opening
1 January carrying
2019 value
GBP000 GBP000 GBP000 GBP000
Unquoted investments
Leengate Holdings Limited 1,291 716 1,240 51
Hutchinson Networks Limited - 880 - -
Seven Technologies Holdings Limited 13 13 5 8
1,304 1,609 1,245 59
-------------------------------------------- ----------- ------- ------------- ----------
Quoted investments
AB Dynamics plc 100 8 95 5
Renalytix plc 109 74 73 36
Volex plc 99 86 86 13
308 168 254 54
-------------------------------------------- ----------- ------- ------------- ----------
Total from disposals in the period 1,612 1,777 1,499 113
-------------------------------------------- ----------- ------- ------------- ----------
Deferred proceeds:
Selima Holding Company Ltd 134 - 117 17
-------------------------------------------- ----------- ------- ------------- ----------
Total from quoted and unquoted investments 1,746 1,777 1,616 130
-------------------------------------------- ----------- ------- ------------- ----------
The proceeds in the table above total GBP1,746,000, whereas that shown in the Statement of Cash Flows including deferred consideration is GBP1,735,000. The difference comprises deferred consideration which is expected to be received after 30 June 2019.
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 GBP70,176,000 (30 June 2018 and 31 December 2018: GBP63,234,000 and GBP64,054,000 respectively) and 131,512,395 (30 June 2018 and 31 December 2018: 107,538,444 and 107,018,820 respectively) ordinary shares in issue at 30 June 2019.
The 7,974,092 (30 June 2018 and 31 December 2018: 4,980,851 and 6,158,561 respectively) treasury shares have been excluded in calculating the number of ordinary shares in issue at 30 June 2019.
The Company has no potentially dilutive shares and consequently, basic and diluted net asset values are equivalent at 30 June 2019, 31 December 2018 and 30 June 2018.
8 Total Return
Total Return per ordinary share is calculated on cumulative dividends paid of 65.0 pence per ordinary share (30 June 2018: 57.0 pence per ordinary share and 31 December 2018: 58.5 pence per ordinary share) plus the net asset value as calculated in note 7.
9 Directors
The directors of the Company are: Peter Charles Waller, Robert Martin Pettigrew, and Roger Steven McDowell.
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 2019
Further to the announcement of its interim results for the six months to 30 June 2019, the Company confirms that an interim dividend of 1.5 pence per ordinary share ("Interim Dividend") will be paid on 23 September 2019 to those shareholders on the Company's register at the close of business on 23 August 2019. The ex-dividend date for these dividends will be 22 August 2019.
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 9 September 2019.
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 Private Equity Limited Tel: 0113 244 1000 Robert Naylor Panmure Gordon (UK) Limited Tel: 0207 886 2768
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
IR VZLBFKVFBBBZ
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