TIDMBSV
RNS Number : 1023I
British Smaller Companies VCT PLC
21 November 2018
British Smaller Companies VCT plc
Unaudited Interim Results and Interim Management Report
For the six months ended 30 September 2018
British Smaller Companies VCT plc (the "Company") today
announces its unaudited interim results for the six months to 30
September 2018.
HIGHLIGHTS
-- Increase in total return of 3.0 pence per ordinary share to
219.0 pence per ordinary share at 30 September 2018 (216.0 pence
per ordinary share as at 31 March 2018).
-- Increase in net asset value ("NAV") to 82.6 pence per
ordinary share prior to the payment of the interim dividend of 4.0
pence per ordinary share in May 2018. The NAV at 30 September 2018
is 78.6 pence per ordinary share.
-- Total dividends for the period ended 30 September 2018
amounted to 4.0 pence per ordinary share which equates to 5.0 per
cent of the opening March 2018 NAV per share.
-- Total cumulative dividends paid since inception of 140.4 pence per ordinary share.
-- The Company invested GBP3.12 million into two new investments during the period.
-- The Company will shortly launch an offer, with British
Smaller Companies VCT2 plc, (together "the Companies"), to raise up
to GBP30 million in aggregate, with an additional GBP5 million over
allotment facility, by way of a new joint prospectus offer of new
ordinary shares for subscription in the 2018/19 tax year ("the
Offer"). The Offer will be open to those shareholders on the
register of one or both of the Companies on 22 October 2018 until 4
January 2019, and unless the Offer has been fully subscribed by
that date the Offer will then be available to new Investors.
CHAIRMAN'S STATEMENT
I am pleased to present the Interim Accounts for the six months
ended 30 September 2018.
Overview
Total Return for the six months was 3.0 pence per ordinary
share, which was 3.8 per cent of the net asset value at 31 March
2018.
New Investment
It is pleasing that in the first six months of 2018, your
Company completed two new investments totalling GBP3.1 million.
These were:
GBP1.3 million was invested into Hutchinson Networks Limited in
April 2018, a leading provider of multi-vendor IT and network
solutions to clients globally. Hutchinson will utilise the money to
fund additional marketing and operational resources to accelerate
international growth in a growing market.
GBP1.8 million was invested into Arcus Global Limited in May
2018, a provider of cloud-based software solutions to local and
national public-sector organisations. The funding will support the
continued growth of the business; building resource in technology
development, sales and customer services. Together, this will
enable Arcus to further expand its range of software solutions to
help the public sector to increase its use of digital technologies
and transform services.
In both cases there is the prospect that follow-on funding may
be required.
Financial Results and Dividends
The movement in Total Return is set out in the table below:
Pence per
Total Return ordinary share
Total Return at 1 April 2018 216.0
Net underlying increase in portfolio 3.0
Total Return at 30 September 2018 219.0
The portfolio produced a value gain of GBP3.3 million,
representing a 5.1 per cent increase over the opening value and
equivalent to an increase in value for shareholders of 3.0 pence
per ordinary share.
Due to the repayment of loans and the different financing
structures of new investments there has been a significant change
in the nature of the Company's income. Newer investments now
include lower levels of debt and higher levels of preference
shares, which means that a growing proportion of income now derives
from preference dividends. In addition, where new investments are
re-investing their profits to fund growth, the payment of dividends
and interest is often deferred until a sale.
Whilst income in the period was slightly higher than the same
period last year, this derived principally from preference
dividends as referred to above - the receipt of which is
anticipated to be less predictable than the interest income from
more mature investments.
Investments made since the changes to the VCT rules in November
2015 now comprise GBP18.7 million (29 per cent) of the value of the
unquoted portfolio as at 30 September 2018, with GBP45.6 million
(71 per cent) of investments made prior to the rule changes. In
general, the more recent additions to the portfolio comprise mainly
equity instruments. Additionally because younger companies
typically re-invest their profits for growth, they may have little
or no capacity to pay dividends.
An interim dividend of 4.0 pence per ordinary share in respect
of the year ending 31 March 2019 was paid in the period, bringing
the cumulative dividends paid to date to 140.4 pence per ordinary
share.
The movement in net asset value per ordinary share and the
dividends paid are set out in the table below:
GBP000 Pence per
Net Asset Value "NAV" ordinary share
NAV at 1 April 2018 86,137 79.6
Net underlying increase in portfolio 3,307 3.0
Profit for the period 33 -
Issue/buy-back of shares 63 -
3,403 3.0
NAV before the payment of dividends 89,540 82.6
Dividends paid (4,322) (4.0)
-------------------------------------- ------ -------- ------- ---------
NAV at 30 September 2018 85,218 78.6
-------------------------------------- ------ -------- ------- ---------
Shareholder Relations
As part of the Board's continuing dialogue with shareholders,
the 23rd shareholder workshop was held in conjunction with British
Smaller Companies VCT2 plc at the Honourable Artillery Company on
16 May 2018. This included a presentation from the CEO of one of
our newest investments, Ncam Technologies Limited, along with short
videos about some of the 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.
As shareholders may be aware the General Data Protection
Regulations ("GDPR") came into force on 25 May 2018. GDPR provides
a greater level of protection over personal information and the
Company and the Investment Adviser have taken all necessary steps
to comply with its requirements. A revised Privacy Notice has been
published and this can be found on your Company's website at
www.bscfunds.com.
A large number of shareholders (83 per cent) now receive
documents such as the annual report via the website,
www.bscfunds.com, rather than by post. This saves on printing
costs, as well as being more environmentally friendly, and your
Board would encourage all shareholders to do this.
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
On 5 July 2018 the European Commission confirmed its approval of
the recent amendments to the VCT rules, including a higher annual
investment limit for Knowledge Intensive Companies of GBP10 million
which, for appropriate investments, your Company intends to
utilise.
HMRC launched a consultation on proposed changes to the advance
assurance process which would allow your Company to make
investments without obtaining advance assurance. The Board
continues to keep these developments under review.
Fundraising
Following a review of the Company's cash requirements, the Board
will shortly launch a joint offer for subscription with British
Smaller Companies VCT2 plc, to raise in aggregate GBP30 million,
with an additional GBP5 million over allotment facility. There will
be a short period of time during which existing shareholders of
both companies will have exclusivity for around four weeks to apply
for new shares in both companies on a first-come, first-served
basis, after which the offers will be open to new investors. The
intention is to have a single allotment, which will be between 1-5
April 2019, in order to maximise the time available to invest the
monies raised and meet the VCT qualifying rules.
Board Composition
After 9 years as a non-executive director Edward Buchan has
decided to retire from the Board at the 2019 Annual General
Meeting. His thoughtful approach as Chair of the Audit Committee
has been invaluable to the Company, and I thank him for the
considerable contribution he has made to its development. His
contribution to the Board will be greatly missed. The Board intends
to begin the process of recruiting a new non-executive director and
Chair of the Audit Committee early in 2019.
Outlook
The Board welcomes the European Commission's approval of the
recent changes to the VCT rules, especially the ability to invest
up to GBP10 million in any one year into Knowledge Intensive
Companies as this should allow investments to be accelerated in
certain cases.
While it is frustrating that there is little clarity on the UK's
future trading relationship with the EU the businesses in the
portfolio continue to prepare for all potential outcomes. There has
been little impact on the level of enquiries seen by the Investment
Adviser to date.
The more mature investments in the portfolio generally continue
to perform well, as can be seen from the valuation uplifts in this
period, and opportunities to realise these investments are pursued
where the timing is felt to be appropriate for the relevant
business. The level of investment pipeline and the expected
financial needs of the newer growth investments informs the
requirement to raise further funds at this time. Your Board hopes
that shareholders will take the opportunity to further invest in
the Company in the proposed fundraising.
I would like to take this opportunity to thank shareholders for
their continued support.
OBJECTIVES AND KEY POLICIES
The Company's objective is to grow Total Return over the medium
to long-term whilst maintaining the Company's status as a venture
capital trust.
INVESTMENT POLICY
The Company's investment policy is to create a portfolio that
blends a mix of businesses operating in established industries with
those that offer opportunities in the application and development
of innovation. Investing across a range of companies and sectors
reduces exposure to particular markets and individual companies.
The changes to the VCT legislation in November 2015 and those
announced in the November 2017 Budget mean that there is greater
emphasis on earlier stage growth businesses focussing on the
application and development of innovation.
To this end, the Company will invest in UK businesses across a
broad range of sectors including but not limited to software,
information technology and telecommunications, retail and brands,
business services, manufacturing and industrial services and
healthcare. These investments will primarily be in unquoted UK
companies which meet the definition of a Qualifying Investment, in
order to maintain the Company's Venture Capital Trust status. 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. In order to limit
the risk to the portfolio that is derived from any particular
investment, at the point of investment no more than 15 per cent of
the Company by value will be in any one investment.
Borrowing
The Company funds the investment programmes out of its own
resources and has no borrowing facilities for this purpose.
Co-investment
British Smaller Companies VCT plc and British Smaller Companies
VCT2 plc ("the VCTs") have in aggregate priority in all investment
opportunities meeting the VCT qualifying criteria that require up
to GBP4.5 million of equity. Amounts above GBP4.5 million will be
allocated one third to YFM's co-investment funds and two thirds to
the VCTs. Where there are opportunities for the VCTs to co-invest
with each other the basis for allocation is 60 per cent to the
Company and 40 per cent to British Smaller Companies VCT2 plc. The
Board of the Company has discretion as to whether or not to take up
or, where British Smaller Companies VCT2 plc does not take its
allocation, increase its allocation in such co-investment
opportunities.
Asset Mix
Pending investment in VCT-qualifying securities, surplus cash is
primarily held in interest bearing instant access, and short-notice
bank accounts and investment funds listed on a recognised stock
exchange (including FCA authorised and regulated UCITS funds).
Subsequent to the Finance (No. 2) Act 2015 investments can no
longer be made in non-qualifying quoted investments traded on an
unregulated exchange. This change therefore now excludes most AIM
investments in this category.
INVESTMENT REVIEW
The Company's portfolio at 30 September 2018 had a value of
GBP66.78 million consisting of GBP64.30 million (96 per cent) in
unquoted investments and GBP2.48 million (4 per cent) in quoted
investments. The largest single investment represents 8.4 per cent
of the net asset value.
Over the six months to 30 September 2018 the portfolio saw an
underlying value gain of GBP3.17 million from the ongoing portfolio
comprising GBP2.69 million from the unquoted portfolio and GBP0.48
million from the quoted portfolio.
The most significant upward movements in the period were:
GBP3.41 million
* ACC Aviation GBP1.12 million
GBP1.02 million
GBP0.65 million
* Matillion Limited
* Deep-Secure Ltd
* Gill Marine Holdings Limited
The increase in ACC's valuation during the period has resulted
from a very strong underlying trading performance and a recent
increase in your Company's equity ownership following a
reorganisation.
These gains were offset by companies which saw profits impacted
by difficult trading conditions:
down GBP0.82
* Seven Technologies Holdings Limited million
down GBP0.74
million
* DisplayPlan Holdings Limited down GBP0.68
million
down GBP0.45
* e2E Engineering Limited million
* Traveltek Group Holdings Limited
New and Follow-on Investments
In the six months to September 2018 the rate of new investment
has increased. So far this year your Company has completed two new
investments totalling GBP3.12 million.
The new investments comprise:
-- GBP1.80 million into Arcus Global Limited (15.6 weeks for advance assurance)
-- GBP1.32 million into Hutchinson Networks Limited (10.4 weeks for advance assurance)
There has been some improvement in HMRC's rate of response to
advance assurance applications, although our experience hasn't yet
seen clearance within their best practice guidance of 15 working
days. However, HMRC has changed its guidance which would allow your
Company to make some investments without obtaining advance
assurance. The Board continues to keep these developments under
review.
Realisation of Investments
During the six months to 30 September 2018 the Company generated
GBP1.52 million from disposals and repayments of loans. An
additional GBP0.84 million was generated from the realisation of a
fixed income security and listed investment funds.
A detailed analysis of all investments realised in the period to
30 September 2018 can be found in note 6.
INVESTMENT PORTFOLIO
The top 10 investments had a combined value of GBP41.0 million,
61.4 per cent of the total portfolio.
Name of Company Sector Date of initial Current Investment Proceeds Realised and
investment cost Valuation to date unrealised
at 30 September value
2018 to date
GBP000 GBP000 GBP000 GBP000
ACC Aviation (via Newacc Business
(2014) Limited) Services Nov 14 220 7,159 1,848 9,007
Matillion Limited Software Nov 16 2,666 6,063 - 6,063
Mangar Health Limited Healthcare Jan 14 2,460 4,446 - 4,446
Intelligent Office UK
(IO Outsourcing Limited Business
t/a Intelligent office) Services May 14 2,934 4,438 - 4,438
Deep-Secure Limited Software Dec 09 1,000 3,875 - 3,875
Gill Marine Holdings
Limited Retail Sep 13 2,500 3,261 - 3,261
Business Collaborator
Limited Software Nov 14 2,010 3,130 - 3,130
Eikon Holdco Limited Software Mar 18 3,000 3,000 - 3,000
GTK (Holdco) Limited Manufacturing Oct 13 222 2,883 1,832 4,715
Springboard Research Business
Holdings Limited Services Oct 14 2,647 2,699 - 2,699
Total top 10 investments 19,659 40,954 3,680 44,634
Remaining unquoted
portfolio
KeTech Enterprises
Limited Software Nov 15 2,000 2,669 - 2,669
Leengate Holdings
Limited Manufacturing Dec 13 1,401 2,415 - 2,415
Friska Limited Retail Jul 17 1,800 1,803 - 1,803
Arcus Global Limited Software May 18 1,800 1,800 - 1,800
Sipsynergy
(via Hosted Network
Services Limited) Software Jun 16 1,770 1,358 - 1,358
Hutchinson Networks
Limited Software Apr 18 1,320 1,320 - 1,320
Wakefield Acoustics
(via Malvar Engineering
Limited) Manufacturing Dec 14 1,080 1,302 75 1,377
DisplayPlan Holdings Business
Limited Services Jan 12 130 1,122 1,521 2,643
Ncam Technologies
Limited Software Mar 18 1,466 1,100 - 1,100
Traveltek Group Holdings
Limited Software Oct 16 1,470 1,090 - 1,090
Macro Art Holdings Business
Limited Services Jun 14 720 1,070 540 1,610
Biz2Mobile Limited Software Oct 16 1,500 932 - 932
GBP0.75 million and
below Other investments 8,346 5,361 2,778 8,139
------------------------- ----------------------------------- -------- ---------------- --------- ---------------
Total unquoted investments 44,462 64,296 8,594 72,890
-------------------------------------------------------------- -------- ---------------- --------- ---------------
Quoted portfolio
GBP0.75 million and
below Other investments 688 2,484 3,023 5,507
------------------------- ----------------------------------- -------- ---------------- --------- ---------------
Total quoted investments 688 2,484 3,023 5,507
-------------------------------------------------------------- -------- ---------------- --------- ---------------
Total portfolio 45,150 66,780 11,617 78,397
Full disposals since 31 March 2002 33,176 - 70,419 70,419
Full disposals prior to 31 March 2002 5,748 - 1,899 1,899
-------------------------------------------------------------- -------- ---------------- --------- ---------------
Total investment portfolio 84,074 66,780 83,935 150,715
-------------------------------------------------------------- -------- ---------------- --------- ---------------
The charts on page 13 of the interim report show the composition
of the portfolio as at 30 September 2018 by industry sector, age of
investment, investment instrument and the value compared to
cost.
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 March 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;
-- Market/liquidity.
Full details of the principal risks can be found in the
financial statements for the year ended 31 March 2018 on pages 28
and 29, a copy of which is available at www.bscfunds.com.
DIRECTOR'S RESPONSIBILITIES STATEMENT
The directors of British Smaller Companies VCT 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 VCT 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 VCT plc are listed in
note 9 of these interim financial statements.
By order of the Board
Helen Sinclair
Chairman
21 November 2018
UNAUDITED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 September 2018
Unaudited 6 months ended Unaudited 6 months ended
30 September 2018 30 September 2017
Notes Revenue Capital Total Revenue Capital Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Gains (losses) on investments held at fair
value - 3,228 3,228 - (67) (67)
Income 2 1,180 - 1,180 1,102 - 1,102
Gains on disposal of investments 6 - 79 79 - 630 630
Total income 1,180 3,307 4,487 1,102 563 1,665
Administrative expenses:
--------- -------- -------- ---------- --------- ----------
Investment Adviser's fee (215) (646) (861) (220) (661) (881)
Other expenses (246) (40) (286) (264) - (264)
--------- -------- -------- ---------- --------- ----------
(461) (686) (1,147) (484) (661) (1,145)
-------------------------------------------- ------ --------- -------- -------- ---------- --------- ----------
Profit (loss) before taxation 719 2,621 3,340 618 (98) 520
Taxation 3 (58) 58 - (72) 72 -
-------------------------------------------- ------ --------- -------- -------- ---------- --------- ----------
Profit (loss) for the period 661 2,679 3,340 546 (26) 520
-------------------------------------------- ------ --------- -------- -------- ---------- --------- ----------
Total comprehensive income (loss) for the
period 661 2,679 3,340 546 (26) 520
-------------------------------------------- ------ --------- -------- -------- ---------- --------- ----------
Basic and diluted earnings (loss) per
ordinary share 5 0.61p 2.45p 3.06p 0.50p (0.02)p 0.48p
-------------------------------------------- ------ --------- -------- -------- ---------- --------- ----------
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 September 2018
Notes Unaudited Unaudited Audited
30 September 30 September 31 March
2018 2017 2018
GBP000 GBP000 GBP000
Assets
Non-current assets
Investments 66,780 56,430 61,756
Listed investment funds 2,391 - 2,336
Fixed income security - 710 706
------------------------------------------------------- ------ -------------- -------------- ----------
Financial assets at fair value through profit or loss 6 69,171 57,140 64,798
Trade and other receivables 1,580 1,123 1,284
------------------------------------------------------- ------ -------------- -------------- ----------
70,751 58,263 66,082
Current assets
Trade and other receivables 534 1,855 1,733
Cash on fixed term deposit 7,001 9,001 9,001
Cash and cash equivalents 7,093 15,568 10,057
------------------------------------------------------- ------ -------------- -------------- ----------
14,628 26,424 20,791
Liabilities
Current liabilities
Trade and other payables (161) (713) (736)
------------------------------------------------------- ------ -------------- -------------- ----------
Net current assets 14,467 25,711 20,055
------------------------------------------------------- ------ -------------- -------------- ----------
Net assets 85,218 83,974 86,137
Shareholders' equity
Share capital 11,517 11,342 11,342
Share premium account 1,052 - -
Capital reserve 48,101 56,024 53,422
Investment holding gains and losses 21,600 13,917 18,146
Revenue reserve 2,948 2,691 3,227
------------------------------------------------------- ------ -------------- -------------- ----------
Total shareholders' equity 85,218 83,974 86,137
------------------------------------------------------- ------ -------------- -------------- ----------
Net asset value per ordinary share 7 78.6p 77.0p 79.6p
------------------------------------------------------- ------ -------------- -------------- ----------
UNAUDITED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 September 2018
Share Share Capital Capital Investment Revenue Total
capital premium Redemption reserve holding reserve equity
account Reserve gains
and
losses
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------- --------- --------- ------------ --------- ----------- --------- ----------
At 31 March 2017 11,101 35,519 221 23,686 15,400 2,145 88,072
--------------------- --------- --------- ------------ --------- ----------- --------- ----------
Revenue return
for the period - - - - - 618 618
Capital expenses - - - (661) - - (661)
Investment holding
loss on investments
held at fair value - - - - (67) - (67)
Realisation of
investments in
the period - - - 630 - - 630
Taxation - - - 72 - (72) -
--------------------- --------- --------- ------------ --------- ----------- --------- ----------
Total comprehensive
income (expense)
for the period - - - 41 (67) 546 520
--------------------- --------- --------- ------------ --------- ----------- --------- ----------
Issue of shares
- DRIS 241 1,505 - - - - 1,746
Issue costs of
ordinary shares* - (14) - - - - (14)
Cancellation of
share premium
account,
net of costs - (37,010) (221) 37,221 - - (10)
Purchase of own
shares - - - (190) - - (190)
Dividends - - - (6,150) - - (6,150)
--------------------- --------- --------- ------------ --------- ----------- --------- ----------
Total transactions
with owners 241 (35,519) (221) 30,881 - - (4,618)
Realisation of
prior year
investment
holding gains - - - 1,416 (1,416) - -
--------------------- --------- --------- ------------ --------- ----------- --------- ----------
At 30 September
2017 11,342 - - 56,024 13,917 2,691 83,974
--------------------- --------- --------- ------------ --------- ----------- --------- ----------
Revenue return
for the period - - - - - 589 589
Capital expenses - - - (629) - - (629)
Investment holding
gain on investments
held at fair value - - - - 3,285 - 3,285
Realisation of
investments in
the period - - - (401) - - (401)
Taxation - - - 53 - (53) -
--------------------- --------- --------- ------------ --------- ----------- --------- ----------
Total comprehensive
(expense) income
for the period - - - (977) 3,285 536 2,844
--------------------- --------- --------- ------------ --------- ----------- --------- ----------
Purchase of own
shares - - - (681) - - (681)
Total transactions
with owners - - - (681) - - (681)
Realisation of
prior year
investment
holding losses - - - (944) 944 - -
--------------------- --------- --------- ------------ --------- ----------- --------- ----------
At 31 March 2018 11,342 - - 53,422 18,146 3,227 86,137
--------------------- --------- --------- ------------ --------- ----------- --------- ----------
Revenue return
for the period - - - - - 719 719
Capital expenses - - - (686) - - (686)
Investment holding
gain on investments
held at fair value - - - - 3,228 - 3,228
Realisation of
investments in
the period - - - 79 - - 79
Taxation - - - 58 - (58) -
--------------------- --------- --------- ------------ --------- ----------- --------- --------
Total comprehensive
(expense) income
for the period - - - (549) 3,228 661 3,340
--------------------- --------- --------- ------------ --------- ----------- --------- --------
Issue of shares
- DRIS 175 1,063 - - - - 1,238
Issue costs of
ordinary shares* - (11) - - - - (11)
Purchase of own
shares - - - (1,164) - - (1,164)
Unclaimed dividends - - - 6 - - 6
Dividends - - - (3,388) - (940) (4,328)
--------------------- --------- --------- ------------ --------- ----------- --------- --------
Total transactions
with owners 175 1,052 - (4,546) - (940) (4,259)
Realisation of
prior year
investment
holding losses - - - (226) 226 - -
--------------------- --------- --------- ------------ --------- ----------- --------- --------
At 30 September
2018 11,517 1,052 - 48,101 21,600 2,948 85,218
--------------------- --------- --------- ------------ --------- ----------- --------- --------
*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 above 48,101 2,948 51,049
Less : Interest and dividends not yet distributable - (2,155) (2,155)
: Cancelled share premium not yet distributable (16,074) - (16,074)
--------------------------------------------------------- --------------------- ---------------- ---------
Reserves available for distribution* 32,027 793 32,820
-------------------------------------------------------------- ---------------- ---------------- -----------
* subject to filing these interim financial statements at
Companies House.
The capital reserve (GBP48,101,000) and the revenue reserve
(GBP2,948,000) are both distributable reserves. These reserves
total GBP51,049,000, representing a decrease of GBP5,600,000 in the
period since 31 March 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 GBP51,049,000 shown
above, GBP2,155,000 relates to interest and dividends receivable
from 2019 onwards and GBP16,074,000 to cancelled share premium
which becomes distributable from 1 April 2019 onwards (see
below).
Total share premium previously cancelled will be available for
distribution from the following dates.
GBP000
1 April 2019 6,295
1 April 2020 8,288
1 April 2021 1,491
------------------------------------------------ -------
Cancelled share premium not yet distributable 16,074
------------------------------------------------ -------
UNAUDITED STATEMENT OF CASH FLOWS
for the six months ended 30 September 2018
Notes Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 September 30 September 31 March 2018
2018 2017
GBP000 GBP000 GBP000
Profit before taxation 3,340 520 3,364
Decrease in trade and other payables (523) (3,164) (3,142)
Increase in trade and other receivables (220) (893) (161)
Gain on disposal of investments (79) (630) (229)
(Gains) losses on investments held at fair value (3,228) 67 (3,218)
Capitalised interest and dividends - - (89)
------------------------------------------------------------- ------ -------------- -------------- ---------------
Net cash outflow from operating activities (710) (4,100) (3,475)
------------------------------------------------------------- ------ -------------- -------------- ---------------
Cash flows from investing activities
Purchase of financial assets at fair value through profit or
loss 6 (3,251) (3,122) (10,586)
Proceeds from sale of financial assets at fair value through
profit or loss 6 2,032 4,191 6,144
Deferred consideration 1,278 213 269
Cash maturing from fixed term deposit 2,000 4,023 4,023
Net cash inflow (outflow) from investing activities 2,059 5,305 (150)
------------------------------------------------------------- ------ -------------- -------------- ---------------
Cash flows from financing activities
Issue of ordinary shares - 4,244 4,245
Costs of ordinary share issues* (11) (118) (118)
Purchase of own shares (1,164) (190) (871)
Share premium cancellation costs - (10) (10)
Dividends paid 4 (3,138) (4,410) (4,411)
Net cash outflow from financing activities (4,313) (484) (1,165)
------------------------------------------------------------- ------ -------------- -------------- ---------------
Net (decrease) increase in cash and cash equivalents (2,964) 721 (4,790)
------------------------------------------------------------- ------ -------------- -------------- ---------------
Cash and cash equivalents at the beginning of the period 10,057 14,847 14,847
------------------------------------------------------------- ------ -------------- -------------- ---------------
Cash and cash equivalents at the end of the period 7,093 15,568 10,057
------------------------------------------------------------- ------ -------------- -------------- ---------------
*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 interim statements have been approved by the directors
whose names appear at note 9, each of whom has confirmed that to
the best of their knowledge:
-- the interim management report includes a true and 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 interim statements have been prepared in accordance with
IAS 34 'Interim financial reporting' and the Disclosure and
Transparency Rules of the Financial Conduct Authority.
The interim statements are unaudited but have been reviewed by
the auditors pursuant to the International Standard of Review
Engagements 2410 (UK and Ireland) guidance on Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity. 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 March 2018 do not constitute full financial
statements and have been extracted from the Company's financial
statements for the year ended 31 March 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 interim statements are the same as those adopted in the
preparation of the audited financial statements for the year ended
31 March 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 March 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.
The Company has carried out an assessment of accounting
standards, amendments and interpretations that have been issued by
the IASB and that are effective for the current reporting period.
These include IFRS 9 Financial Instruments and IFRS 15 Revenue from
Contracts with Customers. The Company has determined that IFRS 15
and other amendments/interpretations that are newly effective do
not affect the Company's performance or position. In respect of
IFRS 9 which replaces IAS 39, the Company continues to account for
its investment assets at fair value through profit or loss as
permitted by IFRS 9. Trade receivables continue to be accounted for
at amortised cost and the Company now applies the new IFRS 9
expected credit loss impairment model to these financial assets.
The impact of recognising impairment based on expected credit
losses rather than on an incurred basis is minimal.
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 interim statements were
approved. As at 30 September 2018 the Company held cash balances
and fixed term deposits with a combined value of GBP14,094,000.
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
interim statements.
2 Income
Unaudited Unaudited
6 months ended 6 months ended
30 September 30 September
2018 2017
GBP000 GBP000
Income from investments
- Dividends from unquoted companies 406 234
- Dividends from AIM quoted companies 9 5
------------------------------------------------------------------- ---------------- ----------------
415 239
- Interest on loans to unquoted companies 652 769
------------------------------------------------------------------- ---------------- ----------------
Income from investment portfolio 1,067 1,008
Income from listed investment funds 37 -
Fixed interest Government securities 3 8
Income from investments held at fair value through profit or loss 1,107 1,016
Interest on bank deposits 73 86
------------------------------------------------------------------- ---------------- ----------------
1,180 1,102
------------------------------------------------------------------- ---------------- ----------------
3 Taxation
Unaudited 6 months ended Unaudited 6 months ended
30 September 2018 30 September 2017
----------------------------- -----------------------------
Revenue Capital Total Revenue Capital Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Profit (loss) before taxation 719 2,621 3,440 618 (98) 520
-------------------------------------------------------- --------- --------- ------- --------- --------- -------
Profit before taxation multiplied by the standard small
company rate of corporation tax in
UK of 19.0% (2017: 19.0%) 137 498 635 117 (18) 99
Effect of:
UK dividends received (79) - (79) (45) - (45)
Non-taxable profits on investments - (628) (628) - (107) (107)
Excess expenses - 72 72 - 53 53
-------------------------------------------------------- --------- --------- ------- --------- --------- -------
Tax charge (credit) 58 (58) - 72 (72) -
-------------------------------------------------------- --------- --------- ------- --------- --------- -------
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 September 2018 30 September 2017 31 March 2018
---------------------------- ---------------------------- ----------------------------
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Interim dividend for the
year ended 31 March 2019
of 4.0p (2018: 5.75p) per
ordinary share 940 3,388 4,328 - 6,150 6,150 - 6,150 6,150
---------------------------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Shares allotted under DRIS (1,238) (1,746) (1,746)
Unclaimed dividends 48 6 7
---------------------------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Dividends paid in the
Statement of Cash Flows 3,138 4,410 4,411
---------------------------- -------- -------- -------- -------- -------- -------- -------- -------- --------
5 Basic and Diluted Earnings (Loss) per Ordinary Share and Changes in Share Capital
The basic and diluted earnings per ordinary share is based on
the profit after tax attributable to equity shareholders of
GBP3,340,000 (30 September 2017: GBP520,000) and 109,168,052 (30
September 2017: 108,626,142) 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
GBP661,000 (30 September 2017: GBP546,000) and 109,168,052 (30
September 2017: 108,626,142) ordinary shares being the weighted
average number of ordinary shares in issue during the period.
The basic and diluted capital earnings (loss) per ordinary share
is based on the capital profit (loss) attributable to equity
shareholders of GBP2,679,000 (30 September 2017: loss of GBP26,000)
and 109,168,052 (30 September 2017: 108,626,142) ordinary shares
being the weighted average number of ordinary shares in issue
during the period.
During the period the Company allotted 1,751,747 new ordinary
shares in respect of its dividend re-investment scheme.
The Company has repurchased 1,589,025 of its own shares in the
period and these shares are held in the capital reserve. The total
of 6,814,043 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
in any period. Consequently basic and diluted earnings per ordinary
share are equivalent at 30 September 2018, 31 March 2018 and 30
September 2017.
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 listed investment funds, AIM quoted investments and
other fixed income securities classified as held at fair value
through profit or loss.
-- Level 2: the fair value of financial instruments that are not
traded in an active market is determined by using valuation
techniques. These valuation techniques maximise the use of
observable market data where it is available and rely as little as
possible on entity specific estimates. If all significant inputs
required to fair value an instrument are observable, the instrument
is included in Level 2. The Company held no such instruments in the
current or prior year.
-- Level 3: the fair value of financial instruments that are not
traded in an active market (for example, investments in unquoted
companies) is determined by using valuation techniques such as
earnings 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
(2017: 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 56 of the financial statements for the year ended 31 March
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 September 2018 are summarised as
follows:
IFRS 13 Level 3 Level 1 Total Quoted Level 1 Level 1 Total
measurement Unquoted Quoted and Unquoted Listed Fixed Income Investments
classification Investments Equity Investment Securities
Investments GBP000 Funds
GBP000
GBP000 GBP000 GBP000 GBP000
Opening cost 42,793 732 43,525 2,431 696 46,652
Opening
valuation gain 16,772 1,459 18,231 (95) 10 18,146
---------------- ------------- ------------- ------------- ------------- ------------- -------------------------
Opening fair
value at 1
April 2018 59,565 2,191 61,756 2,336 706 64,798
Additions at
cost 3,120 - 3,120 131 - 3,251
Disposal
proceeds (1,005) (240) (1,245) (131) (704) (2,080)
Net (loss) gain
on disposal (78) 54 (24) - (2) (26)
Change in fair
value 2,694 479 3,173 55 - 3,228
---------------- ------------- ------------- ------------- ------------- ------------- -------------------------
Closing fair
value at 30
September 2018 64,296 2,484 66,780 2,391 - 69,171
---------------- ------------- ------------- ------------- ------------- ------------- -------------------------
Closing cost 44,462 688 45,150 2,421 - 47,571
Closing
valuation gain 19,834 1,796 21,630 (30) - 21,600
---------------- ------------- ------------- ------------- ------------- ------------- -------------------------
Closing fair
value at 30
September 2018 64,296 2,484 66,780 2,391 - 69,171
---------------- ------------- ------------- ------------- ------------- ------------- -------------------------
The net loss on disposal in the table above is GBP26,000 whereas
a gain of GBP79,000 is shown in the Statement of Comprehensive
Income. The difference comprises the gain of GBP105,000 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 GBP4,596,000 (7.1 per cent)
lower. Using the upside alternative the value would be increased by
GBP4,674,000 (7.3 per cent).
Of the Company's investments, 93 per cent are in unquoted
companies held at fair value (31 March 2018: 92 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 GBP5,429,000 (6.4
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 the same amount.
Of the Company's equity investments, 4 per cent are quoted on
AIM (31 March 2018: 4 per cent) and 3 per cent (31 March 2018: 4
per cent) are investment funds listed on the main market of the
London Stock Exchange (including FCA authorised and regulated UCITS
funds). A 5 per cent increase in stock prices as at 30 September
2018 would have increased the net assets attributable to the
Company's shareholders and the total profit for the period by
GBP244,000 (31 March 2018: GBP226,000). 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 March 2018: none).
The following disposals and loan repayments took place during
the period (all companies are unquoted unless otherwise
stated).
Net Cost Opening Gain (loss) Profit
proceeds carrying over (loss)
from sale value as at opening on
1 April 2018 carrying original
value cost
GBP000 GBP000 GBP000 GBP000 GBP000
Unquoted investments
ACC Aviation (via NewACC (2014) Limited) 922 922 922 - -
Harris Hill Limited 57 57 57 - -
Macro Art Holdings Limited 26 26 26 - -
PowerOasis Limited - 445 78 (78) (445)
Quoted investments
AB Dynamics plc 192 16 151 41 176
EKF Diagnostics plc 48 27 35 13 21
Total from disposals in the period 1,245 1,493 1,269 (24) (248)
-------------------------------------------- ----------- ------- -------------- ------------ ----------
Deferred consideration received:
Ness (Holdings) Limited - - 63 (63) -
Selima Holding Company Ltd 278 - 110 168 278
-------------------------------------------- ----------- ------- -------------- ------------ ----------
Total from quoted and unquoted investments 1,523 1,493 1,442 81 30
Fixed income securities 704 696 706 (2) 8
Listed investment funds 131 143 131 - (12)
-------------------------------------------- ----------- ------- -------------- ------------ ----------
Total proceeds 2,358 2,332 2,279 79 26
-------------------------------------------- ----------- ------- -------------- ------------ ----------
The proceeds in the table above total GBP2,358,000, whereas the
amounts shown for proceeds and deferred consideration in the
Statement of Cash Flows total GBP3,310,000. The difference relates
to the timing differences arising between the recognition of the
deferred income and its receipt in cash.
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 GBP85,218,000 (30 September
2017 and 31 March 2018: GBP83,974,000 and GBP86,137,000
respectively) and 108,352,886 (30 September 2017 and 31 March 2018:
109,107,183 and 108,190,164 respectively) ordinary shares in issue
at 30 September 2018.
The 6,814,043 (30 September 2017 and 31 March 2018: 4,307,999
and 5,225,018) treasury shares have been excluded in calculating
the number of ordinary shares in issue at 30 September 2018.
The Company has no securities which would have a dilutive effect
in any period. Consequently, basic and diluted net asset values are
equivalent at 30 September 2018, 31 March 2018 and 30 September
2017.
8 Total Return
Total Return per share is calculated on cumulative dividends
paid of 140.4 pence per ordinary share (30 September 2017 and 31
March 2018: 136.4 pence per ordinary share) plus the net asset
value as calculated in note 7.
9 Directors
The directors of the Company are: Mrs H Sinclair, Mr CWER Buchan
and Mr R Cook.
10 Post Balance Sheet Events
Subsequent to 30 September 2018 the Company has realised part of
its quoted portfolio raising total proceeds of GBP375,000, in line
with the value of the investments at 30 September 2018.
11 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.
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
Jonathan Becher Panmure Gordon (UK) Limited Tel: 0207 886 2715
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 KMMZMZMGGRZM
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