TIDMBSC
RNS Number : 0121Y
British Smaller Companies VCT2 Plc
30 November 2017
British Smaller Companies VCT2 plc
Interim Management Statement
For the quarter ended 30 September 2017
British Smaller Companies VCT2 plc (the "Company") presents its
interim management statement for the quarter ended 30 September
2017. The statement also includes relevant financial information
between the end of the quarter and the date of this statement. A
copy of this interim management statement can be found at
www.bscfunds.com.
Overview
The Company has continued to make progress in the quarter with
total return rising to 113.4 pence per ordinary share. This is an
increase of 0.4 pence per ordinary share.
It is pleasing that improved profitability across a number of
investments contributed to the GBP0.5 million increase in Net Asset
Value ("NAV") in the period, prior to the payment of the interim
dividend. The performances from GTK, Deep-Secure, Intelligent
Office and Matillion in particular were strong contributors in the
period. DisplayPlan has had a more difficult trading period, albeit
it is very well funded to be able to cope with the challenges and
whilst the additional investment in the sales channel by Business
Collaborator is slower to come through than anticipated the
business remains confident in being able to deliver on its
medium-term growth plans.
Performance
30 September Movement 30 June 2017
2017
--------------------------- ------------- --------- -------------
Net Assets (GBPm) 58.6 (0.8) 59.4
--------------------------- ------------- --------- -------------
NAV per share (PPS) 57.9p (1.1p) 59.0p
--------------------------- ------------- --------- -------------
Cumulative dividends paid
(PPS) 55.5p 1.5p 54.0p
--------------------------- ------------- --------- -------------
Total Return (PPS) 113.4p 0.4p 113.0p
--------------------------- ------------- --------- -------------
Shares in issue 101,091,180 456,434 100,634,746
--------------------------- ------------- --------- -------------
The total return at 30 September 2017, calculated by reference
to the NAV per ordinary share and the cumulative dividends paid per
ordinary share, was 113.4 pence per ordinary share compared to
113.0 pence per ordinary share at 30 June 2017. Cumulative
dividends paid were up 1.5 pence per ordinary share at 55.5 pence
per ordinary share (30 June 2017: 54.0 pence per ordinary
share).
The unaudited NAV per ordinary share as at 30 September 2017 was
57.9 pence per ordinary share (30 June 2017: 59.0 pence per
ordinary share) representing a decrease of 1.1 pence per ordinary
share. The decrease in NAV per ordinary share is primarily due to
the interim dividend of 1.5 pence per ordinary share for the year
ending 31 December 2017, offset by the net upward movement in the
overall portfolio valuation.
Dividends and shares in issue
On 27 September 2017 the Company purchased 150,000 ordinary
shares of 10 pence each at a price of 55.13 pence per ordinary
share. These shares were placed in treasury.
Pursuant to its dividend re-investment scheme on 29 September
2017 the Company issued 606,434 ordinary shares at a price of 54.63
pence per ordinary share.
The number of ordinary shares in issue at 30 September 2017 was
101,091,180 (30 June 2017: 100,634,746). In addition, at 30
September 2017 the Company held 3,405,746 ordinary shares in
treasury (30 June 2017: 3,255,746).
Subsequent to the quarter end on 20 October 2017 the Company
purchased 290,605 ordinary shares of 10 pence each at a price of
55.13 pence per ordinary share. These shares were placed in
treasury.
Net assets
Net assets at 30 September 2017 comprised the following:
% of net
GBP000 assets
Unquoted investments at
fair value 38,392 65.6
Quoted investments at
bid price 2,073 3.5
------- ---------
Total investments 40,465 69.1
Cash and cash equivalents 16,948 28.9
Other net current assets 1,158 2.0
------- ---------
Net assets 58,571 100.0
======= =========
The investment portfolio at 30 September 2017 was comprised as
follows:
Valuation
as a %
Valuation of net
GBP000 assets
ACC Aviation 3,704 6.3
Intelligent Office 3,264 5.6
Mangar Health Limited 2,654 4.5
KeTech Enterprises Limited 2,123 3.6
Springboard Research Holdings
Limited 1,922 3.3
GTK (Holdco) Limited 1,790 3.1
Gill Marine Holdings Limited 1,761 3.0
Business Collaborator Limited 1,650 2.8
Immunobiology Limited 1,612 2.8
Matillion Limited 1,569 2.7
22,049 37.7
Other investments 18,416 31.4
Total investments 40,465 69.1
========== ==========
During the quarter to 30 September 2017 the Company made two new
investments of GBP1.2 million into Friska Limited, a Bristol based
chain of restaurants and GBP0.6 million into e2E Engineering
Limited, a leading technical consultancy operating in the
telecommunications market with particular expertise in satellite
communications.
In the quarter to 30 September 2017 the realisation and
repayment of investments generated cash proceeds of GBP0.6 million,
including GBP0.2 million from the realisation of the Company's
final interest in Harvey Jones. This takes the total return on this
investment to GBP2.2 million, a multiple of 1.4x cost.
Portfolio Performance
Over the quarter to 30 September 2017 aggregate unrealised
portfolio valuations have increased by GBP0.5 million.
The Board continues to follow its policy of maintaining a
diversified portfolio. At 30 September 2017, only two investments
represented more than 5 per cent of the Company's NAV.
Recent budget
It was pleasing that the Government reaffirmed its commitment to
the Venture Capital Trust Schemes as one of the tools to support
investment in the UK's small businesses which remain an engine of
future growth and innovation. The changes announced seek to focus
investment on earlier stage higher risk businesses and away from
any capital preservation/asset-backed investments and also to
achieve higher levels of investment in qualifying companies.
A new "risk-based principles" test is to be introduced to help
achieve the focussing of investments, with guidelines expected to
be published on 1 December 2017. Whilst the test will not formally
be brought into law until the Finance Bill is given Royal Assent,
it is believed that the advance assurance will operate from 1
December 2017 as if the new test applied. Your Board and Investment
Adviser welcome the new test and do not believe that its
introduction will have a material impact on the Company's
operations or investment policy.
There are two new qualifying investment tests; the first is that
for the Company as a whole 80 per cent of its investments will have
to be held in Qualifying Investments as opposed to the current test
of 70 per cent; for the Company this comes into force from 1
January 2020. The second test applies to financial years commencing
on or after 6 April 2019 where 30 per cent of any new funds raised
have to be invested in Qualifying Investments within 12 months.
This will apply for the year ending 31 December 2020. It is not
believed that either of these changes will significantly impact the
Company.
Outlook
Although we remain in uncertain times and it is unclear what the
full implications of the UK's decision to leave the European Union
will mean for many businesses, your Board is confident that the
businesses in your Company's portfolio should be able to adapt to
the new economic environment and the pipeline of new investments is
continuing to develop.
The Company is pleased to note the increased level of investment
opportunities and, as last year, will be seeking to raise up to
EUR5 million by way of a non-prospectus top-up that it plans to
launch on 11 January 2018.
Your Board will continue to seek to grow and diversify the
portfolio, recognising that due to the regulatory environment, its
composition will change over time as the current portfolio is
realised and replaced with growth capital investments in earlier
stage, younger businesses. While the current portfolio should
continue to generate more consistent returns, in the medium to long
term there is likely to be a greater volatility of returns and your
Board will continue to monitor its dividend and buy-back policies
through this transition.
Your Board remains committed to continuing to build a strong and
diversified portfolio to deliver long-term value to
shareholders.
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.
30 November 2017
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 company news service from the London Stock Exchange
END
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