TIDMBSV
RNS Number : 5277U
British Smaller Companies VCT PLC
24 November 2023
British Smaller Companies VCT plc
Unaudited Interim Results and Interim Management Report
for the six months ended 30 September 2023
British Smaller Companies VCT plc (the "Company") today
announces its unaudited interim results for the six months ended 30
September 2023.
HIGHLIGHTS
-- Total Return increase of 0.7p to 259.3p per share
-- Net Asset Value at 30 September 2023 of 82.4p per share (31
March 2023: 83.7p) following payment of 2.0p dividend in the
period
-- The Board has declared a second interim dividend of 2.0p per
share in respect of the year ending 31 March 2024, which will bring
total dividends paid in the current financial year to 4.0p per
share, which equates to 4.8 per cent of the opening net asset value
per share.
-- Two new investments and two follow-on investments totalling
GBP6.0 million were completed during the period. Subsequent to the
period end, a further follow-on investment totalling GBP0.8 million
has been completed.
-- GBP44.3 million raised in fully subscribed November 2022
offer, with shares allotted at the beginning of the year. Combined
applications exceeding GBP45 million received to date in relation
to September 2023 offer. Shares relating to approximately GBP30
million of combined applications to be allotted between 29 and 31
January 2024 with second and final allotment in early April
2024.
Chairman's Statement
I am pleased to present the interim results of British Smaller
Companies VCT plc (the "Company") for the six months to 30
September 2023.
The performance in the period reflects the Company's positive
progress despite ongoing macroeconomic challenges and geopolitical
uncertainty, achieving a Total Return of 0.7 pence, an increase of
0.8 per cent over the opening NAV. In contrast the FTSE Small Cap
fell by 0.4 per cent over the same period.
Underlying portfolio companies remain resilient, showing
adaptability to market conditions and focusing on efficient use of
capital. Revenues continue to grow, contributing to positive
revaluations even with valuation multiples remaining subdued.
Over the past six months, the Company has completed two new
investments to the portfolio, Workbuzz and GEEIQ totalling GBP4.9
million, and made two follow-on investments, totalling GBP1.1
million. Following the period end, a further GBP0.8 million has
also been invested, taking the total invested so far this year to
GBP6.8 million, following the GBP28.4 million invested in the full
year to 31 March 2023.
Realisations in the Period
Realisations of investments generated total proceeds of GBP1.8
million in the period.
The Company realised its investment in Ncam in April, generating
initial proceeds of GBP1.4 million. There is the potential for
additional receipts of up to GBP1.2 million depending on the
achievement of certain milestones over the coming years, which
would see the Company fully recover its investment; GBP0.3 million
of deferred proceeds have been recognised at the period end.
Post-period end, in November 2023, the Company exited its
investments in E2E, a consultancy in the satellite industry, for
GBP2.0 million, representing a 2.5x return on the Company's cost;
and MacroArt, a large scale branding and signage specialist, for
GBP1.5 million, representing a 2.0x return on the Company's cost.
This was a pleasing outcome for the Company following a challenging
hold period and reflects the Company's ethos of working hard to
generate positive returns from all of its investments.
Financial Results
The investment portfolio generated a return of GBP2.4 million in
the period, driven by positive revaluations from a number of
companies.
Given the current interest rate environment, the Company is
managing its treasury position to generate a positive return for
shareholders, balanced against the primary objective of capital
preservation. The Company's treasury operations generated GBP1.3
million of income in the period.
The movement in net asset value ("NAV") per ordinary share and
the dividends paid are set out in the table below.
Pence per GBP000
ordinary share
NAV at 31 March 2023 83.7p 157,032
Net gain arising from investment portfolio 1.0p 2,376
Net operating costs (0.1p) (197)
-------- -------- ------- --------
Comprehensive income in the period 0.9p 2,179
Issue/buy-back of new shares* (0.2p) 44,169
-------- -------- ------- --------
Total Return in the period 0.7p 46,348
-------- -------- ------- --------
NAV before the payment of dividends 84.4p 203,380
Dividends paid (2.0p) (4,816)
-------- -------- ------- --------
NAV at 30 September 2023 82.4p 198,564
Cumulative dividends paid 176.9p
-------- -------- ------- --------
Total Return: At 30 September 2023 259.3p
-------- -------- ------- --------
At 31 March 2023 258.6p
-------- -------- ------- --------
* The allotment of shares from the 2022/23 fundraising reduces
total return per ordinary share as the fundraising was priced at
the 31 December 2022 NAV, being the latest published NAV at the
allotment date shortly after 31 March 2023.
Dividends
An interim dividend of 2.0 pence per ordinary share in respect
of the year ending 31 March 2024 was paid on 28 July 2023, bringing
the cumulative dividends paid to date to 176.9 pence per ordinary
share.
The Board has announced a second interim dividend of 2.0 pence
per ordinary share for the year ending 31 March 2024 which, when
combined with the above dividend, will bring total dividends paid
in the current financial year to 4.0 pence per ordinary share
(2023: 8.5 pence per ordinary share). The dividend will be paid on
8 December 2023 to shareholders on the shareholder register on 10
November 2023.
Shareholder Relations
The shareholder workshop held on 20 June 2023 was well attended.
Attendees heard from Tom Dunlop, CEO of Summize, and Philip Hunt,
Chair of Vuealta.
The Company will be hosting an online webinar on 27 November
2023 to provide an update to shareholders; for further details
please contact Tracey Nice at tracey.nice@yfmep.com.
Documents such as the annual report are now received
electronically by 81 per cent of shareholders, rather than by post,
which helps to meet the Board's impact objectives and reduces
printing costs. The Board continues to encourage all shareholders
to take up this option.
The Company's website is refreshed on a regular basis and
provides a comprehensive level of information in what I hope is a
user-friendly format.
Regulatory Developments
In the Autumn Statement on 22 November 2023, the Government
announced it would extend the sunset clause currently in place for
Venture Capital Trusts until April 2035, and that it would include
legislation to achieve this in the next Finance Bill.
In the period there have been no regulatory changes that impact
the Company; the Manager continues to monitor for any
amendments.
Most new portfolio investments are now self-assured as VCT
qualifying on a case-by-case basis and always with confirmation
from professional advisers that they are Qualifying Investments.
Advance assurance is sought where there is an element of
uncertainty over the application of the rules.
Fundraising
On 4 April 2023 the Company allotted shares from its fully
subscribed 2022/23 share offer. GBP44.3 million was raised by the
Company, resulting in the allotment of 53,559,905 ordinary
shares.
Having assessed its expected cash requirements, the Company
announced a new share offer on 20 September 2023, alongside British
Smaller Companies VCT2 plc, with the intention of raising up to
GBP90 million (in aggregate), which includes an over-allotment
facility of GBP25 million. Applications exceeding GBP45 million
have been received as of the date of this report, of which GBP27
million relate to the Company. The first allotment of GBP30 million
of gross proceeds will take place between 29 and 31 January 2024.
The second and final allotment will take place in early April
2024.
Outlook
Over the past six months it has been pleasing to see portfolio
companies continue to grow revenues, and to see positive exit
outcomes despite challenging conditions. The Company has a
promising pipeline of both new investment and exit opportunities,
and will continue to look for opportunities to deploy capital into
the existing portfolio to support continued growth.
I thank shareholders for their continued support.
Rupert Cook
Chairman
Objectives and Strategy
The Company's objective is to maximise Total Return and provide
investors with a long-term tax free dividend yield whilst
maintaining the Company's status as a venture capital trust.
Investment Strategy
The Company seeks to build a broad portfolio of investments in
early-stage companies focused on growth, with the aim of spreading
the maturity profiles and maximising return, as well as ensuring
compliance with the VCT Regulations.
The Company predominantly invests in unquoted smaller companies
and expects that this will continue to make up the significant
majority of the portfolio. It will also retain holdings in cash or
near-cash investments to provide a reserve of liquidity which will
maximise the Company's flexibility as to the timing of investment
acquisitions and disposals, dividend payments and share
buy-backs.
Unquoted investments are structured using various investment
instruments, including ordinary shares, preference shares,
convertible securities and very occasionally loan stock, to achieve
an appropriate balance of income and capital growth, having regard
to the VCT Regulations. The portfolio is diversified by investing
in a broad range of industry sectors. The normal investment period
into the portfolio companies is expected to be typically between
the range of five to seven years.
Investment Policy
The investment policy of the Company is to invest in UK
businesses across a broad range of sectors 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 will be re-investing their
profits for growth and the investments will comprise mainly equity
instruments.
The Company seeks to build a broad portfolio of investments in
early-stage companies focused on growth with the aim of spreading
the maturity profiles and maximising return as well as ensuring
compliance with the VCT guidelines.
Investment Review
The Company's portfolio at 30 September 2023 has a value of
GBP130.3 million. The top ten investments represent 42.4 per cent
of the net asset value with the largest representing 12.7 per cent
of the net asset value.
The movements in the investment portfolio are set out below:
Portfolio Listed investment funds Investment portfolio
GBPmillion GBPmillion GBPmillion
--------------------------------------------------- ----------- ------------------------ ---------------------
Opening fair value at 1 April 2023 123.4 4.0 127.4
Additions 6.0 - 6.0
Disposal proceeds (1.7) (0.1) (1.8)
Gain (loss) arising from the investment portfolio 2.6 (0.3) 2.3
--------------------------------------------------- ----------- ------------------------ ---------------------
Closing fair value at 30 September 2023 130.3 3.6 133.9
--------------------------------------------------- ----------- ------------------------ ---------------------
The Company's portfolio delivered a positive performance over
the period, generating a return of GBP2.6 million.
There were upward revaluations from several portfolio companies
including Unbiased, Traveltek, E2E, Displayplan and MacroArt,
offset by decreases from Relative Insight, Wooshii and ACC.
Realisation of Investments
During the six months to 30 September 2023 the Company generated
GBP1.8 million from disposals, in line with the opening carrying
value and a loss of GBP0.9 million on cost. Further details are
given in note 6.
Investments
During the six months ended 30 September 2023, the Company
completed four investments, totalling GBP6.0 million. This
comprised two new investments of GBP4.9 million and two follow-on
investments totalling GBP1.1 million. The breakdown of these
investments is shown below:
New Follow-on Total
Company Description GBPmillion GBPmillion GBPmillion
----------------------------------------------------- ----------- ----------- -----------
SaaS-based employee engagement survey and insights
Workbuzz platform 2.6 - 2.6
Data and market intelligence platform in the gaming
GEEIQ space 2.3 - 2.3
Relative Insight AI-based text data analytics platform - 0.8 0.8
Elucidat An e-learning software authoring platform - 0.3 0.3
----------------------------------------------------- ----------- ----------- -----------
Invested in the period 4.9 1.1 6.0
------------------------------------------------------------------------------- ----------- ----------- -----------
Subsequent to the period end, the Company has invested GBP0.8
million into portfolio company Force24.
Cash Deposits and other Liquid Funds
Given the current environment of rising interest rates the
Company is taking an active approach to cash management, whilst
pursuing its primary aim of capital preservation. This is effected
through the use of a pool of money market funds (which can be
converted back to cash with immediate notice), cash deposits with
tier one banking institutions, and a small, diversified portfolio
of listed investment funds. At 30 September 2023 this listed
portfolio was valued at GBP3.6 million, or 1.8 per cent of net
assets; this reduced in value by GBP0.3 million in the period,
predominantly driven by a reduction in the valuation of its bond
investments.
Portfolio
The top 10 investments had a combined value of GBP84.1 million,
64.5 per cent of the total portfolio.
Name of company Sector First Amount Value at 30 Recognised Return to
investment invested Sept 2023 income/proceeds date
to date
GBP000 GBP000 GBP000 GBP000
-------------- -------------- ------------- ------------- ---------------- --------------
Matillion Limited Data Nov 16 2,666 25,233 7,071 32,304
-------------- -------------- ------------- ------------- ---------------- --------------
Tech-enabled
Unbiased EC1 Limited Services Dec 19 5,596 11,559 - 11,559
-------------- -------------- ------------- ------------- ---------------- --------------
Outpost VFX Limited New Media Feb 21 4,500 8,936 38 8,974
-------------- -------------- ------------- ------------- ---------------- --------------
Displayplan Holdings Business
Limited Services Jan 12 1,300 8,611 3,168 11,779
-------------- -------------- ------------- ------------- ---------------- --------------
Application
Elucidat Ltd Software May 19 4,260 6,494 197 6,691
-------------- -------------- ------------- ------------- ---------------- --------------
Wooshii Limited New Media May 19 4,644 6,006 581 6,587
-------------- -------------- ------------- ------------- ---------------- --------------
Application
Force24 Ltd Software Nov 20 3,150 4,792 - 4,792
-------------- -------------- ------------- ------------- ---------------- --------------
ACC Aviation Group Business
Limited Services Nov 14 2,068 4,405 5,280 9,685
-------------- -------------- ------------- ------------- ---------------- --------------
Vypr Validation Tech-enabled
Technologies Limited Services Jan 21 3,300 4,119 - 4,119
-------------- -------------- ------------- ------------- ---------------- --------------
Quality Clouds Cloud &
Limited DevOps May 22 3,916 3,942 - 3,942
-------------- -------------- ------------- ------------- ---------------- --------------
SharpCloud Limited Data Oct 19 3,407 3,859 - 3,859
-------------- -------------- ------------- ------------- ---------------- --------------
DrDoctor (via ICNH Application
Ltd) Software Feb 23 3,565 3,565 - 3,565
-------------- -------------- ------------- ------------- ---------------- --------------
Retail &
Tonkotsu Limited Brands Jun 19 2,388 2,961 - 2,961
-------------- -------------- ------------- ------------- ---------------- --------------
Workbuzz Analytics Application
Limited Software Jun 23 2,577 2,945 - 2,945
-------------- -------------- ------------- ------------- ---------------- --------------
Cloud &
AutomatePro Limited DevOps Dec 22 2,225 2,875 - 2,875
-------------- -------------- ------------- ------------- ---------------- --------------
Traveltek Group Application
Holdings Limited Software Oct 16 1,716 2,797 901 3,698
-------------- -------------- ------------- ------------- ---------------- --------------
GEEIQ (via Checkpoint
GG Limited) Data Sep 23 2,358 2,358 - 2,358
-------------- -------------- ------------- ------------- ---------------- --------------
Retail &
Frescobol Carioca Ltd Brands Mar 19 1,800 2,143 - 2,143
-------------- -------------- ------------- ------------- ---------------- --------------
Relative Insight Tech-enabled
Limited Services Mar 22 3,804 2,092 - 2,092
-------------- -------------- ------------- ------------- ---------------- --------------
Application
Summize Limited Software Oct 22 1,800 2,070 - 2,070
-------------- -------------- ------------- ------------- ---------------- --------------
Cloud &
Plandek Limited DevOps Oct 22 2,070 2,070 - 2,070
-------------- -------------- ------------- ------------- ---------------- --------------
KeTech Enterprises Tech-enabled
Limited Services Nov 15 2,000 2,059 2,599 4,658
-------------- -------------- ------------- ------------- ---------------- --------------
Vuealta Holdings Tech-enabled
Limited Services Sep 21 3,045 2,013 4,601 6,614
-------------- -------------- ------------- ------------- ---------------- --------------
E2E Engineering Business
Limited Services Sep 17 900 1,942 243 2,185
-------------- -------------- ------------- ------------- ---------------- --------------
Xapien (via Digital
Insight Technologies Application
Limited) Software Mar 23 1,740 1,846 - 1,846
-------------- -------------- ------------- ------------- ---------------- --------------
Application
Biorelate Limited Software Nov 22 1,560 1,562 - 1,562
-------------- -------------- ------------- ------------- ---------------- --------------
Panintelligence (via
Paninsight Limited) Data Nov 19 1,500 1,500 - 1,500
-------------- -------------- ------------- ------------- ---------------- --------------
Sipsynergy (via
Hosted Network Cloud &
Services Limited) DevOps Jun 16 2,654 1,346 1 1,347
-------------- -------------- ------------- ------------- ---------------- --------------
Macro Art Holdings Business
Limited Services Jun 14 1,260 1,210 1,002 2,212
-------------- -------------- ------------- ------------- ---------------- --------------
GBP1 million and below 11,153 2,983 6,819 9,802
------------- ------------- ---------------- --------------
Total portfolio 88,922 130,293 32,501 162,794
------------- ------------- ---------------- --------------
Full disposals to date 76,675 - 149,724 149,724
------------- ------------- ---------------- --------------
Total portfolio 165,597 130,293 182,225 312,518
------------- ------------- ---------------- --------------
Our Portfolio at a Glance
The charts on page 13 of the interim report illustrate the broad
range of the investment portfolio.
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 2023. 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:
> VCT Qualifying Status;
> Economic;
> Investment and Strategic;
> Regulatory;
> Legislative;
> Reputational;
> Operational;
> Cyber Security and Information Technology;
> ESG; and
> Liquidity.
Full details of the principal risks can be found in the
financial statements for the year ended 31 March 2023 on pages 31
to 33, a copy of which is available at www.bscfunds.com .
Directors' 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 UK, 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 10 of these interim financial statements.
By order of the Board
Rupert Cook
Chairman
Unaudited Statement of Comprehensive Income
for the six months ended 30 September 2023
Notes Unaudited 6 months ended Unaudited 6 months ended
30 September 2023 30 September 2022
Revenue Capital Total Revenue Capital Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Gains on investments held at fair value 6 - 2,280 2,280 - 650 650
Profit on disposal of investments 6 - 96 96 - 2,849 2,849
---------------------------------------------- ------ --------- -------- -------- --------- -------- --------
- 2,376 2,376 - 3,499 3,499
Income 2 1,629 - 1,629 658 - 658
---------------------------------------------- ------ --------- -------- -------- --------- -------- --------
Total income 1,629 2,376 4,005 658 3,499 4,157
Administrative expenses:
Manager's fee (367) (1,100) (1,467) (351) (1,052) (1,403)
Other expenses (359) - (359) (329) - (329)
---------------------------------------------- ------ --------- -------- -------- --------- -------- --------
(726) (1,100) (1,826) (680) (1,052) (1,732)
---------------------------------------------- ------ --------- -------- -------- --------- -------- --------
Profit (loss) before taxation 903 1,276 2,179 (22) 2,447 2,425
Taxation 3 - - - - - -
---------------------------------------------- ------ --------- -------- -------- --------- -------- --------
Profit (loss) for the period 903 1,276 2,179 (22) 2,447 2,425
---------------------------------------------- ------ --------- -------- -------- --------- -------- --------
Total comprehensive income (expense) for the
period 903 1,276 2,179 (22) 2,447 2,425
---------------------------------------------- ------ --------- -------- -------- --------- -------- --------
Basic and diluted earnings (loss) per
ordinary share 5 0.38p 0.53p 0.91p (0.01p) 1.31p 1.30p
---------------------------------------------- ------ --------- -------- -------- --------- -------- --------
The Total column of this statement represents the Company's
Unaudited Statement of Comprehensive Income, prepared in accordance
with UK adopted international accounting standards. 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
July 2022 - "SORP") published by the Association of Investment
Companies.
Unaudited Balance Sheet
as at 30 September 2023
Notes Unaudited Unaudited Audited
30 September 30 September 31 March
2023 2022 2023
GBP000 GBP000 GBP000
ASSETS
Non-current assets at fair value through profit or loss
Investments 6 130,293 99,010 123,361
Listed investment funds 6 3,620 4,181 4,045
--------------------------------------------------------- ------ -------------- -------------- ----------
Financial assets at fair value through profit or loss 6 133,913 103,191 127,406
Accrued income and other assets 1,891 1,014 1,556
--------------------------------------------------------- ------ -------------- -------------- ----------
135,804 104,205 128,962
Current assets
Accrued income and other assets 825 6,386 161
Current asset investments 32,500 14,471 7,501
Cash and cash equivalents 29,635 33,217 20,766
--------------------------------------------------------- ------ -------------- -------------- ----------
62,960 54,074 28,428
LIABILITIES
Current liabilities
Trade and other payables (200) (146) (358)
--------------------------------------------------------- ------ -------------- -------------- ----------
Net current assets 62,760 53,928 28,070
--------------------------------------------------------- ------ -------------- -------------- ----------
Net assets 198,564 158,133 157,032
--------------------------------------------------------- ------ -------------- -------------- ----------
Shareholders' equity
Share capital 26,452 20,612 20,969
Share premium account 41,586 62,861 1,700
Capital reserve 75,609 34,245 82,893
Investment holding gains and losses reserve 52,397 39,138 49,215
Revenue reserve 2,520 1,277 2,255
--------------------------------------------------------- ------ -------------- -------------- ----------
Total shareholders' equity 198,564 158,133 157,032
--------------------------------------------------------- ------ -------------- -------------- ----------
Net asset value per ordinary share 7 82.4p 85.0p 83.7p
--------------------------------------------------------- ------ -------------- -------------- ----------
Signed on behalf of the Board
Rupert Cook
Chairman
Unaudited Statement of Changes in Equity
for the six months ended 30 September 2023
Share capital Share premium Capital Investment Revenue reserve Total equity
account reserve holding gains
and losses
reserve
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------- -------------- --------------- --------------- --------------- ---------------- -------------
At 31 March
2022 20,510 62,123 33,620 41,982 1,299 159,534
---------------- -------------- --------------- --------------- --------------- ---------------- -------------
Revenue loss
for the period - - - - (22) (22)
Expenses
charged to
capital - - (1,052) - - (1,052)
Investment
holding gain
on investments
held at fair
value - - - 650 - 650
Realisation of
investments in
the period - - 2,849 - - 2,849
---------------- -------------- --------------- --------------- --------------- ---------------- -------------
Total
comprehensive
income
(expense) for
the period - - 1,797 650 (22) 2,425
---------------- -------------- --------------- --------------- --------------- ---------------- -------------
Issue of shares
- DRIS 102 760 - - - 862
Issue costs - (22) - - - (22)
Purchase of own
shares - - (941) - - (941)
Dividends - - (3,725) - - (3,725)
---------------- -------------- --------------- --------------- --------------- ---------------- -------------
Total
transactions
with owners 102 738 (4,666) - - (3,826)
Realisation of
prior year
investment
holding gains - - 3,494 (3,494) - -
---------------- -------------- --------------- --------------- --------------- ---------------- -------------
At 30 September
2022 20,612 62,861 34,245 39,138 1,277 158,133
---------------- -------------- --------------- --------------- --------------- ---------------- -------------
Revenue return
for the period - - - - 1,105 1,105
Expenses
charged to
capital - - (1,159) - - (1,159)
Investment
holding gain
on investments
held at fair
value - - - 7,502 - 7,502
Realisation of
investments in
the period - - 2,364 - - 2,364
---------------- -------------- --------------- --------------- --------------- ---------------- -------------
Total
comprehensive
income for the
period - - 1,205 7,502 1,105 9,812
---------------- -------------- --------------- --------------- --------------- ---------------- -------------
Issue of shares
- DRIS 357 2,485 - - - 2,842
Issue costs - (40) - - - (40)
Share premium
cancellation - (63,606) 63,606 - - -
Purchase of own
shares - - (1,556) - - (1,556)
Dividends - - (12,032) - (127) (12,159)
---------------- -------------- --------------- --------------- --------------- ---------------- -------------
Total
transactions
with owners 357 (61,161) 50,018 - (127) (10,913)
Realisation of
prior year
investment
holding losses - - (2,575) 2,575 - -
At 31 March
2023 20,969 1,700 82,893 49,215 2,255 157,032
---------------- -------------- --------------- --------------- --------------- ---------------- -------------
Revenue return
for the period - - - - 903 903
Expenses
charged to
capital - - (1,100) - - (1,100)
Investment
holding gain
on investments
held at fair
value - - - 2,280 - 2,280
Realisation of
investments in
the period - - 96 - - 96
---------------- -------------- --------------- --------------- --------------- ---------------- -------------
Total
comprehensive
(expense)
income for the
period - - (1,004) 2,280 903 2,179
---------------- -------------- --------------- --------------- --------------- ---------------- -------------
Issue of share
capital 5,356 40,893 - - - 46,249
Issue of shares
- DRIS 127 911 - - - 1,038
Issue costs - (1,918) - - - (1,918)
Purchase of own
shares - - (1,200) - - (1,200)
Dividends - - (4,178) - (638) (4,816)
---------------- -------------- --------------- --------------- --------------- ---------------- -------------
Total
transactions
with owners 5,483 39,886 (5,378) - (638) 39,353
Realisation of
prior year
investment
holding losses - - (902) 902 - -
---------------- -------------- --------------- --------------- --------------- ---------------- -------------
At 30 September
2023 26,452 41,586 75,609 52,397 2,520 198,564
---------------- -------------- --------------- --------------- --------------- ---------------- -------------
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 75,609 2,520 78,129
Less: Income/proceeds not yet distributable (399) (1,952) (2,351)
Less: Cancelled share premium not yet distributable (40,769) - (40,769)
----------------------------------------------------- ---------------- ---------------- ---------
Reserves available for distribution* 34,441 568 35,009
----------------------------------------------------- ---------------- ---------------- ---------
*subject to filing these interim financial statements at
Companies House.
The capital reserve and the revenue reserve are both
distributable reserves. These reserves total GBP78,129,000,
representing a decrease of GBP7,019,000 in the period since 31
March 2023. The directors also consider 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 GBP78,129,000 shown
above, GBP2,351,000 relates to income and proceeds not yet
distributable and GBP40,769,000 relates to cancelled share premium
which becomes distributable from the dates shown below.
Total share premium cancelled is available for distribution from
the following dates:
GBP000
1 April 2024 7,157
1 April 2025 32,128
1 April 2026 1,484
------------------------------------------------------- -------
Cancelled share premium account not yet distributable 40,769
------------------------------------------------------- -------
Unaudited Statement of Cash Flows
for the six months ended 30 September 2023
Notes Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 September 30 September 31 March
2023 2022 2023
GBP000 GBP000 GBP000
Profit before taxation 2,179 2,425 12,237
Decrease in trade and other payables (158) (641) (429)
Increase in accrued income and other assets (599) (224) (660)
Profit on disposal of investments (96) (2,849) (5,213)
Gains on investments held at fair value (2,280) (650) (8,152)
Capitalised income - - (60)
------------------------------------------------------------------ ------ -------------- -------------- ----------
Net cash outflow from operating activities (954) (1,939) (2,277)
------------------------------------------------------------------ ------ -------------- -------------- ----------
Cash flows from (used in) investing activities
Cash maturing from fixed term deposits - - 6,970
Purchase of financial assets at fair value through profit or loss 6 (6,039) (8,778) (28,832)
Proceeds from sale of financial assets at fair value through
profit or loss 6 1,508 8,832 20,716
------------------------------------------------------------------ ------ -------------- -------------- ----------
Net cash (outflow) inflow from investing activities (4,531) 54 (1,146)
------------------------------------------------------------------ ------ -------------- -------------- ----------
Cash flows from (used in) financing activities
Issue of ordinary shares 46,249 - -
Costs of ordinary share issues* (1,918) (22) (62)
Purchase of own shares (1,200) (941) (2,497)
Dividends paid 4 (3,778) (2,863) (12,180)
------------------------------------------------------------------ ------ -------------- -------------- ----------
Net cash inflow (outflow) from financing activities 39,353 (3,826) (14,739)
------------------------------------------------------------------ ------ -------------- -------------- ----------
Net increase (decrease) in cash and cash equivalents 33,868 (5,711) (18,162)
Cash and cash equivalents at the beginning of the period 28,267 46,429 46,429
------------------------------------------------------------------ ------ -------------- -------------- ----------
Cash and cash equivalents at the end of the period 62,135 40,718 28,267
------------------------------------------------------------------ ------ -------------- -------------- ----------
Cash and cash equivalents comprise
Money market funds 32,500 7,501 7,501
Cash at bank 29,635 33,217 20,766
------------------------------------------------------------------ ------ -------------- -------------- ----------
Cash and cash equivalents at the end of the period 62,135 40,718 28,267
------------------------------------------------------------------ ------ -------------- -------------- ----------
*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 10, each of whom has confirmed that to
the best of their 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 International Standard on
Review Engagements (UK) 2410 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 2023 do not constitute full financial
statements and have been extracted from the Company's financial
statements for the year ended 31 March 2023. 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 March 2023. They do not include all disclosures that would
otherwise be required in a complete set of financial statements and
should be read in conjunction with the 2023 annual report.
The accounts have been prepared on a going concern basis as set
out below and in accordance with UK adopted international
accounting standards.
The accounts have been prepared under the historical cost basis
as modified by the measurement of investments at fair value through
profit or loss.
The accounts have been prepared in compliance with the
recommendations set out in the Statement of Recommended Practice
'Financial Statements of Investment Trust Companies and Venture
Capital Trusts' issued by the Association of Investment Companies
(issued in July 2022 - "SORP") to the extent that they do not
conflict with UK adopted international accounting standards.
The financial statements are prepared in accordance with UK
adopted international accounting standards (IFRSs) and
interpretations in force at the reporting date. New standards
coming into force during the period and future standards that come
into effect after the period-end have not had a material impact on
these financial statements.
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.
The Company has determined that the transitional effects of the
standards do not have a material impact.
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 12 months from the date these half year
statements were approved. As at 30 September 2023 the Company held
cash balances, fixed term deposits and other liquid resources with
a combined value of GBP65,755,000. 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 for at least 12 months from
the date of publication of this report.
In the year ended 31 March 2023 the Company's costs and
discretionary expenditures were:
GBP000
Administrative expenses (before fair value movements related to credit risk and incentive
fee) 3,480
Share buy-backs 2,497
Dividends (before DRIS) 15,884
------------------------------------------------------------------------------------------- -------
Total 21,861
------------------------------------------------------------------------------------------- -------
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 30 ended 30
September September
2023 2022
GBP000 GBP000
Income from investments
- Interest on loans to unquoted companies 103 297
- Dividends from unquoted companies 243 172
------------------------------------------------------------------- ----------- -----------
Income from unquoted portfolio 346 469
Income from listed investment funds 62 54
------------------------------------------------------------------- ----------- -----------
Income from investments held at fair value through profit or loss 408 523
Interest on bank deposits/money market funds 1,221 135
------------------------------------------------------------------- ----------- -----------
1,629 658
------------------------------------------------------------------- ----------- -----------
3 Taxation
Unaudited 6 months ended Unaudited 6 months ended
30 September 2023 30 September 2022
Revenue Capital Total Revenue Capital Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Profit (loss) before taxation 903 1,276 2,179 (22) 2,447 2,425
-------------------------------------------------------- --------- --------- ------- --------- --------- -------
Profit (loss) before taxation multiplied by the
standard small company rate of corporation
tax in UK of 19.0% (2022: 19.0%) 172 242 414 (4) 465 461
Effect of:
UK dividends received (47) - (47) (35) - (35)
Non-taxable profits on investments - (451) (451) - (665) (665)
Deferred tax not recognised (125) 209 84 39 200 239
-------------------------------------------------------- --------- --------- ------- --------- --------- -------
Tax charge - - - - - -
-------------------------------------------------------- --------- --------- ------- --------- --------- -------
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 6 months ended Unaudited 6 months ended
30 September 2023 30 September 2022
Revenue Capital Total Revenue Capital Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
First interim dividend for the year ending 31 March
2024 of 2.0p (2023: 2.0p) per ordinary
share 638 4,178 4,816 - 3,725 3,725
Proceeds from shares allotted under DRIS (1,038) (862)
-------------------------------------------------------- --------- -------- -------- --------- --------- -------
Dividends paid in the Statement of Cash Flows 3,778 2,863
-------------------------------------------------------- --------- -------- -------- --------- --------- -------
Audited year ended
31 March 2023
Revenue Capital Total
GBP000 GBP000 GBP000
First interim dividend for the year ending 31 March 2023 of 2.0p per ordinary share - 3,725 3,725
Second interim dividend for the year ended 31 March 2023 of 5.0p per ordinary share - 3,736 3,736
Third interim dividend for the year ended 31 March 2023 of 2.0p per ordinary share 127 8,296 8,423
------------------------------------------------------------------------------------- -------- -------- --------
127 15,757 15,884
Proceeds from shares allotted under DRIS (3,704)
------------------------------------------------------------------------------------- -------- -------- --------
Dividends paid in the Statement of Cash Flows 12,180
------------------------------------------------------------------------------------- -------- -------- --------
The interim dividend of 2.0 pence per ordinary share was paid on
28 July 2023 to shareholders on the register as at 30 June
2023.
A second interim dividend of 2.0p per ordinary share, amounting
to approximately GBP4.8 million, has been announced. This dividend
has not been recognised in these half year financial statements as
the obligation did not exist at the balance sheet date.
5 Basic and Diluted Earnings per Ordinary Share
The basic and diluted earnings per ordinary share is based on
the profit after tax attributable to equity shareholders of
GBP2,179,000 (30 September 2022: GBP2,425,000) and 240,246,488 (30
September 2022: 186,454,862) ordinary shares being the weighted
average number of ordinary shares in issue during the period.
The basic and diluted revenue earnings (loss) per ordinary share
is based on the revenue profit attributable to equity shareholders
of GBP903,000 (30 September 2022: loss of GBP22,000) and
240,246,488 (30 September 2022: 186,454,862) ordinary shares being
the weighted average number of ordinary shares in issue during the
period.
The basic and diluted capital earnings per ordinary share is
based on the capital profit attributable to equity shareholders of
GBP1,276,000 (30 September 2022: GBP2,447,000) and 240,246,488 (30
September 2022: 186,454,862) ordinary shares being the weighted
average number of ordinary shares in issue during the period.
During the period the Company allotted 53,559,905 new ordinary
shares in respect of the 2022/23 fundraising and 1,270,231 new
ordinary shares in respect of its DRIS.
The Company has also repurchased 1,517,931 of its own shares in
the period and these shares are held in the capital reserve. The
total of 23,525,696 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 September
2023, 31 March 2023 and 30 September 2022.
6 Financial Assets at Fair Value through Profit or Loss
IFRS 13 and IFRS 7, in respect of financial instruments that are
measured in the balance sheet at fair value, require 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 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 revenue 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
(2022: 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
Unquoted investments are valued in accordance with IFRS 13 "Fair
Value Measurement" and using the International Private Equity and
Venture Capital ("IPEVC") Valuation Guidelines ("the Guidelines")
issued in December 2022.
Initial measurement
The best estimate of the initial fair value of an unquoted
investment is the cost of the investment. Unless there are
indications that this is inappropriate, an unquoted investment will
be held at this value within the first three months of
investment.
Subsequent measurement
Based on the Guidelines we have identified six of the most
widely used valuation methodologies for unquoted investments. The
Guidelines advocate that the best valuation methodologies are those
that draw on external, objective market-based data in order to
derive a fair value.
Full details of the methods used by the Company were set out on
pages 66 and 67 of the financial statements for the year ended 31
March 2023, a copy of which can be found at www.bscfunds.com .
The primary methods used for valuing non-quoted investments, and
the key assumptions relating to them are:
Unquoted Investments
> revenue multiple. An appropriate multiple, given the risk
profile and revenue growth prospects of the underlying company, is
applied to the revenue of the 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 used to derive the multiple.
> earnings multiple. An appropriate multiple, given the risk
profile and earnings growth prospects of the underlying company, is
applied to the maintainable earnings of the 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 used to
derive the multiple.
Movements in investments at fair value through profit or loss
during the six months to 30 September 2023 are summarised as
follows:
IFRS 13 measurement classification Level 3 Level 1 Total
Unquoted investments Listed investment funds investments
GBP000 GBP000 GBP000
Opening cost 73,515 4,676 78,191
Opening valuation gain (loss) 49,846 (631) 49,215
----------------------------------------- --------------------- ------------------------ ------------
Opening fair value at 1 April 2023 123,361 4,045 127,406
Additions at cost 6,039 - 6,039
Disposal proceeds (1,668) (147) (1,815)
Net profit (loss) on disposals* 9 (6) 3
Change in fair value 2,228 (272) 1,956
Foreign exchange gain 324 - 324
----------------------------------------- --------------------- ------------------------ ------------
Closing fair value at 30 September 2023 130,293 3,620 133,913
----------------------------------------- --------------------- ------------------------ ------------
Closing cost 77,041 4,475 81,516
Closing valuation gain (loss) 53,252 (855) 52,397
----------------------------------------- --------------------- ------------------------ ------------
Closing fair value at 30 September 2023 130,293 3,620 133,913
----------------------------------------- --------------------- ------------------------ ------------
* The net profit on disposals in the table above is GBP3,000
whereas that shown in the Statement of Comprehensive Income is
GBP96,000. The difference comprises deferred proceeds in respect of
assets which have been disposed of in prior periods and were not
included in the portfolio at 1 April 2023.
Level 3 valuations include assumptions based on non-observable
data, such as discounts applied either to reflect changes in the
fair value of financial assets held at the price of recent
investment, or to adjust revenue or 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 GBP6,220,000 (4.8 per cent)
lower. Using the upside alternative, the value would be increased
by GBP6,157,000 (4.7 per cent).
97 per cent of the Company's investments are in unquoted
companies held at fair value. The valuation methodology for these
investments includes the application of externally produced revenue
and earnings multiples. Therefore, the value of the unquoted
element of the portfolio is also indirectly affected by price
movements on the listed market. Those using revenue and earnings
multiple methodologies include judgements regarding the level of
discount applied to that multiple. The effect of changing the level
of discounts applied to the multiples is considered above.
3 per cent of the Company's investments 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 2023 would have increased the net
assets attributable to the Company's shareholders and the total
profit by GBP181,000. An equal change in the opposite direction
would have decreased the net assets attributable to the Company's
shareholders and the total profit 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 2023: none).
The following disposals took place during the period.
Net proceeds from sale Cost Opening carrying value as Profit (loss) over opening
at 1 April 2023 carrying value
GBP000 GBP000 GBP000 GBP000
Unquoted investments
Ncam Technologies Limited 1,668 2,512 1,659 9
--------------------------- ----------------------- ------- -------------------------- ---------------------------
Total from portfolio 1,668 2,512 1,659 9
Listed investment funds 147 202 153 (6)
--------------------------- ----------------------- ------- -------------------------- ---------------------------
Total from investment
portfolio 1,815 2,714 1,812 3
Deferred consideration -
Wakefield Acoustics (via
Malvar Engineering
Limited) 93 - - 93
--------------------------- ----------------------- ------- -------------------------- ---------------------------
Total from investment
portfolio 1,908 2,714 1,812 96
--------------------------- ----------------------- ------- -------------------------- ---------------------------
The total from disposals in the table above is GBP1,908,000
whereas that shown in the Statement of Cash Flows is GBP1,508,000.
This is due to the timing differences 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 GBP198,564,000 (30 September
2022 and 31 March 2023: GBP158,133,000 and GBP157,032,000
respectively) and 240,991,484 (30 September 2022 and 31 March 2023:
186,112,757 and 187,679,279 respectively) ordinary shares in issue
at 30 September 2023.
The treasury shares have been excluded in calculating the number
of ordinary shares in issue at 30 September 2023.
The Company has no potentially dilutive shares and consequently,
basic and diluted net asset values are equivalent at 30 September
2023, 31 March 2023 and 30 September 2022.
8 Total Return
Total Return per ordinary share is calculated on cumulative
dividends paid of 176.9 pence per ordinary share (30 September
2022: 168.4 pence per ordinary share and 31 March 2023: 174.9 pence
per ordinary share) plus the net asset value as calculated in note
7.
9 Post Balance Sheet Events
Subsequent to the period end the Company has invested GBP0.8
million into portfolio company Force24.
In November 2023, the Company exited its investments in E2E for
GBP2.0 million and MacroArt for GBP1.5 million, in line with the
companies' valuations at 30 September 2023.
10 Directors
The directors of the Company are: Rupert Cook, Adam Bastin,
Jonathan Cartwright and Purvi Sapre.
11 Interim Dividend for the year ending 31 March 2024
The directors have previously announced the payment of a second
interim dividend for the year ending 31 March 2024 of 2.0 pence per
ordinary share ("Interim Dividend").
The Interim Dividend will be paid on 8 December 2023 to those
shareholders on the Company's register at the close of business on
10 November 2023. The ex-dividend date will be 9 November 2023.
12 Dividend Re-investment Scheme ("DRIS")
The Company operates a 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 24 November 2023.
13 Inside Information
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
Alex Collins Panmure Gordon (UK) Limited Tel: 0207 886 2767
This information is provided by RNS, the news service of the
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