TIDMBSC
RNS Number : 4999D
British Smaller Companies VCT2 Plc
28 March 2014
BRITISH SMALLER COMPANIES VCT2 PLC
Annual Financial Report Announcement for
the Year to 31 December 2013
British Smaller Companies VCT2 plc ("the Company") today
announces its audited results for the year to 31 December 2013.
Summary Financial Highlights
-- An increase in Total Return of 4.6 per cent to 104.6 pence per ordinary share
-- An increase in Net Asset Value of 4.6 pence per ordinary
share prior to the payment of dividends, representing a 7.0 per
cent increase on the opening Net Asset Value
-- Total dividends paid in the year of 4.5 pence per ordinary share
-- Total cumulative dividends paid since inception of 39.0 pence per ordinary share
Chairman's Statement
I am pleased to report an increase in Net Asset Value per
ordinary share of 4.6 pence in the year to December 2013 prior to
the payment of dividends totalling 4.5 pence per ordinary share.
This is another solid performance as we have continued to build and
diversify the investment portfolio and represents a 7.0 per cent
increase on the opening Net Asset Value for the year.
The Total Return as at 31 December 2013 increased by 4.6 per
cent to 104.6 pence per ordinary share.
Financial Results
The Net Asset Value increase is summarised as follows:
Pence per GBP000 GBP000
ordinary share
------------------ -------- -------
31 December 2012 65.5 27,152
Net underlying increase
in portfolio 5.1 2,345
Net expenses (0.5) (221)
Buy-back of shares - (309)
Issue of new shares - 3,576
4.6 5,389
Ordinary dividends paid (4.5) (2,083)
--------- --------
0.1 3,306
------------------------- --------- ------- -------- -------
31 December 2013 65.6 30,458
------------------------- --------- ------- -------- -------
Considerable progress has been made by many of the portfolio
businesses during the year with an overall value gain from the
investment and fixed income securities portfolio of GBP2.35
million, an increase of 20.6 per cent on the opening 1 January 2013
portfolio value. This return is made up of a gain on realisation of
investments in the year of GBP0.60 million and a profit on
revaluation of the ongoing portfolio of GBP1.75 million.
During the year to 31 December 2013 the Company has paid total
dividends of 4.5 pence per ordinary share, bringing the total
cumulative dividends paid since inception to 39.0 pence per
ordinary share.
The Total Return, (being Net Asset Value plus cumulative
dividends) has increased by 4.6 per cent from 100.0 pence to 104.6
pence per ordinary share.
Shareholder Relations
Dividends
Your Board remains committed to achieving the objective of a
consistent and, where possible, increasing dividend stream over
time.
Dividends paid during the year comprise a final dividend of 2.5
pence per ordinary share in respect of the year ended 31 December
2012 and an interim dividend of 2.0 pence per ordinary share in
respect of the financial year just ended, totalling 4.5 pence per
ordinary share. This represents 7.0 per cent of the opening Net
Asset Value per ordinary share and brings the cumulative dividends
paid to 39.0 pence per ordinary share.
The Board is pleased to propose a final dividend of 2.5 pence
per ordinary share. This final dividend is subject to approval by
Shareholders at the Annual General Meeting and if approved will
then be paid on 9 June 2014 to Shareholders on the register at 9
May 2014.
Dividend Re-investment Scheme (DRIS)
The Company operates a DRIS, which gives Shareholders the
opportunity to re-invest any cash dividends. The DRIS is open to
all Shareholders, including those who have invested under the
recent joint offer.
Fundraising
During the year the Company raised GBP3.58 million net of costs,
GBP3.29 million from the issue of new shares following a linked
offer with British Smaller Companies VCT plc which closed in April
2013 and GBP0.29 million via the DRIS.
As a result of a strong investment rate, coupled with the
increasing pipeline of prospective investments, the Company
recently launched another joint fundraising offer with British
Smaller Companies VCT plc to raise GBP30 million, in aggregate.
Shareholder Relations
Your Board remains committed to enhancing Shareholder
communications and continues to hold Shareholder workshops where
investors are invited to meet members of the Board, representatives
from YFM Private Equity Limited (the Company's Fund Manager) and
the CEOs of one or more of our investee companies. Our 19th
Shareholder workshop was held at Central Hall Westminster on 12
February 2014 and achieved the highest ever attendance with
approaching 200 Shareholders attending. Presentations at the
workshop were made by David Hall on behalf of YFM Private Equity
Limited, Mark Henley (Managing Director of President Engineering
Limited) and Angela Lane (former chairman of Fishawack
Communications). After lunch David Hall, David Bell and Paul
Cannings, all of YFM Private Equity Limited, hosted a Question and
Answer Session which was attended by over 70 Shareholders.
The Annual General Meeting of the Company will be held at 12.00
noon on 19 May 2014 at 33 St James Square, London, SW1Y 4JS.
Regulatory
The Board has submitted an application to the Financial Conduct
Authority for approval to become a Self-managed Alternative
Investment Fund as defined under the new Alternative Investment
Fund Manager's Directive following the implementation of the EU's
directive on self-managed investment funds.
The Company has complied with the new reporting regulations
throughout this Annual Report. The Board hopes these changes will
help Shareholders gain a greater understanding of the Company's
performance and strategy.
Subsequent Events
Following the period end a significant investment of GBP1.64
million has been made to fund the management buyout of Mangar
International Limited, a world leader in inflatable lifting and
handling bathing equipment for the elderly, disabled and emergency
services market. Further to this in March 2013 the Company invested
a further GBP0.07 million into existing quoted portfolio company
EKF Diagnostics plc to support further acquisitions to be
undertaken by the company.
Subsequent to the year end the Company has made a number of
disposals from the quoted portfolio. In January 2014 the Company
disposed of its full investment holding in Optos plc generating
proceeds of GBP150,000, as well as the realisation of 35,000 shares
in Iomart Group plc which generated an additional GBP97,000 of
proceeds. Whilst in February the Company disposed of 17,000 shares
in Pressure Technologies plc generating proceeds of GBP99,500 and a
profit on the 31 December 2013 carrying value of GBP18,500.
In the three months since the year end the Company has also
received GBP320,000 of monthly capital loan repayments from
investee companies. The most significant of these was GBP228,000
received in January 2014 from Displayplan Holdings Limited as part
of an early loan repayment agreed with the company.
Outlook
The UK economy has begun to see some growth again this year but
uncertainties remain regarding the medium term sustainability and
most economists assume an extended period of low growth. Our
portfolio companies are on the whole well-funded and have focused
strategies to maximise the new market opportunities now open to
them. The Company remains well placed to continue to support the
portfolio businesses in the year ahead.
The Company's new investment activity is focused on small UK
businesses with clearly differentiated business models, whether
through an established brand, a niche position in a growing market,
or an innovative application of services and products. The
significant investments made during 2013 have further increased the
diversification of the portfolio, with the largest investment
representing just 7 per cent of Net Asset Value.
The improved economic conditions together with VCT rule changes
which allow up to GBP5 million of investment in any one investee
company have already led to an increase in investment rates which
is expected to continue throughout 2014. The Board remains of the
opinion that this investment strategy can provide good returns
throughout the economic cycles and it was with this in mind that we
have sought to further increase the investment capacity of the
Company this year.
Richard Last
Chairman
28 March 2014
Fund Manager's Review
Introduction
The improving economic outlook, hesitant approach from the banks
and changes in EU restrictions on qualifying VCT investments are
all leading to an increase in the volume and scale of investment
opportunities. To fulfil the pipeline of potential investments
currently being reviewed and those expected to be made over the
coming months, the Company is seeking to increase its investment
capacity by way of a joint fundraising with British Smaller
Companies VCT plc aimed at raising a combined total of GBP30
million of new investment funds.
There has been considerable further progress made by many of the
businesses in the Company's portfolio during the year. The overall
value gain from the investment and fixed income securities
portfolio was GBP2.35 million, an increase of 20.6 per cent on the
opening 31 December 2012 portfolio value, which comprises profits
on disposals during the year of GBP0.54 million, deferred
consideration gains of GBP0.06 million and an increase in the
residual portfolio value of GBP1.75 million.
Investment Portfolio
The Company saw an effective net value gain of GBP2.37 million
(20.8%) on the opening investment portfolio valuation at 31
December 2012, excluding movements due to investments and
realisations. This increase includes deferred proceeds but excludes
a GBP0.02 million value decrease on the gilt portfolio. This can be
broken down into an unrealised value gain of GBP1.77 million
(GBP1.36 million from the unquoted portfolio and GBP0.41 million
from the AIM quoted portfolio) and GBP0.60 million of realised
gains of which GBP0.54 million related to new disposals and GBP0.06
million related to deferred proceeds from disposals in previous
periods. This is broken down in the table below:
GBP000 %
2013
----------------------- ------------- -------
Unquoted value
gain 1,356 57.3
Quoted value gain 414 17.5
Profit on disposal 537 22.7
----------------------- ------------- -------
2,307 97.5
----------------------- ------------- -------
Deferred proceeds 59 2.5
Total Value Movement 2,366 100.0
----------------------- ------------- -------
Significant Investment Movements
The GBP1.36 million value gain from the unquoted portfolio is a
result of good progress by a number of businesses which have seen
profits grow despite the continuing economic uncertainty. The key
movements were:
-- Retail display business, DisplayPlan Holdings Limited, saw a
value increase of GBP0.64 million following strong trading results
since the buyout in January 2012.
-- Specialist provider of communication solutions in remote
locations, Seven Technologies Holdings Limited, saw a value
increase of GBP0.47 million following a solid first year of trading
and the strategic acquisition of Datong plc in June 2013.
-- Contract catering provider, Waterfall Services Limited, saw
an increase of GBP0.27 million following strong trading results and
several new contract wins.
-- Supplier of value-add SME telecom services, Callstream Group
Limited (formerly Bluebell Telecoms Group Limited), saw a value
increase of GBP0.25 million after delivering cost synergies
following previous acquisitions and disposing of non-core contracts
in August 2013.
-- PowerOasis Limited, provider of software to monitor and
control remote hybrid power solutions, saw a fall in value of
GBP0.14 million following a disappointing year where several
promising trials have yet to convert into significant commercial
contracts.
The GBP0.41 million increase from the AIM quoted portfolio
resulted from the following key movements:
-- Manufacturer of high pressure containers for the oil and gas
industry, Pressure Technologies plc, accounted for a value increase
of GBP0.35 million following improved trading results and a
successful diversification strategy.
-- Supplier of advanced automotive testing equipment, AB
Dynamics plc, had a strong year following its initial public
offering in May 2013 with a value gain of GBP0.14 million.
-- Provider of managed IT hosting services, Iomart Group plc,
saw a value gain of GBP0.10 million as it continued to roll out
services and consolidate acquisitions.
-- Cambridge Cognition Holdings plc, which produces psychometric
tests to diagnose mental health conditions, began the year as an
unquoted investment but saw a value fall of GBP0.10 million
following its initial public offer in April 2013 as the market
awaits news of commercial progress.
New Investments
2013 has been an active year for investments with the Company
completing eight investments totalling GBP5.51 million (GBP4.44
million in 2012). This comprised four new investments and four
follow-on investments into existing portfolio companies and is
broken down in the table below:
New Investments GBP million
------------------------------------- ------------
Gill Marine Holdings Limited 1.87
------------------------------------- ------------
GTK (UK) Limited 1.15
------------------------------------- ------------
Leengate Holdings Limited 0.93
------------------------------------- ------------
AB Dynamics plc 0.15
------------------------------------- ------------
Follow-on Investments
------------------------------------- ------------
Seven Technologies Holdings Limited 0.74
------------------------------------- ------------
Bagel Nash Group Limited 0.39
------------------------------------- ------------
Hargreaves Services plc 0.20
------------------------------------- ------------
PowerOasis Limited 0.07
------------------------------------- ------------
Total Investments 5.50
------------------------------------- ------------
Capitalised Interest
------------------------------------- ------------
Bagel Nash Group Limited 0.01
------------------------------------- ------------
Total invested 5.51
------------------------------------- ------------
The new investments during the year totalled GBP4.10
million.
-- In May 2013 the Company invested GBP0.15 million as part of a
GBP5.0 million AIM placing to support the expansion of AB Dynamics
plc, a designer, manufacturer and supplier of advanced testing
products to the global automotive industry.
-- In September 2013 the Company invested GBP1.87 million as
part of the management buyout of Gill Marine Holdings Limited, the
market leading manufacturer of branded sailing clothing and
accessories.
-- In October 2013 the Company invested GBP1.15 million to
support the management buyout of GTK (UK) Limited, a global
manufacturer of cable assemblies, connectors, optoelectronics and
manufacturing solutions for high technology customers.
-- In December 2013 the Company invested GBP0.93 million into
Leengate Holdings Limited, a wholesaler, stockist and distributor
of industrial valves to fund the management buyout from the Linde
Group.
Following the period end a significant investment of GBP1.64
million has been made to fund the management buyout of Mangar
International Limited, a world leader in inflatable lifting and
handling and bathing equipment for the elderly, disabled and
emergency services markets.
The four investments into the existing portfolio during the year
totalled GBP1.40 million.
-- In June 2013 a significant follow-on investment of GBP0.74
million was provided to Seven Technologies Holdings Limited, a
manufacturer of specialist electronic and communication equipment,
as part of the funding package for its GBP7.0 million acquisition
of Datong plc, a manufacturer and international supplier of
specialist communications products.
-- In July 2013 a further GBP0.39 million was invested into
Bagel Nash Group Limited to support the expansion of its bakery and
retail roll out strategy.
-- In August 2013 a further GBP0.20 million of shares were
acquired in AIM quoted Hargreaves Services plc, a UK producer and
distributor of solid fuels with a long term growth strategy.
-- In March 2013 GBP0.07 million was invested into PowerOasis
Limited, a provider of power management solutions for wireless
networks, as part of a $5 million funding round led by a strategic
investor.
Disposal of Investments
During the year to 31 December 2013 the Company received
proceeds from disposals, repayments of loans and deferred
consideration of GBP3.07 million which resulted in a value gain on
disposal of investments of GBP0.60 million. This is broken down in
the table below:
Net proceeds Cost of Opening Gain on opening
from sales investment value 1 value
of investments January
2013
GBP000
GBP000 GBP000 GBP000
------------------- ---------------- ------------ --------- ----------------
Sale of portfolio
investments 2,926 5,532 2,389 537
------------------- ---------------- ------------ --------- ----------------
Deferred proceeds
received 125 - 88 37
------------------- ---------------- ------------ --------- ----------------
Deferred proceeds
accrued 22 - - 22
------------------- ---------------- ------------ --------- ----------------
Total Proceeds 3,073 5,532 2,477 596
------------------- ---------------- ------------ --------- ----------------
The most significant proceeds related to:
-- In January 2013 GBP0.27 million was received on the purchase
of AIM quoted Tikit Group plc by a trade buyer. The value increase
was minimal as the gain had already been taken in the 31 December
2012 valuation but this represented an uplift on cost of GBP0.09
million.
-- In June 2013 GBP0.70 million of non-qualifying loans to Seven
Technologies Holdings Limited were repaid as part of the
refinancing package ahead of its purchase of Datong plc.
-- In August 2013 the Company realised its investment in
healthcare software provider Digital Healthcare Limited via a trade
sale to Emis Group plc for proceeds of GBP1.29 million and an
increase over the 31 December 2012 valuation of GBP0.37 million.
This crystallised a loss on cost of GBP1.79 million due to the
failed original strategy to rollout services to the US market which
had to be abandoned due to market downturn and changes to
reimbursement codes.
-- During the year the Company sold 45 per cent of its holding
in Pressure Technologies plc for GBP0.29 million realising a gain
on cost of GBP0.15 million.
-- In November 2013 the GBP0.17 million investor loan to
Waterfall Services Limited was repaid following a period of strong
trading.
The GBP125,000 of deferred proceeds relates to further cash
payments from the sale of DxS Limited in 2009 and from the sale of
Primal Pictures Limited in August 2012, which resulted in a value
gain of GBP37,000. The expected future payments which have been
included in the net assets total GBP132,000, comprising GBP120,000
relating to Sirigen Group Limited and GBP12,000 relating to Primal
Pictures Limited, an uplift of GBP22,000 versus the previous
carrying values.
Outlook
The year has seen a continuation of recent uncertain market
conditions and although there appears to be some early signs of
economic recovery this situation remains fragile. In spite of this
many of the portfolio companies have delivered improved results,
focusing on proven brands, niche growth sectors or rolling out new
technology. We hope to see economic conditions gradually improve
but continue to plan for low growth and back business models which
will still succeed. The increasing diversification of the portfolio
should also help to reduce the volatility of returns.
We have seen a marked increase in new investment enquiries and
believe the Company is well-placed to take advantage and select the
best of these. The improving economic outlook, hesitant approach
from the banks and changes in EU restrictions on qualifying VCT
investments are all leading to an increase in the volume and scale
of investment opportunities.
With this in mind the Company launched a joint fundraising with
British Smaller Companies VCT plc in January 2014 with the aim of
raising GBP30.0 million across the two Companies. This will enable
the Company to take advantage of these new investment opportunities
and to continue to support our successful portfolio businesses.
We believe there are also several good exit prospects over the
next few years, which should allow the Board to achieve its aim of
a constant dividend stream whilst preserving and if possible
enhancing the underlying Net Asset Value.
David Hall
YFM Private Equity Limited
28 March 2014
Principal Risks
The Board carries out a regular review of the risk environment
in which the Company operates. The principle risks and
uncertainties identified by the Board and techniques used to
mitigate these risks are as follows:
Economic Risk - events such as recession and interest rate
fluctuations could affect smaller investee companies' performance
and valuations.
Mitigation - As well as the response to 'Investment and
Strategic' risk below the Company has a clear investment policy and
a diversified portfolio operating in a range of sectors. The Fund
Manager actively monitors investee performance which provides
quality information for the monthly review of the portfolio.
Investment and Strategic Risk - Inappropriate strategy, poor
asset allocation or consistently weak stock allocation may lead to
underperformance and poor returns to Shareholders. The quality of
enquiries, investments, investee company management teams
monitoring, and the risk of not identifying investee company
underperformance of the Company might also lead to under
performance and poor returns to Shareholders.
Mitigation - The Board reviews strategy annually. At each of the
(at least) quarterly Board meetings the directors review the
appropriateness of the Company's objectives and stated strategy in
response to changes in the operating environment and peer group
activity. The Fund Manager carries out due diligence on potential
investee companies and their management teams and utilises external
reports where appropriate to assess the viability of investee
businesses before investing. Wherever possible a non-executive
director will be appointed to the board of the investee
company.
Loss of Approval as a VCT - the Company must comply with Chapter
3 Part 6 of the Income Tax Act 2007 which allows it to be exempted
from capital gains tax on investment gains. Any breach of these
rules may lead to the Company losing its approval as a VCT,
qualifying Shareholders who have not held their shares for the
designated holding period having to repay the income tax relief
they obtained and future dividends paid by the Company becoming
subject to tax. The Company would also lose its exemption from
corporation tax on capital gains.
Mitigation - one of the Key Performance Indicators monitored by
the Company is the compliance with legislative tests. Details of
how the Company manages these requirements can be found under the
heading "Compliance with VCT Legislative Tests" in the financial
statements.
Regulatory Risk - the Company is required to comply with the
Companies Act 2006, the rules of the UK Listing Authority and
International Financial Reporting Standards as adopted by the
European Union. Breach of any of these might lead to suspension of
the Company's Stock Exchange listing, financial penalties or a
qualified audit report.
Mitigation - The Fund Manager has procedures in place to ensure
recurring Listing Rules requirements are met and actively consults
with brokers, solicitors and external compliance advisors as
appropriate. The key controls around the compliance are explained
in the financial statements.
Reputational Risk - inadequate or failed controls might result
in breaches of regulations or loss of Shareholder trust.
Mitigation - The Board is comprised of directors with suitable
experience and qualifications who report annually to the
Shareholders on their independence. The Fund Manager is
well-respected with a proven track record and has a formal
recruitment process to employ experienced investment staff.
Allocation rules relating to co-investments with other funds
managed by the Fund Manager have been agreed between the Fund
Manager and the Company. Advice is sought from external advisors
where required. Both the Company and the Fund Manager maintain
appropriate insurances.
Operational Risk - failure of the Fund Manager's and
administrator's accounting systems or disruption to its business
might lead to an inability to provide accurate reporting and
monitoring.
Mitigation - The Fund Manager has a documented disaster recovery
plan.
Financial Risk - inadequate controls might lead to
misappropriation of assets. Inappropriate accounting policies might
lead to misreporting or breaches of regulations.
Mitigation - The key controls around financial reporting are
described in the financial statements.
Market/Liquidity Risk - lack of liquidity in both the venture
capital and public markets. Investment in AIM quoted and unquoted
companies, by their nature, involve a higher degree of risk than
investment in companies trading on the main market. In particular,
smaller companies often have limited product lines, markets or
financial resources and may be dependent for their management on a
smaller number of key individuals. The fact that a share is traded
on AIM does not guarantee its liquidity. The spread between the
buying and selling price of such shares may be wide and thus the
price used for valuation may not be achievable. In addition, the
market for stock in smaller companies is often less liquid than
that for stock in larger companies, bringing with it potential
difficulties in acquiring, valuing and disposing of such stock.
Mitigation - overall liquidity risks are monitored on an ongoing
basis by the Fund Manager and on a quarterly basis by the Board.
Sufficient investments in cash and fixed income securities are
maintained to pay expenses as they fall due.
Directors' Responsibilities Statement
The directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law and
regulations.
Company law requires the directors to prepare the financial
statements for each financial year. Under that law they have
elected to prepare the financial statements in accordance with
International Financial Reporting Standards ("IFRS").
Under Company law the directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Company and of the profit and
loss of the Company for the year.
In preparing these financial statements, the directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and estimates that are reasonable and prudent;
-- state whether applicable International Accounting Standards
have been followed, subject to any material departures disclosed
and explained in the financial statements; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
its financial statements comply with the Companies Act 2006. They
have general responsibility for taking such steps as are reasonably
open to them to safeguard the assets of the Company and to prevent
and detect fraud and other irregularities.
Under applicable law and regulations, the directors are also
responsible for preparing a directors' report, directors'
remuneration report and corporate governance statement that comply
with that law and those regulations.
The Company's financial statements are published on the YFM
Equity Partners Limited ("YFM") website, www.yfmep.com. The
maintenance and integrity of this website is the responsibility of
YFM and not of the Company. The audit work carried out by Grant
Thornton UK LLP as independent auditor of the Company does not
involve consideration of the maintenance and integrity of the
website and accordingly they accept no responsibility for any
changes that have occurred to the financial statements since they
were initially presented on the website.
Visitors to the website should be aware that legislation in the
United Kingdom governing the preparation and dissemination of the
financial statements may differ from legislation in their
jurisdiction.
The directors confirm to the best of their knowledge:
-- The financial statements, prepared in accordance with the
applicable accounting standards, give a true and fair view of the
assets, liabilities, financial position and profit of the
Company;
-- The Annual Report and financial statements, taken as a whole,
is fair, balanced and understandable and provides the information
necessary for Shareholders to assess the Company's performance,
business model and strategy; and
-- The Annual Report, including the Strategic Report, includes a
fair review of the development and performance of the business and
the position of the Company, together with a description of the
principal risks and uncertainties that it faces.
This statement was approved by the Board and signed on its
behalf on 28 March 2014.
Richard Last
Chairman
Statement of Comprehensive Income for the year to 31 December
2013
2013 2012
Notes Revenue Capital Total Revenue Capital Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Gain on realisation of
investments - 596 596 - 1,662 1,662
Gains (losses) on investments
held at fair value - 1,748 1,748 - (622) (622)
Income 2 689 - 689 594 - 594
Administrative expenses:
------------ ------------ --------- ---------- ---------- ---------
Fund management fee (141) (421) (562) (116) (346) (462)
Other expenses (340) - (340) (320) - (320)
------------ ------------ --------- ---------- ---------- ---------
(481) (421) (902) (436) (346) (782)
Profit before taxation 208 1,923 2,131 158 694 852
Taxation 3 - - - (4) 4 -
Profit for the year 208 1,923 2,131 154 698 852
------------------------------- -------- ------------ ------------ --------- ---------- ---------- ---------
Total comprehensive income
for the year 208 1,923 2,131 154 698 852
------------------------------- -------- ------------ ------------ --------- ---------- ---------- ---------
Basic and diluted earnings
per ordinary share 5 0.46p 4.27p 4.73p 0.43p 1.96p 2.39p
------------------------------- -------- ------------ ------------ --------- ---------- ---------- ---------
The Total column of this statement represents the Company's
Statement of Comprehensive Income, prepared in accordance with
International Financial Reporting Standards ('IFRSs') as adopted by
the European Union. The supplementary Revenue and Capital columns
are prepared under the Statement of Recommended Practice 'Financial
Statements of Investment Trust Companies and Venture Capital
Trusts' ('SORP') 2009 published by the Association of Investment
Companies.
Balance Sheet at 31 December 2013
2013 2012
GBP000 GBP000
Assets
Non-current assets
Investments 16,255 11,363
Fixed income securities 890 912
------------------------------- --------- ---------
Financial assets at fair
value through profit or loss 17,145 12,275
Trade and other receivables 132 198
------------------------------- --------- ---------
17,277 12,473
Current assets
Trade and other receivables 123 423
Cash on fixed term deposit 4,500 7,048
Cash and cash equivalents 8,680 7,484
13,303 14,955
Liabilities
Current liabilities
Trade and other payables (122) (276)
Net current assets 13,181 14,679
Net assets 30,458 27,152
------------------------------- --------- ---------
Shareholders' equity
Share capital 4,822 4,271
Share premium account 4,926 14,806
Capital redemption reserve 88 88
Other reserve 2 2
Merger reserve 5,525 5,525
Capital reserve 14,568 7,225
Investment holding gains
and losses 448 (4,919)
Revenue reserve 79 154
Total Shareholders' equity 30,458 27,152
------------------------------- --------- ---------
Net Asset Value per ordinary
share 65.6p 65.5p
------------------------------- --------- ---------
Statement of Changes in Equity for the year to 31 December 2013
Share Investment
Share premium *Other Merger Capital holding Revenue Total
capital account reserves reserve reserve gains reserve equity
losses
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 31
December 2011 2,426 4,427 90 5,525 6,885 (3,665) 294 15,982
------------------- ---------- ---------- ----------- ---------- ---------- ------------- ---------- ---------
Revenue return
for the year - - - - - - 154 154
Capital expenses - - - - (342) - - (342)
Investment holding
loss on
investments
held at fair
value - - - - - (622) - (622)
Realisation of
investments in
the year - - - - 1,662 - - 1,662
Total
comprehensive
income for the
year - - - - 1,320 (622) 154 852
------------------- ---------- ---------- ----------- ---------- ---------- ------------- ---------- ---------
Issue of share
capital 1,828 11,015 - - - - - 12,843
Issue costs** - (726) - - - - - (726)
Purchase of own
shares - - - - (184) - - (184)
Issue of shares
- DRIS 17 90 - - - - - 107
Dividends - - - - (1,428) - (294) (1,722)
------------------- ---------- ---------- ----------- ---------- ---------- ------------- ---------- ---------
Total transactions
with owners 1,845 10,379 - - (1,612) - (294) 10,318
Realisation of
negative goodwill - - - - 106 (106) - -
Realisation of
prior year
investment
holding gains - - - - 526 (526) - -
------------------- ---------- ---------- ----------- ---------- ---------- ------------- ---------- ---------
Balance at 31
December 2012 4,271 14,806 90 5,525 7,225 (4,919) 154 27,152
------------------- ---------- ---------- ----------- ---------- ---------- ------------- ---------- ---------
Revenue return
for the year - - - - - - 208 208
Capital expenses - - - - (421) - - (421)
Investment holding
gain on
investments
held at fair
value - - - - - 1,748 - 1,748
Realisation of
investments in
the year - - - - 596 - - 596
------------------- ---------- ---------- ----------- ---------- ---------- ------------- ---------- ---------
Total
comprehensive
income for the
year - - - - 175 1,748 208 2,131
------------------- ---------- ---------- ----------- ---------- ---------- ------------- ---------- ---------
Issue of share
capital 504 2,964 - - - - - 3,468
Issue costs ** - (178) - - - - - (178)
Purchase of own
shares - - - - (309) - - (309)
Issue of shares
- DRIS 47 239 - - - - - 286
Dividends - - - - (1,800) - (283) (2,083)
Cancellation
of share premium
account net of
costs - (12,905) - - 12,896 - - (9)
------------------- ---------- ---------- ----------- ---------- ---------- ------------- ---------- ---------
Total transactions
with owners 551 (9,880) - - 10,787 - (283) 1,175
Realisation of
negative goodwill - - - - 177 (177) - -
Realisation of
prior year
investment
holding losses - - - - (3,796) 3,796 - -
Balance at 31
December 2013 4,822 4,926 90 5,525 14,568 448 79 30,458
------------------- ---------- ---------- ----------- ---------- ---------- ------------- ---------- ---------
*Other reserves include the capital redemption reserve and other
reserve, which are non-distributable. The other reserve was created
upon the exercise of warrants and the capital redemption reserve
was created for the purchase and cancellation of own shares.
** Issue costs include both fundraising costs and costs incurred
from the Company's dividend re-investment scheme.
The merger reserve was created to account for the difference
between the nominal and fair value of shares issued as
consideration for the acquisition of the assets and liabilities of
British Smaller Technology Companies VCT plc. The reserve was
created after meeting the criteria under section 131 of the
Companies Act 1985 and the provisions of the Companies Act 2006 for
merger relief. The merger reserve is a non-distributable
reserve.
The special reserve (now included within the capital reserve -
please see below) was initially created following the approval of
the Court and a resolution of the Shareholders to cancel the
Company's share premium account and is available for other
corporate purposes of the Company. In addition to this, on 16 March
2013, the amount standing to the credit of the share premium
account as at 5 April 2012 was cancelled pursuant to an order of
Court following the passing of a special resolution. The credit
arising of GBP12,905,041, less legal costs of GBP9,247, has been
transferred to a special reserve, which shall be applied in any
manner in which the Company's profits available for distribution
are able to be applied.
The capital reserve includes gains and losses compared to cost
on the realisation of investments, capital expenses, together with
the related taxation effect, capital dividends paid to Shareholders
and the cost of any share buybacks made by the Company. This is a
distributable reserve. The investment holding gains and losses
reserve includes increases and decreases in the valuation of
investment held at fair value. This is a non-distributable
reserve.
The Capital reserve and revenue reserve are both distributable
reserves. These reserves total GBP14,647,000 (2012: GBP7,379,000)
representing an increase of GBP7,268,000 (2012: GBP200,000
increase) during the year. This change arises from the revenue
profit in the year of GBP208,000 (2012: GBP154,000 profit),
movements in the capital reserve relating to the realisation of
investments and capital expenses of GBP175,000 profit (2012:
GBP1,846,000 profit), dividends of GBP2,083,000 (2012:
GBP1,722,000), purchase of shares of GBP309,000 (2012: GBP184,000)
the realisation of negative goodwill of GBP177,000 (2012:
GBP106,000), the cancellation of the Company's share premium
account of GBP12,896,000 (2012: nil) and the realisation of prior
year investment holding losses of GBP3,796,000. The directors also
take into account the level of the investment holding gains and
losses reserve when determining the level of dividend payments.
During the year a presentational adjustment has been made to the
Statement of Changes in Equity, such that the special reserve and
capital reserve are now shown in total. This has been done to allow
for a clearer understanding of the movements during the period.
Statement of Cash Flows for the year ended 31 December 2013
2013 2012
GBP000 GBP000
Net cash outflow from operating activities (79) (354)
------------------------------------------------------------ --------- ---------
Cash flows from investing activities
Purchase of financial assets at fair
value through profit or loss (5,499) (4,867)
Proceeds from sale of financial assets
at fair value through profit or loss 2,926 5,239
Deferred consideration 125 99
Cash placed on fixed term deposit (4,500) (7,048)
Cash maturing from fixed term deposits 7,048 -
Net cash inflow (outflow) from investing
activities 100 (6,577)
------------------------------------------------------------ --------- ---------
Cash flows from financing activities
Issue of share capital 3,412 12,743
Issue costs (122) (605)
Purchase of own shares (309) (184)
Dividends paid (1,797) (1,615)
Share premium cancellation cost (9) -
-------------------------------------------- ------- ----- --------- ---------
Net cash inflow from financing activities 1,175 10,339
------------------------------------------------------------ --------- ---------
Net increase in cash and cash equivalents 1,196 3,408
Cash and cash equivalents at the
beginning of the year 7,484 4,076
Cash and cash equivalents at the
end of the year 8,680 7,484
------------------------------------------------------------ --------- ---------
Reconciliation of Profit before Taxation to Net Cash Outflow
from Operating Activities
2013 2012
GBP000 GBP000
Profit before taxation 2,131 852
(Decrease) increase in trade and
other payables (154) 26
Decrease (increase) in trade and
other receivables 300 (181)
Gains on disposal of investments
in the year (596) (1,662)
(Profit) losses on investments
held at fair value (1,748) 622
Capitalised interest (12) (11)
----------------------------------------------------- ----------- --------
Net cash outflow from operating
activities (79) (354)
Notes to the Financial Statements for the year to 31 December
2013
1. Basis of Preparation
The accounts have been prepared on a going concern basis and in
accordance with 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.
The financial statements have been prepared under the historical
cost convention 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' (SoRP) issued by the Association of Investment
Companies in January 2009 to the extent that they do not conflict
with IFRSs as adopted by the European Union.
The financial statements are prepared in accordance with the
IFRSs and interpretations in force at the reporting date. The only
new standard effective for the year ended 31 December 2013 which
has had a material impact on the financial statements is IFRS 13
"Fair Value Measurement". Note 7 of the financial statements
includes investments disclosed in the fair value hierarchy
classification under IFRS 13 and includes the relevant fair value
disclosures as required by IFRS 13. There has been no material
change to the measurement of fair values of investments from the
implementation of IFRS 13.
Other standards and interpretations have been issued which will
be effective for future reporting periods but have not been adopted
early in these financial statements. These include amendments to
IFRS 9, IFRS 10, IFRS 11 and IFRS 12, and amendments to IAS 27 and
IAS 28. A full impact assessment has not yet been completed in
order to assess whether these new standards will have a material
impact on the financial statements.
2. Income
2013 2012
GBP000 GBP000
Dividends from unquoted companies 40 8
Dividends from AIM quoted companies 44 44
Interest on loans to unquoted companies 384 339
Fixed income Government securities 18 20
Income from investments held at fair
value through profit or loss 486 411
Interest on bank deposits 203 183
689 594
----------------------------------------- -------- --------
The above is stated net of GBP57,000 (2012: GBP52,000) of income
in relation to loan interest, which has been fully provided
for.
3. Taxation
2013 2012
Revenue Capital Total Revenue Capital Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Corporation tax at 20% - - - - - -
(2012: 20%)
-------------------------------- ------------- ---------- --------- ---------- ------------ -----------
Profit before taxation 208 1,923 2,131 158 694 852
---------------------------- ------------ --------------- --------- ---------- ------------ -----------
Profit before taxation
multiplied by standard
small company rate of
corporation tax in UK
of 20% (2012: 20%) 42 385 427 32 139 171
Effect of:
UK dividends received (17) - (17) (10) - (10)
Non taxable profits on
investments - (469) (469) - (208) (208)
Excess management expenses (25) 84 59 (18) 65 47
Tax charge (credit) - - - 4 (4) -
---------------------------- ------------ --------------- --------- ---------- ------------ -----------
The Company has no provided or unprovided deferred tax liability
in either year.
Deferred tax assets of GBP559,000 calculated at 20 per cent
(2012: GBP500,000 calculated at 20 per cent) in respect of
unrelieved management expenses (GBP2.797 million as at 31 December
2013 and GBP2.502 million as at 31 December 2012) have not been
recognised as the directors do not currently believe that it is
probable that sufficient taxable profits will be available against
which assets can be recovered.
Due to the Company's status as a venture capital trust and the
continued intention to meet with the conditions required to comply
with Section 274 of the Income Tax Act 2007, the Company has not
provided for deferred tax on any capital gains or losses arising on
the revaluation or realisation of investments.
4. Dividends
2013 2012
Amounts recognised as distributions
to equity holders in the Revenue Capital Total Revenue Capital Total
period: GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Final dividend for the year
ended 31 December 2012 of
2.5p (2011 year end: 2.0p)
per ordinary share 154 1,001 1,155 294 472 766
Interim dividend for the
year ended 31 December 2013
of 2.0p (2012: 2.0p) per
ordinary share 129 799 928 - 765 765
Special dividend of 0.5
pence per ordinary share - - - - 191 191
283 1,800 2,083 294 1,428 1,722
------------------------------------------------------------------------------------ ---------- ------------ --------- ------------ ------------ ---------
Shares issued under DRIS (286) (107)
------------------------------------------------------------------------------------ --------- ------- --------------- ------- -------- ------------------
Dividends paid in Statement
of Cash Flows 1,797 1,615
------------------------------------------------------------------------------------ --------- ------- --------------- ------- -------- ------------------
The final year-end dividend of 2.5 pence per ordinary share in
respect of the year to 31 December 2012 was paid on 5 June 2013 to
Shareholders on the register at 3 May 2013.
The interim dividend of 2.0 pence per ordinary share was paid on
27 September 2013 to Shareholders on the register as at 30 August
2013.
A final dividend of 2.5 pence per ordinary share in respect of
the year to 31 December 2013 is proposed. This dividend has not
been recognised in the year ended 31 December 2013 as the
obligation did not exist at the balance sheet date.
5. Basic and Diluted Earnings (Loss) per Ordinary Share
The basic and diluted earnings per ordinary share is based on
the profit after tax attributable to Shareholders of GBP2,131,000
(2012: GBP852,000 profit) and 45,070,587 (2012: 35,591,107)
ordinary shares being the weighted average number of ordinary
shares in issue during the year.
The basic and diluted revenue earnings per ordinary share is
based on the profit for the year attributable to Shareholders of
GBP208,000 (2012: GBP154,000) and 45,070,587 (2012: 35,591,107)
ordinary shares being the weighted average number of ordinary
shares in issue during the year.
The basic and diluted capital earnings per ordinary share is
based on the capital profit for the year attributable to
Shareholders of GBP1,923,000 (2012: GBP698,000) and 45,070,587
(2012: 35,591,107) ordinary shares being the weighted average
number of ordinary shares in issue during the year.
During the year the Company issued 5,510,680 ordinary shares.
The Company has also repurchased 524,961 of its own shares which
are held in treasury. The treasury shares have been excluded in
calculating the weighted average number of ordinary shares for the
period that they were treasury shares.
The only potentially dilutive shares are those shares which,
subject to certain criteria being achieved in the future, may be
issued by the Company to meet its obligations under the investment
management agreement. No such shares have been issued or are
currently expected to be issued. There are, therefore, considered
to be no potentially dilutive shares in issue at 31 December 2013
or 31 December 2012. Consequently, basic and diluted earnings per
ordinary share, basic and diluted revenue return per ordinary share
and basic and diluted capital return per ordinary share are the
same for the years ended 31 December 2013 and 31 December 2012.
6. 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 GBP30,458,000 (2012:
GBP27,152,000) and 46,443,563 (2012: 41,457,844) ordinary shares in
issue at the year end.
The treasury shares have been excluded in calculating the number
of ordinary shares in issue at 31 December 2013.
The only potentially dilutive shares are those shares which,
subject to certain criteria being achieved in the future, may be
issued by the Company to meet its obligations under the investment
management agreement. No such shares have been issued or are
currently expected to be issued. There are therefore considered to
be no potentially dilutive shares in issue at 31 December 2013 or
31 December 2012. Consequently, basic and diluted Net Asset Value
per ordinary share is the same for the year ended 31 December 2013
and 31 December 2012.
7. Total Return per Ordinary Share
The Total Return per ordinary share is calculated on cumulative
dividends paid of 39.0 pence per ordinary share (2012: 34.5 pence
per ordinary share) plus the Net Asset Value as calculated per note
6.
8. Events after the Balance Sheet Date
Following the period end a significant investment of GBP1.64
million has been made to fund the management buyout of Mangar
International Limited, a world leader in inflatable lifting and
handling bathing equipment for the elderly, disabled and emergency
services market. Further to this in March 2013 the Company invested
a further GBP0.07 million into existing quoted portfolio company
EKF Diagnostics plc to support further acquisitions to be
undertaken by the company.
Subsequent to the year end the Company has made a number of
disposals from the quoted portfolio. In January 2014 the Company
disposed of its full investment holding in Optos plc generating
proceeds of GBP150,000, as well as the realisation of 35,000 shares
in Iomart Group plc which generated an additional GBP97,000 of
proceeds. Whilst in February the Company disposed of 17,000 shares
in Pressure Technologies plc generating proceeds of GBP99,500 and a
profit on the 31 December 2013 carrying value of GBP18,500.
In the three months since the year end the Company has also
received GBP320,000 of monthly capital loan repayments from
investee companies. The most significant of these was GBP228,000
received in January 2014 from Displayplan Holdings Limited as part
of an early loan repayment agreed with the company.
9. Financial Information
The financial information set out in this announcement for the
year ended 31 December 2013 does not constitute full statutory
accounts as defined in section 434 of the Companies Act 2006 but
has been extracted from the Company's statutory accounts for that
period. Statutory accounts for the year ended 31 December 2013 will
be delivered to the Registrar of Companies following the Company's
Annual General Meeting on 19 May 2014. Those accounts have been
reported upon without qualification by the Company's independent
auditor and did not contain a statement under Section 498(2) or (3)
of the Companies Act 2006.
10. Annual Report and Accounts
Copies of the statutory accounts for the year ended 31 December
2013 will shortly be submitted to the National Storage Mechanism
and will be available to the public for viewing online at
www.hemscott.com/msn/do. They can also shortly be viewed on the
Fund Manager's website at www.yfmep.com. Hard copies of the
statutory accounts for the year ended 31 December 2013 will be
distributed by post to Shareholders and will be available
thereafter to members of the public from the Company's registered
office.
11. Directors
The directors of the Company are Mr R Last, Mr R Pettigrew, and
Mr P Waller.
12. Annual General Meeting
The Annual General Meeting of the Company will be held at 33 St
James Square, London, SW1Y 4JS on 19 May 2014 at 12.00 noon.
13. Final Dividend for the year ended 31 December 2013
Further to the announcement of its final results for the year
ended 31 December 2013, the Company confirms that, subject to its
approval by Shareholders at the forthcoming Annual General Meeting
to be held on 19 May 2014, the final dividend of 2.5 pence per
ordinary share ("Final Dividend") will be paid on 9 June 2014 to
those Shareholders on the Company's register at the close of
business on 9 May 2014.
14. Dividend re-investment scheme ("DRIS")
The Company operates a dividend reinvestment scheme ("DRIS").
The latest date for receipt of DRIS elections so as to participate
in the DRIS in respect of the Final Dividend is the close of
business on 23 May 2014.
For further information, please contact:
David Hall YFM Equity Partners Limited Tel: 0113 294 5039
Matthew Thomas Nplus 1 Singer Advisory LLP Tel: 0207 496
3000
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR QKFDKABKDNNB
British Smaller Companie... (LSE:BSC)
Historical Stock Chart
From Jun 2024 to Jul 2024
British Smaller Companie... (LSE:BSC)
Historical Stock Chart
From Jul 2023 to Jul 2024