BCAP.L Regulatory News (BCAP)

BETTER CAPITAL LIMITED

INTERIM RESULTS UPDATE

Better Capital Limited (the "Company") is pleased to announce its first interim financial results. Highlights include:

·; £210.0 million total capital raised

·; £57.5 million committed

·; Shares trading at a premium to NAV

·; IFRS profit for the period £3.5 million

·; Within BECAP Fund LP (the "Better Capital Fund")

·; Four acquisitions; Gardner, RD Precision, Reader's Digest, Calyx

·; Portfolio companies trading at, or above, plan.

·; Diversified portfolio

·; Strong financial position to react to future opportunities

·; Strong deal flow

1 Based on a weighted average issue price of ordinary shares net of share issue costs.

Richard Crowder, Chairman stated:

"These first set of interim financial statements for Better Capital Limited in its inaugural year are most encouraging. The two fundraising drives were successes, with subscriptions in June 2010 achieving the ceiling set by the Board of Directors of £210 million, so as a result the Company and Better Capital Fund are fully capitalised according to plan. Signs of market confidence are further reinforced by the share price's prevalent premium to NAV. The Company has also completed its migration over to the London Stock Exchange Main Market.

The Better Capital Fund is well placed to take advantage of the healthy deal flow under ongoing consideration by the Better Capital Fund's general partner in conjunction with the Consultant, Better Capital LLP.

It is still early days for the investment portfolio but with the initial restructurings well underway and proceeding generally according to plan, coupled with the impressive early results of Gardner, progress so far is encouraging."

Enquiries:

Better Capital Limited +44 (0)1481 716 000

Mark Huntley (Director)

Laurence McNairn (Administrator and Company Secretary)

Numis Securities Limited (Corporate Broker & Financial Adviser) +44 (0)20 7260 1000

Nathan Brown

Simon Blank

Powerscourt (Public Relations Adviser) +44 (0) 20 7250 1446

Roderick Cameron

Rory Godson

Chairman's Statement

The first period of trading for the Company and the Better Capital Fund has been successful; with three platform investments, a move from AIM to the Main Market and a second fundraising.

Fundraising

In December 2009, the Company successfully raised capital proceeds of £142.4 million from the initial listing on AIM. After payment of share issue costs and retaining £1.0 million for working capital purposes, £138.0 million of these proceeds were invested into Better Capital Fund.

In June 2010, a further fundraising of £67.6 million capital proceeds was completed, bringing the total capital raised to £210.0 million. After payment of share issue costs, the total invested in Better Capital Fund increased to £203.8 million. In July 2010, the enlarged share capital of the Company was admitted to the Official List of the UK Listing Authority and to trading on the London Stock Exchange's Main Market.

Portfolio

The Fund's portfolio is performing broadly in line with expectations, which is pleasing.

The rate at which Gardner is securing new custom highlights how attractive unleveraged, well-invested businesses are to customers. It is entrenching itself as a strong player in the UK aerospace market and deepening relationships with the key industry participants.

The management of Reader's Digest has undertaken a transformational restructuring of its cost base and the team is now working hard to regain momentum lost during the administration process and to organically increase its readership. The company is looking at a number of ways in which it can supplement its product and service offering and best utilise its key strengths; its brand and loyal customer base.

It remains early days for the Calyx turnaround, but its new management team is excited about the possibilities and clear about the way in which the business needs to be repositioned.

Performance

The Company's net asset value as at 30 September was £208.5 million. Net of share issuance costs incurred from fundraising, the NAV return for the period under review was a healthy 1.68%, due in most part to a strong valuation of Gardner.

The net asset value per share was 100.81 pence as at 30 September 2010.

Unique among our peer group of premium listed investment companies, the Company's listing price on AIM, and subsequently on the London Stock Exchange Main Market, has maintained a sizeable premium to NAV. The Board considers that this represents market confidence in the Better Capital brand and the key underlying individuals.

To summarise, I am encouraged by this early positive performance.

Deal Flow

Better Capital LLP ("Consultant" to the General Partner of Better Capital Fund) is fully resourced with a high quality team.

According to the referrer community, the Fund's reputation in the marketplace is strong and the proven ability to transact complex situations at speed is a key differentiator.

The volume of new deal opportunities being investigated continues to be consistently high. The high number of introductions is a result of significant time spent meeting members of the referrer community and building awareness of the brand. During the period a total of 311 introductions were reviewed by the Consultant in conjunction with the General Partner of the Better Capital Fund.

The Board continues to believe that this deal flow should mean that the proceeds of the placings can be substantially invested or committed within the period set out in the prospectus.

Marketplace

In spite of the fact that this economic downturn has been the most severe in recent memory, the number of corporate insolvencies has remained significantly below the levels seen in previous recessions.

There is a general lack of willingness of lenders to enforce on security, in part out of a desire to avoid crystallising losses and also due to a view that supporting distressed businesses provides an opportunity for lenders to mitigate their losses. This means that the major banks are not bringing many businesses to market; preferring instead to reset covenants, extend loan terms, take warrants and engage in other forms of restructuring. This has resulted in lenders sustaining (but often not investing in) underperforming or otherwise insolvent businesses - an unsustainable situation.

However, even with this backdrop to the flow of restructuring opportunities in the marketplace, the Fund's ability to source and execute (through a variety of mechanisms) a number of exciting opportunities is seen as very positive.

The near term outlook for the future is promising for Better Capital Limited - being an investor which can capitalise on corporate underperformance, of which there is an abundance.

Richard Crowder

Chairman

26 November 2010

Investment Report of Better Capital Fund

The Better Capital Fund has invested in three businesses across a diverse range of industry sectors, one of which has made a strategic acquisition.

Gardner

The acquisition of Gardner was completed in February 2010.

Gardner is one of the UK's largest independently owned suppliers of metallic aerospace details and sub-assemblies.

The group has continued to trade ahead of the plan set at the time of the acquisition in February 2010 and the restructuring of the business continues in line with its plans. For the year ended August 2010 the business generated revenues of just over £50.0 million, EBITDA (pre-restructuring costs) in excess of £3.0 million and had net cash reserves in the region of £4.0 million.

Demand from customers has remained generally strong. There have been significant new contract wins which underpin the positive outlook for the coming years. Performance at the gross margin level has exceeded expectations due to a combination of better product mix and cost reduction activities. As a result, the business outperformed EBITDA and cash flow targets for the year ended 31 August 2010. Gardner has been valued on a discounted earnings multiples basis due to the combined factors of the length of ownership and strong early financial performance. The Gardner valuation has resulted in the recognition of a £5.1 million unrealised increase in value as at 30 September 2010 compared to cost.

Better Capital Fund has committed a total of £20.0 million to invest in the Gardner project and to date a total of £18.5 million has been invested, including RD Precision as outlined below.

Originally 100% of the share capital was acquired by Better Capital Fund via a special purpose vehicle, but this has subsequently been reduced to 89% following completion of the anticipated restructuring process in October 2010.

Gardner Bolt-on: RD Precision

The acquisition of RD Precision was completed in May 2010. RD Precision was a small bolt-on investment for Gardner, forecast to turnover approximately £2.0 million per annum.

The business has performed well since the acquisition and the integration into the Gardner group is going to plan. Sales and profitability are ahead of expectation and the UK business has been relocated to a new leased site on the Airbus Broughton campus.

£3.6 million was transferred to Gardner and allocated to finance the acquisition of RD Precision and to fund its working capital requirements. This £3.6 million is allocated against the £20.0 million commitment in the Gardner project. The valuation of RD Precision is included within Gardner.

RD Precision is wholly owned by Gardner.

Reader's Digest

The Reader's Digest acquisition was completed in April 2010.

Reader's Digest is a well recognised brand and a direct marketing business.

Trading was slow to recover out of administration due to the break in marketing activity, but the promising results of recent campaigns suggest that the majority of its customer base has remained loyal to the brand. The forecast turnover for the current (nine month) period to 31 December is £35.0 million. The new group posted its first profitable month in July 2010.

Operational restructuring and investment has significantly improved the internal controls and systems, increasing efficiencies and is having a material positive impact on underlying profitability. The working capital profile is returning to normal, following the predictably challenging period post administration. The challenge now is to increase the breadth of the product offering and increase readership - much is being devoted to this. The Reader's Digest investment has been valued using a price of recent investment methodology due to the relatively short time period since acquisition.

Better Capital Fund has committed a total of £15.0 million to invest in the Reader's Digest project and to date a total of £13.0 million has been invested.

Originally 100% of the share capital was acquired but this has subsequently been reduced to 84.5% following completion of the anticipated restructuring process in November 2010.

Calyx

The Calyx acquisition was completed in September 2010.

Calyx is a provider of IT services, software and hardware.

The most attractive parts of the group were acquired from insolvency processes in the UK and Ireland in September 2010. Whilst the transaction necessitated significant structural upheaval, the business is now quickly returning to pre-administration levels but with the benefit of a reduced overhead base and generally improved management. The operational turnaround is underway and the latest results are positive. The Calyx investment has been valued using a price of recent investment methodology due primarily to the close proximity of the acquisition date to the reporting date.

Better Capital Fund originally committed a total of £17.0 million of which £16.3 million was invested in the Calyx project as at 30 September 2010. A planned additional investment in working capital of £5.5 million was made in October 2010, increasing commitment to £22.5 million and total invested to £21.8 million.

Calyx is wholly owned by Better Capital Fund via a special purpose vehicle.

Portfolio Summary & Reconciliation

* Better Capital Fund holds its investments at acquisition cost in accordance with the terms of the Limited Partnership Agreement.

** The Company fair values its investment in the Better Capital Fund in accordance with the accounting policies as set out in Note 2.

Cash Management

As at 30 September 2010, Better Capital Fund had placed a total of £154.4 million of cash on deposit with eight approved banks with maturity dates ranging from instant access to four months. The Better Capital Fund has in place a strict cash management policy that limits counterparty risks whilst simultaneously maximising return.

26 November 2010

Market Summary

In the wake of the global economic turmoil caused by the collapse of the credit markets, the M&A industry has significantly contracted - and is now in weak recovery.

Fortunately for Better Capital, the lack of availability of leverage is actually of benefit, given the reliance upon gearing that a number of its competitors have. In either prosperous times or those of recession, there remain businesses which are poorly run and hence require an operational turnaround.

The factor which is affecting the marketplace most noticeably is the attitude of the clearing banks. It is extremely common for lenders to refrain from crystallising losses, even though the worth of the underlying businesses is far below the level of the debt. The longer this situation remains, the greater the need for investment in those companies.

A rise in interest rates or a change of attitude in the banking community is likely to prompt a wave of investment opportunities.

Better Capital is now a strong brand in its market with a full set of resources to maximise the return from the turnaround arena. We have considerable confidence that the Better Capital Fund can find further rewarding investments over the months ahead.

Jon Moulton

Director

BECAP GP Limited

26 November 2010

Statement of Responsibility and Other Information

Responsibility Statement

The Directors confirm that to the best of their knowledge:

·; the condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union; and

·; the Interim Financial Report meets the requirements of an interim management report (as defined below), and includes a fair review of the information required by:

a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first period of the financial year ; and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties of the remaining six months of the year; and

b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first period of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the audited historical information that could do so.

Major Shareholders

As at 1 November 2010, insofar as is known to the Company, the following persons were interested, directly or indirectly, in 5% or more of the Ordinary Shares in issue:

Shareholdings of the Directors

*Represents a shareholding of 50,000 shares each by Richard Crowder and his wife.

General Partner's Share and Carried Interest

In the period under review, the Better Capital Fund has paid fees to its General Partner of £2.1 million, under the terms of the limited Partnership Agreement, in respect of the General Partner's Share. This has been accounted for in calculating the fair value of the investment by the Company in the Better Capital Fund. No amounts are yet liable to be paid in respect of carried interest.

Interim management report

·; Important events of the interim period

The important events of the interim period that have occurred during the period and the key factors influencing the financial statements are all set out in this report, comprising the Chairman's Statement, Fund Portfolio and Financial Statement sections.

·; Principal risks and uncertainty

For the remaining six months of the financial period, the Company's principal risk relates to the financial performance of the Better Capital Fund's portfolio investments and the ability of the General Partner to source and invest in turnaround opportunities which can increase in value.

The Directors of the Company are listed on page 23 and have been directors throughout the period.

By order of the Board

Richard Battey

Director

26 November 2010

Independent Review Report to Better Capital Limited

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the interim financial report for the period ended 30 September 2010 which comprises the statement of financial position, statement of comprehensive income, statement of changes in equity, statement of cash flows and related notes. We have read the other information contained in the interim financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors' responsibilities

The interim financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the interim financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

As disclosed in note 2, the annual financial statements of the Company are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this interim financial report have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting' as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the interim financial report based on our review. This report, including the conclusion, has been prepared for, and only for, the Company for the purpose of the Disclosure and Transparency Rules of the Financial Services Authority and for no other purpose. We do not in producing this report accept or assume responsibility for any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the interim financial report for the period 24 November 2009 to 30 September 2010 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

BDO LimitedChartered AccountantsPlace du Pré, Rue du Pré, St Peter Port, Guernsey26 November 2010

Condensed Statement of Financial Position

As at 30 September 2010

The Interim Financial statements were approved and authorised for issue by the Board of Directors on 26 November 2010 and signed on their behalf by:

Mark Huntley Richard Battey

Director Director

The accompanying notes are an integral part of this Interim Financial Report.

Condensed Statement of Comprehensive Income

For the period 24 November 2009 to 30 September 2010

All activities derive from continuing operations.

All income is attributable to the holders of the Ordinary Shares of the Company.

The accompanying notes are an integral part of this Interim Financial Report.

Condensed Statement of Changes in Equity

For the period 24 November 2009 to 30 September 2010

The accompanying notes are an integral part of this Interim Financial Report.

Condensed Statement of Cash Flows

For the period 24 November 2009 to 30 September 2010

The accompanying notes are an integral part of this Interim Financial Report.

Notes to the condensed financial statements

For the period ended 30 September 2010

1. General information

Better Capital Limited (the "Company") was incorporated in Guernsey on 24 November 2009 as a closed-ended investment company with an unlimited life and registration number 51194. The Company is registered with the Guernsey Financial Services Commission as a Registered Closed-ended Collective Investment Scheme. The registered office of the Company is Heritage Hall, PO Box 225, Le Marchant Street, St Peter Port, Guernsey, GY1 4HY.

The investment objective of the Company is to generate total attractive returns through an investment policy of investing (through Better Capital Fund) in a portfolio of distressed businesses, such returns being expected through capital growth.

Better Capital Fund is managed by its general partner, BECAP GP LP (the "General Partner"), which is in turn managed by its general partner BECAP GP Limited. Such arrangements are governed under the respective Limited Partnership Agreements, as amended.

The Company was initially admitted to list on the London Stock Exchange AIM market on 17 December 2009, raising £142.4 million gross capital proceeds by way of a placing of shares. On 28 June 2010 the Company raised an additional £67.6 million gross capital proceeds from a firm placing and placing and open offer. On 8 July 2010 the Company was admitted to the Official List of the Financial Services Authority and the enlarged share capital of the Company was migrated to the London Stock Exchange Main Market.

2. Accounting policies

Basis of preparation

The annual financial statements of the Company will be prepared in accordance with International Accounting Standards, International Financial Reporting Standards and Interpretations adopted for use in the European Union (collectively Adopted IFRS's).

This Interim Financial Report has been prepared in accordance with International Accounting Standard 34 - Interim Financial Reporting. Consequently, these financial statements do not include all of the information required for full financial statements. These condensed financial statements should be read in conjunction with the full audited historical information of the Company for the period from 24 November 2009 to 28 February 2010 (the "historical information").

In consideration of adopting IAS 34 for this Interim Financial Report, the Directors have concluded that the historical financial information provides a detailed level of disclosure, which is independently audited, available publicly and commensurate with the level of disclosure anticipated for the first annual financial statements. Accordingly, the Directors have taken the view that the required disclosure assumptions under IAS 34 have been adequately upheld under the proviso to retain disclosure of full accounting policies.

The financial statements were prepared in accordance with the provisions of the Companies (Guernsey) Law, 2008, as amended. As this is the Company's first reporting period, no comparative figures have been disclosed.

The Company does not operate in an industry where significant or cyclical variations as a result of seasonal activity are experienced during the financial year.

The principal accounting policies adopted are set out below.

Standards, amendments and interpretations to published standards not yet effective

At the date of authorisation of these financial statements, the following standards and interpretations, which have not been applied, were in issue but not yet effective.

Revised, amended and new standards

·; IFRS 2: Share-based Payment - amendment relating to group cash-settled share-based payment transactions - for accounting periods beginning on or after 1 January 2010

·; IFRS 3: Business Combinations - amendments resulting from May 2010 Annual Improvements to IFRS - for accounting periods beginning on or after 1 July 2010*

·; IFRS 5: Non Current Assets held for Sale and Discontinued Operations - amendments resulting from April 2009 annual improvement to IFRS - for accounting periods commencing on or after 1 January 2010

·; IFRS 7: Financial Instruments: Disclosures - amendments enhancing disclosures about transfers of financial assets - for accounting periods beginning on or after 1 July 2011*

·; IFRS 8: Operating Segments - amendments resulting from April 2009 annual improvement to IFRS - for accounting periods commencing on or after 1 January 2010

·; IFRS 9: Financial Instruments - to replace IAS 39 Financial Instruments: Recognition and Measurement - for accounting periods commencing on or after 1 January 2013*

·; IAS 1: Presentation of Financial Statements - amendments resulting from April 2009 annual improvement to IFRS - for accounting periods commencing on or after 1 January 2010

·; IAS 1: Presentation of Financial Statements - amendments resulting from May 2010 annual improvement to IFRS - for accounting periods commencing on or after 1 January 2011*

·; IAS 7: Statement of Cash Flows amendment resulting from April 2009 annual improvements to IFRS - for accounting periods commencing on or after 1 January 2010

·; IAS 17: Leases - amendment resulting from April 2009 - annual improvements to IFRS - for accounting periods commencing on or after 1 January 2010

·; IAS 24: Related Party Disclosures - amendment to simplify related party disclosures - for accounting periods commencing on or after 1 January 2011

·; IAS 27: Consolidated and Separate Financial Statements - amendments resulting from May 2010 annual improvement to IFRS - for accounting periods commencing on or after 1 July 2010*

·; IAS 32: Financial Instruments: Presentation - amendments relating to classification of rights issues - for accounting periods commencing on or after 1 February 2010

·; IAS 34: Interim Financial Reporting - amendments resulting from May 2010 annual improvement to IFRS - for accounting periods commencing on or after 1 January 2011*

·; IAS 36: Intangible Assets - amendment resulting from April 2009 - annual improvements to IFRS - effective on or after 1 January 2010

·; IAS 39: Financial Instruments: Recognition and Measurement amendments resulting from April 2009 annual improvements to IFRS - for accounting periods commencing on or after 1 January 2010

·; IFRIC 13: Customer Loyalty Programmes - amendments resulting from May 2010 annual improvement to IFRS - for accounting periods commencing on or after 1 January 2011*

·; IFRIC 14: interpretation of IAS 19: Employee Benefits - for accounting periods commencing on or after 1 January 2011

·; IFRIC 19: Extinguishing Financial Liabilities with Equity Instruments - for accounting periods commencing on or after 1 July 2010

* still to be endorsed by the EU.

The Directors anticipate that the adoption of these standards and interpretations in future periods will not have a material impact on the financial statements of the Company.

Foreign currencies

The functional currency of the Company is Pounds Sterling reflecting the primary economic environment in which the Company operates.

The presentation currency for financial reporting purposes is Pounds Sterling.

Financial instruments

Financial assets and financial liabilities are recognised in the Company statement of financial position when the Company becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are only offset and the net amount reported in the statement of financial position and statement of comprehensive income when there is a currently enforceable legal right to offset the recognised amounts and the Company intends to settle on a net basis or realise the asset and liability simultaneously.

Financial assets

The classification of financial assets at initial recognition depends on the purpose for which the financial asset was acquired and its characteristics.

All financial assets are initially recognised at fair value. All purchases of financial assets are recorded at trade date, being the date on which the Company became party to the contractual requirements of the financial asset.

The Company has not classified any of its financial assets as Held to Maturity or as Available for Sale.

The Company's financial assets comprise loans and receivables and investments held at fair value through profit or loss.

a) Loans and receivables

These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They principally comprise trade and other receivables and cash and cash equivalents. They are initially recognised at fair value plus transaction costs that are directly attributable to the acquisition, and subsequently carried at amortised cost using the effective interest rate method, less provisions for impairment. The effect of discounting on these financial instruments is not considered to be material.

b) Investments at fair value through profit or loss

i. Classification

The Company classifies its investment in Better Capital Fund as a financial asset at fair value through profit or loss. The financial asset is designated by the Company at fair value through profit or loss at inception.

ii. Recognition

Purchases and sales of investments are recognised on the trade date - the date on which the Company commits to purchase or sell the investment.

iii. Measurement

"International Accounting Standard 39, Financial Instruments: Recognition and Measurement" requires investments treated as "financial assets at fair value through profit or loss" to be held at fair value. Fair value is defined as the amount for which an asset could be exchanged between knowledgeable willing parties in an arms length transaction.

The investment in Better Capital Fund is initially recognised at cost, being the fair value of consideration given.

The Directors base the fair value of the investment in Better Capital Fund on information received from the General Partner. The General Partner's assessment of fair value of investments held by Better Capital Fund, through Special Purpose Vehicles, is determined in accordance with the International Private Equity and Venture Capital ("IPEV") Valuation Guidelines. It is the opinion of the General Partner, that the IPEV valuation methodology used in deriving a fair value is not materially different from the fair value requirements of IAS 39.

iv. Fair value estimation

A summary of the more relevant aspects of IPEV valuations is set out below:

Marketable (Listed) Securities - Where an active market exists for the security, the value is stated at the bid price on the last trading day in the period. Marketability discounts should generally not be applied unless there is some contractual, governmental or other legally enforceable restriction preventing realisation at the reporting date.

Unlisted Investments - are carried at such fair value as the General Partner considers appropriate given the performance of each investee company and after taking account of the effect of dilution, the exercise of ratchets, options or other incentive schemes. Methodologies used in arriving at the fair value include prices of recent investment, earnings multiples, net assets, discounted cash flows analysis and industry valuation benchmarks.

Notwithstanding the above, the variety of valuation basis adopted and quality of management information provided by the underlying Investee Company means there are inherent difficulties in determining the value of these investments. Amounts realised on the sale of these investments will differ from the values reflected in this financial information and the difference may be significant.

c) Derecognition of financial assets

A financial asset (in whole or in part) is derecognised either:

·; when the Company has transferred substantially all the risks and rewards of ownership; or

·; when it has neither transferred nor retained substantially all the risks and rewards and when it no longer has control over the assets or a portion of the asset; or

·; when the contractual right to receive cash flow has expired.

d) Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquid investments with an original maturity of three months or less that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

Financial liabilities

The classification of financial liabilities at initial recognition depends on the purpose for which the financial liability was issued and its characteristics.

All financial liabilities are initially recognised at fair value net of transactions costs incurred. All purchases of financial liabilities are recorded on trade date, being the date on which the Company becomes party to the contractual requirements of the financial liability. Unless otherwise indicated the carrying amounts of the Company's financial liabilities approximate to their fair values.

The Company's financial liabilities consist of any financial liability measured at amortised cost.

a) Financial liabilities measured at amortised cost

These include trade payables and other short-term monetary liabilities, which are initially recognised at fair value and subsequently carried at amortised cost using the effective interest rate method.

b) Derecognition of financial liabilities

A financial liability (in whole or in part) is derecognised when the Company has extinguished its contractual obligations, it expires or is cancelled. Any gain or loss on derecognition is taken to the statement of comprehensive income.

Capital

Financial instruments issued by the Company are treated as equity if the holder has only a residual interest in the assets of the Company after the deduction of all liabilities. The Company's Ordinary Shares are classified as equity instruments.

The Company considers its capital to comprise its Ordinary Share capital, share premium and retained earnings. There has been no change in what the Company considers to be capital since incorporation. The Company is not subject to any externally imposed capital requirements.

Equity instruments

Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction from proceeds.

Incremental costs include those incurred in connection with the placing and admission which include fees payable under the Placing Agreement, legal costs and any other applicable expenses.

Income

Interest income is recognised on a time apportioned basis using the effective interest method.

Investment income

Investment income is recognised on an accruals basis.

Other expenses

Other expenses are accounted for on an accruals basis.

Dividends

Dividends paid during the period will be disclosed in equity. Final dividends proposed by the Board and approved by the Shareholders prior to the period end will be disclosed as a liability. Dividends proposed but not approved will be disclosed in the notes.

Going concern

After making appropriate enquiries, the Directors have a reasonable expectation that the Company, and in turn Better Capital Fund, have adequate resources to continue in operational existence for the foreseeable future and do not consider there to be any threat to the going concern status of the Company. For this reason, they continue to adopt the going concern basis in preparing the financial information.

Segmental reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors, as a whole. The key measure of performance used by the Board to assess the Company's performance and to allocate resources is the total return on the Company's net asset value, as calculated under IFRS, and therefore no reconciliation is required between the measure of profit or loss used by the Board and that contained in the financial information.

For management purposes, the Company is organised into one main operating segment, which invests in one limited partnership.

All of the Company's income is from within Guernsey.

All of the Company's non-current assets are located in Guernsey, via Better Capital Fund.

Due to the Company's nature it has no customers.

Critical accounting judgment and estimation uncertainty

Use of estimates and judgements

The preparation of financial information requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses.

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The areas involving a high degree of judgement or complexity or areas where assumptions and estimates are significant to the financial information are disclosed below. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

The resulting accounting estimates will, by definition, seldom equal the related actual results.

Investment in Better Capital Fund

The value of the Company's investment in Better Capital Fund is based on the value of the Company's limited partner capital and loan accounts within Better Capital Fund, which itself is based on the value of the underlying investee companies as determined by the

General Partner. Any fluctuation in the value of the underlying investee companies will directly impact on the value of the Company's investment in Better Capital Fund.

When valuing the underlying investee companies, the General Partner of Better Capital Fund reviews information provided by the underlying investee companies and other business partners and applies widely recognised valuation methods such as time of lasting finance, multiple analysis, discounted cash flow method and third party valuation to estimate a fair value as at the date of the statement of financial position. The variety of valuation bases adopted and quality of management information provided by the underlying investee companies and the lack of liquid markets for the investments mean that there are inherent difficulties in determining the fair value of these investments that cannot be eliminated. Therefore the amounts realised on the sale of investments will differ from the fair values reflected in this financial information and the differences may be significant.

3. Taxation

The Company is exempt from taxation in Guernsey and is charged an annual exemption fee of £600.

4. Investment in Limited Partnership

The movement in fair value is derived from the fair value uplift in Gardner and the net of income and expenses of Better Capital Fund and its related special purpose vehicles.

The outstanding loans do not carry interest. The loans will be repaid by way of distributions from Better Capital Fund. The Company is not entitled to demand repayment of the outstanding loans. Distributions received from Better Capital Fund in the period amounted to £250,000, which have been allocated as income based on discretionary allocation powers of the General Partner of Better Capital Fund as set out in the Limited Partnership Agreement.

In the accounts of the Company the fair value of the loans will be increased or reduced to reflect the fair value of the Company's attributable valuation of net assets within the Better Capital Fund.

The Company pursues its investment objective and policy by investing in Better Capital Fund.

Better Capital Fund seeks to invest in a portfolio of companies which have significant operating issues and may have associated financial distress, with a primary focus on investments in companies which have significant activities within the United Kingdom and Ireland.

5. Corporate broker, administration and registrar fees

Corporate broker fees

On 15 April 2010 the Company entered into an engagement letter with Numis Securities Limited ("Numis") which defined the terms of the new corporate broker engagement and constituted the termination of the existing nominated adviser and broker agreement ("Nomad Agreement"), dated 14 December 2009, pursuant to which, Numis had agreed to act as the Company's Nominated Adviser and Broker from admission to trading on AIM for the purpose of Compliance with the AIM Rules. The new Corporate Broker arrangement became effective upon the admission to the London Stock Exchange Main Market on 8 July 2010. Pursuant to the engagement letter Numis would act as corporate broker, rendering brokerage services in relation to the migration of the Company's listed shares from AIM to the London Stock Exchange Main Market and the provision of ongoing support to the Company. In exchange for these services the Company has agreed to pay a fee of £35,000 for the first 12 months of the engagement to Numis.

Under the terms of the engagement letter the Company has agreed to indemnify and hold harmless Numis, including defined indemnified parties, from and against any losses which Numis and the indemnified parties may suffer or incur and any claims made as defined in the engagement letter.

During the period, the Company incurred fees of £42,459 in respect of the original Nomad agreement, and £7,972 in respect of the Corporate Broker fee.

Administration fees

The Administrator has been appointed to provide day to day administration and secretarial services to the Company as set out in the Administration Agreement. In consideration for its services, and in addition to a set up fee of £30,000 plus disbursements, the Administrator receives an annual fee of 0.1 per cent. of the net asset value (subject to a minimum of £75,000 and a maximum of £175,000), for administration, company secretarial and corporate governance services. The Company shall also reimburse the Administrator for incurred out of pocket expenses. The Administration Agreement is terminable by either party giving not less than 90 days' notice in writing and in certain other circumstances, including material breach of the terms of the agreement by either party.

During the period, the Company incurred administration fees of £122,272, of which £43,750 remained outstanding as at the period end.

Registrar fees

The Company is party to an Offshore Registrar Agreement with Capita Registrars (Guernsey) Limited (the "Registrar") dated 14 December 2009, pursuant to which the Registrar will provide registration services to the Company which will entail, among other things, the Registrar having responsibility for the transfer of shares, maintenance of the share register and acting as transfer and paying agent. For the provision of such services, the Registrar is entitled to receive a basic fee based on the number of shareholder accounts subject to an annual minimum charge of £6,500. In addition to this basic fee, the Registrar is entitled to additional fees for specific actions.

During the period, the Company incurred fees of £11,314 in respect of this agreement, of which £3,156 remained outstanding as at the period end.

6. Share capital

On incorporation one Ordinary Share of no par value was issued for a consideration of £1. Following the Company's listing on the London Stock Exchange AIM market on 17 December 2009, a total of 142,399,999 additional Ordinary Shares were issued with no par value at 100 pence per share. The Company incurred immediate listing expenses comprising of commissions, professional adviser fees and disbursements of £3,442,928. These costs have been taken to the share premium account.

On 28 June 2010 the Company issued a total of 64,380,952 new additional ordinary shares with no par value at 105 pence per share, raising an additional £67,600,000 gross capital proceeds, under firm placing and placing and open offer. The Company incurred additional fundraising expenses comprising predominately of commissions, regulatory fees, professional adviser fees and disbursements totalling £1,551,141. These costs have been taken to the share premium account.

The Company has one class of Ordinary Shares which carry no right to fixed income.

Members of Better Capital LLP, the appointed Consultant to BECAP GP Limited, which acts as general partner to BECAP GP LP, which in turn acts as General Partner to Better Capital Fund, hold investments in the Company in accordance with the terms of the Prospectus. At the period end, those members held the following proportions of Ordinary Shares:

*Shareholding is held through a discretionary trust in favour of Nick Sanders' children

7. Retained earnings

Any surplus/deficit arising from the net profit/loss for that period is taken to the revenue reserve which may be utilised for payment of dividends.

8. Related party transactions

Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the party in making financial or operational decisions. The Directors are responsible for overall control, management and supervision of the Company's affairs and are responsible for the overall implementation of the investment objective and policy of the Company.

The Company has four non-executive Directors, all independent of the Administrator other than Mr Mark Huntley, who is also the managing director of Heritage International Fund Managers Limited. Mr Huntley is also a director of BECAP GP Limited, the general partner of the General Partner.

Directors' fees for the period to 30 September 2010 amounted to £115,305, of which £33,750 was outstanding at the period end. Annual remuneration terms for each Director are summarised as follows: the Chairman receives £40,000, the chairman of the audit committee receives £35,000 and other non-executive directors receive £30,000 each.

9. Earnings per share and net asset value per share

Earnings per share

The earnings per share is based on the profit for the period and on the weighted average number of shares in issue for the period.

The Company does not have any instruments which could potentially dilute basic earnings per share in the future.

Net asset value per share

The net asset value per share for the Company is arrived at by dividing the total net assets of the Company at the period end by the number of ordinary shares in issue at the period end.

10. Contingent liabilities

As at the date of the Interim Financial Report there were no contingent liabilities to report

11. Events after the period end

There are no material post period events.

General Information