BCAP.L Regulatory News (BCAP)

19 August 2011

Better Capital Limited

Interim Management Statement

This statement is made in accordance with the UK Listing Authority's Disclosure Rules and Transparency Rules and relates to the period from 1 April to 19 August 2011.

Overview

Better Capital Limited ("Better Capital") is a limited liability, closed-ended investment company, which has been incorporated in Guernsey with an unlimited life and registered with the Guernsey Financial Services Commission as a Registered Closed-Ended Collective Investment Scheme.

Better Capital has the investment objective of generating attractive total returns from investing through BECAP Fund LP ("BECAP") in a portfolio of distressed businesses, such returns being expected to be largely from capital growth.

To date Better Capital has committed an aggregate of £203.8 million to BECAP. BECAP has made the following investments in the period prior to 1 April 2011:

Across the portfolio, investments are generally showing improving trends.Recent transactions

Details of transactions in the very active period from 1 April to 19 August 2011 are listed below.

·; 17 May 2011 - An £8 million facility was extended to Gardner to fund the working capital requirements of Gardner's new Eurocopter and Vought work programmes. At 19 August 2011, a total of £4.25 million has been drawn down. The working capital facility as funded by BECAP has been provided to Gardner on standard commercial terms.

·; 25 May 2011 - Following a period of trading, it was concluded that the initial amount invested by BECAP into Santia was in excess of its then current restructuring and working capital requirements. On that date, Santia returned £3.5 million to BECAP. BECAP's commitment to Santia remains at £15 million, whilst the amount invested has reduced to £11.5 million. 

·; 6 June 2011 - An additional £6 million was committed and invested in Calyx to fund the acquisition of two Microsoft Dynamics GP re-sellers. They are the trade and certain assets of a division of Touchstone Group plc ("Touchstone") and the entire issued share capital of Trinity Computer Services Holdings Limited ("Trinity"). Both acquisitions were completed on the same date and have been combined with Calyx's existing software business, making it the largest Microsoft Dynamics GP re-seller in the UK.

·; 4 July 2011 - A further £3 million has been committed and invested in Reader's Digest to fund its on-going restructuring programme. 

·; 6 July 2011 - An agreement was entered into by BECAP to acquire the UK and Irish businesses of Spicers, a pan-European supplier of stationery and office products, which is currently a subsidiary of DS Smith Plc. Under the agreement, Unipapel SA will acquire all of the Spicers businesses and immediately sell the UK and Irish businesses to BECAP. The agreement is conditional upon the proposed disposal of Spicers by DS Smith Plc to Unipapel SA being completed, which is subject to competition clearance. BECAP has committed £40 million and invested £32 million in a wholly owned new company set up to effect the transaction.

·; 12 July 2011 - BECAP and the Royal Bank of Scotland plc jointly acquired Fairline Boats Acquisition Limited (together with its subsidiaries, "Fairline") via a new holding company, Macsco 30 Limited ("Macsco 30"). Under the terms of the transaction, BECAP acquired a majority stake in Macsco 30, a special purpose vehicle set up solely for acquiring the entire issued share capital of Fairline. Fairline is a leading global brand in the design, engineering, manufacturing and sales of luxury boats in the 38 to 80 feet range. BECAP has committed £16.6 million to Macsco 30 to fund the acquisition and restructuring programme. At 19 August 2011, a total of £14.5 million has been invested.

·; 22 July 2011 - The DigiPos group ("DigiPos Group") is a supplier of electronic point of sale hardware and software and provides related installation services to a range of retail customers. On 4 July 2011, BECAP acquired the principal bank facilities of the DigiPos Group. On 22 July 2011, BECAP through BECAP SPV 6 Limited, a special purpose vehicle set up to effect the transaction, acquired the entire issued share capital of DigiPos Store Solutions Holdings Limited, the DigiPos Group holding company. £21 million has been committed to this transaction. 

Financial

The unaudited net asset value of Better Capital as at 30 June 2011 was £209.9 million, representing a net asset value per share of 101.5 pence. In accordance with the guidance set out in the Prospectus, fair market valuations of BECAP's investments are carried out on a six-monthly basis as at 31 March and 30 September. Consequently, the above net asset value has not been subject to a revaluation of the underlying carrying value of investments from those reported in the Annual Financial Report. Follow-on investment made into existing investee companies during the period had been added at cost to the carrying values brought forward.

At 31 July 2011, BECAP had cash balances of £38.9 million, placed with maturity dates ranging from instant access to four months.

At market close on 17 August 2011, Better Capital's shares had a closing price on the London Stock Exchange of 119.75 pence.

Portfolio Summary & Reconciliation as at 30 June 2011

Outlook

BECAP has enjoyed a busy period in the past few months with the successful deployment of funds to a number of new opportunities. It is encouraging to have concluded the three platform transactions mentioned earlier, which has further demonstrated BECAP's capability to invest selectively but at pace. Concluding the transactions has generated considerable interest and contacts from referrers of potential investment opportunities and further raises the Better Capital profile in the marketplace. 

BECAP through its Consultant, Better Capital LLP continues to receive a strong pipeline of opportunities across a wide range of sectors. The quality and size of the opportunities seen are also showing a positive trend.

BECAP's approach of not leveraging the portfolio companies at acquisition means that there is scope to introduce a manageable level of external finance once the companies are stabilised. In order to provide for further capital for investment into new opportunities, BECAP is weighing options that will permit re-deployment of existing funds into other opportunities.

Commenting on the Interim Management Statement, Richard Crowder, Chairman of Better Capital said, "The board is pleased with the progress achieved by the BECAP portfolio companies and is encouraged by the prospects of the recently acquired businesses. The disciplined approach of assessing all the opportunities received and discerning those that have a strong potential of being turned around is paying dividend. Leveraging on the broad experience of the Better Capital team, the prospects of investing in more of such opportunities are excellent. In line with Better Capital's stated objective, the board remains confident that BECAP is on track to generate attractive total returns to Better Capital's investors."

For further information, please contact:

Better Capital Limited +44 (0)1481 716 000

Mark Huntley (Director)

Laurence McNairn (Administrator and Company Secretary)

Powerscourt +44 (0)20 7250 1446

Roddy Cameron

Jon Earl

Numis Securities Limited +44 (0)20 7260 1000

Nathan Brown

This statement is a general description of the financial position and performance of the Company for the period from 1 April 2011 to 19 August 2011. It does not contain any profit forecast or forward looking information. Future performance and share price are likely to be affected by a number of factors, including (but not limited to) general economic and market conditions and specific factors affecting the financial performance or prospects of individual investments within the Company's portfolio.