BCAP.L Regulatory News (BCAP)

25 November 2013

BETTER CAPITAL PCC LIMITED

(the "Company")

INTERIM RESULTS UPDATE

Better Capital PCC Limited is pleased to announce its 2013 interim results for both the 2009 Cell and the 2012 Cell.

2009 Cell Interim Results

· £210.0 MILLION total capital raised

· £12.4 MILLION distribution in the period to 30 September 2013

· £26.5 MILLION/12.6 PER CENT. cumulative distributions to date

· 42.65 PER CENT. return from NAV growth and distributions since inception

· 7 platform acquisitions

· 1 bolt-on acquisition in the period to 30 September 2013

· 10 bolt-on acquisitions since inception

· 1 exit in Fund I

* Based on the weighted average issue price of ordinary shares and net of share issue costs.

2012 Cell Interim Results

· £185.6 MILLION additional capital raised in August 2013

· £355.5 MILLION total capital raised in the 2012 Cell

· £347.4 MILLION net proceeds invested in Fund II

· £110.0 MILLION/31.7 PER CENT. committed to date

· 3 platform acquisitions at 30 September 2013

· 5.8 PER CENT. increase in NAV (net of issue costs) since inception

* Based on the weighted average issue price of ordinary shares and net of share issue costs.

Chairman's Statement

The Board is pleased to present the Company's Interim Report for the six months to ended 30 September 2013. From a corporate perspective, this has been a busy period. Notably the Company (through the 2012 Cell) was successful in raising further capital for deployment into Fund II. Gross proceeds of £185.6 million were raised over the summer. The Company, through the 2009 Cell also distributed a further 6.0 pence per share to the 2009 Cell investors in the period.

The Fund I GP and the Fund II GP have provided trading updates to the Board. Broadly, the portfolio companies continue to operate in a weak environment despite some very early signs of growth in the UK. The Board has been informed that the 2009 Cell NAV for the period (adjusted for distributions) is only marginally uplifted, principally reflecting continuing progress in Gardner, Spicers and Santia being offset by weaker performances in Calyx and Fairline. Progress in the Fund II portfolio companies remains encouraging, providing for a modest growth in the 2012 Cell NAV.

2009 Cell

Overview

NAV (including distributions) in the period grew by £1.2 million. At the fund level, the Fund I portfolio carrying value rose by £8.8 million, a combination of further investments into the portfolio companies and value enhancement. Cash reduced by £18.3 million in the period, reflecting a distribution of £12.4 million to the 2009 Cell and the funding of various portfolio company activities. The carry provision in the valuation also rose by £1.4 million in the period to £8.7 million.

In April 2013, the Board approved the 2009 Cell's second distribution of £12.4 million to the 2009 Cell investors. This brought the total distribution in the 2009 Cell to £26.5 million or 12.6 per cent. of total capital raised.

Investment activities

Three portfolio companies received further investment from Fund I. Santia received £2.0 million towards the acquisition of First Order Red Limited, an asbestos consultancy business. Fairline and Calyx Managed Services received funding injections totalling £2.6 million, to fund working capital.

Portfolio

Gardner is a medium to high complexity metallic components manufacturer, serving the aerospace industry. The business completed its 2013 financial period in August with underlying profitability significantly ahead of prior year. Gardner's current year plan shows further improvement albeit this is dependent on the timing of customer demand. The restructuring in the legacy UK sites is substantially completed with considerable work still on-going in Airia, the French business acquired in April 2012.

Reader's Digest has emerged from a Company Voluntary Arrangement in early 2013 and is now trading as a small magazine business. However, in recognition of the scale of the business, the general weakness in the printing sector and the challenges to grow its value, Reader's Digest is now fully written down.

The Calyx Group is made up of m-hance, a provider of business software management solutions operating on the Microsoft Dynamics AX Enterprise Resource Planning (ERP) solution, and Calyx Managed Services, a managed service provider to small medium size enterprises. Both businesses are now expected to report lower year-on-year profitability, predominantly driven by weak revenues.

m-hance, which is re-positioning its proposition from a software re-seller to a bespoke provider of business management software solutions, has struggled to convert its prospect pipeline. The failure to close expected business in the autumn led to a substantial reduction in expected 2013 profitability which was disappointing. Considerable change is underway to drive focus back into growing the order pipeline and to improve conversion. The Microsoft Dynamics AX ERP solution remains an area for growth due to its scalability and the ability to customise to complex requirements.

Calyx Managed Services continues to face highly competitive market conditions. The business has now re-focused in its core competencies such as break-fix and telephony. Calyx Managed Services has also made structural changes to its sales team with further cost reduction measures and management change being implemented.

Santia is a health and safety consultancy, providing services in occupational health, health and safety management, contractor accreditation, training, food safety testing and asbestos management. Santia is on course to deliver strong year-on-year underlying profitable growth. The integration of First Order Red, an asbestos consultancy business acquired in May 2013 is progressing satisfactorily and provides the scale required to make Santia's asbestos management division a significant market participant. Santia is expecting to make a small repayment back to Fund I before the end of 2013.

Omnico is a global omni-channel point of sale software and hardware provider. Considerable progress has been achieved in stabilising the business which recorded a small underlying profit in its 2013 financial year in September, compared with a significant loss in its prior year. Omnico's priority now is to continue to drive growth through its software and mobile point of sale offering, supported by new product launches. The order pipeline is encouraging with some high profile prospects.

Fairline designs and manufactures luxury boats, ranging from 38 to 80 feet in length. Trading conditions remain challenging for the sector with the demise of a number of businesses and widespread reduction in the availability of dealer financing. This resulted in a significant reduction in sales to dealers with a healthy reduction in dealer stocks. Fairline also suffered from short term production issues as a result of migrating its manufacturing to the re-engineered Corby facility and the introduction of the new Targa 48 range. Significant effort is being invested to resolve the production issues, to drive retail sales, and strengthen the dealer network. A new CEO is in place. The new Targa 48 has been well received and has a full order book until Q3 2014, with overall retail sales turning up.

Spicers is a wholesale stationery and office equipment distributor. The business remains profitable despite the industry as a whole contracting at around 8 per cent. per annum, reflecting the shift towards a paperless environment. The challenge for Spicers is to arrest revenue decline with growth initiatives such as contract distribution and targeting the small home office via e-commerce platforms such as Amazon and its own proprietary portal (www.memoetc.co.uk). The business has set itself an ambitious plan in the current year and is working to distribute further cash to Fund I in the near term. Significant surplus assets are in the process of being realised.

2012 Cell

Overview

The 2012 Cell invests solely in Fund II. In the period, Fund II acquired its third platform, City Link. The carrying value of Everest has increased, with Jaeger and City Link retained at the price of recent investment, providing a NAV growth in the 2012 Cell of 5.8 per cent., net of issuance costs, 20.3 per cent. on invested capital.

Fundraising

In line with the intent stated in the Company's prospectus dated 19 December 2011, the Company embarked on the second fundraising of the 2012 Cell over the summer through the issuance of new 2012 Cell shares. The issue closed in under ten weeks and raised gross proceeds of £185.6 million.

The new 2012 Cell shares were issued at 105.0 pence per share, at a 2.1 per cent. premium to NAV. The issue received strong support from both existing and new investors, all attracted by the Better Capital proposition of superior total returns from investing in a pool of distressed businesses.

Proceeds, net of issuance costs, of £181.9 million were deployed into Fund II on 16 August 2013.

Investment activities

On 26 April, Fund II acquired City Link, an express delivery courier business from Rentokil Initial plc for a nominal sum. Fund II has invested £40.0 million into City Link, to fund its restructuring programme and growth initiatives.

Fund II has also invested a total of £6.4 million in the period to fund Jaeger's refurbishment of its flagship store on Regent Street, London and its on-going restructuring.

Portfolio

Everest manufactures and installs premium priced home improvement products such as double glazed windows, doors, rooflines and conservatories. The business continues to make good progress in its turnaround, particularly with the restructuring of the sales organisation and the refining of the installation process. Current year profitability is significantly ahead of the prior year.

Jaeger, a British premium fashion retailer, has strengthened its management team in the period. Like-for-like and current year sales have grown considerably, albeit from a low base. Under the new management team, some sourcing and production are being brought back into Europe to improve quality and lead time. Jaeger is expected to generate a modest profit in the current year which will be a substantial improvement on the prior year loss.

The turnaround programme in City Link is progressing at pace. The IT implementations to improve visibility across the logistics chain and to provide more accurate estimated delivery time to the customers are largely complete and being trialled. City Link generated a small underlying profit in September 2013 despite experiencing some setback due to the threat of a RMT Union strike.

Deal flow

The position in the UK reported in previous periods persists, with struggling businesses still supported by the benign interest rate environment. Deal flow in the UK has been consistent but attractive transactions have been very few in number. The Board remains confident that due to Better Capital's market position as a leading turnaround investor, Better Capital LLP, the Consultant to Fund II GP, has been privy to the vast majority of all UK turnaround opportunities.

The average weekly deal flow volume has risen in the period as the Consultant expands its marketing efforts beyond the UK. Particular focus has been invested in Germany due to the volume of attractive opportunities that would benefit from Better Capital's investment led modus operandi. Germany is also appealing due to the Consultant's extensive knowledge and experience of operating in the country. A German office is in the process of being set up to facilitate further deal origination. Deal flow is also coming from other European jurisdictions.

Better Capital (Dublin) Limited, the Dublin Consultant to Fund II GP, continues to generate a good flow of leads in Ireland. The backing from both Fund II and the National Pensions Reserve Fund of Ireland has given the Dublin Consultant credibility among the local advisory and banking communities. Deal flow from Ireland has improved following the setup of a Dublin office, albeit the opportunities are typically smaller than those in the UK and Continental Europe.

The Consultant continues to be well-resourced. In the period, Richard Favier, formerly from the Pension Protection Fund, joined the Consultant on a consultancy basis. With Richard's input, the Consultant intends to originate opportunities with complex pension issues.

The composition of source and sector has remained broadly consistent with the prior periods. A total of 1,337 leads had been logged by the Consultant from incorporation to 30 September 2013.

Outlook

Better Capital is now moving into its fifth year of operations and has established a strong market position through its proven ability to execute deals and restructure distressed businesses. The additional capital raised over the summer reinforces Better Capital's ability to participate in the niche market of distressed turnaround investing and its long term position as a reputable investor in growth.

The team has grown significantly over the past year, having boosted resources in Ireland and now Germany, and in specialist areas such as pension and legal.

The Board believes that deal flow should remain sufficient to deploy the remainder of the uncommitted funds in Fund II in the remaining investment period, with UK sources enhanced by the expansion into Continental Europe and growing traction in the Irish market.

Richard Crowder

Chairman

22 November 2013

Enquiries:

Better Capital PCC Limited +44 (0)1481 716 000

Richard Crowder (Chairman)

Mark Huntley (Administrator and Company Secretary)

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

Nathan Brown

Oliver Hardy

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

Justin Griffith

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 financial statements that could do so.

Shareholdings of the Directors

The beneficial interests in shares of the Company that were held by Directors as at 30 September 2013 are detailed below:

2009 Cell

* Per cent. holding is given on one for one share holding basis rather than on voting rights.

2012 Cell

* Per cent. holding is given on one for one share holding basis rather than on voting rights.

There have been no changes to the Directors' shareholdings since 30 September 2013.

On 28 June 2013, Mr Mark Huntley resigned as a director of the Company. On 28 June 2013, Mr Jon Moulton was appointed as a director of the Company.

Shareholders' voting rights

Other than the 100 Core Shares issued to the Better Capital Purpose Trust as part of the Conversion, the Directors confirm that there are no securities in issue that carry special rights with regards to the control of the Company. The Core Shares have no voting rights for so long as Cell Shares are in issue.

The Company's issued share capital consists of 206,780,952 in the 2009 Cell and 346,600,520 in the 2012 Cell. Under the Company's articles of incorporation, at any general meeting of the Company:

• each holder of 2009 Shares who is present in person shall have one vote and on a poll the vote shall be weighted where a vote cast in relation to each 2009 Share shall count as 1.1096 towards the total number of votes cast; and

• each holder of 2012 Shares who is present in person shall have one vote and on a poll the vote shall be weighted where a vote cast in relation to each 2012 Share shall count as 0.9770 towards the total number of votes cast.

The figure which may be used by the Shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, Better Capital PCC Limited under the FCA's Disclosure and Transparency Rules, is the aggregate of the number of votes capable of being cast on a poll, namely 568,072,852. This is calculated as the sum of the 2009 Shares (206,780,952) multiplied by 1.1096 plus the 2012 Shares (346,600,520) multiplied by 0.9770.

Similarly, to calculate the numerator, Shareholders should multiply their holding of 2009 Shares by 1.1096 and multiply their holding of 2012 Shares by 0.9770. The sum of those calculations will result in the relevant number of voting rights for the numerator.

Fund I GP's Share and Carried Interest

The Fund I GP's Share is calculated under the terms of the Fund I Limited Partnership Agreement and as described in the Prospectus dated 29 July 2013. Pursuant to the terms of the Fund I Limited Partnership Agreement, where net income and net capital gains are insufficient to extinguish the Fund I GP's Share, Fund I shall advance a non-interest bearing loan to the extent of the Fund I GP's Share not already drawn by the Fund I GP. The loan is not recoverable from the Fund I GP other than by allocation of net income or net capital gains.

In the period under review, Fund I has advanced a non-interest bearing loan to its general partner of £1.2 million (31 March 2013: £2.9 million, 30 September 2012: £1.55 million) in respect of the Fund I GP's Share. This has been accounted for as a reduction in the underlying fair value when calculating the fair value of the investment by 2009 Cell in Fund I.

Pursuant to Clause 14 of the Fund I Limited Partnership Agreement, the Net Asset Value limit has been reached however no amounts are yet liable to be paid or accrued in respect of Carried Interest but is taken into account when calculating the fair value of the 2009 Cell's investment in Fund I.

Fund II GP's Share and Carried Interest

The Fund II GP's Share is calculated under the terms of the Fund II Limited Partnership Agreement and as described in the Prospectus dated 29 July 2013. Pursuant to the terms of the Fund II Limited Partnership Agreement, where net income and net capital gains are insufficient to extinguish the Fund II GP's Share, Fund II shall advance a non-interest bearing loan to the extent of the Fund II GP Share not already drawn by the Fund II GP. The loan is not recoverable from the Fund II GP other than by allocation of net income or net capital gains.

In the period under review, Fund II has advanced a non-interest bearing loan to its general partner of £1.6 million (31 March 2013: £2.5 million, 30 September 2012: £1.3 million) in respect of the Fund II GP's Share. This has been accounted for as a reduction in the underlying fair value when calculating the fair value of the investment by 2012 Cell in Fund II.

Pursuant to Clause 14 of the Fund II Limited Partnership Agreement, the Net Asset Value limit has not yet been reached; therefore no amounts are yet liable to be paid or accrued in respect of Carried Interest.

Going Concern

After making enquiries and given the nature of the Company, Fund I and its investments and Fund II and its investments, the Directors are satisfied that it is appropriate to continue to adopt the going concern basis in preparing the financial statements, and, after due consideration, the Directors consider that the Company is able to continue for the foreseeable future.

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 I General Partner's Report, Investment Report of Fund I and Financial Statement sections and Fund II General Partner's Report, Investment Report of Fund II and Financial Statement sections.

· Principal risk

For the remaining six months of the financial period, the Company's principal risk relates to the financial performance of the Fund I and Fund II portfolios.

The Company's principal risk factors are fully discussed in the Company's prospectuses, available on the Company's website (www.bettercapital.gg).

The Directors of the Company are listed in the General Information section and, with the exception of Mr Jon Moulton, have been directors throughout the period.

By order of the Board

Richard Crowder

Chairman

22 November 2013

Independent Review Report to Better Capital PCC Limited

Introduction

We have been engaged by the Company to review the condensed set of financial statements of the Company in the interim financial report for the period ended 30 September 2013 which comprises the Company Condensed Statement of Financial Position, Company Condensed Statement of Comprehensive Income, Company Condensed Statement of Changes in Equity, Company Condensed Statement of Cash Flows and Company 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 Conduct 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 Company's 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 Company's condensed set of financial statements in the interim financial report based on our review.

Our report has been prepared in accordance with the terms of our engagement to assist the Company in meeting its responsibilities in respect of interim financial reporting in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority and for no other purpose. No person is entitled to rely on this report unless such a person is entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.

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 Company's condensed set of financial statements in the interim financial report for the six months ended 30 September 2013 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 Conduct Authority.

BDO LimitedChartered AccountantsPlace du Pré, Rue du Pré, St Peter Port, Guernsey

Date: 22 November 2013

Condensed Statement of Financial Position

As at 30 September 2013

The unaudited condensed financial statements of the Company were approved and authorised for issue by the Board of Directors on 22 November 2013 and signed on their behalf by:

Richard Crowder Richard Battey

Chairman Director

The notes form an integral part of the Company's condensed interim financial statements.

Condensed Statement of Comprehensive Income

For the six month period to 30 September 2013

All activities derive from continuing operations.

The notes form an integral part of the Company's condensed interim financial statements.

Condensed Statement of Changes in Equity

For the six month period to 30 September 2013

The notes form an integral part of the Company's condensed interim financial statements.

Condensed Statement of Cash Flows

For the six months period to 30 September 2013

The notes form an integral part of the Company's condensed interim financial statements.

Notes to the Condensed Interim Financial Statements

For the six month period to 30 September 2013

1. General information

Better Capital PCC Limited (formerly known as Better Capital Limited) was incorporated on 24 November 2009 in Guernsey with an unlimited life and registered with the Commission as a Registered Closed-ended Collective Investment Scheme pursuant to the POI Law. The registered office of the Company is Heritage Hall, PO Box 225, Le Marchant Street, St Peter Port, Guernsey, GY1 4HY.

Further information regarding the background of the Company is detailed in the Company Background and Further Information section.

2. Accounting policies

Basis of preparation

The unaudited company condensed financial information included in the interim financial report for the six months ended 30 September 2013 have been prepared in accordance with the DTRs and Listing Rules of the UK's FCA and IAS 34, 'Interim Financial Reporting' as adopted by the EU.

The interim financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Company's annual financial statements for the year to 31 March 2013, which are available on the Company's website (www.bettercapital.gg). The annual financial statements have been prepared in accordance with EU adopted IFRSs.

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

Except as listed below, the same accounting policies and methods of computation are followed in the interim financial statements as in the annual financial statements for the year ended 31 March 2013.

Standards, interpretations and amendments to published standards adopted in the period

The following standards, which have only impacted disclosures, are mandatory for accounting periods beginning on or after 1 January 2013 and have been adopted in the financial statements:

- Amendments to IAS 34 Interim Financial Reporting

- IFRS 13 Fair Value Measurement (Note 4 & Note 5)

Going concern

After making appropriate enquiries, the Directors have a reasonable expectation that the Company, and in turn Funds I and II, 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 these financial statements.

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 statements.

For management purposes, the Company is organised into two main operating segments, being the 2009 Cell and the 2012 Cell. Full details of the 2009 Cell's and 2012 Cell's results are shown on in the Cell sections.

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

All of the Company's non-current assets are located in Guernsey.

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

Critical accounting judgement and estimation uncertainty

Use of estimates and judgements

The preparation of financial statements 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 statements 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.

Investments in Fund I and Fund II

The value of the Cells investments in the Funds are based on the value of each cell's limited partner capital and loan accounts within each Fund. This is based on the components within the Funds, principally the value of the underlying investee companies. Any fluctuation in the value of the underlying investee companies will directly impact on the value of the Cells investments in the Funds.

Further information in relation to the valuations of the investments in the Funds is disclosed in Note 4 and Note 5.

3. Taxation

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

4. Investment in Limited Partnerships

Total Investment:

The movement in fair value is derived from the fair value movements in the underlying investments held by Fund I and Fund II, net of income and expenses of Fund I and Fund II and their related special purpose vehicles.

The outstanding loans do not carry interest. The loans are expected to be repaid by way of distributions from the Funds. The Company is not entitled to demand repayment of the outstanding loans, however, the General Partner may, upon request by the Company, repay to the Company any amount of the outstanding loan. During the period £12.4 million was repaid to the Company by Fund I (31 March 2013: £12.8 million, 30 September 2012: £nil).

During August 2013 a further investment of £181.9 million was paid into Fund II.

Distributions receivable from the Funds in the period amounted to £0.8 million (31 March 2013: £0.8 million, 30 September 2012: £0.8 million) of which £1.6 million (31 March 2013: £0.8 million, 30 September 2012: £1.6 million) remains outstanding at the period end, which have been allocated as income based on discretionary allocation powers of the respective General Partners of the Funds as set out in the respective Limited Partnership Agreements.

In the financial statements of the Company, the fair value of the investments in Limited Partnerships will be increased or reduced to reflect the fair value of the Cell's attributable valuation of net assets within Fund I and Fund II.

5. Fair value

The level in the fair value hierarchy within which the financial assets or financial liabilities are categorised is determined on the basis of the lowest level input that is significant to the fair value measurement.

Financial assets and financial liabilities are classified in their entirety into only one of the three levels.

The fair value hierarchy has the following levels:

- Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities

- Level 2 - inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly (i.e. as prices) or indirectly (i.e. derived from prices)

- Level 3 - inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).

The only financial instruments carried at fair value are the investments which are fair valued at each reporting date.

The Company's investments have been classified within Level 3 as they have unobservable inputs and are not traded. Amounts classified under Level 3 for the period are, £265,663,000 for Fund I (31 March 2013: £276,667,000, 30 September 2012: £273,249,000) and £366,230,000 for Fund II (31 March 2013: £173,423,000, 30 September 2012: £164,047,000).

Transfers during the period

There have been no transfers between levels. Due to the nature of the investments, they are always expected to be classified under Level 3.

Valuation techniques

The value of the Cells investments in the Funds is based on the value of each Cell's limited partner capital and loan accounts within each Fund. This is based on the components within the Funds, principally the value of the underlying investee companies. Any fluctuation in the value of the underlying investee companies will directly impact on the value of the Company's investment in the Funds.

When valuing the underlying investee companies, the GPs of each Fund review information provided by the underlying investee companies and other business partners and applies IPEV methodologies, to estimate a fair value as at the date of the statement of financial position.

Initially acquisitions are valued at price of recent investment. Once maintainable earnings can be identified the preferred method of valuation is the earnings multiple valuation technique, where a multiple that is an appropriate and reasonable indicator of value (given the size, risk profile and earnings growth prospects of the underlying company) is applied to the maintainable earnings of the company. Occasionally other methods, as deemed suitable by the GPs, may be used, such as revenue or gross profit multiples, net assets, break-up value or discounted cash flows.

The Board reviews and considers the fair value arrived at by the GPs before incorporating into the fair value of the investment adopted by the Company. The variety of valuation bases adopted, 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 may differ from the fair values reflected in these financial statements and the differences may be significant.

Where the price of recent investment is determined to be the most appropriate methodology the transactional price will be that of the investment by Fund I or Fund II. The Omnico, Jaeger and City Link investments are carried at the price of recent investment. Due to the immaturity of the turnaround position of these investee companies, interest receivable on loans advanced by the Funds will only be recognised when it is deemed more likely than not that the interest will be paid. As at 30 September 2013 such unrecognised interest receivable amounted to £9.0 million (31 March 2013: £2.1 million, 30 September 2012: £0.6 million) (Note 2 - Investments in Fund I and Fund II).

The significant unobservable inputs in the 2009 Cell and in the 2012 Cell are shown in the Cell reports.

6. Share Capital

Core Shares

Period ended 30 September 2013

Year ended 31 March 2013

Cell Shares

Period ended 30 September 2013

Authorised:

The Cells are authorised to issue unlimited shares at £1 par value.

Year ended 31 March 2013

Authorised:

The Cells are authorised to issue unlimited shares at nil par value.

During the period the 2009 Cellmade a second distribution of capital of 6.0 pence per ordinary share to Shareholders of the 2009 Cell as at the ex-date of 3 April 2013. In line with the first distribution, this distribution of £12.4 million will be treated by the Company as a reduction of share capital. The distribution was paid on 19 April 2013.

The two capital distributions (reductions of share capital) announced to date for the 2009 Cell total £26.5 million, 12.6 per cent. of funds raised.

On 13 August 2013 a total of 176,738,625 shares were issued in 2012 Cell under the Firm Placing and Placing and Open Offer raising gross proceeds of £185.6 million. Following Admission the Better Capital 2012 Cell consisted of 346,600,520 shares.

On 31 July 2013, at the Annual General Meeting, the Shareholders of the 2009 Cell and the 2012 Cell approved by ordinary resolution the re-designation of the 2009 Cell and 2012 Cell shares to par value of £1 (31 March 2013: nil par value).

Principal members of Better Capital LLP, the appointed Consultant to BECAP GP LP and BECAP12 GP LP, which act as General Partners to Fund I and Fund II, respectively, hold investments in the Company in accordance with the terms of the Prospectus. At the period end, those members held the following proportions of shares:

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

7. 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. On 28 June 2013, Mr Mark Huntley resigned from the Board and Mr Jon Moulton was appointed as a non-executive Director of the Company. Mr Moulton is a Director and the sole shareholder of BECAP GP Limited, the general partner of the Fund I GP and BECAP12 GP Limited, the general partner of the Fund II GP.

Annual remuneration for each Director is as follows: the Chairman receives £60,000, the Chairman of the audit committee receives £52,500, the Chairman of the management engagement, nomination and remuneration committee receives £50,000 and the other non-executive Director receives £45,000. During the period Mr Moulton waived his fee.

Other remuneration paid to each Director of £5,000 (£2,500 for Mr Huntley) during the period was in respect of additional services rendered in relation to the fund raising in the 2012 Cell and totalled £17,500. These have been included within share capital as costs of raising capital within the 2012 Cell. Mr Moulton waived his fee for the fundraising.

Directors' fees for the period to 30 September 2013 amounted to £92,000 (31 March 2013: £208,000, 30 September 2012: £104,000), of which £41,000 (31 March 2013: £52,000, 30 September 2012: £11,000) was outstanding at the period end.

Directors share holdings are shown on page 6.

During the period, the Company incurred administration fees of £130,000 (31 March 2013: £250,000, 30 September 2012: £125,000) apportioned on a NAV basis between the Cells. £68,000 (31 March 2013: £63,000, 30 September 2012: £63,000) remained outstanding at the period end.

8. Earnings per share and net asset value per share

Earnings per share

The earnings per share is based on the profit or loss of each Cell of the Company for the period/year and on the weighted average number of shares of each Cell of the Company in issue for the period/year.

The Cells of the Company do 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 2009 Cell and 2012 Cell are shown in the Cell reports.

9. Subsequent events

On 11 October 2013, Fund I received £0.7 million of interest income from Spicers.

On 13 November 2013, Omnico received £1.3 million of further investment from Fund I. The new investment was deployed towards working capital requirements.

Other than the above, there have been no significant subsequent events since 30 September 2013.

Better Capital 2009 Cell

Investment policy summary

Better Capital 2009 Cell has invested in a portfolio of businesses which, when purchased, had significant operating issues and associated financial distress, and which have significant activities within the United Kingdom or Ireland.

Uninvested or surplus capital or assets may be invested on a temporary basis in cash or cash equivalents, money market instruments, bonds, commercial paper or other debt obligations with banks or other counterparties having a "single A" or higher credit rating as determined by any reputable rating agency selected by the General Partner and any "government and public securities" as defined for the purposes of the FCA Rules.

The 2009 Cell Investment policy is in the Company's prospectuses, available on the Company's website (www.bettercapital.gg).

Investment activities in Fund I

In the period under review, total follow-on investments of £4.6 million were made.

Santia

· 2 May 2013 - Fund I invested £2.0 million in Santia to fund the bolt-on acquisition of First Order Red Limited. Total commitment and investment in Santia now stands at £15.5 million.

Calyx

· 23 July 2013 - Fund I injected £1.0 million into Calyx Managed Services to fund its working capital requirements. Total commitment and investment by Fund I in Calyx (comprising Calyx Managed Services and m-hance) is £32.0 million.

Fairline

· 15 August 2013 - Fund I provided further funding to Macsco 30 Limited, the acquisition vehicle of Fairline, to fund working capital requirements. Fund I invested £1.6 million whilst the minority shareholder, West Register (Investments) Limited, a wholly owned subsidiary of the Royal Bank of Scotland plc, invested £1.4 million. To date, Fund I has committed and invested £23.1 million in the business.

The following investment activity took place post 30 September 2013:

Omnico

· 13 November 2013 - Omnico Group received a £1.3 million investment to fund working capital. Total commitment and investment by Fund I in Omnico Group is £34.3 million.

General Partner's Report

The market conditions for most portfolio companies remained subdued during the period.

Activities

A total of £2.6 million was injected into funding the working capital requirements of two portfolio companies in the period. Calyx Managed Services and Fairline received £1.0 million and £1.6 million respectively. The markets in which these businesses operate continue to be challenging as they progress with their respective restructuring.

Santia received £2.0 million in May 2013 to fund the acquisition of First Order Red Limited, an asbestos consultancy business to provide both scale and management expertise to Santia's asbestos management division.

In April 2013, Fund I returned £12.4 million, 6.0 pence per share to the 2009 Cell for onward distribution to the 2009 Cell investors. This was enabled following the sale of debt instruments in ATH Resources in March 2013. Total distributions from the 2009 Cell now stand at £26.5 million, or 12.6 per cent of total capital raised.

The cash balance at 30 September 2013 stood at £3.0 million.

Subsequent events

On 11 October 2013, Fund I received £0.7 million of interest income from Spicers.

On 13 November 2013, Omnico Group received £1.3 million to fund working capital.

Portfolio update

Gardner continues to deliver on service levels with customer confidence remaining high. For the financial year ended 31 August 2013, Gardner delivered a solid underlying profitability, significantly ahead of prior year. The UK businesses performed ahead of plan; however, Airia, the French business acquired in April 2012 has struggled operationally. The key issue has been the level of resources required to manage the integration and turnaround of Airia. In addition Airia, which supplies directly to Airbus, suffered from customer delays on some new programmes. Considerable resources have been invested in Airia and it is now starting to demonstrate tangible improvements. The carrying value in Gardner has been marked up by £14.7 million, reflecting confidence in the business to deliver further improvement in profitability supported by favourable market multiples.

The Reader's Digest business is now trading from a substantially smaller platform and with better systems and processes following its exit from the direct marketing activities earlier in 2013. Modest investment has also been made to drive growth in the subscriber base, including the development of a new web portal which was launched on 1 November 2013. Early signs are encouraging. The carrying value in Reader's Digest has been marked down to a nominal value, reflecting a cautious view of the business's medium term prospects and the generally weak state of the printed media market.

m-hance is one of two businesses making up the Calyx Group. m-hance is expected to record a significantly lower profitability in the current year to 31 December 2013. Although market conditions remain broadly flat, poor sales performance and the integration of the Maxima acquisition has resulted in the underperformance of the enlarged business. Additional resources have been introduced into the business to strengthen the sales functions.

Calyx Managed Services, also part of the Calyx Group, is still experiencing difficult trading conditions in a largely fragmented market. The management team was strengthened in late 2012 and had executed a strategy to re-focus on the business's core competencies. Considerable long term investment has been made to overhaul the sales team and in the short term, further cost rationalisation measures are being deployed.

To reflect both m-hance and Calyx Managed Services' current weaker performance, the carrying value has been written down by £13.8 million.

Santia, the health and safety consultancy business acquired out of the Connaught plc administration is on course to deliver significant underlying improvement in profitability and cash generation. First Order Red Limited, the asbestos consultancy follow-on investment acquired in May 2013, is performing in line with the investment case. The strategy to amalgamate the existing Santia Asbestos Management division with First Order Red is progressing satisfactorily. The business has also completed the acquisition of its head office freehold in the period, funded by a mortgage and loans from the Welsh government. The order pipeline is continuing to grow across most business streams with international sales picking up. Santia's carrying value has been written up by £4.3 million.

Omnico Group, the business formed from the merger of Digipos and Clarity reported a small underlying profit in the financial year ended 30 September 2013. The business has enjoyed good success with winning contracts on the back of its software and mobile capability, boasting customers such as Merlin Entertainments, Universal Studios, Waterstones, Paperchase and YO! Sushi, with good prospects for further growth in software licences. At the operational level, the centralisation of the procurement functions has had the dual impact of improving quality control and working capital. It is anticipated that further investment will be required to fund product development and the implementation of a new Enterprise Resource Planning system. Whilst profitability is in sight, the business is still in the early stages of profitable growth. Omnico's carrying value remains unchanged.

Fairline is a luxury boat business. The demand for luxury boats continued to be weak for most of the period although there are recent signs of improvement. Floor plan finance for dealers has been restricted and as a result, boat stocks in the dealer network have reduced resulting in fewer sales for Fairline. In the current year, Fairline embarked on a major investment which involved the re-engineering of the Corby facility. Teething issues at the Corby mixed model line due to inadequate management of the new Targa 48 furniture design had an adverse impact on productivity. However, the benefits from the mixed model line will allow for a reduced cost base and provide the flexibility to react to changes in market demand. The Targa 48 range boats have been well received with new products set to be unveiled at the London Boat Show in January 2014. The business received a £1.6 million investment from Fund I to fund its short-term needs. It is anticipated that further investment will be required in early 2014 to fund working capital and growth initiatives. In light of its weaker performance, Fairline's carrying value has been marked down by £5.2 million. However there are grounds for believing performance will improve under the new CEO in the near future.

Sales at Spicers continue to reduce as the market for wholesale stationery and office equipment contracts. However, margins have remained on plan and the business remains profitable. New growth initiatives such as contract sales and direct selling to the small home office via e-commerce platforms such as Amazon and its own website (www.memoetc.co.uk) are gaining good traction. The re-development of its central distribution facility in Birmingham is on schedule to complete in December 2013. The marketing of the business's surplus freehold land in Sawston, Cambridge has attracted a number of interested parties with a potential sale in discussion. The carrying value in Spicers has been written up by £9.8 million, reflecting the profitable and cash positive business. The investment in Spicers remains at £5.0 million having already repaid £35.0 million of the original investment.

Valuation

The portfolio carrying value has risen by a net £8.8 million in the period. Total movement of the portfolio during the period was as follows:

Uninvested cash

The investment period for Fund I expired on 31 December 2012, with the Fund I portfolio moving towards realisation phase. Uninvested cash (£2.0 million at 20 November 2013) in Fund I may be utilised for the acquisition of bolt-on investments, working capital requirements or restructuring costs.

Jon Moulton

Chairman

BECAP GP Limited

22 November 2013

Investment Report of Fund I

Gardner

Business description

· A Tier-1 supplier of medium and high complexity machined metallic components to the aerospace industry (www.gardner-aerospace.com)

Progress

· Performance at the UK and Polish sites continue to be satisfactory

· Airia is now fully resourced and the turnaround is progressing albeit at a slower pace and greater cost than initially anticipated

· Sites in Burnley and Ilkeston are being marketed for disposal

· Emphasis now on cash generation after a period of heavy investment

· Airbus A350 flight tests are reportedly progressing well

Performance

· UK business performing in line with investment plan. Operational issues in Airia are being addressed

· Significant year-on-year growth (56.7 per cent.) in underlying profitability

Fund I Investment details

Reader's Digest

Business description

· An iconic magazine brand in the UK (www.readersdigest.co.uk)

Progress

· Rightsizing of business complete

· New web portal launched on 1 November

· Implementation of the new standalone IT system in advance progress

· Printing market remains challenging

Performance

· Reader's Digest is now trading satisfactorily from a substantially smaller platform. The business remains debt-free

· The key challenge for the business is to reduce subscriber attrition

Fund I Investment details

Calyx

Business description

· m-hance - develops, manages and deploys enterprise-wide business management software solutions (www.m-hance.com)

· Calyx Managed Services - supplier of managed IT and cloud services, connectivity, technology infrastructure management, hardware maintenance and support (www.calyxms.com)

Progress

· m-hance - The restructuring of the sales team to facilitate more upsell of Microsoft Dynamics AX products

· Calyx Managed Services - Investment into the sales force to drive volume

- Product offering has been reviewed

Performance

· m-hance is suffering from a shortfall in sales

· Trading remains difficult for Calyx Managed Services. The business remains debt-free

Fund I Investment details

·

Santia

Business description

· Provider of consultancy and advisory health, safety and environmental services (www.santia.co.uk)

Progress

· Growth in order pipeline continues to be encouraging

· Further investment into sales and marketing

· Integration completed of First Order Red, an asbestos consultancy acquired in May 2013

· Acquisition of the head office freehold near Cardiff completed in September 2013

Performance

· Substantial growth in year-on-year profitability

· Varied performance across Santia's seven divisions with strong growth in its contractor accreditation and occupational health divisions offset by weaker performance in training and asbestos

Fund I Investment details

Omnico Group

Business description

· Provider of omni-channel hardware, software and services to the retail, entertainment, hospitality and leisure sectors (www.omnicogroup.com)

Progress

· Progress with repositioning the business to be software-led

· Heavy investment into new software products continuing

· Some significant licence software sales to high profile corporates

· Certain country-level management change completed - benefits already showing

· Centralisation of the procurement process has improved quality control and working capital

Performance

· Omnico is profitable and trading to plan

· A further £1.3 million has been injected to fund working capital since the period end

Fund I Investment details

Fairline

Business description

· A leading global brand specialising in the design, engineering and manufacture of luxury boats in the range of 38 to 80 feet (www.fairline.com)

Progress

· Restrictions on dealer finance have resulted in a reduction in sales. However sales to retail customers have been significantly ahead of sales to dealers resulting in a considerable reduction in dealer stock which should help 2014 sales

· Significant productivity issues in Corby mixed model line linked to the new Targa 48 furniture design and mix of customer orders - issues are now actively managed

· Strengthening of the management team completed

· Targa 48 is well-received and has a full order book until Q3 2014

· New routes to market being developed, with retail rates growing

Performance

· Short term losses expected due to one-off events

Fund I Investment details

Spicers

Business description

· A leading office products and stationery wholesaler, supplying a vast product range - with over 16,000 stock lines across 300 vendors (www.spicers.co.uk, www.memoetc.co.uk)

Progress

· New routes to market and products gaining traction

· Re-development of new distribution facility in Birmingham is on schedule to complete in December 2013

· Disposal of surplus freehold assets also being progressed

Performance

· The business continues to deliver improved underlying profitability and remains cash generative

Fund I Investment details

Portfolio summary and reconciliation