BCAP.L Regulatory News (BCAP)

28 November 2014

BETTER CAPITAL PCC LIMITED

(the "Company")

INTERIM RESULTS UPDATE

Better Capital PCC Limited is pleased to announce its 2014 interim results for both the 2009 Cell and the 2012 Cell.

2009 Cell Final Results

· £210.0 million total capital raised

· £26.5million/12.6 per cent. cumulative distributions to date

· 23.1 per cent. return from NAV growth and distributions since inception

· 6 platform acquisitions

· 10 bolt-on acquisitions since inception

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

2012 Cell Final Results

· £355.5 million total capital raised

· £6.1 million/1.7 per cent. distribution to date

· £347.4million net proceeds invested in Fund II

· £241.0 million/69.4 per cent. committed to date

· £89.3 million remaining cash in Fund II as at 24 November 2014

· 4 platform acquisitions at 30 September 2014

· 1 further platform acquisition completed post 30 September 2014

· 3.52 per cent. return from NAV growth and distributions since inception

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

Chairman's Statement

Over the recent months the Board has had a number of opportunities to communicate with the Company's shareholders and to listen to their feedback. We share shareholders' frustration at the disappointing underperformance by the Company, made worse by some underperformance in Better Capital LLP, the Consultant to the Fund GPs. Whilst we believe that these issues are now under control, investor confidence in the Better Capital brand has been damaged and this has manifested itself in the erosion of the significant premia previously enjoyed by both the 2009 and 2012 Shares.

I hope that this statement, together with the accompanying reports from the Fund GPs, will go some way towards providing insight into the considerable efforts made on shareholders' behalf to address the issues that the Company has faced.

Allow me to open by recording the Board's continued support and belief in the Better Capital brand, people and portfolio companies. Better Capital went through a period of growing pains some of which, with hindsight, were avoidable. However, we have observed the determination of Better Capital to: identify the problems encountered; implement a number of management improvements; and take corrective measures and more to drive performance forward.

The Board has been given comprehensive updates on the portfolios from the Fund GPs, whose views are set out in their reports that follow. The operating performance of both portfolios has clearly been disappointing and in some regards has been simply bad. The Board is encouraged by the incremental progress across the portfolios as a whole as well as by Better Capital's resolve to address the challenges ahead.

The Consultant has reacted to this situation with improved monitoring. The loss of two Operating Partners in 2014 has been more than countered by the addition of three very capable new Partners. Thierry Bouzac has significant pan-European turnaround experience. Peter Mottershead is an engineer with multiple CEO and Chair positions. Simon Pilling was formerly the COO of the Capita Group. Further details on the new team members can be found on the Consultant's website www.bettercapital.co.uk. In addition there have been several important non executive appointments to the investee company boards.

One of the principal challenges faced by the Board is to govern the Company, with its underlying exposures to the world of distressed investing, within the regulatory environment for listed companies. Problems within the Funds' portfolios, which are often short term and transitory in nature, potentially translate into discloseable events by the Company, the implications of which we have to weigh against the potentially disruptive/destructive commercial impact of such disclosures on the affected portfolio companies. It is this reason that communications with shareholders have been somewhat constrained and lacking in the detail which we otherwise wish to share with our investors. The Board is also cognisant that, occasionally, investors have been able to access significantly more unverified information through media channels.

Going forward, the Board aims to incorporate more detail in the Company's announcements and to make more information available through its website, www.bettercapital.gg, including company updates to replace the now obsolete Interim Management Statements. The aim is to provide newsworthy updates in the context of portfolio performance, to the extent that this is not significantly detrimental to the portfolio companies.

Another challenge in the world of distressed investing is the valuation methodology for portfolio companies. There are inherent difficulties in determining the fair value of this type of investment and the Fund GPs' approach is necessarily tailored to each portfolio company's circumstances. We understand shareholders' wish for greater transparency on this issue and, where possible, we intend to provide appropriate information.

The Company's structure is such that distributions are intended to be made to shareholders through the lives of the underlying Funds. Further distributions out of the 2012 cell will be made as exits or redemptions of capital occur. The Board requested the Fund II GP to report on its deployment strategy for Fund II and, following its review, the Fund II GP reaffirmed that it believes it is feasible to deploy the balance of Fund II into attractive investment opportunities. As for the 2009 Cell, distributions will generally only recommence following further realisations in the Fund I portfolio as the Fund I GP believes it essential to retain sufficient capital to protect and enhance the value of the portfolio companies.

The Board has sought and received assurances that the rigour and endeavour of the Better Capital team since the start of the calendar year will continue. Despite the short term valuation fluctuations, our expectations have remained unchanged and we are confident that the long term outcome for shareholders will be significantly better than recent experience. The Directors intend to demonstrate their continued support to the Better Capital brand, people and portfolios by recording their intentions to purchase more of the 2009 and 2012 Shares.

Richard Crowder

Chairman

28 November 2014 

Enquiries:

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

Richard Crowder (Chairman)

Laurence McNairn (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

Carmen Murray

Justin Griffith

Board Report

2009 Cell

Overview

The 2009 Cell NAV, including accumulated distributions of £26.5 million (12.6 per cent. of funds raised), fell by £7.8 million (3.0 per cent.) in the period. The Fund I portfolio carrying value increased by £1.6 million (0.7 per cent.), as a result of net additions at cost of £8.0 million offset by £6.4 million of net write-downs.

The 2009 Cell NAV per share was 109.19p as at 30 September 2014, which compares to 112.96p as at 31 March 2014. The 2009 Cell Adjusted NAV per share, which includes accumulated distributions, was 121.99p as at 30 September 2014, which compares to 125.76p as at 31 March 2014.

In April 2014, Fund I repaid £0.5 million of its loan from the 2009 Cell to provide working capital for the Company for a period of at least 18 months. Net cash in the 2009 Cell closed at £0.5 million at the end of the period.

Investment activities

Two portfolio companies received further investments totalling £10.6 million in the period.

In May 2014, Spicers received a £5.0 million investment to fund its working capital. The Fund II GP (whose main Limited Partners are Jon Moulton, Mark Aldridge and Nick Sanders) provided Fund I with a £2.5 million loan to support the transaction. Over the summer Fund I disposed of its remaining interest in Spicers to SPOT in exchange for a 9.9 per cent. stake in SPOT.

In August 2014, Fund I acquired the remaining Fairline debt and equity instruments from the Royal Bank of Scotland plc for £3.1 million as a signal of its continued commitment to and belief in this business's long term value. Fund I also injected £2.5 million to fund on-going losses.

In line with the stated intent, Gardner repaid £3.0 million to Fund I during the period. This repayment was funded from operational cash flows.

Events since 30 September 2014

In October 2014, Fairline received the remaining £1.5 million cash injection committed earlier in the year. Including the investments made during the period, the business has received investments totalling £7.1 million in the current financial year.

In November 2014, Gardner repaid a further £4.0 million funded through a refinancing activity, taking the total repaid to £11.2 million or 27.6 per cent. of the total investment. Most of these funds have gone towards settling the deferred consideration to the Royal Bank of Scotland plc in respect of Fairline.

Portfolio

The Board of the Company has been given a comprehensive update from the Fund I GP, whose views are set out further in the Fund I GP report on in the relevant section below.

Headway on the Airbus A350 platform has had a positive impact on Gardner. The business is expected to perform ahead of its Q1 budget for the year ending 31 August 2015. Performance in its French division has improved considerably; however, there is still much to be done to make the French division as profitable and as cash generative as the UK division.

m-hance Group and Calyx Managed Services, together the Calyx Group, are also both performing ahead of expectations and considerably better than prior year. Both businesses are expected to generate EBITDA profitability in the year to 31 December 2014, albeit at modest levels.

Santia faced a temporary setback in recent months having failed to renew a key Food contract which will expire at the end of this calendar year. Lost profitability from this contract is not particularly material (£0.3 million in the year to 31 January 2014). As a result, the business undertook an overarching strategic review, with particular emphasis on Santia's highly profitable Safecontractor business. Santia is on course to return some cash in the near future.

Omnico has had a busy few months whilst it completed the remaining restructuring of non-profitable overseas subsidiaries. Omnico closed its financial year to 30 September 2014 with a substantial improvement in profitability over the prior year. The hardware product range has been strengthened and consequently the business has seen robust year-on-year growth in its sales pipeline. This is a major reversal of previously negative trends. The software division continues to grow from strength to strength with credible customer acquisitions. Changes to the Europay, Mastercard and Visa (EMV) regulation in the US as well as the opportunities afforded by Oracle Corporation's acquisition of MICROS Systems, Inc. - a significant competitor, should have favourable consequences for Omnico.

As reported earlier, the acquisition of Fairline's debt and equity facilities from the Royal Bank of Scotland plc underlined Fund I's continued commitment to and belief in this business's long term value. The restructuring initiatives which commenced earlier in the year have not yet translated into sustainable profitable earnings. Its CEO recently departed and Peter Mottershead, one of the new Operating Partners in the Consultant, has taken over primary responsibility for working with Fairline. The Fund I General Partner remains encouraged by the improvements in key metrics which were absent before but has nevertheless written down to a carrying value of £10.0 million, reflecting the slow progress. There is room for optimism given a stronger order book and clear operating improvement.

2012 Cell

Overview

The 2012 Cell NAV, including distributions of £6.1 million (1.7 per cent. of funds raised), fell by £15.4 million (4.1 per cent.) in the period. The Fund II portfolio had net additions at cost of £103.5 million, offset by net write downs of £15.1 million predominately in Jaeger and City Link.

The 2012 Cell NAV per share was 102.16p as at 30 September 2014, which compares to 108.37p as at 31 March 2014. The 2012 Cell Adjusted NAV per share, which includes accumulated distributions, was 103.91p as at 30 September 2014, which compares to 108.37p as at 31 March 2014.

Acquisitions and other investment activity

The Board was pleased to be informed of the progress made by Fund II in deploying £120.0 million in two platform acquisitions within a space of four months.

During the summer, Fund II through one of its UK special purpose vehicles, The Spicers-OfficeTeam Group Limited (SPOT), acquired a majority equity stake in Project Oliver Topco Limited which, together with its subsidiaries, trade as OfficeTeam a leading office products and business services supplier. SPOT also acquired Fund I's remaining interest in Spicers in exchange for a minority stake in SPOT. The total invested by Fund II to fund the OfficeTeam acquisition and its restructuring was £100.0 million. Due to market shifts towards digitalisation and increasing adoption of a paperless environment, the view is that the office products sector is ready for consolidation. The SPOT deal provides a stable platform to participate in this consolidation. SPOT is producing monthly profits and the integration is going well.

In line with the intent stated in the previous report, Jaeger received £8.5 million of further investment during the period. The investment was to support the business's capital expenditure across its properties, improvement to its website and on-going operations.

Events since 30 September 2014

On 7 November 2014, Fund II acquired the debt facilities of iNTERTAIN from a syndicate of lenders. iNTERTAIN operates 26 Walkabouts (Australian-themed sports and late night party venues) and six further unbranded bars. £20.0 million has been invested to acquire the debt facilities and to provide some further capital.

Following the iNTERTAIN transaction and as at 24 November 2014, Fund II held £89.3 million of cash, circa 25.7 per cent. of total funds raised.

Portfolio

The Board of the Company has also received a detailed briefing on the Fund II portfolio from the Fund II GP.

Everest continues to progress well and is expected to close its financial year to 31 December 2014 with EBITDA profitability substantially better than prior year (31 December 2013 audited underlying EBITDA profitability: £6.9 million). The business is cash generative and had returned £6.1 million to Fund II in August 2014 which facilitated the 2012 Cell's first distribution. Further repayments from Everest are expected in FY15. The timing of an exit is under consideration.

Jaeger's 'Autumn/Winter 2014' collection was unveiled to very positive feedback from industry critics. The collection has continued to receive strong press coverage through the season, which is pleasing. Like-for-like sales for the 37 weeks to 15 November were 7 per cent. higher than prior year, to be compared with the 3.4 per cent. average decline across the sector (source: BDO High Street Sales Tracker). Rather disappointingly the sales performance has not resulted in stronger margins. The warm September and October months had driven a large number of retailers into early discounting and Jaeger had to respond accordingly. A further £8.5 million has been invested into the business to fund a number of initiatives, notably improvements to its online offering as well as store refurbishments. Jaeger has recently appointed Peter Williams to the post of non-executive Chairman. Peter was formerly the CEO of Selfridges and also currently sits on the board of Rightmove and boohoo.com. The £6.0 million write down reflects the failure, thus far, to break into material profitability.

City Link has been written down by 50 per cent. from £40.0 million to £20.0 million. This is despite the company having no external debt funding but it reflects the continued lack of profitability in a fiercely competitive market. Various options to maximise the value of the investment are currently being considered.

SPOT has had an encouraging start. The management team has hit the ground running and gained good traction on achieving the planned synergies (e.g. purchasing optimisation) and harmonising the back office functions (such as finance, procurement, IT and HR). The management vigour and improvement to the overall processes and controls have benefitted Spicers hugely. Customer service levels in Spicers have returned to expected levels. All of the above initiatives have had a beneficial impact on SPOT's current earnings and more is expected next year. In October 2014, OfficeTeam participated in further sector consolidation and acquired Buro Business Supplies on a deferred basis.

Although it is still early days, trading in iNTERTAIN is broadly in line with the positive investment case. Fund II is committed to supporting the management team's restructuring plan to drive the business forward through a number of initiatives.

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.

Interim management report

· Important events of the interim period

The important events that have occurred during the interim period and the key factors influencing the financial statements are all set out in this report, comprising: the Chairman's Statement, Board Report, Fund I General Partner's Report, Investment Report of Fund I, Fund II General Partner's Report, Investment Report of Fund II and the Financial Statement sections.

· Principal risk

There are a number of risks that could have a material impact on the performance of the Company over the remaining six months of the financial year, thereby causing actual performance to differ materially from expectations.

The Board considers that the principal risks and uncertainties have not materially altered from those published in the Annual Report for the year ended 31 March 2014. The Company's principal risk relates to the financial and operational 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 at the end of this document and have been directors throughout the period.

By order of the Board

Richard Crowder

Chairman

28 November 2014

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 2014 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 IFRS 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 2014 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

28 November 2014

Condensed Statement of Financial Position

As at 30 September 2014

The unaudited condensed interim financial statements of the Company were approved and authorised for issue by the Board of Directors on 28 November 2014 and signed on their behalf by:

Richard Crowder Jon Moulton

Chairman Director

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

Condensed Statement of Comprehensive Income

For the six months ended 30 September 2014

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 months ended 30 September 2014

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

Condensed Statement of Cash Flows

For the six months ended 30 September 2014

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

Notes to the Condensed Interim Financial Statements

For the six months ended 30 September 2014

1. General information

Better Capital PCC Limited is a Closed-ended Investment Company, incorporated in, and controlled from Guernsey as a Protected Cell Company. It has an unlimited life and is registered with the GFSC as a Registered Closed-ended Collective Investment Scheme pursuant to the POI Law.

The Company maintains a separate cell account for each class of shares, to which the capital proceeds of issue and the income arising from the investment of these proceeds in the respective Fund are credited, and against which the expenses allocated are charged. In any redemption, shareholders are only entitled to their proportion of the net assets held in the cell relating to the particular shares.

The Company currently has two cells: 2009 Cell and 2012 Cell. The financial results for each cell can be found in the relevant section below.

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 2014 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 2014, which are available on the Company's website www.bettercapital.gg. The annual financial statements have been prepared in accordance with EU adopted IFRS.

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.

The same accounting policies and methods of computation are followed in the interim financial statements as in the annual financial statements for the year to 31 March 2014.

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

The following standards, which have no impact on the interim financial statements, are mandatory for accounting periods beginning on or after 1 January 2014 and have been adopted in the interim financial statements:

- IFRS 10 Consolidated financial statements

- IFRS 12 Disclosure of Interest in Other Entities

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 interim financial statements.

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.

The critical accounting judgements and estimation uncertainties for the 2009 Cell and 2012 Cell are stated in the relevant section below.

Taxation

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

3. 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 interim 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 in the relevant section below.

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 incur 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 £0.5 million was repaid to the Company by Fund I (Year to 31 March 2014: £12.4 million, Six months to 30 September 2013: £12.4 million) and £6.1 million by Fund II (Year to 31 March 2014: £nil, Six months to 30 September 2013: £nil).

Income distributions receivable from the Funds in relation to the period amounted to £1.8 million (Year to 31 March 2014: £0.8 million, Six months to 30 September 2013: £0.8 million), with an aggregate £2.6 million (Year to 31 March 2014: £0.8 million, Six months to 30 September 2013: £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 are adjusted to reflect the fair value of the Cell's attributable valuation of net assets within Fund I and Fund II, as seen in more detail in Note 5.

No amounts are yet liable to be paid or accrued in respect of Carried Interest.

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, £225,304,000 for Fund I (31 March 2014: £233,442,000, 30 September 2013: £265,663,000) and £350,923,000 for Fund II (31 March 2014: £373,973,000, 30 September 2013: £366,230,000).

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 apply IPEV methodologies to estimate a fair value that is in adherence with the requirements of IFRS 13 'Fair Value Measurement' 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 techniques used in determining the fair value of the Cells' investments are selected on an investment by investment basis so as to maximise the use of market based observable inputs.

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 disposal of investments may differ from the fair values reflected in these interim 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 and SPOT investments are carried at the price of recent investment. Due to the position in the turnaround cycle 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 2014 such unrecognised interest receivable amounted to £11.2 million (31 March 2014: £16.6 million, 30 September 2013: £9.0 million)

The significant unobservable inputs in the 2009 Cell and in the 2012 Cell are shown on in the relevant section below.

6. Share Capital

Core Shares

Period ended 30 September 2014

Year ended 31 March 2014

Cell Shares

Authorised:

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

Period ended 30 September 2014

Year ended 31 March 2014

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.

During the period the 2012 Cell made a distribution of capital of 1.75 pence per ordinary share to Shareholders of the 2012 Cell as at the ex-date of 10 September 2014. The distribution of £6.1 million was treated by the Company as a reduction of share capital. The distribution was paid on 19 September 2014.

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

The Company has four non-executive Directors. Mr Jon 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.

Directors' fees and expenses for the period to 30 September 2014 amounted to £105,000 (31 March 2014: £187,000, 30 September 2013: £92,000), of which £52,000 (31 March 2014: £52,000, 30 September 2013: £41,000) remained outstanding at the period end.

8. Earnings per share and net asset value per share

The earnings per share, net asset value per share and adjusted net asset value per share for the 2009 Cell and 2012 Cell are shown in the relevant section below.

9. Subsequent events

On 2 October 2014, Fund II extended a £0.2 million short term loan to BECAP12 Everest Limited. The purpose of the loan was to enable BECAP12 Everest Limited to repurchase 2 per cent. of management equity in Hillary Bidco Limited.

On 9 October 2014, the Fund II GP extended a loan to Fund I of £1.5 million. Subsequently, Fund I subscribed for £1.5 million of secured C Loan Notes in Macsco 30 Limited, a Fairline company.

On 7 November 2014, Fund II committed and invested £20.0 million to fund the debt acquisition and future financing requirements of iNTERTAIN Limited and its subsidiary companies.

On 24 November 2014, BECAP Gardner 1 Limited returned £4.0 million to Fund I by way of a repayment of its revolving loan facility.

On 27 November 2014, Fund I settled the outstanding consideration of £3.1 million in respect of its acquisition of the debt and equity facilities in Macsco 30 Limited, a Fairline company.

Other than the above, there have been no significant subsequent events since 30 September 2014.

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.

Uninvested or surplus capital may be invested on a temporary basis in cash, 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.

General Partner's Report

I concluded my last report by stating my hope and expectation of being able to communicate a more encouraging picture this time round and I am pleased to report more optimism than gloom. Looking across the Fund I portfolio on a like-for-like basis, sales were 3.9 per cent. lower in the six months to October 2014 over a similar period in the year before. However, EBITDA profitability improved by over 250 per cent. in a similar period.

One business continues to grow strongly with a further two firmly on exit trajectories. The rest are in generally sound condition. Portfolio cash flows continue to improve. Gardner has returned a further £7.0 million since my last report (taking total repayments to £11.2 million, or 27.6 per cent. of total investment) and Santia is expected to repay a significant amount imminently.

It has been an incredibly busy period at Better Capital and in the Fund I portfolio companies but I believe we have seen the worst. The ultimate outcome is a matter of professional pride as well as realising maximum value.

Investment activities from 1 April to 24 November 2014

During the period, Gardner repaid a combination of capital and interest totalling £3.0 million. These were funded out of internal cash resources. A further £4.0 million of interest was repaid on 24 November 2014 facilitated by a recent refinancing exercise in the business. As above, the total repaid to date by Gardner is £11.2 million.

As reported in the Company's Annual Report as at 31 March 2014, Fund I injected £5.0 million into Spicers to fund its losses in May 2014. In order to support the transaction, the Fund II GP (whose main limited partners are Mark Aldridge, Nick Sanders and Jon Moulton) had extended a £2.5 million loan to Fund I on commercial terms. Over the summer Fund I disposed its interest in Spicers to a special purpose vehicle, SPOT, controlled by Fund II. Following a capital restructure, Fund I now effectively owns 9.9 per cent. of SPOT, a company 76.0 per cent. controlled by Fund II. The allocation between Funds I and II was derived from the realisable value of Fund I's interest in Spicers and the cash invested by Fund II in OfficeTeam.

In August 2014, Fund I committed an additional £7.1 million to Fairline. A total of £4.0 million has been invested to date (£2.5 million was drawn during the period and £1.5 million in October 2014) to fund the business's on-going losses. The balance of £3.1 million will be drawn imminently and is in relation to the deferred consideration on Fund I's acquisition of the remaining debt and equity instruments in Fairline.

During the period, Calyx Managed Services extended a loan of £0.5 million to Fund I from surplus cash to fund short term working capital requirements in Fund I.

Portfolio update

Gardner reported flat unaudited revenues of £112.3 million and underlying EBITDA of £11.8 million (with no exceptional costs) in the year to 31 August 2014 (prior year audited revenues £114.1 million and underlying EBITDA £11.6 million before exceptional costs of £6.1 million) despite delays in a key customer programme. Cash conversion was strong with returns to Fund I as noted above. Gardner's UK business continues to grow from strength to strength, with the performance in the French arm continuing to improve through a combination of cost reductions, increased volumes on the Airbus A350 platform and increased pricing. Gardner has made a strong start in the FY15 financial year and is expected to perform ahead of its Q1 budget. I remain confident that this business will continue to deliver considerable improvement in profitability.

Having significantly underperformed in FY13, m-hance Group (which is evaluated together with Calyx Managed Services and reported as Calyx) continues to build on the momentum achieved in the first half of its financial year to 31 December 2014. Monthly order intakes and sales pipeline in H2 FY14 continue to grow, reversing the declining trend of the previous year. It has, nevertheless, proved rather challenging to fill the permanent CEO vacancy; however, the business is more than adequately managed by Gordon Matthews, Interim CEO, and is expected to outperform its budgeted EBITDA profitability in FY14, albeit at a modest level. This is a significant improvement on prior year (FY13 audited underlying EBITDA loss: (£0.7) million) with further improvement firmly expected.

Also building on the momentum achieved in FY13, Calyx Managed Services is delivering modest profitability since the completion of an aggressive cost-reduction exercise and rightsizing its product offerings in the year to 31 December 2013. Cash management has been strong and it had extended loans of £1.0 million to related parties during FY14. Like m-hance Group, Calyx Managed Services is also expected to outperform its modest FY14 budgeted underlying EBITDA profitability. Strategic options are being evaluated for this (relatively small) investment.

Santiahas had a mixed bag of news over the past two months. Disappointingly the business has failed to re-secure a key Food contract which expires in December 2014 following the client's decision to expand the scope to provide global coverage. In the year ended 31 January 2014, this contract contributed £0.3 million to EBITDA. As a result of this development, a strategic review has been completed which has seen the business reorganised to optimise value in preparation for exit. There is significant value in Santia, particularly in its Safecontractor business. A significant repayment is expected from the business in the near future.

Omnicoclosed its 30 September 2014 financial year with moderate improvement in underlying EBITDA profitability over the prior year (prior year audited underlying EBITDA profitability: £0.5 million after £1.4 million of capitalised internal development costs) albeit this was below its FY14 budget. Omnico continues to trade as a business of two halves, with software performing very well and hardware having a weaker year. Omnico has very recently parted company with its CEO and has also added a number of new senior hires to the business. The recruitment of a senior manager with responsibility for global hardware sales, together with a strengthened product range, have produced good year-on-year growth in the hardware sales pipeline. The sales pipeline for the business as a whole ("Omni-Basket") remains encouraging particularly given the recent market destabilisation following the acquisition of MICROS Systems, Inc by Oracle. The business intends to capitalise on the situation and is in the process of ramping up its sales and management team. The medium term prospects are looking more favourable.

It has been a particularly busy six months for Fairline from an operations and corporate perspective. The business has seen the departure of its CEO and there will continue to be heavy involvement from the Consultant team in the foreseeable future as they drive further operational efficiency in the business. The business has continued to record mixed trading in recent months, with weak trading in August and September but then recording strong orders in October. Revenues for the year ending 31 December 2014 will be materially lower than budget as the business now operates a strict build to order policy which is margin enhancing. Most of Q1 FY2015's anticipated sales are covered by firm orders. In August 2014, Fund I acquired the debt and equity instruments held by Royal Bank of Scotland plc at a significant discount to book value. This provides Fund I with greater flexibility over the strategic direction of the business and also demonstrates our continued support and belief in the long term future of Fairline. The near term objective is to return the business to generating consistent profitability. Fairline's carrying value has been written down to £10.0 million to reflect the current lack of profitability. Rather disappointingly there remains further opportunity to reduce factory cost which is being energetically pursued.

Over the summer Fund I disposed of its remaining interest in Spicers to a Fund II controlled entity, SPOT, which also controls OfficeTeam in exchange for a 9.9 per cent. holding in SPOT. Although it is still early days, the combined business has gained good traction across the various restructuring initiatives. Further context has been provided in the Fund II General Partner's Report on below.

Valuation

The Fund I portfolio carrying value has increased by £1.6 million (or 0.7 per cent.) from 1 April 2014 to 30 September 2014 due largely to the Gardner repayments and slight upward revaluation offsetting the Fairline write down.

Uninvested cash

On 24 November 2014, Fund I had uninvested cash of £4.3 million which may only be applied to follow-on investments in the portfolio companies (none are currently contemplated), the payment of expenses and the Fund I GP fee, or for distribution to shareholders. This balance will reduce by £3.1 million following full settlement of the deferred consideration for the Fairline debt and equity instruments but will be boosted following the imminent repayment from Santia.

In closing

The intensity of portfolio monitoring and intervention has risen greatly during the year. This has resulted in fewer errors and the determined implementation of changed plans for several portfolio companies. There is good reason to believe that the next few months will see improvement in the portfolio's metrics and prospects.

Jon Moulton

Director

BECAP GP Limited

24 November 2014

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)

Fund I Investment details

Calyx

Business description

· m-hance - implements, deploys and manages 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)

Fund I Investment details

·

Santia

Business description

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

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)

Fund I Investment details

Fairline

Business description

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

Fund I Investment details

SPOT

Business description

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

· OfficeTeam is a leading office products and services supplier (www.officeteam.co.uk)

Fund I Investment details

Portfolio summary and reconciliation

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

** 2009 Cell fair values its investment in Fund I in accordance with the accounting policies as set out in Note 2.

Cash Management

As at 30 September 2014, Fund I had placed a total of £0.8 million (31 March 2014: £5.0 million, 30 September 2013: £3.0 million) of cash on instant access deposit with one bank. Fund I has in place a strict cash management policy that limits counterparty credit risk whilst simultaneously seeking to maximise returns.

INDEPENDENT REVIEW REPORT TO BETTER CAPITAL PCC LIMITED IN RESPECT OF THE 2009 CELL

Introduction

We have been engaged by the Company to review the condensed set of financial statements of the 2009 Cell, a cell of Better Capital PCC Limited, for the period ended 30 September 2014 which comprises the 2009 Cell Condensed Statement of Financial Position, the 2009 Cell Condensed Statement of Comprehensive Income, the 2009 Cell Condensed Statement of Changes in Equity, the 2009 Cell Condensed Statement of Cash Flows, and the 2009 Cell 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 Company's 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 2009 Cell are prepared in accordance with IFRS as adopted by the European Union. The 2009 Cell'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 2009 Cell's condensed set of financial statements in the interim financial report based on our review.

Our report, including the conclusion, has been prepared in accordance with the terms of our engagement to assist the 2009 Cell 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 2009 Cell's condensed set of financial statements in the interim financial report for the six months ended 30 September 2014 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

28 November 2014

Condensed Statement of Financial Position

As at 30 September 2014

The unaudited condensed interim financial statements of the 2009 Cell were approved and authorised for issue by the Company's Board of Directors on 28 November 2014 and signed on its behalf by:

Richard Crowder Jon Moulton

Chairman Director

The notes form an integral part of the 2009 Cell condensed interim financial statements.

Condensed Statement of Comprehensive Income

For the six months ended 30 September 2014