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21 Nov 2019 13:00
British Smaller Companies VCT2 plc
Interim Management Statement
For the quarter ended 30 September 2019
British Smaller Companies VCT2 plc (the "Company") presents its interim management statement for the quarter ended 30 September 2019. The statement also includes relevant financial information between the end of the quarter and the date of this statement. A copy of this interim management statement can be found at www.bscfunds.com.
Overview
The Company has continued to make good progress in the quarter with Total Return rising to 120.2 pence per ordinary share. This is an increase of 1.8 pence per ordinary share and represents an increase of 3.0 per cent over the Net Asset Value ("Nav") of 59.9 pence per share at the beginning of the financial year.
Realisation of Eikon
Subsequent to the period end your Company has part-realised its investment in Eikon Holdco Limited which has resulted in a valuation uplift of £2.0 million in the quarter to 30 September 2019. The Company has to date received proceeds of £2.0 million out of a total value of £4.3 million. The balance comprises deferred consideration, loan notes and a residual equity stake. The terms of the deferred consideration are expected to result in further receipts in the near term.
Performance
The movement in Total Return in pence per ordinary share is set out in the table below:
Pence per ordinary share | |||||
Cumulative dividends to 30 June 2019 | 65.0 | ||||
Net Asset Value at 30 June 2019 | 53.4 | ||||
Total Return at 30 June 2019 | 118.4 | ||||
Net underlying increase in portfolio | 1.9 | ||||
Net income after expenses / share buy-backs | (0.1) | ||||
Increase in Total Return | 1.8 | ||||
Total Return at 30 September 2019 | 120.2 | ||||
30 September 2019 | Movement | 30 June 2019 | |
Net Assets (£m) | 71.0 | 0.8 | 70.2 |
NAV per share (PPS) | 53.7p | 0.3p | 53.4p |
Cumulative dividends paid (PPS) | 66.5p | 1.5p | 65.0p |
Total Return (PPS) | 120.2p | 1.8p | 118.4p |
Shares in issue | 132,200,546 | 688,151 | 131,512,395 |
The Total Return at 30 September 2019, calculated by reference to the NAV per ordinary share and the cumulative dividends paid per ordinary share, was 120.2 pence per ordinary share compared to 118.4 pence per ordinary share at 30 June 2019.
The unaudited NAV per ordinary share as at 30 September 2019 was 53.7 pence per ordinary share (30 June 2019: 53.4 pence per ordinary share) representing an increase of 1.8 pence per ordinary share from the portfolio/net income, offset by the interim dividend of 1.5 pence per share paid on 23 September 2019.
Cumulative dividends paid were up 1.5 pence per ordinary share at 66.5 pence per ordinary share (30 June 2019: 65.0 pence per ordinary share).
The movement in NAV per ordinary share and the dividends paid are set out in the table below:
| £m | Pence per ordinary share | ||
NAV at 30 June 2019 | 70.2 | 53.4 | ||
Net underlying increase in portfolio | 2.5 | 1.9 | ||
Net income after expenses | (0.1) | (0.1) | ||
Issue of shares/buybacks | 0.4 | - | ||
Increase | 2.8 | 1.8 | ||
NAV before the payment of dividends | 73.0 | 55.2 | ||
Dividends paid | (2.0) | (1.5) | ||
NAV at 30 September 2019 | 71.0 | 53.7 | ||
Dividends and shares in issue
An interim dividend of 1.5 pence per ordinary share was paid on 23 September 2019. On the same date 923,151 ordinary shares were issued under the Company's DRIS.
On 26 September 2019 the Company purchased 235,000 ordinary shares of 10 pence each at a price of 49.81 pence per ordinary share. These shares were placed in treasury.
The number of ordinary shares in issue at 30 September 2019 was 132,200,546 (30 June 2019: 131,512,395). In addition, at 30 September 2019 the Company held 8,209,092 ordinary shares in treasury (30 June 2019: 7,974,092).
Net assets
Net assets at 30 September 2019 comprised the following:
£000 | % of net assets | |
Unquoted investments at fair value | 45,351 | 63.9% |
Quoted investments at bid price | 226 | 0.3% |
Total investments | 45,577 | 64.2% |
Cash and cash equivalents | 24,322 | 34.3% |
Other net current assets | 1,067 | 1.5% |
Net assets | 70,966 | 100% |
The investment portfolio at 30 September 2019 was comprised as follows:
Valuation £000 | Valuation as a % of net assets | |
ACC Aviation Group Limited | 6,479 | 9.1% |
Matillion Limited | 5,489 | 7.7% |
Eikon Holdco Limited | 4,331 | 6.1% |
Intelligent Office UK Limited | 3,142 | 4.4% |
Business Collaborator Limited | 2,847 | 4.0% |
KeTech Enterprises Limited | 2,311 | 3.3% |
Springboard Research Holdings Limited | 1,759 | 2.5% |
Tonkotsu Limited | 1,592 | 2.3% |
Deep-Secure Limited | 1,515 | 2.1% |
Wooshii Limited | 1,440 | 2.0% |
30,905 | 43.5% | |
Other investments | 14,672 | 20.7% |
Total investments | 45,577 | 64.2% |
Although there were no investments during the quarter, subsequent to the quarter end the Company invested £1.5 million into SharpCloud Software Limited, which has developed an enterprise software product that is a visualisation and collaboration tool for large organisations and made a small further investment into Ncam Technologies Limited.
In the quarter to 30 September 2019 the realisation and repayment of investments generated cash proceeds of £0.7 million.
Investments made prior to the November 2015 Budget represented 53 per cent of the value of the unquoted portfolio at 30 September 2019.
Portfolio Performance
Over the quarter to 30 September 2019 the aggregate unrealised portfolio valuation has increased by £2.5 million. The Board continues to follow its policy of maintaining a diversified portfolio. At 30 September 2019, only three investments represented more than 5 per cent of the Company's NAV, the largest being 9.1 per cent, with the top ten investments representing 43.5 per cent of NAV (30 June 2019 40.2 per cent).
Outlook
It is pleasing that Total Return has increased further in the third quarter against a background of political change and economic uncertainty. The portfolio businesses continue to invest and grow and your Company will to continue to fund this as appropriate. The level of investment enquiries remains strong and the speed of conversion has been helped because of your Company's ability to self-assure under HMRC's revised guidelines.
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU No. 596/2014). Upon the publication of this announcement via Regulatory Information Service this inside information is now considered to be in the public domain.
21 November 2019
For further information please contact:
David Hall YFM Private Equity Limited Tel: 0113 244 1000
Robert Naylor Panmure Gordon (UK) Limited Tel: 0207 886 2768
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