Interim Results

British Smaller Companies VCT PLC 17 October 2007 17 October 2007 BRITISH SMALLER COMPANIES VCT PLC Unaudited half year statements for the 6 months to 30 September 2007 British Smaller Companies VCT plc ('the Company') today announces its unaudited half year results for the six months to 30 September 2007. Chairman's Statement I am pleased to present the half year results which reflect a very active six months both for new investments, our own fundraising and the portfolio, which has resulted in a period of continued growth in net asset value. For the six months to 30 September 2007, net asset value, before taking account of the interim dividend, has risen to 102.7 pence per Ordinary share an increase of 4.2 pence per over the same period last year. This has increased total return to 140.7 pence per share an increase of 6.5% over the same period last year. In December 2006 the Company launched its share offers which were successfully closed during April 2007 raising a total of £9.2 million after expenses. Since those share offers opened, the Company has invested a total of £3.9 million in 6 companies, of which £2.7 million has been invested in the six months to 30 September 2007. As a consequence of this continued performance, I am pleased to announce that the interim dividend will be 2 pence per share, an increase of 33% over the previous year. The dividend will be paid on 16 November 2007 to shareholders on the register at 26 October 2007. Interim Management Report During the period the directors consider the following events to have been of particular importance. Important Events in the Period The first six months of this financial year has seen two investments realised for a total of £1.36 million compared to a cost of £0.44 million. These investments were Oasis Healthcare plc (a nationwide chain of dental practitioners - which realised a profit of £0.66 million) and JDA Limited (a north of England based advertising and marketing agency - which realised a profit of £0.26 million). In addition, on 28 September 2007 at an EGM of Cozart plc its shareholders voted to accept an offer of 57.5 pence per share from Concateno plc. The value of this offer to this Company is £2.2 million. Cozart plc became an investment in 2001 when it was a small unquoted company. Cozart achieved its listing on the Alternative Investment Market (AIM) in 2004 at a price of 30 pence per share. The offer for Cozart plc values the company at £64 million. Your company's residual holding in Cozart plc was acquired at a cost of £0.45 million. This first six months of the year has also seen high levels of activity in new investment. In total, £2.7 million has been invested of which £2.28 million has been into three unquoted companies and £0.42 million into one AIM listed company. The unquoted investments comprised £0.78 million into London-based Harvey Jones Limited (a management buy-out of a kitchen manufacturer and retailer); £0.6 million into Kingston-Upon-Thames-based Harris Hill Limited (a management buy-in led by a previous Chief Executive of Office Angels Limited of a business specialising in recruitment for the not-for-profit and charity sectors); £0.9 million into Goole-based RMS Group Holdings Limited (a buy-in management buy-out of a Humber port operator and stevedoring business). It is also pleasing to note that following the sale of Tamesis Limited to Patsystems plc in 2005 that Tamesis Limited has achieved its earnout conditions and that consequently the Company has received shares in Patsystems plc to the value of £0.2 million. Richard Last, a director of the Company is also a director and shareholder of Patsystems plc. Financial Results and Dividend The net asset value of the Ordinary shares at 30 September 2007, before taking account of the approved interim dividend of 2 pence per share, is 102.7 pence per share. Taking account of the dividends paid to date, the total return for eligible founder shareholders at the balance sheet date is 140.7 pence per share. The increase in income has arisen largely as a result of the successful fundraising. This increase has more than offset the rise in the investment advisory fee which is linked directly to movements in net asset value. The recorded pre-tax profit for Ordinary shares for the six months ended 30 September 2007 is £1.89 million after taking account of realised valuation gains of £0.64 million and unrealised valuation gains of £1.16 million. Shareholder Relations and Fundraising Following the success of the previous Offers, and taking account of the quality and number of investment opportunities available, your Board has decided to recommend a further Issue of Ordinary shares. Your Board will be seeking to raise up to £5 million. A further fundraising will allow your Company to take advantage of the increasing proprietary investment flow arising from the national office network of YFM Private Equity and to benefit further from increasing the scale of your Company. Details of the Offer will be sent to shareholders in the near future. The Company continues to operate a share buy back policy to enable shareholders to obtain some liquidity in what remains a relatively illiquid market where there is a need to dispose of their stock. This policy is kept under review to ensure that any decisions taken are in the best interests of shareholders as a whole. In accordance with this policy, the Company has purchased a total of 448,445 shares during the period at an average price of 86.81 pence per share and the shares have been placed in Treasury. These purchases are made with funds taken from the Special Reserve and do not adversely impact on the Company's ability to distribute tax free dividends to shareholders. Your Company continues to undertake workshops where shareholders are invited to meet members of the Board and the Investment Adviser and have the opportunity to meet some of the management teams of your Company's investments. It is intended to hold the next workshop in February 2008. Outlook and Risks The directors believe that the principal risks and uncertainties facing the Company for the remaining six months of the year continue to be the identification of sufficient quality of new investment opportunities. General market conditions have provided a more volatile backdrop with some continued uncertainty over the attitude that banks will take to providing debt in support of private equity and venture capital transactions. To date there has been no evidence of any material change to the market in which venture capital trusts operate, but the Board will continue to keep the situation under close review. It also remains unclear as to what effect the recently announced changes in respect of moving to a single rate of capital gains tax of 18% will have on private investors and entrepreneurs both in the unquoted and AIM markets. Again the Board continues to keep this developing situation under close review. In addition, market and liquidity risks are greater for unquoted and AIM traded companies than investment in companies traded on the main market. The Board will continue to seek to mitigate these risks by setting policies, reviewing performance and monitoring progress. The recent economic climate has supported a strong corporate market enabling your Company to continue its record of successful realisations supporting the increase in dividend policy. The underlying performance of the remainder of the portfolio continues to show pleasing progress and it is a feature of the portfolio that it is not exposed to significant levels of debt finance. This investment structure has been continued through to the new investments where your Company has sought to ensure that, as a portfolio, the exposure to debt levels is not significantly increased. Your Company remains well positioned to take advantage of selective investment opportunities as they arise and your Board remains optimistic about the second half of the year. Sir Andrew Hugh Smith 17 October 2007 Income Statement For the 6 months ended 30 September 2007 Unaudited Unaudited Audited 6 months ended 6 months ended Year ended 30 September 30 September 31 March 2007 2006 2007 Notes £000 £000 £000 Income 489 215 368 Administrative expenses: Investment advisory fee (299) (186) (381) Other expenses (106) (131) (234) --------- --------- --------- (405) (317) (615) Operating profit (loss) 84 (102) (247) --------- --------- --------- Gains on realisation of investments (net) 642 194 503 Unrealised gains on investments held at fair value (net) 1,162 493 1,082 --------- --------- --------- Net movement on investments 1,804 687 1,585 --------- --------- --------- Profit on ordinary activities before taxation 1,888 585 1,338 Taxation 2 - - - --------- --------- --------- Profit for the period from continuing operations 1,888 585 1,338 --------- --------- --------- Basic and diluted earnings per share 4 7.37p 3.43p 7.91p --------- --------- --------- Balance Sheet As at 30 September 2007 Unaudited Unaudited Audited 6 months ended 6 months ended Year ended 30 September 30 September 31 March 2007 2006 2007 Notes £000 £000 £000 Assets Non-current assets Financial assets at fair value through profit or loss 14,699 10,262 11,627 --------- --------- --------- Current assets Trade and other receivables 631 506 512 Cash and cash equivalents 11,504 5,991 4,867 --------- --------- --------- 12,135 6,497 5,379 Liabilities Current liabilities Trade and other payables (155) (103) (218) --------- --------- --------- Net current assets 11,980 6,394 5,161 --------- --------- --------- Net assets 26,679 16,656 16,788 --------- --------- --------- Shareholders' equity Share capital 2,641 2,191 2,148 Share premium account 10,504 1,813 1,813 Capital redemption reserve 221 178 221 Special reserve 2,019 2,795 2,408 Retained earnings 11,294 9,679 10,198 --------- --------- --------- Total Shareholders' equity 26,679 16,656 16,788 --------- --------- --------- Net asset value per Ordinary share 5 102.7p 98.5p 101.3p --------- --------- --------- Net asset value per C share 5 n/a* 101.5p 110.8p --------- --------- --------- * The C shares were converted into Ordinary shares on 9 May 2007. Unaudited Statement of Changes in Shareholders' Equity For the 6 months ended 30 September 2007 Share Share Capital Special Retained Total capital premium redemption reserve earnings equity account reserve £000 £000 £000 £000 £000 £000 Balance at 31 March 2006 2,195 1,336 117 3,330 9,569 16,547 Purchase of own shares (61) - 61 (535) - (535) Issue of Ordinary shares 57 477 - - - 534 Dividends - - - - (475) (475) Profit for the period - - - - 585 585 --------- ------- -------- ------- -------- -------- Balance at 30 September 2006 2,191 1,813 178 2,795 9,679 16,656 Purchase of own shares (43) - 43 (387) - (387) Dividends - - - - (234) (234) Profit for the period - - - - 753 753 --------- ------- -------- ------- -------- -------- Balance at 31 March 2007 2,148 1,813 221 2,408 10,198 16,788 Issue of Ordinary shares 980 8,723 - - - 9,703 Issue costs - (444) - - - (444) C share conversion (487) 493 - - - 6 Commissions paid - (81) - - - (81) Purchase of own shares - - - (389) - (389) Dividends - - - - (792) (792) Profit for the period - - - - 1,888 1,888 --------- ------- -------- ------- -------- -------- Balance at 30 September 2007 2,641 10,504 221 2,019 11,294 26,679 --------- ------- -------- ------- -------- -------- Unaudited Cash Flow Statement For the 6 months ended 30 September 2007 Unaudited Unaudited Audited 6 months ended 6 months ended Year ended 30 September 30 September 31 March 2007 2006 2007 £000 £000 £000 Net cash outflow from operating activities (182) (93) (267) --------- --------- --------- Cash flows (used in) from investing activities Purchase of fixed asset investments (2,705) - (1,380) Proceeds from sale of fixed asset investments 1,605 1,230 2,198 --------- --------- --------- Net cash (used in) from investing activities (1,100) 1,230 818 --------- --------- --------- Cash flows from (used in)financing activities Cost of C share issue - (2) (3) Issue of Ordinary shares 9,703 564 574 Cost of Ordinary share issue (520) (70) (80) Purchase of own Ordinary shares (515) (535) (796) Dividends paid (792) (475) (709) --------- --------- --------- Net cash from (used in)financing activities 7,876 (518) (1,014) --------- --------- --------- Net increase (decrease) in cash and cash equivalents 6,594 619 (463) Cash and cash equivalents at the beginning of the period 4,867 5,395 5,395 Effect of market value changes in cash equivalents 43 (23) (65) --------- --------- --------- Cash and cash equivalents at the end of the period 11,504 5,991 4,867 --------- --------- --------- Notes to the Financial Statements For the 6 months ended 30 September 2007 1. These half year statements, which have been approved by the directors whose names appear at note 6, each of whom has confirmed that to the best of his knowledge the Interim Management Report includes a fair review of the information required by Rules 4.2.7 and 4.2.8 of the Disclosure Rules and the Transparency Rules. The half year statements are unaudited, nor have they been reviewed by the auditors pursuant to the Auditing Practices Board (ASB) guidance on Review of Interim Financial Information. They do not constitute full financial statements as defined in section 240 of the Companies Act 1985. The comparative figures for the year ended 31 March 2007 do not constitute full financial statements and have been extracted from the Company's financial statements for the year ended 31 March 2007. Those accounts were reported upon without qualification by the auditors and have been delivered to the Registrar of Companies. The half year statements comply with IAS 34 'Interim financial reporting' and the accounting policies and methods of computation followed in the half year statements are the same as those adopted in the preparation of the audited financial statements for the year ended 31 March 2007. The financial statements for the year ended 31 March 2007 were prepared in accordance with the International Financial Reporting Standards (IFRS), which comprise standards and interpretations approved by the International Accounting Standards Board (IASB) and the International Accounting Standards Committee (IASC) as adopted by the European Union and those parts of the Companies Act 1985 applicable to companies reporting under IFRS. 2. Taxation charge: Unaudited Unaudited Audited 6 months ended 6 months ended Year ended 30 September 30 September 31 March 2007 2006 2007 £000 £000 £000 Profit on ordinary activities multiplied by standard small company rate of corporation tax in the UK of 19% (2006: 19%) 359 111 254 Effect of: UK dividends received (13) (16) (21) Non taxable profits on investments 3) (130) (301) Excess management expenses (3) 35 68 --------- --------- --------- Current tax charge for the period - - - --------- --------- --------- The Company has no provided, or unprovided, deferred tax liability in either year. Deferred tax assets in respect of losses have not been recognised as management currently believe that there will not be sufficient taxable profits against which the assets can be recovered. Due to the Company's status as a venture capital trust, and the continued intention to meet the conditions required to comply with Chapter 3 of Part 6 of the Income Tax Act 2007, the Company has not provided deferred tax on any capital gains or losses arising on the revaluation or realisation of investments. 3. Dividends Unaudited Unaudited Audited 6 months ended 6 months ended Year ended 30 September 30 September 31 March 2007 2006 2007 £000 £000 £000 Interim paid - 1.5p per Ordinary share; paid 6 November 2006 - - 234 Final paid - 3.0p per Ordinary share; paid 11 August 2006 - 469 469 Final paid - 0.5p per C share; paid 11 August 2006 - 6 6 Final paid - 3.0p per Ordinary share; paid 8 August 2007 792 - - --------- --------- --------- Dividends paid and declared 792 475 709 --------- --------- --------- 4. The earnings per share is based on the net profit from ordinary activities after tax attributable to shareholders of £1,888,000 (30 September 2006: £585,000 and 31 March 2007: £1,338,000) and on 25,608,000 shares (30 September 2006: 17,051,000 and 31 March 2007: 16,923,000), being the weighted average number of shares in issue during the period. 448,445 treasury shares have been excluded in calculating the number of Ordinary shares in issue at 30 September 2007 (30 September 2006 and 31 March 2007: nil). The Company has no securities that would have a dilutive effect and hence basic and diluted earnings per share are the same. 5. The net asset value per share is calculated on attributable assets of £26,679,000 and 25,975,718 shares in issue at the period end (30 September 2006: assets of £16,656,000 and 16,880,040 shares, 31 March 2007: assets of £16,788,000 and 16,450,040 shares). 448,445 treasury shares have been excluded in calculating the number of Ordinary shares in issue at 30 September 2007 (30 September 2006 and 31 March 2007: nil). The Company has no securities that would have a dilutive effect and hence basic and diluted net asset values per share are the same. 6. The directors of the Company are: Sir Andrew Hugh Smith; Mr PS Cammerman; Mr S Noar; Mr RM Pettigrew and Mr R Last. For further information, please contact: David Hall, YFM Private Equity Limited Tel: 0161 819 3195 Jonathan Becher, Landesbanki Securities (UK) Limited Tel: 0207 426 3269 Michael Bellamy, Landesbanki Securities (UK) Limited Tel: 0207 426 9547 This information is provided by RNS The company news service from the London Stock Exchange

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