REG - British Smlr Comp 2 - 3rd Quarter Results

British Smaller Companies VCT2Announcement

25/11/2022 09:30

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RNS Number : 6243H  British Smaller Companies VCT2 Plc  25 November 2022

British Smaller Companies VCT2 plc

Interim Management Statement

For the quarter ended 30 September 2022

British Smaller Companies VCT2 plc (the "Company") presents its interim
management statement for the quarter ended 30 September 2022. 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 (http://www.bscfunds.com) .

Overview

The Company's Total Return at 30 September 2022 was unchanged at 139.8 pence
per ordinary share. During the same period the FTSE Small Cap fell by 5.7 per
cent.

Four follow-on investments were made in the period, into Vypr, Force24,
Vuealta and Wooshii, totalling £2.4 million.

Following the quarter end, two new investments and two follow-on investments
totalling £4.7 million have been completed, taking the total invested in the
current financial year to £12.8 million, following the £6.1 million invested
in the whole of the previous year.

Realisations in the period

During the period, the Company realised its investments in Springboard and
Intelligent Office, generating total proceeds of £9.9 million in the period,
realising a gain of £0.5 million over the opening carrying value and £4.2
million over the original cost.

The realisation of Springboard generated proceeds of £5.8 million,
representing a capital profit over cost of £3.9 million, an uplift of 46.0
per cent or £1.8 million on the carrying value at the beginning of the year.
Including income, the total return from this investment was £6.6 million over
a near eight year holding period, producing an internal rate of return of 23
per cent and a multiple of 4.1x cost. There is the prospect of further
consideration in 2023 based on performance targets; however, no value has been
recognised relating to these potential payments at this time.

The sale of Intelligent Office generated proceeds of £4.1 million,
representing a capital profit over cost of £2.1 million and an uplift of 29.0
per cent, or £0.9 million, on the carrying value at the beginning of the
year. Including income, the total return from this investment was £5.0
million over an eight and a half year holding period, producing an internal
rate of return of 14 per cent and a multiple of 2.6x cost.

 

Performance

The movement in Total Return in pence per ordinary share is set out in the
table below:

                                  30                                                            Decrease in Value  Buyback of shares  Movement    30 September 2022
                                  June                          2022

                                                                                                                                      In Period
 Net Assets (£m)                  109.6                                                         (0.1)              (0.3)              (0.4)       109.2
 NAV per share (PPS)              60.3p                                                         -                  -                  -           60.3p
 Cumulative dividends paid (PPS)  79.5p                                                         -                  -                  -           79.5p
 Total Return (PPS)               139.8p                                                        -                  -                  -           139.8p
 Shares in issue                  181,720,724                                                   -                  (556,386)          (556,386)   181,164,338

The unaudited NAV per ordinary share was unchanged at 60.3 pence per share (30
June 2022: 60.3 pence per ordinary share).

The movements in NAV per ordinary share are set out in the table below:

                              £m            Pence per

                                            ordinary share
 NAV at 30 June 2022                 109.6            60.3
 Increase in portfolio value  0.3           0.2
 Net operating costs          (0.4)         (0.2)
 Buy-back of shares           (0.3)         -
                                     (0.4)            -
 NAV at 30 September 2022            109.2            60.3

 

Following payment of the second interim dividend of 1.5 pence per ordinary
share for the year ending 31 December 2022 on 3 October 2022, the unaudited
net asset value is 58.8 pence per ordinary share.

Dividends and shares in issue

On 27 September 2022, the Company purchased 556,386 ordinary shares of 10
pence each at a price of 56.36 pence per ordinary share. These shares were
placed in treasury.

The number of ordinary shares in issue at 30 September 2022 was 181,164,338
(30 June 2022: 181,720,724).  In addition, at 30 September 2022 the Company
held 18,048,870 ordinary shares in treasury (30 June 2022: 17,492,484)

Following payment of the second interim dividend for the year ending 31
December 2022 of 1.5 pence per ordinary share on 3 October 2022, the Company
issued 922,314 ordinary shares under the DRIS, taking cumulative dividends
paid to 81.0 pence per ordinary share and the number of ordinary shares in
issue to 182,086,652 at that date.

The Board has approved a special dividend of 2.25 pence per ordinary share
which will be paid on 11 January 2023 to those shareholders on the Company's
register at the close of business on 18 November 2022. The payment of the
special dividend follows the successful exits from the investments in
Springboard and Intelligent Office noted above.

Net assets

Net assets at 30 September 2022 comprised the following:

                                     £000     % of net assets
 Unquoted investments at fair value  71,038   65.0
 Listed investment funds             1,326    1.2
 Cash and cash equivalents           32,444   29.7
 Other net current assets            4,414    4.1
 Net assets                          109,222  100.0

 

Investments

The investment portfolio at 30 September 2022 comprised:

                    Valuation  Cumulative valuation as a % of net assets

                    £000
 Matillion          20,721     19.0%
 Outpost            5,469      24.0%
 Unbiased           4,330      27.9%
 Displayplan        3,967      31.6%
 Wooshii            3,652      34.9%
 Force24            3,188      37.8%
 ACC Aviation       3,147      40.7%
 Elucidat           2,699      43.2%
 SharpCloud         2,668      45.6%
 Vypr               2,661      48.1%
                    52,502     48.1%
 Other investments  18,536     65.0%
 Total investments  71,038     65.0%

Shareholder relations

The online Shareholder Workshop will be held on Thursday 1 December 2022 at
11:00am.

Fundraising

On 2 August 2022, the Company announced its intention to launch a new joint
offer for subscription for the tax year 2022-23 later this year, alongside
British Smaller Companies VCT plc.  A prospectus with full details of the
proposed offer will be published on or around 30 November 2022.

Outlook

In the face of a challenging economic environment, portfolio companies are to
date proving themselves to be adaptable and resilient.  It is expected that
in these testing times, demand for equity capital from the UK's smaller
innovative businesses will increase. Such conditions often prove to be an
opportune time to invest long term capital in fast growing businesses, and
therefore the planned fundraising by the Company will ensure it is well placed
to take advantage of new opportunities arising across the United Kingdom.

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.

25 November 2022

For further information please contact:

David Hall                YFM Private Equity
Limited
Tel:  0113 244 1000

Alex Collins              Panmure Gordon (UK) Limited
                            Tel:  0207 886 2767

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