REG - British Smlr Comp 2 - Annual Financial Report
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RNS Number : 2202X British Smaller Companies VCT2 Plc 19 March 2026
British Smaller Companies VCT2 plc
Annual Financial Report Announcement
for the year ended 31 December 2025
British Smaller Companies VCT2 plc (the "Company") today announces its audited
results for the year ended 31 December 2025.
HIGHLIGHTS
l 2.4 per cent return on opening net assets, driven by underlying revenue growth
in portfolio companies
l Total Return increased by 1.30 pence; net asset value at 31 December 2025 of
54.40 pence per share (2024: 57.10 pence per share)
l Realisations generated total proceeds of £15.7 million in the year, a gain of
£2.2 million over the opening carrying value and £9.7 million over cost
l Four new investments and 13 follow-on investments totalling £16.1 million
completed during the year. One follow-on investment of £2.0 million made
subsequent to the year end.
l Total dividends paid during the year ended 31 December 2025 of 4.00 pence per
share (2024: 3.00 pence per share), bringing total cumulative dividends paid
since inception to 93.25 pence per share at 31 December 2025 (2024: 89.25
pence per share)
l £29.2 million of allotted funds in the year from the 2024/25 fundraising.
Gross applications of c. £31.9 million received in relation to the 2025/26
offer, with £9.4 million allotted in January 2026 and the remaining funds to
be allotted between 1 and 2 April 2026
CHAIR'S STATEMENT
I am pleased to present the 2025 annual report and financial statements of
British Smaller Companies VCT2 plc. The Company has continued to make
positive progress this year, with encouraging developments across a number of
its portfolio businesses.
The last 12 months have been set against a global backdrop of macroeconomic
volatility. Tariffs, geopolitical tensions and inflationary pressures have all
featured, as nations have sought to navigate a way through their respective
challenges.
Despite this, the Company's focus on innovative, entrepreneur-led businesses
that are addressing clearly defined market needs has helped to provide
insulation from these external factors.
The benefits of this approach are reflected in the performance of the Company,
which generated an annualised 2.4 per cent return on its opening net asset
value in the year.
There are several factors contributing to this performance: 20 out of the 25
companies valued on a revenue basis have shown positive revenue growth over
the last 12 months, with eight of these delivering growth of 30 per cent or
more. Overall performance has however been dampened by the reduction in value
of a small number of portfolio companies, where specific circumstances have
held back their growth. The Company's Manager continues to work closely with
these companies to navigate these challenges.
Pleasingly, as well as adding four new companies to the portfolio in the year,
the Company has had the opportunity to provide £10.1 million of further
funding to 13 existing portfolio companies, with the vast majority of this
being deployed into the fastest growing companies to help accelerate their
impressive growth.
From an exit perspective, the Company has continued to realise investments
this year despite a subdued M&A environment, recognising £15.7 million of
proceeds from three full realisations, one partial exit and deferred
consideration.
Financial Performance
In 2025, the Company delivered a 1.30 pence per ordinary share increase in
Total Return, equivalent to an annualised 2.4 per cent of the opening net
asset value at 31 December 2024. Total Return is now 147.65 pence per ordinary
share.
Portfolio
The year's growth in Total Return was driven by value growth in the portfolio,
which generated a return of £6.1 million, 5.8 per cent over its opening
value.
Over half of the portfolio saw positive value movements in the year, with the
largest valuation uplifts from the key contributors more than offsetting the
largest valuation falls.
The Company's investments in Summize and Xapien each increased in value by
£3.4 million over the year. Summize has continued to deliver strong revenue
growth, enhancing the functionality of its contract lifecycle management
product and increasing its customer base in the large US market. In January
2026, Summize completed a $50 million Series B funding round, which provides
the business with additional capital to continue its scaling journey.
2025 was a strong year for Xapien, with turnover increasing by 137 per cent
and the continued build-out of the company's senior team. Xapien's AI-powered
software, which automates research on individuals and companies, is
increasingly being used by customers across a range of sectors. The Company
participated in a follow-on funding round at the end of 2025, which will
enable Xapien to maintain its momentum.
The Company's holding in Unbiased increased by £2.1 million in the year. The
business provides an online marketplace that can generate new customer leads
for financial advisers. It continues to show good growth in its established UK
business and is seeing increasing traction in the US, as it scales its
customer base there. Unbiased is well-placed to continue on its current
trajectory in 2026.
Other notable positive valuation movements in the period include a £1.5
million increase in data validation business Vypr, and a £1.0 million
increase in automated software testing business AutomatePro.
The Company's holding in data engineering software business, Matillion,
decreased by £3.1 million. This fall is due to a combination of factors,
which include subdued revenue growth, a reduction in valuation multiples and
adverse currency movements. The Company's holding in Outpost reduced by
£1.7 million, as the visual effects business continued to navigate industry
challenges. The Company's investment in Vuealta also reduced in value by £1.1
million, with the business facing adverse market conditions, ahead of its
January 2026 sale. Portfolio company Wooshii experienced significant market
challenges, and the trading business was sold during the year, with the
valuation of the Company's investment falling by £1.3 million.
New Investments
The Company invested £6.0 million into four new investments during the year.
Investment Sector
DynaRisk Cyber risk solutions
S4labour
Workforce management
Stormharvester AI Analytics for wastewater
utilities
TeamFeePay Payment platform for
grassroots football
Follow-On Investments in the Year
In our continued support of the portfolio, 13 companies received follow-on
funding, totalling £10.1 million in aggregate. Further details are given in
the Investment Review.
Post-year end, in January 2026 the Company invested £2.0 million into
portfolio company Summize.
Realisations in the Year
Realisations of portfolio investments generated recognised proceeds of £15.7
million in the year. These investments have returned a net gain of £9.7
million over the original cost, which includes £2.2 million over the opening
carrying value at the start of the financial year.
In February 2025 the Company realised its investment in ACC Aviation,
receiving £3.1 million in initial proceeds, with additional deferred
consideration of £1.5 million anticipated to be received over the next two to
four years. Including the deferred consideration, the ACC investment has
generated an overall return of £8.2 million, a 5.9x return on the original
cost of £1.4 million.
In July 2025 the sale of the trade and liabilities of Wooshii was completed;
no proceeds were received on exit, in line with its minimal carrying value,
although there is the potential for a small return for the Company depending
on future trading.
In October 2025, the Company realised its investment in Elucidat, receiving
£3.6 million in initial proceeds (including income due), with additional
deferred consideration of £0.5 million anticipated to be received over the
next 18 months. To date, the Elucidat investment has generated a 1.3x return
on the original cost of £2.8 million. Including deferred consideration,
proceeds have the potential to rise to £4.1 million, and the return to 1.45x.
In December 2025, the Company realised its investment in SharpCloud receiving
£5.8 million in initial proceeds, with additional deferred consideration of
£0.6 million anticipated to be received over the next two years. To date,
the SharpCloud investment has generated a 2.0x return on the original cost of
£2.9 million. Including deferred consideration, proceeds have the potential
to rise to £6.4 million, and the return to 2.2x.
In December 2025, portfolio company Teraview successfully completed an
oversubscribed listing on the Korean Stock Exchange. The Company
subsequently realised 34 per cent of its holding prior to 31 December 2025,
receiving proceeds of £1.2 million. The balance of the Company's holding
was realised post-year end, in January 2026, generating a further £1.8
million of proceeds. Overall, the Teraview investment has generated an
8.2x return on the original cost of £0.4 million.
The Company also recognised additional deferred consideration of £0.3 million
relating to an investment realised in 2024.
Post-year end, the Company realised its remaining holding in Vuealta,
receiving proceeds of £0.5 million, in line with the valuation at the year
end. Overall, the Vuealta investment has generated a 1.5x return on the
original cost of £2.4 million.
The Company also realised its investment in Sipsynergy post-year end, with
total expected proceeds of c. £0.7 million, in line with the valuation at the
year end. This represents a 0.3x return on the original cost of £2.1
million.
Treasury
Due to the nature of its structure, a proportion of the Company's net assets
will be held in cash and cash equivalents at any point in time. The Company
takes an active approach to generating a return on liquid funds, whilst
remaining focused on the primary goal of capital preservation.
A portion of the Company's liquid assets are held across a diversified range
of Triple-A rated money market funds, managed by global institutions, while
the balance is held as readily accessible cash, all of which is held at Tier 1
Financial Institutions (A2 rated or above).
In the year, the Company generated a return of £2.5 million on its liquid
assets, and at year end was generating a weighted run-rate return on these
assets of c.3.7 per cent per annum.
Financial Results
The movement in net asset value ("NAV") per ordinary share and the dividends
paid are set out in the table below:
Pence per ordinary share £000
NAV at 31 December 2024 57.10 160,451
Increase in value 1.25 4,176
Gain on disposal of investments 0.70 2,206
Net underlying change in investment portfolio 1.95 6,382
Net operating costs (0.40) (1,337)
Incentive fee (0.20) (623)
Total Return in the year 1.35 4,422
Issue/buy-back of new shares (0.05) 26,237
NAV before the payment of dividends 58.40 191,110
Dividends paid (4.00) (12,711)
NAV at 31 December 2025 54.40 178,399
Cumulative dividends paid 93.25
Total Return:
at 31 December 2025 147.65
at 31 December 2024 146.35
The charts on page 12 of the annual report show the movement in Total Return
and net asset value over time in greater detail.
The investments held at the beginning of the financial year, amounting to
£105.5 million, delivered a return over the year of £6.1 million.
The current portfolio's net valuation increased by £4.2 million. Within this
there were valuation gains of £14.4 million, offset by £10.2 million of
downward movements.
Following the portfolio's evolution towards younger, higher growth companies
after changes to VCT regulations in 2015, as expected the level of income
generated by the portfolio continues to decrease. Overall, £0.3 million was
recognised in the year, down from £0.6 million in 2024.
Dividends
Dividends paid in the year totalled 4.00 pence per ordinary share. This
comprised two 1.50 pence per ordinary share interim dividends and one 1.00
pence per ordinary share special dividend. Cumulative dividends paid as at 31
December 2025 were 93.25 pence per ordinary share.
Dividend Re-investment Scheme ("DRIS")
The Company operates a DRIS, which gives shareholders the opportunity to
re-invest any cash dividends; it is open to all shareholders, including those
who invested under the recent offers. The main advantages of the DRIS are:
1. the dividends remain tax free; and
2. any DRIS investment attracts income tax relief at the rate of 30
per cent (20 per cent from 6 April 2026).
For the financial year ended 31 December 2025, £2.0 million was re-invested
by way of the DRIS, from overall dividend proceeds of £12.7 million.
Liquidity and Fundraising
The Company completed a successful fundraise during the year, allotting £28.3
million relating to the 2024/25 tax year.
At 31 December 2025, the Company's cash and money market reserves of £63.8
million represented 35.8 per cent of net assets.
Post-period end, in January 2026, a further £9.4 million of funds were
allotted, relating to the 2025/26 tax year. It is expected that a further
c.£22.5 million will be allotted between 1 and 2 April 2026, following the
close of the Company's joint share offer alongside British Smaller Companies
VCT plc on 18 December 2025.
Shareholder Relations
Investor Workshop
The annual shareholder workshop held on 19 June 2025 was well attended. The
theme for the day was Artificial Intelligence ("AI"). Attendees heard from the
CEOs of the portfolio businesses Xapien and AutomatePro, who provided
overviews of their companies and how they are using AI within their own
product offerings.
We are pleased to announce that the next in-person shareholder workshop will
be held jointly with British Smaller Companies VCT plc on 18 June 2026 at The
Royal Institution, 21 Albermarle Street, London W1S 4BS.
Annual General Meeting
The Annual General Meeting of the Company will be held at 1:30 pm on 9 June
2026 at Thomas House, 84 Ecclestone Square, London SW1V 1PX. Full details of
the agenda for this meeting are included in the Notice of the Annual General
Meeting on page 86 of the annual report.
The electronic communications policy continues to be a success, with 84 per
cent of shareholders now receiving communications in this way. Documents such
as the annual report are published on the website www.bscfunds.com rather than
by post, saving on printing costs, as well as being more environmentally
friendly.
The Company's website, www.bscfunds.com, is refreshed on a regular basis and
provides a comprehensive level of information in what I hope is a
user-friendly format.
Budget
The November 2025 Budget included increases to the annual and lifetime VCT
investment limits into businesses. This a welcome step that will allow VCT
funds to provide more support to their portfolio companies for longer.
The Budget also announced a reduction in initial income tax relief from 30 per
cent to 20 per cent. It is too early to predict the full impact of this
change, but we expect the more established VCTs with stronger track records,
like the Company, to continue to be able to meet their fundraising objectives.
Post Balance Sheet Events
Having previously assessed its expected cash requirements, the Company
announced a new share offer on 25 September 2025, alongside British Smaller
Companies VCT plc, with the intention of raising up to £85 million, in
aggregate, which included an over-allotment facility of £25 million, in
aggregate. The offers closed to new applications on 18 December 2025. Gross
applications of £85 million have been received, of which c. £31.9 million
relate to the Company. The first allotment of £25 million (£9.4 million
relating to the Company) took place on 7 January 2026. The second and final
allotment will take place between 1 and 2 April 2026.
Subsequent to the year end, the Company invested £2.0 million into portfolio
company Summize. The Company also completed the realisations of Teraview,
Vuealta, and Sipsynergy, as detailed above.
As part of the 7 January 2026 allotment, the Company issued 16,978,814 shares.
Following this allotment, the Company's issued share capital consists of
344,956,241 ordinary shares with voting rights and 36,211,546 shares held in
treasury.
Outlook
The Company's portfolio is well positioned, and we are optimistic about its
potential to deliver value over the long-term. During 2025, the Company was
pleased to be able to continue to provide follow-on funding to accelerate the
growth of its strong performing portfolio companies and we expect this
strategy to continue into 2026.
The Manager maintains a hands-on approach to portfolio management, with a
large and experienced group of professionals working with the management teams
of the Company's investments. This proactive style enables it to identify
value creation opportunities within high-potential investee companies and to
provide targeted support to those facing performance challenges. Overall,
the portfolio is being positioned to benefit from an increasingly AI-led
world, which we feel should help to insulate the Company from the more subdued
sentiment towards software stocks.
Macroeconomic uncertainty experienced in 2025 has persisted into 2026, with
the conflict in the Middle East adding to an already challenging
environment. We will continue to assess and manage the potential impacts on
portfolio businesses. The resilience of investee companies and the experience
of the Manager remain important in navigating this environment.
The Company also completed a successful fundraise for the 2025/26 tax year
during the period. The Company's joint offer with British Smaller Companies
VCT plc reached its full target of £85 million. This raise ensures the
Company continues to have strong levels of liquidity to support new and
follow-on investments, fund shareholder distributions and to meet operating
costs.
With this strong capital position behind the Company, there is confidence to
deploy these funds into promising new opportunities across the Manager's
regional footprint in the year ahead. I would like to thank shareholders for
their ongoing support.
Barbara Anderson
Chair
18 March 2026
OBJECTIVES AND KEY POLICIES
The Company's objective is to maximise Total Return and provide investors with
a long-term tax-free dividend yield whilst maintaining the Company's status as
a venture capital trust.
Investment Strategy
The Company seeks to build a broad portfolio of investments in early-stage
companies focused on growth, with the aim of spreading the maturity profiles
and maximising returns, as well as ensuring compliance with VCT regulations.
The Company predominantly invests in unquoted smaller companies and expects
that this will continue to make up the significant majority of the portfolio.
It will also retain holdings in cash or near-cash investments to provide a
reserve of liquidity which will maximise the Company's flexibility as to the
timing of investment acquisitions and disposals, dividend payments and share
buy-backs.
Unquoted investments are structured using various investment instruments,
including ordinary shares, preference shares, convertible securities and very
occasionally loan stock, to achieve an appropriate balance of income and
capital growth, having regard to the VCT Regulations. The portfolio is
diversified by investing in a broad range of industry sectors. The normal
investment period into the portfolio companies is expected to be typically
between the range of five to seven years.
Investment Policy
The investment policy of the Company is to invest in UK businesses across a
broad range of sectors that blends a mix of businesses operating in
established and emerging industries that offer opportunities in the
application and development of innovation in their products and services.
These investments will all meet the definition of a Qualifying Investment and
be primarily in unquoted UK companies. It is anticipated that the majority of
these will be re-investing their profits for growth and the investments will
comprise mainly equity instruments.
The Company seeks to build a broad portfolio of investments in early-stage
companies focused on growth with the aim of spreading the maturity profiles
and maximising return as well as ensuring compliance with the VCT guidelines.
Borrowing
The Company does not borrow and has no borrowing facilities, choosing to fund
investments from its own resources.
Co-investment
British Smaller Companies VCT plc and British Smaller Companies VCT2 plc
(together "the VCTs") typically co-invest in investments, allocating such
investments 40 per cent to the Company and 60 per cent to British Smaller
Companies VCT plc. However, the Board of the Company has discretion as to
whether or not to take up its allocation; where British Smaller Companies VCT
plc does not take its allocation, the Board may opt to increase the Company's
allocation in such opportunities.
The VCTs may invest alongside co-investment funds managed by YFM, the Manager
of the VCTs. The VCTs have first priority on all equity investment
opportunities meeting the VCT qualifying criteria. Non-VCT qualifying
investments are allocated to YFM's co-investment funds.
Asset Mix
Cash which is pending investment in VCT-qualifying securities is held in money
market funds and interest-bearing instant access and short-notice bank
accounts.
Remuneration Policy
The Company's policy on the remuneration of its directors, all of whom are
non-executive, can be found on page 47 of the annual report.
Other Key Policies
Details of the Company's policies on the payment of dividends, the DRIS and
the buy-back of shares are given on page 2 of the annual report. In addition
to these the Company's anti-bribery and environmental and social
responsibilities policies can be found on page 34 of the annual report.
PROCESSES AND OPERATIONS
The Manager is responsible for the sourcing and screening of investment
opportunities, carrying out suitable due diligence investigations and making
submissions to the Board regarding potential investments.
Post investment, the Manager works with the businesses and management teams in
which the Company is invested, monitoring progress, effecting change and,
where applicable, redefining strategies with a view to maximising values
through structured exit processes.
The Board regularly monitors the performance of the portfolio and the
investment requirements set by the relevant VCT legislation. Reports are
received from the Manager regarding the trading and financial position of each
investee company and senior members of the Manager regularly attend the
Company's Board meetings. Monitoring reports on compliance with VCT
regulations are also received at each Board meeting so that the Board can
monitor that the Venture Capital Trust status of the Company is maintained and
take corrective action if appropriate. Monitoring reports carrying out an
independent review of this compliance are received twice a year.
The Board reviews the terms of YFM Private Equity Limited's appointment as
Manager on a regular basis.
YFM Private Equity Limited has performed investment advisory or management,
administrative and secretarial services for the Company since its inception on
28 November 2000. The principal terms of the agreement under which these
services are performed are set out in note 3 to the financial statements.
In the opinion of the directors, the continuing appointment of YFM Private
Equity Limited as Manager is in the interests of the shareholders as a whole,
in view of its experience in managing venture capital trusts and in making,
managing and exiting investments of the nature falling within the Company's
investment policies.
KEY PERFORMANCE INDICATORS
Total Return
Total Return, calculated by reference to the cumulative dividends paid plus
net asset value (excluding tax reliefs received by shareholders), is the
primary measure of performance in the VCT industry.
Further explanation is given under the heading "Financial Performance" on page
6 of the Annual Report.
The chart on page 12 of the annual report shows how the Total Return of the
Company has developed over the last ten years.
Shareholder Returns
The Board considers Total Return to be the primary measure of shareholder
value. The Internal Rate of Return (the "IRR") from the offers over the last
ten years are set out below. IRR, which is an Alternative Performance Measure
(defined on page 3 of the annual report), is a key metric used to assess the
potential profitability of an investment, a higher IRR indicates a more
profitable investment. More specifically, IRR is the annual rate of return
that equates the cost at the date of the original investment, with the value
of subsequent dividends plus the audited 31 December 2025 net asset value.
This excludes the benefit of any initial tax relief.
The IRRs shown are based on fundraisings and offer prices during the relevant
calendar year whilst the second table below shows specific financial periods
to 31 December 2025. Note there was no fundraising in 2020, and it is too soon
to give meaningful returns for the fundraisings in 2024 and 2025.
Year Internal Rate of Return (IRR)
2014 5.8%
2015 6.3%
2016 6.4%
2017 6.6%
2018 7.7%
2019 7.8%
2021 9.3%
2022 3.5%
2023 2.1%
Note: excluding all tax reliefs
Set out below is the annualised return over 10, 5, 3 and 1 years to 31
December 2025. The annualised return is calculated with reference to the
cumulative dividends paid in the period plus the audited 31 December 2025 net
asset value, compared to the net asset value at the beginning of the relevant
period.
Period Annualised Return p.a.
10 years 6.4%
5 years 8.8%
3 years 3.0%
1 year 2.4%
Note: excluding all tax reliefs
Expenses
Ongoing Charges
The Ongoing Charges figure, as calculated in line with the AIC recommended
methodology, is used by the Board to monitor expenses. This figure shows
shareholders the costs of the Company's recurring operational expenses of
£3,467,000 (2024: £3,119,000) as shown in note 3 of the annual report,
expressed as a percentage of the average net asset value during the year of
£177,492,000 (2024: £157,839,000). Whilst based on historical information,
this provides an indication of the likely level of costs that will be incurred
in managing the Company in the future.
Year to Year to
31 December 2025 31 December 2024
(%) (%)
Ongoing Charges figure* 1.95 1.98
*Alternative Performance Measure
Shareholders benefit from the Company's agreement with the Manager to pay a
lower level of management fee of 1.25 per cent (1.00 per cent prior to 1
January 2026) on surplus cash. The Company estimates that the Ongoing Charges
figure for the year ended 31 December 2025 would have been c.2.17 per cent
under the new fee arrangements set out in note 3, remaining one of the lowest
in the VCT industry.
Expenses Cap
The total costs incurred by the Company in the year (excluding any performance
related fees, trail commission payable to financial intermediaries and VAT)
are capped at 2.9 per cent of the total net asset value as at the relevant
year end. The treatment of costs in excess of the cap is described in note 3.
There was no breach of the expenses cap in the current or prior year.
Compliance with VCT Legislative Tests
A principal risk facing the Company is the retention of its VCT qualifying
status. The Board receives regular reports on compliance with the VCT
legislative tests from the Manager. In addition, the Board receives formal
reports from its VCT Status Adviser (Philip Hare & Associates LLP) twice a
year. The Board confirms that during the period, all VCT legislative tests
have been met.
Under Chapter 3 Part 6 of the Income Tax Act 2007, in addition to the
requirement for a VCT's ordinary share capital to be listed in the Official
List on a European regulated market throughout the period, there are further
specific tests that VCTs must meet following the initial three-year
provisional period.
Income Test
The Company's income in the period must be derived wholly or mainly (70 per
cent) from shares or securities.
Retained Income Test
The Company must not retain more than 15 per cent of its income from shares
and securities.
Qualifying Investments Test
At least 80 per cent by value of the Company's investments must be represented
throughout the period by shares or securities comprised in Qualifying
Investments of investee companies.
For shares issued in accounting periods beginning on or after 6 April 2018, at
least 30 per cent of those share issues must be invested in Qualifying
Investments of investee companies by the anniversary of the accounting period
in which those shares are issued.
Eligible Shares Test
At least 70 per cent of the Company's Qualifying Investments must be
represented throughout the period by holdings of non-preferential shares.
Investments made before 6 April 2018 from funds raised before 6 April 2011 are
excluded from this requirement.
At least 10 per cent of the Company's total investment in each Qualifying
Investment must be in eligible shares.
In addition, monies are not permitted to be used to finance buyouts or
otherwise to acquire existing businesses or shares.
Investment Limits
There is an annual limit for each investee company which provides that they
may not raise more than £5 million (£10 million from 6 April 2026) of state
aided investment (including from VCTs) in the 12 months ending on the date of
each investment (£10 million for Knowledge Intensive Companies, £20 million
from 6 April 2026).
There is also a lifetime limit that a business may not raise more than £12
million (£24 million from 6 April 2026) of state aided investment (including
from VCTs); the limit for Knowledge Intensive Companies is currently £20
million (changing to £40 million from 6 April 2026).
Maximum Single Investment Test
The value of any one investment must not, at any time in the period, represent
more than 15 per cent of the Company's total investment value. This is
calculated at the time of investment and updated should there be further
additions; as such, it cannot be breached passively.
The Board can confirm that during the period, all of the VCT legislative tests
set out above have been met, where required.
Further restrictions placed on VCTs are:
Dividends from Cancelled Share Premium
The Finance Act 2014 introduced a restriction with respect to the use of
monies in respect of VCTs. In particular, no dividends can be paid out of
share capital or cancelled share premium arising from shares allotted on or
after 6 April 2014 until at least three full financial years have elapsed from
the date of allotment.
In December 2024 the Company cancelled the balance of its Share Premium and
Capital Redemption Reserve of £54.3 million, of which £0.9 million is now
distributable. The remaining £53.4 million will become distributable over the
period to 1 January 2028.
Also in December 2024, the Company reduced the nominal value of the share
capital of the Company from 10 pence per ordinary share to 0.01 pence per
ordinary share, creating additional distributable reserves of £30.9 million,
of which £19.9 million is now distributable. The remaining £11.0 million
will become distributable over the period to 1 January 2028.
Other
No more than seven years can have elapsed since the first commercial sale
achieved by the business (ten years in the case of a Knowledge Intensive
Company), unless:
a) The business has previously received an investment from a source
that has received state aid; or
b) The investment comprises more than 50 per cent of the average of the
previous five years' turnover and the funds are to be used in the business to
fund growth into new product markets and/or new geographies.
Wherever possible, the Company self-assures that an investment is a Qualifying
Investment, subject to the receipt of professional advice.
PORTFOLIO STRUCTURE AND ANALYSIS
Portfolio Structure
The broad range of the portfolio is illustrated below, with 39 per cent of the
portfolio valuation being held for more than five years, whilst 88 per cent is
held at cost or above. 3 per cent of the portfolio value is held in loans and
preference shares.
AGE OF INVESTMENTS (%) 2025 2024
Less than 1 year 6% 6%
Between 1 and 3 years 24% 28%
Between 3 and 5 years 31% 15%
Greater than 5 years 39% 51%
Total 100% 100%
VALUE COMPARED TO COST (%) 2025 2024
Value above cost 85% 88%
At cost 3% 6%
Value below cost 12% 6%
Total 100% 100%
INVESTMENT INSTRUMENT (%) 2025 2024
Equity 97% 95%
Loans and preference shares 3% 5%
Total 100% 100%
Portfolio Analysis
Also included below is a profile of the portfolio by industry sector.
INDUSTRY SECTOR (%) 2025 2024
Application Software 35% 24%
Data 21% 28%
Tech-enabled Services 19% 17%
Cloud & DevOps 13% 12%
Retail & Brands 4% 4%
New Media 3% 7%
Business Services 2% 6%
Other 3% 2%
Total 100% 100%
INVESTMENT REVIEW
The Portfolio
£112.3 million Fair value of the portfolio (2024: £105.5 million)
£0.3 million Income from the portfolio (2024: £0.6 million)
£16.1 million Level of investment in the year (2024: £15.1 million)
£6.1 million Return from the portfolio in the year (2024: £2.9 million)
The portfolio showed steady performance in the period, adding £6.1 million of
value on the opening fair value of £105.5 million. The composition of
investments continues to show its dynamism, with £16.1 million invested in
the year and proceeds of £15.4 million recognised from the opening portfolio.
Table A - Investment Portfolio
Investment portfolio
£million
Opening fair value at 1 January 2025 105.5
Additions 16.1
Disposal proceeds (15.4)
Gain arising from the portfolio 6.1
Closing fair value at 31 December 2025 112.3
Accrued income 0.5
Financial assets - investments 112.8
At 31 December 2025 the investment portfolio was valued at £112.3 million,
representing 62.9 per cent of net assets (65.8 per cent at 31 December 2024).
Cash and cash equivalents at 31 December 2025 of £63.8 million represent 35.8
per cent of net assets (33.1 per cent at 31 December 2024).
Fair value changes
Table B - Gain from Investment Portfolio
£million
Gain in fair value from the portfolio 4.2
Gain on disposal over opening value from the portfolio 1.9
Gain arising from the portfolio 6.1
Deferred income recognised 0.3
Gain arising from the investment portfolio 6.4
Of the £6.4 million gain in the year, £2.2 million arose from investments
which were realised, including £0.3 million deferred consideration received
from investments realised in prior years. Further details can be found in the
Chair's Statement and note 7.
The ongoing portfolio delivered a net value gain of £4.2 million in the year.
It is pleasing to see the fair value increases arising across a range of
companies, including Summize, Xapien, Unbiased, Vypr, AutomatePro and
Teraview.
Some decreases in value have been seen, with notable reductions for the
investments in Matillion, Outpost and Wooshii (the latter of which realised
its trade and assets in the year), as well as Vuealta, which was realised
post-period end, in line with its year end value.
Other Significant Investment Movements
Investments
During the year ended 31 December 2025, the Company invested £16.1 million
across 17 companies.
Four new companies were added to the portfolio, receiving aggregate investment
of £6.0 million; while a further £10.1 million was invested across 13
existing portfolio companies. The analysis of these investments is shown in
Table C.
Table C - Investments
Company Description Investments made
New Follow-on Total
£million £million £million
TeamFeePay Payment platform for grassroots football 1.8 - 1.8
S4labour Workforce management 1.6 - 1.6
Vypr Data validation - 1.6 1.6
Workbuzz Insights and engagement - 1.4 1.4
Stormharvester AI analytics for wastewater utilities 1.4 - 1.4
AutomatePro Automated software testing - 1.2 1.2
DynaRisk Cyber risk solutions 1.2 - 1.2
Fuuse EV charging point software - 1.2 1.2
DrDoctor Patient engagement - 1.2 1.2
Plandek Engineering analytics - 1.1 1.1
Xapien Automated research on individuals and companies - 1.0 1.0
Ohalo Unstructured data governance platform - 0.6 0.6
Force24 B2B marketing automation software - 0.3 0.3
Panintelligence Business intelligence software - 0.2 0.2
Relative Insight Text data analytics - 0.1 0.1
Immunobiology Life sciences - 0.1 0.1
Sipsynergy Software tools for telephony services - 0.1 0.1
Portfolio 6.0 10.1 16.1
In January 2026 the Company invested £2.0 million into portfolio company
Summize.
Disposal of Investments
During the year to 31 December 2025, the Company recognised proceeds from
disposals of £15.7 million, a net gain of £2.2 million over the opening
carrying value at the beginning of the year, and an overall net gain of £9.7
million over cost. This included the successful realisations of ACC,
SharpCloud and Elucidat. Further details are given in the Chair's statement.
Table D - Disposal of Investments
Net proceeds Opening Gain on
from sale of value opening
investments 31 December 2024 value
£million £million £million
Portfolio 15.4 13.5 1.9
Deferred consideration 0.3 - 0.3
Total investment disposals 15.7 13.5 2.2
Further analysis of all investments sold in the year can be found in note 7 to
the financial statements.
Investment Portfolio Composition
As at 31 December 2025, the portfolio was valued at £112.3 million,
comprising £111.1 million of unquoted investments and one quoted investment
of £1.2 million (Teraview, which arose from an IPO in the year and was
subsequently realised post-period end).
The charts on pages 16 and 17 of the annual report show the diversity of the
portfolio, split by industry sector, age of investment, investment instrument
and the valuation compared to cost.
The single largest investment, Matillion, represents 9.3 per cent of the net
asset value.
Treasury Management
Under VCT legislation, it is not possible to deposit funds for longer than
seven days, which means that cash deposits must be available on very short
notice. The Company takes an active approach to cash management, whilst
pursuing its primary aim of capital preservation. This is effected through the
use of a pool of money market funds (which can be converted back to cash with
immediate notice) and cash deposits held with Tier 1 banking institutions.
£2.5 million of income was earned from money market funds and bank deposits
during the year, equating to a weighted average interest rate of c.4.0 per
cent across the year. At 28 February 2026 the Company was achieving a weighted
average return on liquid assets of 3.5 per cent.
Valuation Policy
Unquoted investments are valued in accordance with both IFRS 13 'Fair Value
Measurement' and International Private Equity and Venture Capital Guidelines
(the "IPEV Guidelines").
Initially, at the first quarter-end following investment, investments are
valued at the price of the funding round; following this, the valuation
switches to a new primary basis for all subsequent periods.
The valuation methodology applied depends upon the facts and circumstances of
each individual investment. This may be with reference to revenue multiples,
earnings multiples, net assets, discounted cash flows or calibrated from the
price of the most recent investment.
The full valuation policy is set out in note 1.
Table E shows the value of investments within each valuation category as at 31
December 2025.
With continued investment in earlier stage businesses that are investing for
growth, the majority of valuations continue to be based on revenue multiples.
Table E - Valuation Policy
2025 2024
Valuation % of % of
£million portfolio portfolio
by value by value
Revenue multiple 99.0 88 86
Earnings multiple 5.9 5 9
Cost or price of recent investment, reviewed for change in fair value 3.2 3 2
Net assets, reviewed for change in fair value 2.4 2 3
Quoted investment 1.2 1 -
Sale proceeds 0.6 1 -
Total 112.3 100 100
Responsible Investment and Environmental, Social and Governance ("ESG")
Management
The Company backs small UK businesses to help them to grow, with the primary
aim to produce strong financial returns for shareholders. However, in doing
this we believe this can have a significant positive impact on our economy and
society through economic growth, jobs creation and innovation. At the same
time the Company aims to help the businesses it invests in become better and
more sustainable businesses over time.
The Manager maintains a Responsible Investment (RI) policy that sets out its
approach to integrating responsible investment practices into its operations
and investment activities. This policy outlines the processes the Manager
follows and describes how environmental, social and governance (ESG) risks are
considered and incorporated when appropriate.
Please view the Manager's policy here:
https://yfmep.com/wp-content/uploads/2025/04/YFM-Responsible-Investment-Policy-Final.pdf
(https://yfmep.com/wp-content/uploads/2025/04/YFM-Responsible-Investment-Policy-Final.pdf)
The Manager's approach is based on the belief that sustainable businesses:
· Grow our economy;
· Improve our society;
· Value their people; and
· Protect the environment
This approach is consistent with the Company's financial aims, as improvements
in these areas can strengthen the resilience and value creation potential of
portfolio businesses through their increased attractiveness to customers,
employees, suppliers, and eventual future owners and investors.
Underpinning the Manager's approach to responsible investing is the United
Nations' Principles for Responsible Investment (PRI), which the Manager has
been a signatory to since 2020. The Manager is rated 4 stars (out of 5) by
the PRI.
Responsible Investment Principles
This set of principles guides the Manager's investment process:
· To seek to understand the ESG related impacts and risk factors of
the businesses the Company invests in, aiming to enhance positive impacts and
to avoid, reduce or minimise any negative impacts where possible over an
investment's lifetime, leaving them overall better businesses;
· To play a positive role in the investor, business and wider
communities by promoting good practice in ESG management, and by being
transparent in the way that investments are made and how the Manager behaves;
· To increase focus on the challenge of climate change both as it may
be affected by our investments, and as it may impact on them and their
resilience to possible climate change scenarios; and
· To show leadership by managing the Manager's own business' ESG
impacts to the best of its ability.
The Manager has developed processes to help portfolio businesses to improve in
these areas, by assessing them in terms of creating positive impacts and
outcomes and preventing or minimising negative ones.
The Manager has developed and integrated the following ESG management
processes:
· Pre-investment Phase:
The Manager applies an ESG screening process at the pre‑investment stage to
identify material risks and potential improvement areas. An assessment is also
made for any links to excluded sectors or high‑risk practices.
· Portfolio Phase:
During the portfolio phase the Manager works with each management team to
assess ESG priorities and then works with each business to improve performance
in ESG areas.
· Reporting:
Data is collected on an annual basis across a variety of ESG areas across our
investments. Note that investment companies such as the Company are not within
scope for reporting under the Task Force on Climate-Related Financial
Disclosures (TCFD); and the Company does not use more than 40,000kWh of energy
and therefore is not required to report on its energy usage within Streamlined
Energy and Carbon Reporting (SECR) regulations.
· Oversight and Support:
The Manager monitors the responsible investment approach. This includes
delivering events and webinars and providing resources focused on key ESG
themes such as environmental management, diversity and inclusion, company
culture and cyber security.
ESG PERFORMANCE DATA AND REPORTING
Growing our economy
· Average revenue growth rate of 17 per cent across the portfolio
during 2025
· Over £49 million of R&D investment during 2025
· £92 million of export sales achieved in 2025
· c.1,100 new jobs were created from date of investment to 2025
representing a 69 per cent increase
Improving our society
· 82 per cent of the portfolio employees underwent cyber security
training, and 64 per cent of portfolio companies have a cyber accreditation or
management system in place
· 74 per cent was the average customer rating of portfolio
companies in 2025
· 89 per cent of companies were independently chaired in 2025
Valuing their people
· 54 per cent had mental well-being programmes in place and held
regular employee engagement surveys
· 57 per cent of the portfolio held DE&I training for employees
in 2025
· 39 per cent of companies had female representation at board-level,
with 14 per cent having a female CEO/MD
· 54 per cent of businesses had a designated board member with
responsibility for improving ESG issues
· 37,500+ hours of non-statutory training were given to employees
across the portfolio
Protecting the environment
· 32 per cent had Environmental Policies in place
· 29 per cent formally measured their carbon footprint in 2025
· 14 per cent have embedded an active carbon reduction plan
Summary and Outlook
2025 has been another positive year for the Company despite a tough
macroeconomic environment. The portfolio continues to develop, with several
holdings delivering strong growth during the period. Our active portfolio
management approach allows us to stay close to investee companies and support
them as they scale. Adding new companies to the portfolio and providing
follow-on capital to support their growth, remains central to our strategy.
Although macroeconomic volatility is likely to persist into 2026, we believe
the resilience of the portfolio and the Company's strong liquidity position
leave it well-placed to manage downside risks and capture upside potential.
We are optimistic about the year ahead and are grateful to shareholders for
their continued support.
Jamie Roberts
YFM Private Equity Limited
18 March 2026
PORTFOLIO SUMMARY
Name of Date of Location Industry Amount Valuation at Recognised Realised &
company initial Sector invested 31 December income/ unrealised
(unquoted unless stated) investment £000 2025 proceeds value to date*
to date
£000 £000 £000
Matillion Limited Nov-16 Manchester Data 1,778 16,572 5,946 22,518
Unbiased EC1 Limited Dec-19 London Tech-enabled Services 3,731 11,057 - 11,057
Xapien (via Digital Insight Technologies Limited) Mar-23 London Application Software 5,072 9,503 - 9,503
Vypr Validation Technologies Limited Jan-21 Manchester Tech-enabled Services 3,798 7,543 - 7,543
Summize Limited Oct-22 Manchester Application Software 1,700 6,649 - 6,649
AutomatePro Limited Dec-22 London Cloud & DevOps 3,923 6,507 - 6,507
DrDoctor (via ICNH Ltd) Feb-23 London Application Software 3,570 4,184 - 4,184
Workbuzz Analytics Limited Jun-23 Milton Keynes Application Software 3,135 3,974 - 3,974
Plandek Limited Oct-22 London Cloud & DevOps 3,414 3,935 - 3,935
Force24 Ltd Nov-20 Leeds Application Software 2,850 3,894 162 4,056
Quality Clouds Limited May-22 London Cloud & DevOps 3,880 3,496 - 3,496
Fuuse Limited May-24 Lancaster Application Software 3,200 3,409 - 3,409
Outpost VFX Limited Feb-21 Bournemouth New Media 3,833 3,398 113 3,511
Tonkotsu Limited Jun-19 London Retail & Brands 1,592 2,689 - 2,689
Spotless Water Limited Jun-24 Frimley Business Services 1,456 1,880 - 1,880
S4labour Limited Apr-25 Banbury Application Software 1,600 1,874 - 1,874
TeamFeePay (via Concept Apps Ltd) Dec-25 Belfast Application Software 1,800 1,800 - 1,800
GEEIQ (via Checkpoint GG Limited) Sep-23 London Data 1,572 1,770 - 1,770
Stormharvester Holdings Limited Jan-25 Belfast Data 1,400 1,686 - 1,686
Ohalo Limited Jun-24 Bicester Data 1,710 1,639 - 1,639
Frescobol Carioca Ltd Mar-19 London Retail & Brands 1,200 1,478 - 1,478
Biorelate Limited Nov-22 Manchester Application Software 1,540 1,438 - 1,438
DynaRisk (via Zen Risk Limited) Jul-25 London Application Software 1,200 1,348 - 1,348
Panintelligence (via Paninsight Limited) Nov-19 Leeds Data 1,187 1,257 - 1,257
Arcus Global Limited May-18 Cambridge Application Software 2,050 1,220 238 1,458
Relative Insight Limited Mar-22 Lancaster Tech-enabled Services 3,057 1,166 33 1,199
KeTech Technology Holdings Limited Nov-15 Nottingham Tech-enabled Services 2,000 1,296 4,059 5,355
Teraview Limited (quoted from December 2025) Apr-17 Cambridge Advanced Manufacturing 377 1,226 1,231 2,457
Other investments below £1.0 million 18,406 4,362 7,765 12,127
Total investments 86,031 112,250 19,547 131,797
Full disposals to date 58,587 - 108,634 108,634
Total portfolio 144,618 112,250 128,181 240,431
* represents income and proceeds recognised to date
plus the unrealised valuation at 31 December 2025.
SUMMARY OF PORTFOLIO MOVEMENT
Name of company (unquoted unless stated) Investment Disposal Additions Valuation Investment
valuation at proceeds gains including valuation at
31 December profits/(losses) 31 December
2024 on disposal 2025
£000 £000 £000 £000 £000
Summize Limited 3,256 - - 3,393 6,649
Xapien (via Digital Insight Technologies Limited) 5,132 - 1,008 3,363 9,503
Unbiased EC1 Limited 8,962 - - 2,095 11,057
Vypr Validation Technologies Limited 4,475 - 1,598 1,470 7,543
SharpCloud Software Limited 4,789 (6,254) - 1,465 -
Teraview Limited (quoted from December 2025) 1,100 (1,231) - 1,357 1,226
AutomatePro Limited 4,253 - 1,240 1,014 6,507
DrDoctor (via ICNH Ltd) 2,377 - 1,193 614 4,184
Stormharvester Holdings Limited - - 1,400 286 1,686
Arcus Global Limited 940 - - 280 1,220
S4labour Limited - - 1,600 274 1,874
Biorelate Limited 1,199 - - 239 1,438
Fuuse Limited 2,000 - 1,200 209 3,409
Spotless Water Limited 1,729 - - 151 1,880
DynaRisk (via Zen Risk Limited) - - 1,200 148 1,348
Tonkotsu Limited 2,546 - - 143 2,689
ACC Aviation Group Limited 4,285 (4,368) - 83 -
Workbuzz Analytics Limited 2,476 - 1,417 81 3,974
Panintelligence (via Paninsight Limited) 1,000 - 187 70 1,257
Frescobol Carioca Ltd 1,447 - - 31 1,478
KeTech Technology Holdings Limited 1,275 - - 21 1,296
TeamFeePay (via Concept Apps Ltd) - - 1,800 - 1,800
Plandek Limited 2,908 - 1,054 (27) 3,935
Relative Insight Limited 1,180 - 137 (151) 1,166
Ohalo Limited 1,277 - 600 (238) 1,639
Other investments below £1.0 million 3,413 - 169 (371) 3,211
GEEIQ (via Checkpoint GG Limited) 2,146 - - (376) 1,770
Elucidat Ltd 4,057 (3,589) - (468) -
Integrum ESG Limited 1,160 - - (581) 579
Quality Clouds Limited 4,118 - - (622) 3,496
Force24 Ltd 4,331 - 250 (687) 3,894
Vuealta Holdings Limited 1,594 - - (1,112) 482
Wooshii Limited 1,419 - - (1,329) 90
Outpost VFX Limited 5,058 - - (1,660) 3,398
Matillion Limited 19,624 - - (3,052) 16,572
Total investments 105,526 (15,442) 16,053 6,113 112,250
Deferred consideration - (269) - 269 -
105,526 (15,711) 16,053 6,382 112,250
Accrued income 1,241 535
Financial assets - investments 106,767 112,785
RISK FACTORS
The Board has responsibility for identifying, assessing and monitoring the
risks to which the Company is exposed and for maintaining appropriate systems
and controls to manage those risks. The Board regularly reviews the risk
environment in which the Company operates, including changes in market
conditions, regulation and the wider economic and operational environment, and
seeks to identify emerging risks that may affect the Company's ability to
achieve its investment objectives.
The risks described below represent the principal and emerging risks currently
considered by the Board to be relevant to the Company. These risks are not
intended to be exhaustive and additional risks and uncertainties, including
those not currently known to the Company or which the Board presently
considers to be immaterial, may also have an adverse effect on the Company's
business, financial condition, performance or prospects.
Investment & Portfolio
The Company's performance is dependent on the performance of individual The Manager actively monitors portfolio company performances and provides
portfolio companies. Unquoted growth companies may require additional funding strategic, operational and governance support where appropriate. Investment
to support their development and growth, and such funding may not be available risk is mitigated through disciplined investment selection and diversification
on acceptable terms or at all. Portfolio companies may also be adversely across sectors and investment stages. Follow on funding decisions are made
affected by changes in market conditions, customer demand, competitive selectively and subject to capital availability.
dynamics or regulatory requirements.
Poor performance or failure of one or more portfolio companies could have a
material adverse effect on the Company's net asset value and returns to
shareholders.
Liquidity
Investments in unquoted companies are inherently illiquid and it may take a The Company & Manager monitor liquidity and cash resources on an ongoing
considerable period of time to realise investments. Exits are typically basis and seek to manage the timing of investments and realisations
dependent on trade sales, secondary transactions or other corporate events,
which may not occur when anticipated or at all.
In some cases, investments may only be realised at a value materially below
their carrying value, or may not be realised, which could restrict the
Company's ability to return capital to shareholders.
Economic
Adverse economic conditions, including recession, inflation, interest rate The Company seeks to mitigate this risk through diversification and active
changes or geopolitical instability, may adversely affect portfolio companies, portfolio management. The Board regularly considers macroeconomic conditions
restrict access to funding and delay or reduce exit opportunities. Market as part of its review of strategy and performance.
volatility may also impact investor sentiment and valuations.
VCT Qualifying Status
The continued availability of VCT tax reliefs is dependent on the Company The Board monitors compliance with the VCT rules on an ongoing basis and
continuing to satisfy the conditions for VCT approval, including compliance receives regular reports from the Manager and VCT Status Adviser. Specialist
with qualifying investment requirements applicable to unlisted companies. tax advice is obtained as required, and a formal review of compliance with the
VCT rules is conducted bi-annually and reported to the Board.
A breach of the VCT legislation could result in the withdrawal of VCT status,
which would have significant adverse tax consequences for shareholders,
including the loss of income tax relief and the taxation of dividends and
capital gains.
Legislative and Regulatory
The Company operates in a regulatory environment that is subject to change. The Board and Manager monitor legislative and regulatory developments and
Amendments to VCT legislation, changes in HMRC practice or interpretation, or engage external legal and tax advisers as appropriate. The Company seeks to
broader changes to financial services regulation could restrict the Company's maintain flexibility within its investment policy to adapt to regulatory
ability to pursue its investment strategy, increase compliance costs or change, but such change remains outside the Company's control.
adversely affect returns.
Operational
The Company has no employees and is reliant on a number of third‑party The Board seeks to mitigate this risk through oversight of service providers,
service providers, including the Manager, receiving agent, registrar and other the use of experienced and regulated counterparties, and regular review of
professional advisers, for the day‑to‑day operation of the business. As a service arrangements and internal controls.
result, the Company is exposed to the risk of failure, disruption or poor
performance by these third parties, including operational errors, systems
failures, cybersecurity incidents or the loss of key personnel. Any such
failure could result in financial loss, regulatory breaches or reputational
damage and could adversely affect the Company's operations or performance.
IT & Cyber Security
The Company is reliant on information technology systems operated by the The Board seeks to mitigate this risk through oversight of service providers,
Manager and other third‑party service providers for the processing, storage the use of established systems and controls, and regular review of cyber
and reporting of data. As a result, the Company is exposed to risks arising security and business continuity arrangements.
from cyber security incidents, data breaches, systems failures or
technological disruption, whether caused by malicious attack, human error or
third‑party failure. Such incidents could result in financial loss,
regulatory breaches, loss of confidential information or reputational damage,
and may adversely affect the Company's operations or the services provided to
shareholders.
OTHER MATTERS
Section 172 Statement
This Section 172 Statement should be read in conjunction with the other
contents of the Strategic Report (on pages 6 to 34 of the annual report).
Section 172 of the Companies Act 2006 requires that a director must act in the
way that they consider, in good faith, would be most likely to promote the
success of the company for the benefit of its members as a whole, and in doing
so have regard (amongst other matters) to:
· The likely consequences of any decision in the long term;
· The interests of the company's employees;
· The need to foster the company's business relationships with
suppliers, customers and others;
· The impact of the company's operations on the community and the
environment;
· The desirability of the company maintaining a reputation for high
standards of business conduct; and
· The need to act fairly as between members of the company.
The Company takes a number of steps to understand the views of investors and
other key stakeholders and considers these, along with the matters set out
above, in Board discussions and decision making.
Key Stakeholders
As an investment company with no employees, the Company's key stakeholders are
its investors, its service providers and its portfolio companies.
Investors
The Board engages and communicates with shareholders in a variety of ways.
The Company encourages shareholders to attend its Annual General Meeting.
Along with British Smaller Companies VCT plc, the Company held an Investor
Workshop on 19 June 2025 which was well attended. A further event is scheduled
for June 2026.
Maintaining the Company's status as a VCT is critical to meeting the Company's
objective to maximise Total Return and provide investors with an attractive
long-term tax-free dividend yield. The Company receives regular reports on
this issue from the Manager and has taken various steps in the year to ensure
that the relevant tests are met.
The Board also aims for investors to continue to have tax efficient
opportunities to invest in the Company, and to generate tax-free returns from
both capital appreciation and ongoing dividends.
After carefully considering its funding needs, on 25 September 2025 the
Company issued a prospectus, alongside British Smaller Companies VCT plc, to
raise up to £85 million in aggregate for the 2025/26 tax year.
During the year the Board kept its arrangements for dividends, share buy-backs
and the dividend re-investment scheme under constant review. Along with normal
dividends totalling 3.00 pence per ordinary share in the year ended 31
December 2025, a special dividend of 1.00 pence per ordinary share was paid in
January 2025, following the realisation of the Company's investment in
Traveltek in 2024.
Manager
The Company's most important service provider is its Manager. There is regular
contact with the Manager, and members of the Manager's board attend all of the
Company's Board meetings. There is also an annual strategy meeting with the
Manager, alongside the board of British Smaller Companies VCT plc.
The Manager maintains strong relationships with relevant media publications
and a wide range of distributors for the Company's shares, including wealth
managers, independent financial advisers and execution-only brokers. RAM
Capital acts as a promoter of the Company's shares to smaller distributors.
The Company is a member of the Association of Investment Companies, which
promotes the interests of investment companies, including VCTs. The Manager is
a founder member of the Venture Capital Trust Association, which promotes the
interests of VCTs in a variety of ways.
Portfolio Companies
The Company holds minority investments in its portfolio companies and has
delegated the management of the portfolio to the Manager. The Manager provides
the Board with regular updates on the performance of each portfolio company at
least quarterly and the Board is made aware of all major issues.
The Manager has a dedicated portfolio team to assist portfolio companies with
the challenges they face as fast-growing companies. The Manager promotes
ongoing sustainable growth within the businesses; this often involves
improving systems and processes, as well as significant job creation.
Employees
The Company has no employees. The Board is composed of one female
non-executive director and two male non-executive directors. For a review of
the policies used when appointing directors to the Board of the Company,
please refer to the Directors' Remuneration Report (page 47 of the annual
report).
Environment and Community
The Company seeks to ensure that its business is conducted in a manner that is
responsible to the environment. The management and administration of the
Company is undertaken by the Manager, YFM Private Equity Limited, which
recognises the importance of its sustainable investment responsibilities and
is a signatory of the United Nations' Principles for Responsible Investment.
More details of the work that the Manager has achieved in this area are set
out on pages 21 to 23 of the annual report. Its Responsible Investment Policy
can be found at www.yfmep.com/who-we-are/our_impact/.
Business Conduct
The Company has a zero-tolerance approach to bribery and corruption. The
following is a summary of the controls in place:
· The Company conducts all its business in an honest and ethical manner.
The Company is committed to acting professionally, fairly and with integrity
in all its business dealings and relationships;
· The Company prohibits the offering, the giving, the solicitation
or the acceptance of any bribe;
· The Company has communicated its Anti-Bribery & Corruption Policy
to the Manager and its other service providers; and
· The Manager has its own Anti-Bribery & Corruption Policy and
monitors portfolio companies' compliance with their legal obligations.
Statement on Long-term Viability
The statement on long-term viability on page 37 of the annual report is
included in the Strategic Report by reference.
The Strategic Report on pages 6 to 34 of the annual report is approved by
order of the Board.
Barbara Anderson
Chair
18 March 2026
STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2025
2025 2024
Notes Revenue Capital Total Revenue Capital Total
£000 £000 £000 £000 £000 £000
(Losses)/gains on investments held at fair value 7 (557) 4,176 3,619 - 3,105 3,105
Gain on disposal of investments 7 - 2,206 2,206 - 234 234
(Loss)/gain arising from the investment portfolio (557) 6,382 5,825 - 3,339 3,339
Income 2 2,861 - 2,861 3,336 - 3,336
Total income 2,304 6,382 8,686 3,336 3,339 6,675
Administrative expenses:
Manager's fee (711) (2,134) (2,845) (624) (1,872) (2,496)
Incentive fee - (623) (623) - (818) (818)
Other expenses (796) - (796) (751) - (751)
3 (1,507) (2,757) (4,264) (1,375) (2,690) (4,065)
Profit before taxation 797 3,625 4,422 1,961 649 2,610
Taxation 4 (146) 146 - (12) 12 -
Profit for the year 651 3,771 4,422 1,949 661 2,610
Total comprehensive income for the year 651 3,771 4,422 1,949 661 2,610
Basic and diluted earnings per ordinary share 6 0.20p 1.18p 1.38p 0.72p 0.24p 0.96p
The notes on pages 63 to 85 of the annual report are an integral part of the
financial statements.
The Total column of this statement represents the Company's Statement of
Comprehensive Income, prepared in accordance with UK adopted international
accounting standards. The supplementary Revenue and Capital columns are
prepared under the Statement of Recommended Practice 'Financial Statements of
Investment Trust Companies and Venture Capital Trusts' (issued in December
2025 - "SORP") published by the AIC.
BALANCE SHEET
At 31 December 2025
Notes 2025 2024
£000 £000
ASSETS
Non-current assets at fair value through profit or loss
Financial assets at fair value through profit or loss 7 112,785 106,767
Other assets 1,916 -
114,701 106,767
Current assets
Accrued income and other assets 816 1,651
Current asset investments 38,000 35,500
Cash at bank and other cash equivalents 25,840 17,627
64,656 54,778
LIABILITIES
Current liabilities
Trade and other payables (958) (1,094)
Net current assets 63,698 53,684
Net assets 178,399 160,451
Shareholders' equity
Share capital 36 31
Share premium account 30,165 -
Other reserves 2 2
Merger reserve 217 217
Capital reserve 108,960 121,455
Investment holding gains and losses reserve 7 37,594 36,280
Revenue reserve 1,425 2,466
Total shareholders' equity 178,399 160,451
Net asset value per ordinary share 8 54.40p 57.10p
The notes on pages 63 to 85 of the annual report are an integral part of the
financial statements.
The financial statements were approved and authorised for issue by the Board
of Directors and were signed on its behalf on 18 March 2026.
Barbara Anderson
Chair
STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2025
Share Share Other Capital Investment holding gains and losses reserve Revenue Total
capital premium reserves* reserve £000 reserve equity
£000 account £000 £000 £000 £000
£000
Balance at 31 December 2023 25,014 25,386 5,615 37,458 40,245 1,898 135,616
Revenue return for the year - - - - - 1,961 1,961
Expenses charged to capital - - - (2,690) - - (2,690)
Investment holding gains on investments held at fair value - - - - 3,105 - 3,105
Realisation of investments in the year - - - 234 - - 234
Taxation - - - 12 - (12) -
Total comprehensive (expense) income for the year - - - (2,444) 3,105 1,949 2,610
Issue of share capital 5,720 28,822 - - - - 34,542
Issue of shares - DRIS 246 1,153 - - - 1,399
Issue costs ** - (1,131) - - - - (1,131)
Reduction in nominal value (30,949) - - 30,949 - - -
Share premium cancellation - (54,230) (88) 54,318 - - -
Purchase of own shares - - - (4,086) - - (4,086)
Dividends - - - (7,118) - (1,381) (8,499)
Total transactions with owners (24,983) (25,386) (88) 74,063 - (1,381) 22,225
Transfer between reserves - - (5,308) 5,308 - - -
Realisation of prior year investment holding gains - - - 7,070 (7,070) - -
Balance at 31 December 2024 31 - 219 121,455 36,280 2,466 160,451
Revenue return for the year - - - - - 797 797
Expenses charged to capital - - - (2,757) - - (2,757)
Investment holding gains on investments held at fair value - - - - 4,176 - 4,176
Realisation of investments in the year - - - 2,206 - - 2,206
Taxation - - - 146 - (146) -
Total comprehensive (expense) income for the year - - - (405) 4,176 651 4,422
Issue of share capital 5 29,165 - - - - 29,170
Issue of shares - DRIS - 1,961 - - - 1,961
Issue costs ** - (961) - - - - (961)
Purchase of own shares - - - (3,933) - - (3,933)
Dividends - - - (11,019) - (1,692) (12,711)
Total transactions with owners 5 30,165 - (14,952) - (1,692) 13,526
Transfer between reserves - - - (4,610) 4,610 - -
Realisation of prior year investment holding gains - - - 7,472 (7,472) - -
Balance at 31 December 2025 36 30,165 219 108,960 37,594 1,425 178,399
The notes on pages 63 to 85 of the annual report are an integral part of the
financial statements.
Reserves available for distribution
Under the Companies Act 2006 the capital reserve and the revenue reserve are
distributable reserves. The table below shows amounts that are available for
distribution.
Capital Revenue Total
reserve reserve £000
£000 £000
Distributable reserves as shown above 108,960 1,425 110,385
Share capital and cancelled share premium not yet distributable (see below) (64,327) - (64,327)
Income/proceeds not yet distributable (2,286) (341) (2,627)
Reserves available for distribution*** 42,347 1,084 43,431
*Other reserves include the merger reserve and the other reserve, which are
non-distributable. The other reserve was created upon the exercise of
warrants, and the merger reserve was created on the merger with British
Smaller Technologies Company VCT plc.
** Issue costs include both fundraising costs and costs incurred from the
Company's DRIS.
*** Following the circulation of the Annual Report to shareholders.
The merger reserve arose following the Company's acquisition of the assets and
liabilities of British Smaller Technology Companies VCT plc in 2005. The
reserve accounted for the difference between the nominal and fair value of
shares issued as consideration, in accordance with section 131 of the
Companies Act 1985 and the provisions of the Companies Act 2006 for merger
relief. As the majority of the assets and liabilities acquired in the merger
have subsequently been realised, £5,308,000 of the merger reserve was
transferred to distributable reserves during 2024. The remaining merger
reserve will become distributable once the remaining assets acquired are
realised.
The capital reserve and revenue reserve are both distributable reserves. The
reserves total £110,385,000, representing a decrease of £13,536,000 during
the year. The directors also take into account the level of the investment
holding gains and losses reserve and the future requirements of the Company
when determining the level of dividend payments.
Of the potentially distributable reserves of £110,385,000 shown above,
£2,627,000 relates to income/proceeds not yet distributable. In addition,
£64,327,000 relates to cancelled share premium and the reduction in the
nominal value of share capital which will become distributable from the dates
shown in the table below.
Share Share Total
premium Capital £000
£000 £000
1 January 2027 24,528 4,995 29,523
1 January 2028 28,844 5,960 34,804
Total 53,372 10,955 64,327
STATEMENT OF CASH FLOWS
For the year ended 31 December 2025
Notes 2025 2024
£000 £000
Net cash outflow from operating activities (1,355) (1,491)
Cash flows generated from (used in) investing activities
Proceeds from sale of financial assets at fair value through profit or loss 7 13,310 8,406
Deferred consideration 1,285 43
Purchase of financial assets at fair value through profit or loss 7 (16,053) (15,127)
Net cash outflow from investing activities (1,458) (6,678)
Cash flows from (used in) financing activities
Issue of ordinary shares 29,170 34,542
Costs of ordinary share issues* (961) (1,131)
Purchase of own ordinary shares (3,933) (4,086)
Dividends paid 5 (10,750) (7,100)
Net cash inflow from financing activities 13,526 22,225
Net increase in cash and cash equivalents 10,713 14,056
Cash and cash equivalents at the beginning of the year 53,127 39,071
Cash and cash equivalents at the end of the year 63,840 53,127
* Issue costs include both fundraising costs and expenses incurred from the
Company's DRIS
Cash and cash equivalents comprise:
Money market funds 38,000 35,500
Cash at bank and other cash equivalents 25,840 17,627
Cash and cash equivalents at the end of the year 63,840 53,127
Reconciliation of Profit before Taxation to Net Cash Outflow from Operating
Activities
2025 2024
£000 £000
Profit before taxation* 4,422 2,610
Decrease in trade and other payables (136) (748)
Decrease (increase) in accrued income and other assets** 184 (14)
Gain on disposal of investments (2,206) (234)
Gains on investments held at fair value (3,619) (3,105)
Net cash outflow from operating activities (1,355) (1,491)
* Includes cash inflows from
Dividends 483 248
Interest 2,590 3,083
**Includes accrued income and other assets disclosed in Note 7 - Financial
Assets at Fair Value through Profit or Loss - Investments.
The notes on pages 63 to 85 of the annual report are an integral part of the
financial statements.
NOTES TO THE FINANCIAL STATEMENTS
1. Principal Accounting Policies
Basis of Preparation
The accounts have been prepared on a going concern basis as set out in the
Directors Report (on page 36 of the annual report) and in accordance with UK
adopted international accounting standards.
The directors have carefully considered the issue of going concern in view of
the Company's activities and associated risks. The Company has a
well-diversified portfolio with businesses in a variety of sectors, many of
which are well funded. Some portfolio companies may require additional funding
in the near- to medium-term; the Company is well placed to provide this, where
appropriate.
The Company has a significant level of liquidity, which will be further
enhanced by the current fundraising. In addition, the Board has control over,
and can flex as appropriate, the Company's major outgoings, which
predominantly comprise investments, dividends and share buy-backs.
The directors have also assessed whether material uncertainties exist and
their potential impact on the Company's ability to continue as a going
concern; they have concluded that no such material uncertainties exist.
Taking all of the above into consideration, the directors are satisfied that
the Company has sufficient resources to meet its obligations for at least 12
months from the date of this report and therefore believe that it is
appropriate to continue to apply the going concern basis of accounting in
preparing the financial statements.
The financial statements have been prepared under the historical cost basis as
modified by the measurement of investments at fair value through profit or
loss.
The accounts have been prepared in compliance with the recommendations set out
in the Statement of Recommended Practice 'Financial Statements of Investment
Trust Companies and Venture Capital Trusts' issued by the Association of
Investment Companies (issued in December 2025 - the "SORP") to the extent that
they do not conflict with UK adopted international accounting standards.
The financial statements are prepared in accordance with UK adopted
international accounting standards (International Financial Reporting
Standards ("IFRS") and International Accounting Standards ("IAS")) and
interpretations in force at the reporting date. New standards coming into
force during the year and future standards that come into effect after the
year end have not had a material impact on these financial statements.
The Company has carried out an assessment of accounting standards, amendments
and interpretations that have been issued by the International Accounting
Standards Board and that are effective for the current reporting period. The
Company has determined that the transitional effects of the standards do not
have a material impact. The Company is assessing the effects of IFRS18,
Presentation and Disclosure of Financial Statements, as it is not yet
effective.
The financial statements are presented in sterling, and all values are rounded
to the nearest thousand (£000), except where stated.
Financial Assets held at Fair Value through Profit or Loss - Investments
Financial assets designated as at fair value through profit or loss ("FVPL")
at inception are those that are managed and whose performance is evaluated on
a fair value basis, in accordance with the documented investment strategy of
the Company. Information about these financial assets is provided internally
on a fair value basis to the Company's key management. The Company's
investment strategy is to invest cash resources in venture capital investments
as part of the Company's long-term capital growth strategy. Consequently, all
investments are classified as held at fair value through profit or loss.
Purchases and sales of investments are recognised when the contract for
acquisition or sale becomes unconditional.
All investments are measured at fair value on the whole unit of account basis
with gains and losses arising from changes in fair value being included in the
Statement of Comprehensive Income as gains or losses on investments held at
fair value. Accrued income on loans/preference shares that is rolled to exit
and is not yet past due, forms part of the investment's fair value.
Transaction costs on purchases are expensed immediately through profit or
loss.
Although the Company holds more than 20 per cent of the equity of certain
companies, it is considered that the investments are held as part of the
investment portfolio, and their value to the Company lies in their marketable
value as part of that portfolio. These investments are therefore not accounted
for using equity accounting, as permitted by IAS 28 'Investments in
associates' and IFRS 11 'Joint arrangements' which give exemptions from equity
accounting for venture capital organisations.
Under IFRS 10 "Consolidated Financial Statements", control is presumed to
exist when the Company has power over an investee (whether or not used in
practice); exposure or rights; to variable returns from that investee, and
ability to use that power to affect the reporting entities returns from the
investees. The Company does not hold more than 50 per cent of the equity of
any of the companies within the portfolio. The Company does not control any of
the companies held as part of the investment portfolio. It is not considered
that any of the holdings represent investments in subsidiary undertakings.
Due to the above factors, the Company has applied the IFRS 10 investment
entity consolidation exemption and has not prepared consolidated financial
statements.
Valuation of Investments
Unquoted investments are valued in accordance with IFRS 13 "Fair Value
Measurement" and using the International Private Equity and Venture Capital
Valuation Guidelines, most recently updated in December 2025 (the "IPEV
Guidelines"). Quoted companies are valued at market bid price. A detailed
explanation of the valuation policies of the Company is included below.
Initial Measurement
The best estimate of the initial fair value of an unquoted investment is the
cost of the investment. Unless there are indications that this is
inappropriate, an unquoted investment will be held at this value within the
first three months of investment.
Subsequent Measurement
Based on the IPEV Guidelines we have identified six of the most widely used
valuation methodologies for unquoted investments. The IPEV Guidelines advocate
that the best valuation methodologies are those that draw on external,
objective market-based data in order to derive a fair value.
Unquoted Investments
· Revenue multiples. An appropriate multiple, given the risk profile and
revenue growth prospects of the underlying company, is applied to the revenue
of the company. The multiple is adjusted to reflect any risk associated with
lack of marketability and to take account of the differences between the
investee company and the benchmark company or companies used to derive the
multiple.
· Earnings multiple. An appropriate multiple, given the risk profile and
earnings growth prospects of the underlying company, is applied to the
maintainable earnings of the company. The multiple is adjusted to reflect any
risk associated with lack of marketability and to take account of the
differences between the investee company and the benchmark company or
companies used to derive the multiple.
· Net assets. The value of the business is derived by using
appropriate measures to value the assets and liabilities of the investee
company.
· Discounted cash flows of the underlying business. The present
value of the underlying business is derived by using reasonable assumptions
and estimations of expected future cash flows and the terminal value, and
discounted by applying the appropriate risk-adjusted rate that quantifies the
risk inherent in the company.
· Discounted cash flows from the investment. Under this method, the
discounted cash flow concept is applied to the expected cash flows from the
investment itself rather than the underlying business as a whole.
· Price of recent investment. This may represent the most
appropriate basis where a significant amount of new investment has been made
by an independent third party. This is adjusted, if necessary, for factors
relevant to the background of the specific investment such as preference
rights and will be benchmarked against other valuation techniques. In line
with the IPEV Guidelines the price of recent investment will usually only be
used for the initial period following the round and after this an alternative
basis will be found.
Due to the significant subjectivity involved, discounted cash flows are only
likely to be reliable as the main basis of estimating fair value in limited
situations. Their main use is to support valuations derived using other
methodologies and for assessing reductions in fair value.
One of the valuation methods described above is used to derive the gross
attributable enterprise value of the company after which adjustments are made
to reflect specific circumstances. This value is then apportioned
appropriately to reflect the respective debt and equity instruments in the
event of a sale at that level at the reporting date.
Income
Dividends and interest are received from financial assets measured at fair
value through profit and loss and are recognised on the same basis in the
Statement of Comprehensive Income. This includes interest and preference
dividends rolled up and/or payable at redemption. Interest income is also
received on cash, cash equivalents and current asset investments. Dividend
income from unquoted equity shares is recognised at the time when the right to
the income is established.
Expenses
Expenses are accounted for on an accruals basis. Expenses are charged through
the Revenue column of the Statement of Comprehensive Income, except for the
Manager's fee and incentive fees. Of the Manager's fees 75 per cent are
allocated to the Capital column of the Statement of Comprehensive Income, to
the extent that these relate to an enhancement in the value of the investments
and in line with the Board's expectation that over the long term 75 per cent
of the Company's investment returns will be in the form of capital gains. The
incentive fee payable to the Manager (as set out in note 3) is charged wholly
through the Capital column.
Tax relief is allocated to the Capital Reserve using a marginal basis.
Incentive Fee
The incentive fee is accounted for on an accruals basis. As further detailed
in note 3, the incentive fee is calculated as 20 per cent of the amount by
which the cumulative dividends per ordinary share paid as at the last business
day in December in any year, plus the average of the Company's middle market
price per ordinary share on the five dealing days prior to that day, exceeds
the Hurdle (as defined in note 3), multiplied by the number of ordinary shares
issued and the ordinary shares under option. At the end of each reporting
period, an accrual is recognised based upon the cumulative dividends per
ordinary share paid to the reporting date, plus the average of the Company's
middle market price per ordinary share on the five dealing days prior to the
reporting date. The incentive fee is charged wholly through the Capital
column.
Cash, Cash Equivalents and Current Asset Investments
Cash at bank comprises cash at hand and demand deposits. Cash equivalents
comprises short-term deposits and highly liquid investments readily
convertible into known amount of cash and subject to an insignificant risk of
changes in value.
Current asset investments comprise money market funds.
Cash and cash equivalents include cash at hand, money market funds and bank
deposits repayable on up to three months' notice, as these meet the definition
in IAS 7 'Statement of cash flows' of a short-term highly liquid investment
that is readily convertible into known amounts of cash and subject to
insignificant risk of change in value.
Cash and cash equivalents (excluding money market funds) are valued at
amortised cost, which equates to fair value. Money market funds are valued at
fair value through profit and loss.
Cash flows classified as "operating activities" for the purposes of the
Statement of Cash Flows are those arising from the Revenue column of the
Statement of Comprehensive Income, together with the items in the Capital
column that do not fall to be easily classified under the headings for
"investing activities" given by IAS 7 'Statement of cash flows', being
management and incentive fees payable to the Manager. The capital cash flows
relating to the acquisition and disposal of investments are presented under
"investing activities" in the Statement of Cash Flows in line with both the
requirements of IAS 7 and the positioning given to these headings by general
practice in the industry.
Share Capital and Reserves
Share Capital
This reserve contains the nominal value of all shares allotted under offers
for subscription.
Share Premium Account
This reserve contains the excess of gross proceeds less issue costs over the
nominal value of shares allotted under offers for subscription, to the extent
that it has not been cancelled.
Capital Reserve
The following are included within this reserve:
· Gains and losses on realisation of investments;
· Realised losses upon permanent diminution in value of investments;
· Capital income from investments;
· 75 per cent of the Manager's fee expense, together with the related
taxation effect to this reserve in accordance with the policy on expenses in
note 1 of the financial statements;
· Incentive fee payable to the Manager;
· Capital dividends paid to shareholders;
· Transfers from the merger reserve;
· Purchase and holding of the Company's own shares; and
· Credits arising from the cancellation of any share premium account or
changes in the nominal value of the share capital.
Investment Holding Gains and Losses Reserve
Increases and decreases in the valuation of investments held at the year end
are accounted for in this reserve, except to the extent that the diminution is
deemed permanent.
Revenue Reserve
This reserve includes all revenue income from investments along with any costs
associated with the running of the Company - less 75 per cent of the Manager's
fee expense as detailed in the Capital Reserve above.
Taxation
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 Part 6 of
the Income Tax Act 2007, no provision for taxation is required in respect of
any realised or unrealised appreciation of the Company's investments which
arises. Deferred tax is recognised on all temporary differences that have
originated, but not reversed, by the balance sheet date.
Deferred tax assets are only recognised to the extent that they are regarded
as recoverable. Deferred tax is calculated at the tax rates that are expected
to apply when the asset is realised. Deferred tax assets and liabilities are
not discounted.
Dividends Payable
Dividends payable are recognised only when an obligation exists. Interim and
special dividends are recognised when paid and final dividends are recognised
when approved by shareholders in general meetings.
Segmental Reporting
In accordance with IFRS 8 'Operating Segments' and the criteria for
aggregating reportable segments, segmental reporting has been determined by
the directors based upon the reports reviewed by the Board. The directors are
of the opinion that the Company has engaged in a single operating segment -
investing in equity and debt securities within the United Kingdom - and
therefore no reportable segmental analysis is provided.
Critical Accounting Estimates and Judgements
The preparation of financial statements in conformity with generally accepted
accounting practice requires the use of estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Although these estimates are based on management's best
knowledge of the amount, event or actions, actual results may ultimately
differ from those estimates. The estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year are those used to
determine the fair value of investments at fair value through profit or loss,
as disclosed in note 7 to the annual report.
The fair value of investments at fair value through profit or loss is
determined by using valuation techniques. As explained above, the Board uses
its judgement to select from a variety of methods and makes assumptions that
are mainly based on market conditions at each balance sheet date.
The Board uses its judgement to select the appropriate method for determining
the fair value of investments through profit or loss.
2. Income
2025 2024
£000 £000
Dividends from unquoted companies 240 430
Interest on loans to unquoted companies 94 172
Income from unquoted portfolio 334 602
Income from money market funds 1,820 1,837
Income from investments held at fair value through profit or loss 2,154 2,439
Income from bank deposits 707 897
2,861 3,336
3. Administrative Expenses
2025 2024
£000
£000
Manager's fee 2,845 2,496
Administration fee 93 90
Total payable to YFM Private Equity Limited 2,938 2,586
Other expenses:
Directors' remuneration 136 119
General expenses 109 141
Listing and registrar fees 99 80
Auditor's remuneration - audit fees (excluding irrecoverable VAT) 67 67
Printing 62 74
Irrecoverable VAT 56 52
Ongoing charges 3,467 3,119
Incentive fee 623 818
Trail commission 174 128
4,264 4,065
Ongoing charges figure 1.95% 1.98%
Directors' remuneration comprises only short-term benefits including national
insurance contributions of £15,000 (2024: £11,000).
The Company does not have employees other than non-executive directors.
No fees are payable to the auditor in respect of other services (2024: £nil).
YFM Private Equity Limited has previously acted as Manager and performed
administrative and secretarial duties for the Company under an Investment
Agreement dated 28 November 2000, superseded by an agreement dated 31 October
2005 and as varied by agreements dated 8 December 2010, 26 October 2011, 16
November 2012, 17 October 2014, 7 August 2015 and 13 November 2019 (the "IA").
Under an Investment Agreement dated 18 November 2019, YFM Private Equity
Limited was appointed as the Company's Alternative Investment Fund Manager. On
19 September 2023 YFM Private Equity Limited was approved as a full-scope
Alternative Investment Fund Manager, from this date Thompson Taraz Depositary
Limited were appointed as the Depositary and assumed responsibility for asset
safekeeping, cash flow monitoring and oversight duties.
On 22 December 2025 the Company entered into a Deed of Amendment and
Restatement to the Alternative Investment Fund Management Agreement (the
"AIFMA") dated 18 November 2019 incorporating (and amending) the provisions of
the IA. The changes to the AIFMA are effective from 1 January 2026. The AIFMA
agreement may be terminated by not less than twelve months' notice given by
either party at any time.
The key features of the AIFMA agreement are:
· YFM Private Equity Limited receives a Manager's fee, payable quarterly
in advance, calculated at half-yearly intervals as at 30 June and 31 December.
The fee is allocated between capital and revenue as described in note 1;
· The annual Manager's fee payable to the Manager is 1.25 per cent
(1.0 per cent prior to 1 January 2026) on all surplus cash, defined as all
cash and cash equivalents above £20 million (£5 million prior to 1 January
2026). The annual fee on all other assets is 2.0 per cent of net assets per
annum. Based on the Company's net assets at 31 December 2025 of £178,399,000,
and cash and cash equivalents of £63,840,000 at that date this equates to
approximately £3,239,000 per annum;
· From 1 January 2026 the Manager's fee relating to surplus cash and cash
equivalents applies to balances allotted from fundraisings from the date of
allotment of the shares;
· YFM Private Equity Limited shall bear the annual operating costs of
the Company (including the Manager's fee set out above but excluding any
payment of the performance incentive fee, details of which are set out below
and excluding VAT and trail commissions, where applicable) to the extent that
those costs exceed 2.9 per cent of the net asset value of the Company. No
excess expenses were payable in the year (2024: £nil);
· From the 2025/26 fundraise onwards, YFM Private Equity Limited will bear
the costs of any trail commissions payable in relation to fundraising
allotments; and
· Under the AIFMA, YFM Private Equity Limited also provides
administrative and secretarial services to the Company for a fee of £92,924
per annum plus annual adjustments to reflect movements in the Consumer Prices
Index. This fee is charged fully to revenue and totalled £92,924 for the year
ended 31 December 2025 (2024: £90,000).
The total remuneration payable to YFM Private Equity Limited under the IA in
the year was £2,938,000 (2024: £2,586,000).
When the Company makes investments into its unquoted portfolio, the Manager
charges that investee an advisory fee. If the average of relevant fees exceeds
3.0 per cent of the total invested into new portfolio companies and 2.0 per
cent into follow-on investments over the Company's financial year, this excess
will be rebated to the Company. As at 31 December 2025, the Company was due a
rebate from the Manager of £25,000 (2024: £22,000).
Monitoring and directors' fees the Manager receives from the investee
companies are limited to a maximum of £60,000 (£40,000 prior to 1 January
2026) per annum per company.
Under the AIFMA, YFM Private Equity Limited is entitled to receive fees from
investee companies in respect of the provision of non-executive directors and
other advisory services. YFM Private Equity Limited is responsible for paying
the due diligence and other costs incurred in connection with proposed
investments which for whatever reason do not proceed to completion. In the
year ended 31 December 2025, the fees receivable by YFM Private Equity Limited
from investee companies which were attributable to advisory and directors' and
monitoring fees amounted to £929,000 (2024: £861,000).
Under the Subscription Rights Agreement (the "SRA") dated 22 April 2024 a
performance incentive fee is payable when the aggregate of cumulative
dividends paid as at the last business day in December each year and the
average of the middle market price per share on the five business days prior
to that day (the "Share Price"), exceeds a hurdle (the "Hurdle"). The fee is
20 per cent of the excess over this amount multiplied by the number of shares
in issue and the shares under option (if any). Once the Hurdle has been
exceeded it is reset at that value going forward, which becomes the new
Hurdle. The fee is payable in cash or shares granted through rights to
subscribe. These rights are currently exercisable in the ratio 95:5 between
the Manager and Chord Capital Limited respectively, although from 1 January
2027 the rights will be wholly exercisable by the Manager.
With effect from 1 January 2024 the Hurdle for each financial year will be
increased by an agreed percentage of the corresponding opening Share Price,
commencing with 1 per cent for the year ended 31 December 2024 and increasing
by an additional 1 percentage point per year until the year ending 31 December
2028 when the increase to the Hurdle will be 5 per cent of the corresponding
opening Share Price. The Hurdle for the year ended 31 December 2024 was
141.295 pence per ordinary share.
As at 31 December 2024 the total of cumulative cash dividends paid and the
Share Price was 142.75 pence per ordinary share. Consequently, the Hurdle was
exceeded and a performance related incentive of £818,000 for the year ended
31 December 2024 was paid. The Hurdle for the year ended 31 December 2025 was
143.80 pence per ordinary share.
As at 31 December 2025 the total of cumulative cash dividends paid and the
Share Price was 144.75 pence per ordinary share. Consequently, the Hurdle was
exceeded and a performance related incentive of £623,000 for the year ended
31 December 2025 is payable. The Hurdle for the year ending 31 December 2026
is 146.295 pence per ordinary share.
If the AIFMA is terminated, the beneficiaries of the SRA will continue to be
entitled to the incentive payment. The incentive payment will be modified so
as to entitle the recipients to an incentive payment that is fair, having
regard to all the circumstances.
Under the terms of the offer launched with British Smaller Companies VCT plc
on 17 October 2024, YFM Private Equity Limited was entitled to 3.0 per cent of
gross subscriptions, (3.5 per cent for applications received from applicants
who did not invest their money through a financial intermediary advisor and
invested directly into the Company) less commissions payable to an
execution-only broker or platform. The net amount paid to YFM Private Equity
Limited under this offer amounted to £874,000.
Under the terms of the offer launched with British Smaller Companies VCT plc
on 25 September 2025, YFM Private Equity Limited will be entitled to 3.0 per
cent of gross subscriptions, (3.5 per cent for applications received from
applicants who did not invest their money through a financial intermediary
advisor and invested directly into the Company) less commissions payable to an
execution-only broker or platform.
The details of directors' remuneration are set out in the Directors'
Remuneration Report on page 48 of the annual report under the heading
"Directors' Remuneration for the year ended 31 December 2025 (audited)".
4. Taxation
2025 2024
Revenue Capital Total Revenue Capital Total
£000 £000 £000 £000 £000 £000
Profit before taxation 797 3,625 4,422 1,961 649 2,610
Profit before taxation multiplied by standard rate of corporation tax in UK of 151 689 840 373 123 496
19%* (2024: 19%)
Effect of:
UK dividends received (5) - (5) (152) - (152)
Non-taxable gains from investments - (1,213) (1,213) - (634) (634)
Deferred tax not recognised - 378 378 (209) 499 290
Tax charge (credit) `146 (146) - 12 (12) -
* due to taxable losses incurred.
The Company has no provided or unprovided deferred tax liability in either
year.
Deferred tax assets of £4,058,000 (2024: £3,680,000) calculated at 19%
(2024: 19%) in respect of unrelieved management expenses (£21.36 million as
at 31 December 2025 and £19.37 million as at 31 December 2024) have not been
recognised as the directors do not currently believe that it is probable that
sufficient taxable profits will be available against which assets can be
recovered.
Due to the Company's status as a venture capital trust and the continued
intention to meet with the conditions required to comply with Section 274 of
the Income Tax Act 2007, the Company has not provided for deferred tax on any
capital gains or losses arising on the revaluation or realisation of
investments.
5. Dividends
Amounts recognised as distributions to equity holders in the period to 31
December:
2025 2024
Revenue Capital Total Revenue Capital Total
£000 £000 £000 £000 £000 £000
Special dividend for the year ended 31 December 2025 of 1.00p per ordinary - 2,810 2,810 - - -
share
First interim dividend for the year ended 31 December 2025 of 1.50p (2024: 1,185 3,777 4,962 583 3,687 4,270
1.50p) per ordinary share
Second interim dividend for the year ended 31 December 2025 of 1.50p (2024: 507 4,432 4,939 798 3,431 4,229
1.50p) per ordinary share
1,692 11,019 12,711 1,381 7,118 8,499
Proceeds from shares allotted under DRIS (1,961) (1,399)
Dividends paid in Statement of Cash Flows 10,750 7,100
The special dividend of 1.00 pence per ordinary share was paid on 27 January
2025 to shareholders on the register on 27 December 2024.
The first interim dividend of 1.50 pence per ordinary share was paid on 23
June 2025 to shareholders on the register as at 23 May 2025.
The second interim dividend of 1.50 pence per ordinary share was paid on 31
October 2025 to shareholders on the register as at 26 September 2025.
6. Basic and Diluted Earnings per Ordinary Share
The basic and diluted earnings per ordinary share is based on the profit after
tax attributable to shareholders of £4,422,000 (2024: £2,610,000) and
321,119,116 (2024: 272,756,162) ordinary shares being the weighted average
number of ordinary shares in issue during the year.
The basic and diluted revenue earnings per ordinary share is based on the
revenue profit for the year attributable to shareholders of £651,000 (2024:
£1,949,000) and 321,119,116 (2024: 272,756,162) ordinary shares being the
weighted average number of ordinary shares in issue during the year.
The basic and diluted capital earnings per ordinary share is based on the
capital profit for the year attributable to shareholders of £3,771,000 (2024:
£661,000) and 321,119,116 (2024: 272,756,162) ordinary shares being the
weighted average number of ordinary shares in issue during the year.
During the year the Company allotted 3,612,444 new ordinary shares in respect
of its DRIS and 50,774,434 new ordinary shares from the fundraising.
The Company has also repurchased 7,440,583 of its own shares in the year, and
these shares are held in the capital reserve. The total of 36,211,546 treasury
shares has been excluded in calculating the weighted average number of
ordinary shares for the period. The Company has no securities that would have
a dilutive effect and hence basic and diluted earnings per ordinary share are
the same.
The Company has no potentially dilutive shares and consequently, basic and
diluted earnings per ordinary share are equivalent in both the year ended 31
December 2025 and 31 December 2024.
7. Financial Assets at Fair Value through Profit or Loss - Investments
2025 2024
£000 £000
Investment portfolio 112,250 105,526
Accrued income and other assets 535 1,241
Financial assets at fair value through profit and loss 112,785 106,767
IFRS 13, in respect of financial instruments that are measured in the balance
sheet at fair value, requires disclosure of fair value measurements by level
of the following fair value measurement hierarchy:
Level 1: quoted prices in active markets for identical assets or liabilities.
The fair value of financial instruments traded in active markets is based on
quoted market prices at the balance sheet date. An active market is defined as
a market in which transactions for the asset or liability take place with
sufficient frequency and volume to provide pricing information on an ongoing
basis. The quoted market price used for financial assets held by the Company
is the current bid price. These instruments are included in level 1 and
comprise money market funds classified as held at fair value through profit or
loss. The Company's current asset investments fall into this category at 31
December 2025 and 31 December 2024. The Company also held one portfolio
investment classed as a financial asset at fair value through profit and loss
in this category at 31 December 2025 (31 December 2024: none) which was
subsequently realised in January 2026.
Level 2: the fair value of financial instruments that are not traded in an
active market is determined by using valuation techniques. These valuation
techniques maximise the use of observable market data where it is available
and rely as little as possible on entity specific estimates. If all
significant inputs required to fair value an instrument are observable, the
instrument is included in level 2. The Company held no such investments in the
current or prior year.
Level 3: the fair value of financial instruments that are not traded in an
active market (for example, investments in unquoted companies) is determined
by using valuation techniques such as revenue and earnings multiples. If one
or more of the significant inputs is not based on observable market data, the
instrument is included in level 3. Apart from one asset classed in level 1 at
31 December 2025, as noted above, all of the Company's portfolio investments
classed as financial assets at fair value through profit and loss fall into
this category at 31 December 2025 and 31 December 2024.
Each investment is reviewed at least quarterly to ensure that it has not
ceased to meet the criteria of the level in which it is included at the
beginning of each accounting period. The change in fair value for the current
and previous year is recognised through profit or loss.
There was one transfer between level 3 and level 1 during the year (2024:
none).
All items held at fair value through profit or loss were designated as such
upon initial recognition.
Valuation of Investments
Full details of the methods used by the Company are set out in note 1.
Movements in investments at fair value through profit or loss during the year
to 31 December 2025 are summarised as follows:
IFRS 13 measurement classification Level 3 Level 1 Total
Unquoted Quoted £000
Investments Investment
£000 £000
Opening cost 69,273 - 69,273
Opening investment holding gain*** 36,253 - 36,253
Opening fair value at 1 January 2025 105,526 - 105,526
Additions at cost 16,053 - 16,053
Transfer between levels (1,961) 1,961 -
Disposal proceeds (14,211) (1,231) (15,442)
Net gain on disposal* 1,373 564 1,937
Change in fair value ** 5,585 (85) 5,500
Foreign exchange (loss) gain (1,341) 17 (1,324)
Closing fair value at 31 December 2025 111,024 1,226 112,250
Closing cost 79,044 249 79,293
Closing investment holding gain*** 31,980 977 32,957
Closing fair value at 31 December 2025 111,024 1,226 112,250
* The net gain on disposal in the table above is £1,937,000 whereas that
shown in the Statement of Comprehensive Income is a profit of £2,206,000. The
difference comprises deferred proceeds in respect of assets which have been
disposed of in prior periods and were not included in the portfolio at 1
January 2025.
** The change in fair value and foreign exchange loss shown above total
£4,176,00. In addition, a fair value movement related to credit risk of
£557,000, relating to accrued income that was deemed irrecoverable, has been
charged to the revenue account in the Statement of Comprehensive Income.
*** Following the merger between the Company and British Smaller Technologies
Company VCT plc a total of £975,000 of negative goodwill was recognised in
the investment holding gains and losses reserve in respect of the investments
acquired. The relevant amount per investment is realised at the point of
disposal to the capital reserve. At 31 December 2025 a total of £27,000
(2024: £27,000) was held on investments yet to be realised in the investment
holdings gains and losses reserve. In addition, a permanent diminution in
value of investments totalling £4,610,000 (2024: £nil) has been transferred
to the capital reserve.
There were no individual reductions in fair value during the year that
exceeded 5 per cent of the total assets of the Company (2024: £nil).
Level 3 valuations include assumptions based on non-observable market data,
such as discounts applied either to reflect changes in fair value of financial
assets held at the price of recent investment, or to adjust revenue and
earnings multiples. IFRS 13 requires an entity to disclose quantitative
information about the significant unobservable inputs used. Of the Company's
level 3 investments, 89 per cent are held on a Revenue Multiple ("RM") basis
and 5 per cent on an Earnings Multiple ("EM") basis, both of which have
significant judgement applied to the valuation inputs. The table on page 74 of
the annual report sets out the range of RM, EM, and discounts applied in
arriving at investments valued on these bases. The remaining 6 per cent are
valued at cost (3 per cent), net asset value reviewed for change in fair value
(2 per cent), and sales proceeds (1 per cent).
The following disposals (including partial disposals) took place in the year:
Net Cost Opening Profit (loss)
proceeds £000 carrying on disposal
from sale value as at £000
£000 1 January 2025
£000
Unquoted investments unless stated:
SharpCloud Software Limited 6,254 2,920 4,789 1,465
ACC Aviation Group Limited 4,368 145 4,285 83
Elucidat Ltd 3,589 2,840 4,057 (468)
Teraview Limited* 1,231 128 374 857
Total from portfolio 15,442 6,033 13,505 1,937
Traveltek Group Holdings Limited 269 - - 269
Deferred consideration 269 - - 269
Total from investment portfolio** 15,711 6,033 13,505 2,206
* Partial disposal of quoted investment.
** The total from disposals in the year in the table above is
£15,711,000 whereas that shown in total in the Statement of Cash Flows is
£13,310,000. The difference comprises deferred proceeds which have been
received during the year or will be received in subsequent years.
8. Basic and Diluted Net Asset Value per Ordinary Share
The basic and diluted net asset value per ordinary share is calculated on
attributable assets of £178,399,000 (2024: £160,451,000) and 327,977,427
(2024: 281,031,132) ordinary shares in issue at the year end.
The treasury shares have been excluded in calculating the number of ordinary
shares in issue at 31 December 2025.
The Company has no potentially dilutive shares and consequently, basic and
diluted net asset values per ordinary share are equivalent in both the years
ended 31 December 2025 and 31 December 2024.
9. Total Return per Ordinary Share
The Total Return per ordinary share is calculated on cumulative dividends paid
of 93.25 pence per ordinary share (2024: 89.25 pence per ordinary share) plus
the net asset value as calculated per note 8.
10. Financial Commitments
There are no financial commitments at 31 December 2025 or 31 December 2024.
11. Events after the Balance Sheet Date
Having previously assessed its expected cash requirements, the Company
announced a new share offer on 25 September 2025, alongside British Smaller
Companies VCT plc, with the intention of raising up to £85 million, in
aggregate, which included an over-allotment facility of £25 million, in
aggregate. The offers closed to new applications on 18 December 2025. Gross
applications of £85 million have been received, of which c. £31.9 million
relate to the Company. The first allotment of £25 million (£9.4 million
relating to the Company) took place on 7 January 2026. The second and final
allotment will take place between 1 and 2 April 2026.
As part of the 7 January 2026 allotment, the Company issued 16,978,814 shares.
Following this allotment, the Company's issued share capital consists of
344,956,241 ordinary shares with voting rights and 36,211,546 shares held in
treasury.
Subsequent to the year end, the Company invested £2.0 million into portfolio
company Summize. The Company also completed the realisations of Teraview,
Vuealta and Sipsynergy, as detailed in the Chair's Statement.
12. Related Party Transactions
Fees payable during the year to the directors and their interests in the
shares of the Company are disclosed within the Directors' Remuneration Report
on page 48 of the annual report. There were no amounts outstanding and due to
the directors at 31 December 2025 (2024: £nil).
13. Annual Report and Accounts
Copies of the statutory accounts for the year ended 31 December 2025 will
shortly be submitted to the National Storage Mechanism and will be available
to the public for viewing online at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism. They can also shortly
be viewed on the Company's website at www.bscfunds.com. Hard copies of the
statutory accounts for the year to 31 December 2025 will be distributed by
post or electronically to shareholders and will thereafter be available to
members of the public from the Company's registered office.
14. Directors
The directors of the Company are Ms B L Anderson, Mr A Ahmed and Mr R S
McDowell.
15. Annual General Meeting
The Annual General Meeting of the Company will be held at 1:30 pm on 9 June
2026 at Thomas House, 84 Ecclestone Square, London SW1V 1PX. Full details of
the agenda for this meeting are included in the Notice of the Annual General
Meeting on page 86 of the annual report.
16. Inside Information
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.
For further information, please contact:
Marcus Karia YFM Equity Partners
Tel: 0113 244 1000
Alex Collins Panmure
Liberum Tel:
0207 886 2767
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
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. END FR SFEESAEMSESD
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