REG - British Smaller Co's - Annual Financial Report
13/06/2025 13:30
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RNS Number : 8305M British Smaller Companies VCT PLC 13 June 2025
British Smaller Companies VCT plc
Annual Financial Report
for the year ended 31 March 2025
British Smaller Companies VCT plc (the "Company") today announces its audited
results for the year ended 31 March 2025.
HIGHLIGHTS
l 2.5 per cent annualised return on opening net assets, driven by both
underlying revenue growth in portfolio companies and positive realisations.
l Total Return increased by 2.20 pence; net asset value at 31 March 2025 of
80.55 pence per share (2024: 83.60 pence per share).
l Realisations generated total proceeds of £9.1 million in the year, a gain of
£1.0 million over the opening carrying value and £7.2 million over cost.
l Five new investments and 12 follow-on investments totalling £29.3 million
completed during the year. Post-year-end, one new investment and one follow-on
investment totalling £2.8 million completed.
l Total dividends paid during the year ended 31 March 2025 of 5.25 pence per
share (2024: 4.00 pence per share), bringing total cumulative dividends paid
since inception to 184.15 pence per share at 31 March 2025 (2024: 178.90 pence
per share).
l £50.5 million raised in the year. £35.7 million raised in 2023/24 and
allotted in April 2024, £14.8 million raised in 2024/25 and allotted in
January 2025. An additional £29.5 million raised in 2024/25 and allotted
post-year-end, in April 2025.
l The Board is declaring an interim dividend of 2.00 pence per share in respect
of the year ending 31 March 2026. The dividend will be paid on 25 July 2025 to
shareholders on the register on 27 June 2025.
Chairman's Statement
I am pleased to present the 2025 annual report and financial statements of
British Smaller Companies VCT plc. The Company is successfully navigating the
evolving market dynamics and has continued to achieve positive performance in
investing in and supporting early-stage UK businesses.
During the financial year, the UK saw a change of government, with Labour
returning to power and promising a focus on growth. The political stability,
combined with inflation coming under control and a reduction in interest
rates, should be seen as positive indicators for the UK economy and long-term
investment, although annual GDP growth rates remain subdued.
At a global level, there continue to be changes in the geopolitical landscape.
A significant number of countries held elections in 2024, with many of these
seeing a change in government. Conflicts in Ukraine and the Middle East have
continued to impact the global agenda, as has the commencement of President
Trump's second term in office. Announcements and opinions relating to the US's
tariff policies are extensive and well-documented and there remains ongoing
market uncertainty as we move into the Company's new financial year.
Developments in Artificial Intelligence ("AI") are coming through at
significant speed. AI is increasingly pervasive, with businesses finding a
growing number of ways to use AI applications to improve their operations and,
where relevant, incorporating it into the products and services they offer.
This wave of technological advancement will continue to build momentum in the
years ahead: understanding and managing the associated risks and opportunities
presented by AI for the Company and its portfolio businesses will be an
important factor in the future delivery of the Company's objectives.
Despite this combination of varying degrees of domestic and global volatility
and technological change, the Company has performed positively, generating an
annualised 2.5 per cent return on its opening net asset value in the year.
There are several factors contributing to this performance: 23 out of the 26
portfolio companies valued on a revenue basis have shown positive revenue
growth over the last 12 months, with eight of these delivering growth of over
40 per cent. Nevertheless there have been a small number of portfolio
businesses where performance issues have affected the valuation. As you would
expect, the Company's Manager, YFM Private Equity Limited, is heavily involved
with the investee businesses, supporting them to face challenges and pursue
growth opportunities.
The Company had a busy year for investment activity, with £29.3 million
deployed in the year. Five new companies were added to the portfolio, while
the Company provided follow-on funding to 12 existing holdings. It remains the
Company's strategy to "back its winners" and shareholders should expect to see
this approach of investing follow-on capital to help to accelerate future
growth continuing in future years.
Despite the current market conditions making it challenging to deliver the
realisation of portfolio assets, the Company has benefited from the successful
exit of two investee businesses in the period.
Financial Performance
In 2025, the Company delivered a 2.2 pence per ordinary share increase in
Total Return which, as noted above, is equivalent to an annualised 2.5 per
cent of the opening net asset value at 31 March 2024. Total Return is now
264.7 pence per ordinary share.
The portfolio drove the positive performance, generating a return of £6.6
million, 5.2 per cent over its opening value: £1.0 million of the return
arose from realised investments and £5.6 million from unrealised investments.
Realisations in the Year
There were two realisations in the year: ACC Aviation and Traveltek. These
exits generated proceeds of £9.1 million, and delivered a £1.0 million gain
over the year's opening carrying value and £7.2 million over the original
cost.
In October 2024, the Company realised its investment in Traveltek, receiving
£2.6 million in initial proceeds, with additional deferred consideration of
£0.6 million anticipated to be received over the next year. Including the
deferred consideration, the Traveltek investment has generated an overall
return of £4.3 million, a 2.5x return on the original cost of £1.7 million.
£0.6 million of deferred proceeds have been recognised at the year-end.
In February 2025, the Company sold its investment in ACC Aviation for initial
cash consideration of £4.7 million, plus potential deferred consideration of
£2.3 million, of which £1.7 million has been recognised at the end of the
year. The ACC investment has generated an overall return of £10.0 million to
date, a 4.8x return on the original cost of £2.1 million. Including deferred
consideration, proceeds have the potential to rise to £12.3 million, and the
return to 5.9x.
In the year the Company also recognised a net loss of £0.5 million relating
to deferred consideration previously recognised from investments realised in
prior years. These deferred consideration proceeds were contingent rather than
guaranteed, with one holding realising a £0.1 million gain and another
realising a £0.6 million loss against the previous holding value.
Investment Activity
The Company invested £29.3 million in the year into the portfolio. £10.7
million was deployed into five new investments.
The new investments are:
Investment Sector
Fuuse Electric vehicle charge point
management system
Spotless Water Ultra-pure water distribution network
Ohalo Unstructured data governance platform
Integrum ESG A specialist ESG ratings and analytics
platform
Stormharvester An AI platform for wastewater utilities
In our continued support of the portfolio, 12 companies received follow-on
funding, totalling £18.6 million in aggregate. Further details are given in
the Investment Review below.
Financial Results
The movement in net asset value ("NAV") per ordinary share and the dividends
paid in the year are set out in the table below:
Pence per £000
ordinary share
NAV at 31 March 2024 83.60 219,600
Increase in value 1.80 5,656
Gain on disposal of investments 0.30 965
Net underlying change in investment portfolio 2.10 6,621
Net operating income 0.05 148
Total Return in period 2.15 6,769
Issue/buy-back of new shares 0.05 46,591
NAV before the payment of dividends 85.80 272,960
Dividends paid (5.25) (15,849)
NAV at 31 March 2025 80.55 257,111
Cumulative dividends paid 184.15
Total Return: at 31 March 2025 264.70
at 31 March 2024 262.50
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 portfolio investments held at the beginning of the financial year,
amounting to £126.6 million, delivered a return over the year of £7.1
million.
The current portfolio's net valuation increased by £5.6 million. Within this
there were gains of £17.8 million, offset by £12.2 million of downward
movements.
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
has taken an active approach to generating a good 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 £4.8 million on its liquid
assets, and at year-end was generating a weighted run-rate return on these
assets of around 4.2 per cent per annum.
Dividends
Dividends paid in the year totalled 5.25 pence per ordinary share. These
comprised interim dividends of 4.0 pence per ordinary share and a special
dividend of 1.25 pence per ordinary share. Cumulative dividends paid as at 31
March 2025 were 184.15 pence per ordinary share.
An interim dividend for the year ending 31 March 2026 of 2.0 pence per
ordinary share will be paid on 25 July 2025, to shareholders on the register
at 27 June 2025.
Dividend Re-investment Scheme ("DRIS")
The Company operates a DRIS, which gives shareholders the opportunity to
re-invest any cash dividends received; 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.
For the financial year ended 31 March 2025, £2.9 million was re-invested by
way of the DRIS, from overall dividends paid of £15.8 million.
Regulatory Developments
During the period, the process of extending the Venture Capital Trust regime
to 2035 was completed by the Government, with the underlying regulations
brought into force. As part of the Budget on 30 October 2024, Chancellor
Rachel Reeves noted this extension as a sign of the Government's commitment to
supporting growth and entrepreneurship. Most new portfolio investments are now
self-assured as VCT qualifying on a case-by-case basis and always with
confirmation from professional advisers that they are Qualifying Investments.
Advance assurance is sought from HMRC where there is an element of uncertainty
over the application of the rules.
Fundraising
During the year the Company received net proceeds of £35.7 million from the
second allotment of its 2023/24 fundraising, allotted in April 2024; and
£14.8 million from the first allotment of its 2024/25 fundraising, allotted
in January 2025.
Shareholder Relations
Investor Workshop
The annual shareholder workshop held on 20 June 2024 was well attended.
Attendees heard from Steve Frost, CEO of Workbuzz, and Scott Morris, Managing
Director of Displayplan.
We are pleased to confirm that the next in-person shareholder workshop will be
held jointly with British Smaller Companies VCT2 plc on 19 June 2025 at 30
Euston Square, London NW1 2FB.
The electronic communications policy continues to be a success, with 82 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.
Annual General Meeting
The Annual General Meeting of the Company will be held at 12:00 pm on 9
September 2025 at 8-10 Hill Street, London W1J 5NG. Full details of the agenda
for this meeting are included in the Notice of the Annual General Meeting on
page 92 of the annual report.
Events after the Balance Sheet Date
On 1 April 2025 the Company allotted the final shares from its fully
subscribed 2024/25 share offer. Gross proceeds of £30.5 million were raised,
resulting in the issue of 36,799,582 ordinary shares. This increased the
number of ordinary shares in issue to 355,978,239.
Subsequent to the year end, the Company has invested £2.4 million into new
portfolio company S4labour, and £0.4 million into existing portfolio company
Force24.
Outlook
The economic conditions noted at the start of my statement have contributed to
a greater sense of uncertainty in the broader market. Nevertheless, as the
Company moves into its new financial year, shareholders should be comforted by
the positive trends within many of the underlying portfolio companies.
Indeed, it can often be the case at this point in the economic cycle that
technology-led companies with a differentiated product or service, such as
many of those in the Company's portfolio, are able to disrupt existing
third-party customer-supplier relationships and succeed in growing their
market share in a way that can be harder to achieve in more stable and
potentially prosperous economic times. Building solid foundations in their
markets in this environment will leave these companies well-positioned for
further growth when the economic outlook is more positive.
The Company's investee businesses typically target sales into national and
international enterprises and, despite macroeconomic conditions prompting some
existing or potential customers to review costs and tighten expenditure, the
Company has seen positive growth rates from its performing holdings, often
reflecting the strength of the investee's underlying proposition and their own
market opportunity. It is our hope and expectation that this will continue in
the new financial year, with a number of businesses in the portfolio showing
meaningful progress and significant potential.
Accelerating the success of the performing investments held in the portfolio,
through a combination of providing access to follow-on growth capital and to
the Manager's long-standing expertise in portfolio management, is at the heart
of what the Company strives to do. It remains the Company's mission to support
the development of young British businesses, which can deliver positive
outcomes to their shareholders, employees and customers and also to wider
society. Venture Capital Trusts were created with this purpose at their core
and the Company and its shareholders can be proud of the contribution that has
been made over many years.
The strong fundraising seen over this period will enable the Company to
continue to add new businesses to the portfolio, whilst also providing further
investment into the existing holdings. On behalf of the Board, I would like to
thank shareholders for their support and we look ahead to the new year with
optimism.
Rupert Cook
Chairman
13 June 2025
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 return, 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 60 per cent to the Company and 40 per cent to British Smaller
Companies VCT2 plc. However, the Board of the Company has discretion as to
whether or not to take up its allocation; where British Smaller Companies VCT2
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 52 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, details of the Company's anti-bribery and environmental and social
responsibilities policies can be found below.
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 experienced 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 February 1996. 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" above.
The chart on page 12 of the annual report shows how the Total Return of your
Company has developed over the last ten years.
The evaluation of comparative success of the Company's Total Return is by way
of reference to the Share Price Total Return for an index of VCTs that are
members of the AIC (based on figures provided by Morningstar). This is the
Company's stated benchmark index. A comparison and explanation of the
calculation of this return is shown in the Directors' Remuneration Report on
page 54 of the annual report.
The table "Shareholder Returns" below illustrates the Total Return (excluding
tax reliefs received by shareholders) for investors who subscribed to the
first fundraising in 1996 who have re-invested their dividends.
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,
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 March
2025 Net Asset value ("NAV"). 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 March 2025. Note, as VCTs are long term investments it is too soon to
give meaningful returns for the fundraisings in 2023 and 2024.
Shareholder Returns excluding all tax reliefs
2015 8.3%
2016 7.2%
2017 7.9%
2019 9.2%
2021 11.6%
2022 4.7%
Set out below is the annualised return over 10, 5, 3 and 1 years to 31 March
2025. The annualised return is calculated with reference to the cumulative
dividends paid in the period plus the audited NAV at 31 March 2025, compared
to the NAV at the beginning of the relevant period.
Annualised Return over 10, 5, 3 and 1 years to 31 March 2025
10 years 8.4%
5 years 14.0%
3 years 5.6%
1 year 2.5%
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,
expressed as a percentage of the average net asset value. 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 March 31 March
2025 2024
(%) (%)
Ongoing Charges figure* 1.75 1.85
* Alternative Performance Measure
Shareholders benefit from the Company's agreement with the Manager to pay a
lower level of management fee of 1 per cent on surplus cash. The Company's
ongoing charges ratio is 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) is
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 below.
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 Tax Adviser (Philip Hare & Associates LLP) twice per
year. The Board can confirm that during the period, all of the 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 buy-outs 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 of state aided investment (including from
VCTs) in the 12 months ending on the date of each investment (£10 million for
Knowledge Intensive Companies).
There is also a lifetime limit that a business may not raise more than £12
million of state aided investment (including from VCTs); the limit for
Knowledge Intensive Companies is £20 million.
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 October 2022 the Company cancelled the balance of its share premium
account, £63.6 million, of which £62.1 million is now distributable. The
remaining £1.5 million will become distributable from 1 April 2026, as set
out under the heading "Reserves Available for Distribution" below.
The Company is recommending resolutions at the forthcoming Annual General
Meeting relating to the cancellation of the Company's share premium account,
and the reduction in the nominal value of the Company's issued share capital.
If approved, the resolutions will create c.£169.9 million of additional
distributable reserves over the next four years, as set out on under the
heading "Reserves Available for Distribution" below. There is no dilution to
shareholders interest from the resolutions.
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 42 per cent of the
portfolio valuation being held for more than five years, while 97 per cent is
valued at cost or above. 4 per cent of the portfolio value is held in loans
and preference shares, and loans account for only 2 per cent of the value.
AGE OF INVESTMENTS (%)
2025 2024
Less than 1 year 8% 5%
Between 1 and 3 years 32% 18%
Between 3 and 5 years 18% 42%
Greater than 5 years 42% 35%
Total 100% 100%
VALUE COMPARED TO COST (%)
2025 2024
Value above cost 91% 89%
At cost 6% 4%
Value below cost 3% 7%
Total 100% 100%
INVESTMENT INSTRUMENT (%)
2025 2024
Loan 2% 3%
Preference shares 2% 6%
4% 9%
Equity 96% 91%
Total 100% 100%
Portfolio Analysis
Also included below is a profile of the portfolio by industry sector.
INDUSTRY SECTOR (%)
2025 2024
Application Software 29% 24%
Data 27% 29%
Tech-enabled Services 19% 19%
Cloud & DevOps 12% 8%
New Media 5% 11%
Retail & Brands 4% 4%
Business Services 2% 4%
Other 2% 1%
Total 100% 100%
The Portfolio
£153.4 million (Fair value of the portfolio)
(2024: £126.6 million)
29 (Number of portfolio companies with an investment value of more than £1.0
million)
(2024: 25)
£0.7 million (Income from the portfolio in the year)
(2024: £1.1 million)
£29.3 million (Level of investment in the year)
(2024: £9.1 million)
£7.1 million (Return from the portfolio in the year)
(2024: £10.6 million)
The portfolio showed robust performance in the year, adding £7.1 million of
value on the opening fair value of £126.6 million. The composition of
investments continues to show its dynamism, with £29.3 million invested in
the period and proceeds of £9.1 million recognised.
Investment Review
The movements in the investment portfolio are set out in Table A below:
Table A: Investment Portfolio
Total
£million
Opening fair value at 1 April 2024 126.6
Additions 29.3
Disposal proceeds (9.6)
Valuation movement 7.1
Closing fair value at 31 March 2025 153.4
Accrued income 1.1
Financial assets - investments 154.5
At 31 March 2025 the portfolio was valued at £153.4 million, representing
59.7 per cent of net assets (57.6 per cent at 31 March 2024). Cash and cash
equivalents at 31 March 2025 of £100.0 million represented 38.9 per cent of
net assets (40.9 per cent at 31 March 2024).
Fair value changes
Table B: Gain from Investment Portfolio
£million
Gain in fair value from the portfolio 5.6
Gain on disposal over opening value from the portfolio 1.5
Gain arising from the portfolio 7.1
Deferred consideration from prior year realisations (0.5)
Gain arising from the investment portfolio 6.6
Of the £6.6 million gain in the year, £1.0 million arose from investments
which were realised, including deferred consideration recognised from
investments realised in prior years. Further details can be found in the
Chairman's Statement and note 7 to the financial statements.
The ongoing portfolio delivered a net value gain of £5.6 million in the year.
It is pleasing to see the fair value increases arising across a range of
companies, including tech-focused businesses such as Summize, Vypr,
AutomatePro, SharpCloud and Xapien.
Some decreases in value have been seen, notably in Wooshii and Outpost where
the Manager continues to work closely with each company's management to
navigate their current challenges. In addition, the value of Matillion was
reduced due to currency movements and the effect on revenues of migrating the
customer base across to the new version of its product.
Other Significant Investment Movements
Investments
During the year ended 31 March 2025, the Company invested £29.3 million
across 17 companies.
Five new companies were added to the portfolio, receiving aggregate investment
of £10.7 million; while a further £18.6 million was invested across 12
existing portfolio companies. The analysis of these investments is shown in
Table C. The case studies on pages 24 and 25 of the annual report give more
information on the investments in Summize and Vypr.
Table C: Investments
Investments made
New Follow-on Total
Company £million £million £million
Xapien - 4.4 4.4
Fuuse 3.0 - 3.0
Vypr - 2.4 2.4
Spotless Water 2.2 - 2.2
Workbuzz - 2.1 2.1
Stormharvester 2.1 - 2.1
Quality Clouds - 1.9 1.9
AutomatePro - 1.8 1.8
DrDoctor - 1.8 1.8
Integrum 1.7 - 1.7
Ohalo 1.7 - 1.7
Plandek - 1.5 1.5
SharpCloud - 0.8 0.8
Biorelate - 0.7 0.7
Summize - 0.7 0.7
Wooshii - 0.3 0.3
Relative Insight - 0.2 0.2
Portfolio 10.7 18.6 29.3
Disposal of Investments
As set out in Table D below, during the year to 31 March 2025 the Company
recognised proceeds from disposals of £9.1 million, a net gain of £1.0
million over the opening carrying value at the beginning of the year, and an
overall net gain of £7.2 million over cost. This included the successful
realisations of ACC Aviation and Traveltek. Further details are given in the
Chairman's Statement above.
Table D: Disposal of Investments
Opening Gain/
Net proceeds value (loss) on
from sale of 31 March opening
Investments 2024 value
£million £million £million
Portfolio 9.6 8.1 1.5
Deferred consideration (0.5) - (0.5)
Total investment disposals 9.1 8.1 1.0
Further analysis of all investments sold in the year can be found in note 7 to
the financial statements below.
Investment Portfolio Composition
As at 31 March 2025, the portfolio was valued at £153.4 million, comprising
wholly of unquoted investments. An analysis of the movements in the year is
shown in note 7 below.
The portfolio has 29 investments valued above £1.0 million, with the single
largest investment, Matillion, representing 9.0 per cent of the NAV.
The charts on pages 16 and 17 of the annual report show the diversity of the
portfolio, split by industry sector, investment instrument, age of investment
and the valuation compared to cost.
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 (i)
the use of a pool of money market funds, which can be converted back to cash
with immediate notice; and (ii) cash deposits held with Tier 1 banking
institutions. £4.8 million of income was earned from money market funds and
bank deposits during the year. At 31 March 2025, the Company was achieving a
weighted average return on liquid assets of 4.2 per cent. This rate had
reduced to 4.0 per cent at 31 May 2025, moving commensurately with UK base
rates.
Valuation Policy
Unquoted investments are valued in accordance with both IFRS 13 'Fair Value
Measurement' and International Private Equity and Venture Capital Guidelines
(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 on pages 69 and 70 of the
annual report.
Table E shows the value of investments within each valuation category as at 31
March 2025; no investments are valued using discounted cash flow
methodologies.
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
% of % of
Valuation portfolio portfolio
£million by value by value
Revenue multiple 140.0 91.0 91.0
Earnings multiple 7.7 5.0 7.0
Cost or price of recent investment, reviewed for change in fair value 3.1 2.0 -
Net assets, reviewed for change in fair value 2.4 2.0 2.0
Sale proceeds 0.2 - -
Total 153.4 100.0 100.0
Responsible Investment and Environmental, Social and Governance ("ESG")
Management
The Company seeks to build a broad portfolio of investments in early-stage
companies focused on growth, with the additional aim of building better
businesses that are ultimately more sustainable.
In order to deliver more sustainable businesses, and to meet its commitments
under the Principles for Responsible Investment (the "PRI"), the Manager has
continued to develop its processes in this area.
The Manager's approach is based on the belief that good businesses:
· Grow our economy
· Improve our society
· Value their people
· Protect the environment
These aims are consistent with the Company's financial aims because businesses
which improve in these areas also strengthen their resilience and value
creation potential through their increased attractiveness to customers,
employees, suppliers and eventual future owners and investors.
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 the Manager's
portfolio companies and their resilience to possible climate change scenarios;
> To show leadership by managing the Manager's own business' ESG
impacts to the best of its ability; and
> To be a proactive signatory to the PRI and to integrate its
principles into the Manager's business practices.
In line with the PRI the Manager has developed processes to help portfolio
companies to improve in each of these spheres, 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:
Structured processes at the pre-investment stage to identify areas
of potential ESG improvement and risk as part of the due diligence and
pre-investment deliberations. Appropriate data is collected and assessed on
each business against ESG criteria at the point of investment as a benchmark
against which to evaluate future progress.
> Portfolio Phase:
Based on the data collected at the point of investment, at the
start of the portfolio phase bespoke areas for improvement are agreed with
each management team, together with consequent objectives and targets.
Improvements are then monitored, measured and recorded against a set of ESG
criteria using the Manager's bespoke ESG framework. During the portfolio
phase, targets are refreshed and increased focus is placed on any new issues
as they become more material in the management of the company and in meeting
the expectations of its stakeholders.
> Reporting:
Annual reports are produced using the Manager's ESG framework,
recording the ESG KPI performance of each company and providing an overview of
progress across the Manager's portfolios.
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 regulations.
> Oversight and Support:
To ensure effective oversight and support, the Manager has
established an ESG Committee that meets quarterly to oversee its responsible
investment strategy ESG approach. Additionally, in 2024 the Manager has
recruited an ESG & Sustainability Manager who works across its portfolio
companies to implement ESG initiatives and encourage and share ESG best
practice. The support offered includes operating a programme of events and
webinars and providing ESG resources to the portfolio focused on key ESG
themes, such as environmental management, diversity and inclusion, company
culture, and cyber security.
ESG Performance Data and Reporting
ESG KPI data analysis
The Manager has developed its own ESG KPI data collation process, allowing it
to monitor year-on-year performance and benchmark across its portfolio. This
includes providing its portfolio companies with a bespoke annual Healthcheck
report showing their performance across a range of ESG areas.
2024 ESG KPI Report for Investments held in the British Smaller Companies VCT
funds
Grow our economy
> £56 million of R&D investment during 2024
> £108 million of export sales achieved in 2024
> c.600 new jobs were created from date of investment to 2024,
representing a 41 per cent increase
Improve our society
> 84 per cent of the portfolio provided employees with
cyber-security training
> 66 per cent of portfolio companies had a cyber accreditation
or management system in place
> on average 75 per cent of our portfolio companies rate their
employees good or above
> 84 per cent of companies were independently chaired in 2024
Valuing our people
> 53 per cent of portfolio companies had mental well-being
programmes in place and 66 per cent held regular employee engagement surveys
> 44 per cent of the portfolio are measuring DE&I metrics
and have a policy in place
> 44 per cent of companies had female representation at
board-level, with 13 per cent having a female CEO/MD
> 53 per cent of businesses had a designated board member with
responsibility for improving ESG issues
> 34,000 hours of non-statutory training was given to employees
across the portfolio
Protecting our environment
> 44 per cent had environmental policies in place
> 16 per cent formally measure their carbon footprint with 13 per cent
formally setting a target and strategy for achieving net zero carbon emissions
> 9 per cent offset all or a defined portion of their carbon
emissions
Summary and Outlook
Despite increased geopolitical uncertainty and tariff threats from a change in
government in the US, and subdued business confidence in the UK, there has
been promising growth from portfolio companies in the year, driven by
increases in underlying revenue and market multiples.
Navigating the macroeconomic headwinds, we have been encouraged by the
progress made by the portfolio, with strong rates of revenue growth seen from
many companies this year. Where companies are performing strongly, we have
taken the opportunity to provide further funding to allow them to continue
their positive progress.
Thanks to the support of shareholders the Company remains well funded to both
continue to support the portfolio in this way, as well as to invest in
exciting fast growing UK businesses.
Jamie Roberts
YFM Private Equity Limited
Portfolio Summary at 31 March 2025
Name of company Date of initial investment Location Industry Sector Amount invested Valuation at 31 March 2025 Recognised Income/proceeds to date Realised & unrealised value to date*
£000 £000 £000 £000
Matillion Limited Nov-16 Manchester Data 2,666 23,238 7,071 30,309
Unbiased EC1 Limited Dec-19 London Tech-enabled Services 5,596 13,253 - 13,253
Vypr Validation Technologies Limited Jan-21 Manchester Tech-enabled Services 5,698 10,638 - 10,638
Xapien (via Digital Insight Technologies Ltd) Mar-23 London Application Software 6,095 7,964 - 7,964
SharpCloud Software Limited Oct-19 London Data 4,380 7,952 - 7,952
AutomatePro Limited Dec-22 London Cloud & DevOps 4,025 7,222 - 7,222
Outpost VFX Limited Feb-21 Bournemouth New Media 5,750 7,123 148 7,271
Summize Limited Oct-22 Manchester Application Software 2,550 6,366 - 6,366
DrDoctor (via ICNH Ltd) Feb-23 London Application Software 5,355 6,345 - 6,345
Workbuzz Analytics Limited Jun-23 Milton Keynes Application Software 4,703 6,119 - 6,119
Force24 Ltd Nov-20 Leeds Application Software 3,900 5,934 136 6,070
Elucidat Ltd May-19 Brighton Application Software 4,260 5,869 647 6,516
Quality Clouds Limited May-22 London Cloud & DevOps 5,821 5,867 - 5,867
Plandek Limited Oct-22 London Cloud & DevOps 3,540 4,218 - 4,218
Tonkotsu Limited Jun-19 London Retail & Brands 2,388 3,812 - 3,812
Other investments £1.0 million and below 15,271 3,294 7,522 10,816
Fuuse Limited May-24 Lancaster Application Software 3,000 3,000 3,000
GEEIQ Sep-23 London Data 2,358 2,965 - 2,965
(via Checkpoint GG Limited)
Spotless Water Limited Jun-24 Frimley Business Services 2,183 2,588 - 2,588
Biorelate Limited Nov-22 Manchester Application Software 2,310 2,351 - 2,351
Stormharvester Jan-25 Belfast Data 2,100 2,100 - 2,100
Holdings Limited
Relative Insight Limited Mar-22 Lancaster Tech-enabled Services 4,380 2,065 13 2,078
Vuealta Holdings Limited Sep-21 London Tech-enabled Services 3,580 2,045 4,672 6,717
Ohalo Limited Jun-24 London Data 1,665 2,040 - 2,040
Frescobol Carioca Ltd Mar-19 London Retail & Brands 1,800 2,033 - 2,033
Integrum ESG Limited Sep-24 London Data 1,740 1,740 - 1,740
Panintelligence Nov-19 Leeds Data 1,500 1,500 - 1,500
(via Paninsight Limited)
Arcus Global Limited May-18 Cambridge Application Software 3,075 1,410 346 1,756
KeTech Technology Nov-15 Nottingham Tech-enabled Services 2,000 1,315 4,059 5,374
Holdings Limited
Teraview Limited Apr-17 Cambridge Advanced Manufacturing 377 1,044 - 1,044
Total unquoted investments 114,066 153,410 24,614 178,024
Full disposals to date 83,919 - 173,936 173,936
Total portfolio 197,985 153,410 198,550 351,960
* represents recognised income and proceeds received to date plus the
unrealised valuation at 31 March 2025.
Summary of Portfolio Movement
Name of company Investment valuation at 31 March 2024 Disposal proceeds £000 Additions £000 Valuation gains/(losses) including profits/(losses) on disposal Investment valuation at 31 March 2025
£000 £000 £000
Summize Limited 2,421 - 750 3,195 6,366
Vypr Validation Technologies Limited 5,317 - 2,398 2,923 10,638
AutomatePro Limited 3,229 - 1,800 2,193 7,222
SharpCloud Software Limited 5,375 - 803 1,774 7,952
ACC Aviation Group Limited 4,725 (6,421) - 1,696 -
Xapien (via Digital Insight Technologies Ltd) 2,014 - 4,356 1,594 7,964
DrDoctor (via ICNH Ltd) 3,565 - 1,790 990 6,345
Tonkotsu Limited 3,090 - - 722 3,812
Teraview Limited 338 - - 706 1,044
Plandek Limited 2,070 - 1,470 678 4,218
Workbuzz Analytics Limited 3,447 - 2,126 546 6,119
Arcus Global Limited 952 - - 458 1,410
Unbiased EC1 Limited 12,829 - - 424 13,253
Spotless Water Limited - - 2,183 405 2,588
Ohalo Limited - - 1,665 375 2,040
Relative Insight Limited 1,598 - 180 287 2,065
GEEIQ (via Checkpoint GG Limited) 2,827 - - 138 2,965
KeTech Technology Holdings Limited 1,176 - - 139 1,315
Force24 Ltd 5,835 - - 99 5,934
Integrum ESG Limited - - 1,740 - 1,740
Fuuse Limited - - 3,000 - 3,000
Stormharvester Holdings Limited - - 2,100 - 2,100
Frescobol Carioca Ltd 2,072 - - (39) 2,033
Quality Clouds Limited 4,019 - 1,905 (57) 5,867
Elucidat Ltd 5,933 - - (64) 5,869
Biorelate Limited 1,691 - 750 (90) 2,351
Panintelligence (via Paninsight Limited) 1,606 - - (106) 1,500
Traveltek Group Holdings Limited 3,401 (3,222) - (179) -
Other investments £1.0 million and below 3,519 - - (361) 3,158
Vuealta Holdings Limited 2,459 - - (414) 2,045
Outpost VFX Limited 9,518 - - (2,395) 7,123
Matillion Limited 27,415 - - (4,177) 23,238
Wooshii Limited 4,151 - 272 (4,287) 136
Total portfolio 126,592 (9,643) 29,288 7,173 153,410
Deferred consideration - 552 - (552) -
Total 126,592 (9,091) 29,288 6,621 153,410
Portfolio
The top 10 investments had a combined value of £96.2 million, 62.7 per cent
of the total portfolio.
Risk Factors
The Board carries out a regular review of the risk environment in which
the Company operates. The emerging and principal risks and uncertainties
identified by the Board and techniques used to mitigate these risks are set
out in this section.
The Board seeks to mitigate its emerging and principal risks by setting
policy, regularly reviewing performance and monitoring progress and
compliance. In the mitigation and management of these risks, the Board
rigorously applies the principles detailed in section 8: "Audit, Risk and
Internal Control" of the AIC Code. Details of the Company's internal controls
are contained in the Corporate Governance Internal Control section on pages 47
and 48 of the annual report and further information on exposure to risks,
including those associated with financial instruments, can be found in note 16
of the financial statements.
The Board carries out a regular review of the risk environment in which the
Company operates, together with changes to the operational environment. The
Board also seeks to identify emerging risks which might impact on the Company.
The principal and emerging risks identified by the Board, and how the Board
manages the risks are set out below.
Risk Commentary Mitigation
Macroeconomic: Up. The Board, in conjunction with the Manager, regularly assesses the resilience
of the portfolio. The Company has a clear Investment Policy (summarised above)
and invests in a diverse portfolio of companies across a range of sectors,
which helps to mitigate against the impact on any one sector. The Manager also
Macroeconomic risk refers to the potential for losses or adverse effects on an Events such as the conflicts in the Middle East and Ukraine, elections and the seeks to maintain adequate liquidity to ensure it can provide follow-on
investment or business due to broad economic factors such as inflation, uncertainty of US trade tariffs continue to present risks to trading investment to those portfolio companies which require funding when supported
interest rates, economic growth, and political stability. conditions. These risks can impact entire markets and economies, influencing by the individual investment case
the performance of investments and the overall business environment.
The crystallisation of these risks could adversely affect smaller companies'
valuations, as they may be more vulnerable to changes in trading conditions or
the sectors in which they operate. This could lead to a reduction in the
Company's share price, resulting in capital losses for Shareholders.
Portfolio: Unchanged. The Board comprises individuals experienced in assessing suitable investment
opportunities. The Manager has significant experience, expertise and a strong
track record of investing in early-stage unquoted companies. The Manager has a
rigorous and robust formal process in selecting new companies which includes
Portfolio risk refers to the potential for losses within an investment The Company invests in small and medium-sized VCT qualifying companies, which, appropriate due diligence and approval by an Investment Committee made up of
portfolio due to various factors, including market volatility, economic by their nature, entail a higher level of risk and shorter cash runway than senior members of the Manager's investment team.
changes, and specific risks associated with individual assets. It encompasses investments in larger quoted companies. Poor performance could reduce returns
both systematic risk, which affects the entire market, and idiosyncratic risk, for shareholders through downward valuations.
which is unique to specific investments.
A current emerging risk that we are actively monitoring is the impact of the
rapid advancement of AI and machine learning technology and its potential to
disrupt a range of industries and sectors.
A failure to implement effective portfolio risk management such as
diversification, regular monitoring, and strategic adjustments to mitigate
these risks could result in poor investment outcomes.
ESG: Unchanged The Manager has implemented a robust governance framework designed to ensure
compliance with regulatory initiatives. This framework also aims to support
and educate portfolio companies. Additionally, the Manager actively conducts
horizon scanning to anticipate and respond to emerging ESG trends.
ESG risk refers to ESG factors that can affect portfolio companies and the Investors are increasingly focusing on ESG-related challenges such as climate
Manager. These risks include exposure to regulatory non-compliance, transition, biodiversity, and regulatory changes. Should the Company fail to
reputational damage, climate related vulnerabilities, and workforce or supply properly manage the risk of regulatory non-compliance it could suffer
chain issues. financial penalties, reputational damage or erode investor trust.
Strategic: Unchanged. The Board reviews strategy annually. At each of the Board meetings, the
directors review the appropriateness of the Company's objectives and stated
strategy in response to changes in the operating environment and peer group
activity. It also reviews compliance of the Manager with the stated investment
Strategic risk involves the potential for losses due to poor strategic The Board sets appropriate strategic objectives and monitors the Company's strategy.
decisions, such as market positioning, misjudging market trends, or failing to implementation of the strategy.
adapt to regulatory changes. This risk can impact our ability to achieve the
investment objectives and deliver returns to investors.
The Manager also tracks the Company's VCT qualifying status on an ongoing and
The key strategy being to maintain VCT qualifying status, a loss of this continual basis. Furthermore, external independent experts have been retained
status could lead to investors losing the various tax benefits associated with and report on the VCT qualifying status twice per year.
VCT investments.
The Manager reports to the Board on a quarterly basis.
Further information on these requirements can be found under the heading
"Compliance with VCT Legislative Tests" on pages 14 and 15 of the annual
report.
Legislative & Regulatory: Unchanged. The Manager ensures that it has suitably qualified members of staff who are
experienced with regulatory requirements and relevant accounting standards.
The Manager and the Company Secretary have procedures in place to ensure
recurring Listing Rules requirements are met.
Legislative and regulatory risk refers to the potential for losses or adverse Should the Company fail to comply with applicable laws and regulations, or
outcomes due to changes in laws, regulations, or non-compliance with existing adapt to new legal requirements, it could suffer financial loss, reputational
rules. This risk can impact an organisation's operations, financial damage or regulatory intervention, including the loss of VCT status.
performance, and reputation.
The Board and Manager review corporate governance, regulatory legislative
change and political developments on a continual basis and seek additional
advice as and when required.
Key relevant legislation and regulation includes VCT rules, UK Listing
Authority Rules, AIC Code on Corporate Governance, Stewardship Code, Companies
Act, Bribery Act, Market Abuse Regulations, data protection rules, Criminal
Finances Act and relevant Taxes Acts The Manager is a member of the Venture Capital Trust Association which engages
with the Government to help shape future legislation.
Changes to the UK legislation, in particular relating to the VCT rules, could
have an adverse effect on the Company's ability to achieve investment returns.
Failure to adapt to new legal requirements, maintain compliance with current
regulations, and manage the consequences of any legal or regulatory breaches
could result in regulatory action.
Operational: Unchanged. The Board regularly reviews the system of internal controls, both financial
and non-financial, operated by the Company and the Manager. These include
controls designed to ensure that the Company's assets are safeguarded and
proper accounting records are maintained.
Operational risk refers to the potential for losses resulting from inadequate Effective management of operational risk involves implementing robust internal
or failed internal processes, systems, human errors, or external events. This controls, regular monitoring, and contingency planning to minimise the impact
includes risks such as fraud, system failures, data breaches, and natural of these risks on the operations and financial stability of the Company.
disasters.
Failure of key service providers, such as the Manager, to have adequate
procedures for the identification, evaluation and management of risks could
put the Company's assets and data at risk.
Liquidity: Unchanged. The Company's overall liquidity risks and cashflow forecasts are monitored on
an ongoing basis by the Manager and on a quarterly basis by the Board.
Liquidity risk refers to the potential difficulty a fund may face in meeting Should the Company fail to manage its liquidity risk it may result in
its short-term financial obligations due to an inability to quickly convert financial losses owing to discounted sales, reputational damage and potential The Company's valuation methodology takes account of potential liquidity
assets into cash without significant loss in value. regulatory action. restrictions in the markets in which it invests.
The Manager regularly reviews its exit plans for portfolio companies to aim to
identify what it believes to be the optimal point at which to seek a sale. As
part of a planned exit, the assistance of a third party adviser will normally
be sought, with a view to identifying the most appropriate number of possible
purchasers.
Emerging Risk - Cyber Security & Information Technology: Up. The Manager has in place significant cybersecurity controls, including
multifactor authentication, email protection software, monitored firewalls and
regularly updated electronic devices. Staff at the Manager regularly receive
training in relation to their cybersecurity obligations. The Manager is Cyber
Cybersecurity & information technology risk refers to the potential for A failure to implement effective management involving robust security Essentials Plus certified.
financial loss, operational disruption, or reputational damage due to cyber measures, regular system updates, employee training, and incident response
threats and IT system failures. This includes risks such as data breaches, plans to protect sensitive information and ensure the resilience of IT
hacking, malware attacks, and system outages. infrastructure could result in data loss, operational disruptions, financial
losses, reputational damage and regulatory fines. Due diligence is conducted on other service providers, including a review on
their controls for information security.
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 37 of the annual report.
Section 172 of the Companies Act 2006 requires that a director must act in a
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 24 June 2024 which was well attended. A further event is scheduled
for June 2025.
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 17 October 2024 the Company
issued a prospectus, alongside British Smaller Companies VCT2 plc, to raise up
to £75 million in aggregate for the 2024/25 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 4.00 pence per ordinary share in the year ended 31 March
2025, a special dividend of 1.25 pence per ordinary share was paid in January
2025, following the realisation of the Company's investment in Traveltek.
To ensure the Company has sufficient distributable reserves to facilitate the
above arrangements, the Company is recommending resolutions at the forthcoming
Annual General Meeting relating to the cancellation of the Company's share
premium account, and the reduction in the nominal value of the Company's
issued share capital. If approved, the cancellation and reduction will create
c.£169.9 million of additional distributable reserves over the next four
years, as set out under the heading "Reserves Available for Distribution"
below. There is no dilution to shareholders interest from the resolutions.
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 VCT2 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 the portfolio companies
with the challenges that 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 four 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 on
pages 52 to 54 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 environmental 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. 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 40 of the annual report is
included in the Strategic Report by reference.
The Strategic Report on pages 6 to 37 of the annual report is approved by
order of the Board.
Rupert Cook
Chairman
FINANCIAL STATEMENTS
Statement of Comprehensive Income
For the year ended 31 March 2025
2025 2024
Notes Revenue £000 Capital £000 Total £000 Revenue £000 Capital £000 Total £000
Gains on investments 7 - 5,656 5,656 - 6,045 6,045
held at fair value
Gain on disposal 7 - 965 965 - 4,475 4,475
of investments
Gain arising from the - 6,621 6,621 - 10,520 10,520
investment portfolio
Income 2 5,463 - 5,463 4,045 - 4,045
Total income 5,463 6,621 12,084 4,045 10,520 14,565
Administrative expenses:
Manager's fee (943) (2,830) (3,773) (795) (2,384) (3,179)
Other expenses (1,542) - (1,542) (768) - (768)
3 (2,485) (2,830) (5,315) (1,563) (2,384) (3,947)
Profit before taxation 2,978 3,791 6,769 2,482 8,136 10,618
Taxation 4 (517) 517 - - - -
Profit for the year 2,461 4,308 6,769 2,482 8,136 10,618
Total comprehensive 2,461 4,308 6,769 2,482 8,136 10,618
income for the year
Basic and diluted 6 0.80p 1.41p 2.21p 1.01p 3.33p 4.34p
earnings per
ordinary share
The notes on pages 68 to 91 of the annual report are an integral part of these
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 July 2022 -
"SORP") published by the AIC.
Balance Sheet
At 31 March 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 7 154,546 128,662
Other assets 1,714 -
156,260 128,662
Current assets
Accrued income and other assets 1,224 1,382
Current asset investments 69,000 53,500
Cash at bank and other cash equivalents 30,971 36,304
101,195 91,186
LIABILITIES
Current liabilities
Trade and other payables (344) (248)
Net current assets 100,851 90,938
Net assets 257,111 219,600
Shareholders' equity
Share capital 35,338 28,830
Share premium account 105,086 58,293
Capital reserve 65,203 79,171
Investment holding gains and losses reserve 48,673 49,207
Revenue reserve 2,811 4,099
Total shareholders' equity 257,111 219,600
Net asset value per ordinary share 8 80.55p 83.6p
The notes on pages 68 to 91 of the annual report are an integral part of these
financial statements.
The financial statements were approved and authorised for issue by the Board
of Directors and were signed on its behalf on 13 June 2025.
Rupert Cook
Chairman
Statement of Changes in Equity
For the year ended 31 March 2025
Share Share Capital Investment Revenue Total
capital premium reserve holding reserve equity
£000 account £000 gains and £000 £000
£000 losses
reserve
£000
Balance at 31 March 2023 20,969 1,700 82,893 49,215 2,255 157,032
Revenue return for the year - - 2,482 2,482
- -
Expenses charged to capital - (2,384) - (2,384)
- -
Investment holding gain on investments held at fair value - - 6,045 - 6,045
-
Realisation of investments in the year - 4,475 - 4,475
- -
Total comprehensive - 2,091 6,045 2,482 10,618
income for the year -
Issue of share capital 7,612 57,237 - - 64,849
-
Issue of shares - DRIS 249 1,769 - - 2,018
-
Issue costs * - (2,413) - - (2,413)
-
Purchase of own shares - (2,869) - (2,869)
- -
Dividends - (8,997) (638) (9,635)
- -
Total transactions with owners 7,861 56,593 (11,866) (638) 51,950
-
Realisation of prior year investment holding gains - 6,053 (6,053) - -
-
Balance at 31 March 2024 28,830 58,293 79,171 49,207 4,099 219,600
Revenue return for the year - - 2,978 2,978
- -
Expenses charged to capital - (2,830) - (2,830)
- -
Investment holding gain on investments held at fair value - - 5,656 - 5,656
-
Realisation of investments in the year - 965 - 965
- -
Taxation - 517 (517) -
- -
Total comprehensive (expense) - (1,348) 5,656 2,461 6,769
income for the year -
Issue of share capital 6,147 45,932 - - 52,079
-
Issue of shares - DRIS 361 2,533 - - 2,894
-
Issue costs* - (1,672) - - (1,672)
-
Purchase of own shares - (6,710) - (6,710)
- -
Dividends - (12,100) (3,749) (15,849)
- -
Total transactions with owners 6,508 46,793 (18,810) (3,749) 30,742
-
Realisation of prior year investment holding gains - 6,190 (6,190) - -
-
Balance at 31 March 2025 35,338 105,086 65,203 48,673 2,811 257,111
* Issue costs include both fundraising costs and costs incurred from
the Company's DRIS.
The notes on pages 68 to 91 of the annual report are an integral part of these
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 reserve Revenue reserve Total
£000 £000 £000
Distributable reserves as shown on previous page 65,203 2,811 68,014
Income/proceeds not yet distributable (2,384) (1,196) (3,580)
Cancelled share premium not yet distributable (1,484) - (1,484)
Reserves available for distribution* 61,335 1,615 62,950
* Following the circulation of the Annual Report to shareholders.
The capital reserve and revenue reserve are both distributable reserves. The
reserves total £68,014,000, representing a decrease of £15,256,000 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 £68,014,000 shown above,
£3,580,000 relates to income and proceeds not yet distributable and
£1,484,000 relates to cancelled share premium which will become distributable
from 1 April 2026.
The Company is recommending resolutions at the forthcoming Annual General
Meeting relating to the cancellation of the Company's share premium account,
and the reduction in the nominal value of the Company's issued share capital.
If approved, the resolutions will create at least £169.9 million of
additional distributable reserves over the next four years, as set out below.
Available for distribution Reserves arising from cancelled share premium Reserves arising from reduction in share capital £000 Total
£000 £000
July 2026, once the 2026 annual report has been circulated 1,700 20,948 22,648
1 April 2027 56,593 7,853 64,446
1 April 2028 46,793 6,501 53,294
1 April 2029 25,867 3,676 29,543
Total 130,953 38,978 169,931
Statement of Cash Flows
For the year ended 31 March 2025
Notes 2025 2024
£000 £000
Net cash inflow (outflow) from operating activities 1,003 (744)
Cash flows generated from (used in) investing activities
Purchase of financial assets at fair value through profit or loss 7 (29,288) (9,390)
Proceeds from sale of financial assets at fair value through profit or loss 7 7,259 19,625
Deferred consideration 451 96
Net cash (outflow) inflow from investing activities (21,578) 10,331
Cash flows from (used in) financing activities
Issue of ordinary shares 52,079 64,849
Costs of ordinary share issues* (1,672) (2,413)
Purchase of own ordinary shares (6,710) (2,869)
Dividends paid 5 (12,955) (7,617)
Net cash inflow from financing activities 30,742 51,950
Net increase in cash and cash equivalents 10,167 61,537
Cash and cash equivalents at the beginning of the year 89,804 28,267
Cash and cash equivalents at the end of the year 99,971 89,804
* Issue costs include both fundraising costs and expenses incurred from the
Company's DRIS.
Cash and cash equivalents comprise
Money market funds 69,000 53,500
Cash at bank and other cash equivalents 30,971 36,304
Cash and cash equivalents at the end of the year 99,971 89,804
Reconciliation of Profit before Taxation to Net Cash Inflow (Outflow) from
Operating Activities
2025 2024
£000 £000
Profit before taxation* 6,769 10,618
Increase (decrease) in trade and other payables 96 (110)
Decrease (increase) in accrued income and other assets 759 (732)
Gain on disposal of investments (965) (4,475)
Gains on investments held at fair value (5,656) (6,045)
Net cash inflow (outflow) from operating activities 1,003 (744)
*Includes cash inflow from dividends of £372,000 (2024: £341,000) and
interest of 5,346,000 (2024: £2,899,000).
The notes on pages 68 to 91 of the annual report are an integral part of these
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 pages 39 and 40 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 was
enhanced by the final allotment of the 2024/25 fundraising post-year-end, in
April 2025. 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 and other assets 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 July 2022 - "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. Other 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 IASB 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 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.
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 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 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.
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 ("the IPEV Guidelines"). Quoted investments are
valued at market bid prices. 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 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, a performance incentive fee is payable to the Manager
subject to the Company achieving both a target level of Total Return (the
"Total Return Hurdle") and dividends ("Dividend Hurdle"). Subject to meeting
the Total Return Hurdle, the Manager will receive an amount equivalent to 20
per cent of the amount by which dividends paid per share exceeds the Dividend
Hurdle, multiplied by the number of shares in issue at the year end. The
incentive fee in any financial year will be subject to a cap if the excess of
dividends paid over the Dividend Hurdle is greater than the sum of the excess
of the Total Return over the Total Return Hurdle divided by 1.2. At the end of
each reporting period, an accrual is recognised based upon the dividends paid
during the financial year to date and the Total Return at the end of the
reporting period. 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
that are readily convertible into known amounts 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 demand 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 or 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;
> 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 financial statements.
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 443 907
Interest on loans to unquoted companies 243 218
Income from unquoted portfolio 686 1,125
Income from listed investment funds - 97
Income from investments held at fair value through profit or loss 686 1,222
Income from bank deposits/money market funds 4,777 2,823
5,463 4,045
3. Administrative Expenses
2025 2024
£000 £000
Manager's fee 3,773 3,179
Administration fee 89 85
Total payable 3,862 3,264
Other expenses:
Trail commission paid to financial intermediaries 238 142
Directors' remuneration 154 138
General expenses 116 136
Listing and registrar fees 90 89
Auditor's remuneration - audit of the financial statements (excluding 67 66
irrecoverable VAT)
Printing 53 60
Irrecoverable VAT 52 52
4,632 3,947
Fair value movement related to credit risk 683 -
5,315 3,947
Ongoing charges figure 1.75% 1.85%
Directors' remuneration comprises only short-term benefits including national
insurance contributions of £14,000 (2024: £12,000).
The Company does not have employees (2024: nil).
No fees are payable to the auditor in respect of other services (2024: £nil).
YFM Private Equity Limited provides management services to the Company under
an investment agreement (IA) dated 28 February 1996 as varied by agreements
dated 1 July 2009, 16 November 2012, 17 October 2014, 24 August 2015 and 18
November 2019. The agreement may be terminated by not less than 12 months'
notice given by either party at any time. No notice has been issued to or by
YFM Private Equity Limited terminating the contract as at the date of this
Report.
The key features of the IA are:
> YFM Private Equity Limited receives a Manager's fee, calculated at
half-yearly intervals as at 31 March and 30 September. The fee is allocated
between capital and revenue as described in note 1. The fee is payable
quarterly in advance;
> The annual fee payable to the Manager is (i) 1.0 per cent on all
surplus cash, defined as all cash above £7.5 million; and (ii) 2.0 per cent
per annum of all other net assets. Based on the Company's net assets at 31
March 2025 of £257,111,000, including cash and cash equivalents of
£99,971,000 at that date, this equates to approximately £4,218,000 per
annum;
> Under the IA, YFM Private Equity Limited also provides
administrative and secretarial services to the Company. The original fee for
these services at 28 February 1996 was £35,000 per annum. This is adjusted
annually to reflect movements in the Retail Prices Index. For the year ended
31 March 2025 the fee totalled £89,000 (2024: £85,000); and
> YFM Private Equity Limited shall bear the annual operating costs of
the Company to the extent that those costs exceed 2.9 per cent of the net
asset value of the Company. This includes the fees set out above but excludes
any payment of the performance incentive fee (details of which are set out
below), VAT and trail commissions payable to financial intermediaries.
Operating costs in the year totalled 1.69 per cent of the Company's net asset
value (2024: 1.71 per cent); therefore no excess expenses were payable to the
Company from YFM Private Equity Limited in the year (2024: £nil).
When the Company makes investments into its unquoted portfolio the Manager
typically charges that investee an advisory fee or arrangement fee, calculated
by applying a percentage to the investment amount. The Company and the Manager
have agreed that, if the average of the relevant fees during the Company's
financial year exceeds 3.0 per cent of the total invested into new portfolio
companies and 2.0 per cent into follow-on holdings this excess will be rebated
to the Company. As at 31 March 2025, the Company was due a rebate from the
Manager of £34,000 (2024: £nil).
The total remuneration payable to YFM Private Equity Limited under the IA in
the period was £3,862,000 (2024: £3,264,000).
Monitoring and directors' fees the Manager receives from the investee
companies are limited to a maximum of £40,000 (excluding VAT) per annum per
company.
Under the IA, 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 March 2025 the fees receivable by YFM Private Equity Limited
from investee companies which were attributable to advisory and director and
monitoring fees attributable to the Company amounted to £1,440,000 (2024:
£932,000).
A performance incentive fee is payable to the Manager subject to the Company
achieving both a target level of Total Return (the "Total Return Hurdle") and
dividends ("Dividend Hurdle"). Subject to meeting the Total Return Hurdle, the
Manager will receive an amount equivalent to 20 per cent of the amount by
which dividends paid per share exceeds the Dividend Hurdle, multiplied by the
number of shares in issue at the year end. The incentive fee in any financial
year will be subject to a cap if the excess of dividends paid over the
Dividend Hurdle is greater than the sum of the excess of the Total Return over
the Total Return Hurdle divided by 1.2. With effect from 31 March 2019 the
Total Return Hurdle was 228.6 pence per share and the annual increase is
equivalent to 4.0 pence per share, as increased or decreased by the percentage
increase or decrease (if any) in RPI from 1 April 2009. For the year ended 31
March 2025 the annual increase in the Total Return Hurdle was 7.25 pence per
share.
The Dividend Hurdle was 4.0 pence per share (increasing in line with RPI) from
1 April 2009. For the year ended 31 March 2025 the Dividend Hurdle was 7.25
pence per share.
There were no incentive fees payable for the years ended 31 March 2025 and 31
March 2024, as calculated below:
2025 2024
Total Return Hurdle (p) 272.75 265.50
Actual Total Return per Share before incentive fee (p) 264.70 262.50
Shortfall over Total Return Hurdle (p) (8.05) (3.00)
Dividend Hurdle (p) 7.25 7.00
Actual Dividends per share (p) 5.25 4.00
Shortfall over Dividend Hurdle (p) (2.00) (3.00)
Lower excess of the two hurdles (p) - -
Fee impact reduction (divide by 1.2) (p) - -
Performance fee per share at 20% of adjusted excess (p) - -
Number of shares in issue ('000) 319,179 262,659
Incentive fee payable (£'000) - -
The Total Return Hurdle for the year ending 31 March 2026 is 280.25 pence per
share. The Dividend Hurdle is 7.50 pence per share.
If the annual incentive fee exceeds £5.0 million then the excess is deferred
until following the next year's Annual General Meeting. Payment of the
remainder is made five Business Days after the relevant Annual General Meeting
at which the audited accounts are presented to shareholders.
The amount of the incentive payment paid to the Manager for any one year
shall, when taken with all other relevant costs, ensure that the Company's
total costs in a single year do not exceed 5 per cent of net assets. Any
excess over the 5 per cent is carried forward to be included in the
calculation of the amount that can be paid in future years. Except with
shareholder approval the maximum fee payable in any 12 month period will not
exceed £7.5 million.
There are also provisions for a compensatory fee in circumstances where the
Company is taken over or the Incentive Agreement is terminated, which is
calculated as a percentage of the fee that would otherwise be payable under
the Incentive Agreement by reference to the accounting period following its
termination. In this instance 80 per cent is payable in the first accounting
period after such an event, 55 per cent in the second, 35 per cent in the
third and nothing is payable thereafter.
Under the terms of the offer launched with British Smaller Companies VCT2 plc
on 20 September 2023, 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 £1,645,000.
Under the terms of the offer launched with British Smaller Companies VCT2 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 £1,370,000.
The details of directors' remuneration are set out in the
Directors' Remuneration Report on page 53 of the annual report under the
heading "Directors' Remuneration for the year ended 31 March 2025 (audited)".
4. Taxation
Revenue 2025 Total Revenue 2024 Total
£000 Capital £000 £000 Capital £000
£000 £000
Profit before taxation 2,978 3,791 6,769 2,482 8,136 10,618
Profit before taxation multiplied 566 720 1,286 471 1,546 2,017
by standard rate of corporation
tax in UK of 19% (2024: 19%)
Effect of:
UK dividends received (79) - (79) (172) - (172)
Non-taxable profits - (1,258) (1,258) - (1,999) (1,999)
on investments
Deferred tax not recognised 30 21 51 (299) 453 154
Tax charge (credit) 517 (517) - - - -
The Company has no provided or unprovided deferred tax liability in either
year.
Deferred tax assets of £3.91 million (2024: £4.98 million)
calculated at 19% (2024: 25%) in respect of unrelieved management expenses
(£20.58 million as at 31 March 2025 and £19.93 million as at 31 March 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
March:
Revenue 2025 Total Revenue 2024 Total
£000 Capital £000 £000 Capital £000
£000 £000
Interim dividend for the year 1,969 4,077 6,046 638 4,178 4,816
ended 31 March 2025 of 2.0p
(2024: 2.0p) per ordinary share
Second interim dividend for the 1,780 4,257 6,037 - 4,819 4,819
year ended 31 March 2025 of 2.0p
(2024: 2.0p) per ordinary share
Special dividend for the year - 3,766 3,766 - - -
ended 31 March 2025
of 1.25p per ordinary share
3,749 12,100 15,849 638 8,997 9,635
Shares allotted under DRIS (2,894) (2,018)
Dividends paid in 12,955 7,617
Statement of Cash Flows
The first interim dividend of 2.0 pence per ordinary share was paid on 26 July
2024 to shareholders on the register as at 28 June 2024.
The second interim dividend of 2.0 pence per ordinary share was paid on 20
December 2024 to shareholders on the register as at 22 November 2024.
The special dividend of 1.25 pence per ordinary share was paid on 27 January
2025 to shareholders on the register as at 27 December 2024.
An interim dividend of 2.0 pence per ordinary share, in respect of the year
ending 31 March 2026, will be paid on 25 July 2025 to shareholders on the
register on 27 June 2025. This dividend was not recognised in the year ended
31 March 2025 as the obligation did not exist at the balance sheet date.
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 £6,769,000 (2024: £10,618,000) and
305,699,410 (2024: 244,463,235) 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 £2,461,000 (2024:
£2,482,000) and 305,699,410 (2024: 244,463,235) 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 £4,308,000 (2024:
£8,136,000) and 305,699,410 (2024: 244,463,235) ordinary shares being the
weighted average number of ordinary shares in issue during the year.
During the year the Company allotted 3,609,790 new ordinary shares in respect
of its DRIS and 61,470,081 new ordinary shares from its fundraising.
The Company has also repurchased 8,560,575 of its own shares in the year, and
these shares are held in the capital reserve. The total of 34,198,996 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
March 2025 and 31 March 2024.
7. Financial Assets at Fair Value through Profit or Loss -
Investments
2025 2024
£000 £000
Investment portfolio 153,410 126,592
Accrued income on the investment portfolio 1,136 2,070
Financial assets at fair value through profit and loss 154,546 128,662
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 fixed income securities classified as held at fair value through
profit or loss. The Company's current asset investments fall into this
category at 31 March 2025 and 31 March 2024.
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 instruments 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. All of the Company's investments classed as
financial assets at fair value through profit and loss fall into this category
at 31 March 2025 and 31 March 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 have been no transfers between these classifications in either period.
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 of these
financial statements.
Movements in investments at fair value through profit or loss during the year
to 31 March 2025 are summarised as follows:
IFRS 13 measurement classification Level 3
Unquoted
Investments
£000
Opening cost 77,385
Opening investment holding gain 49,207
Opening fair value at 1 April 2024 126,592
Additions at cost 29,288
Disposal proceeds (9,643)
Net profit on disposal* 1,517
Change in fair value 6,317
Foreign exchange loss (661)
Closing fair value at 31 March 2025 153,410
Closing cost 104,737
Closing investment holding gain 48,673
Closing fair value at 31 March 2025 153,410
* The net profit on disposal in the table above is £1,517,000 whereas
that shown in the Statement of Comprehensive Income is £965,000. The
difference comprises the change in the value of deferred proceeds totalling a
loss of £552,000 in respect of assets which have been disposed of and are not
included within the investment portfolio at 1 April 2024.
The following disposals took place in the year:
Net proceeds from sale Cost Opening carrying value as at 1 April 2024 Realised gain (loss) on disposal
£000 £000 £000 £000
Unquoted investments:
ACC Aviation Group Limited 6,421 220 4,725 1,696
Traveltek Group Holdings Limited 3,222 1,716 3,401 (179)
Total from portfolio 9,643 1,936 8,126 1,517
Ncam Technologies Limited 131 - 131
-
Displayplan Holdings Limited (683) - (683)
-
Deferred consideration (552) - (552)
-
Total from investment portfolio* 9,091 1,936 8,126 965
* The total from disposals in the year in the table above is £9,643,000
whereas that shown in the Statement of Cash flows is £7,259,000. The
difference comprises deferred proceeds of £2,384,000 which 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 £257,111,000 (2024: £219,600,000) and 319,178,657
(2024: 262,659,361) 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 March 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 March 2025 and 31 March 2024.
9. Total Return per Ordinary Share
The Total Return per ordinary share is calculated on cumulative dividends paid
of 184.15 pence per ordinary share (2024: 178.9 pence per ordinary share) plus
the net asset value as calculated per note 8.
10. Financial Commitments
There are no financial commitments at 31 March 2025 or 31 March 2024.
11. Events after the Balance Sheet Date
On 1 April 2025 the Company allotted the final shares from its fully
subscribed 2024/25 share offer. Gross proceeds of £30.5 million were raised,
resulting in the issue of 36,799,582 ordinary shares. This increased the
number of ordinary shares in issue to 355,978,239.
Subsequent to the year end, the Company has invested £2.4 million into new
portfolio company S4labour, and £0.4 million into existing portfolio company
Force24.
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 53 of the annual report. There were no amounts outstanding and due to
the directors at 31 March 2025 (2024: £nil).
13. Annual Report and Accounts
Copies of the statutory accounts for the year ended 31 March 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
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) . They can also
shortly be viewed on the Company's website at www.bscfunds.com
(http://www.bscfunds.com) . Hard copies of the statutory accounts for the
year to 31 March 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 Mr R Cook, Mr A C N Bastin, Mr J H Cartwright
and Ms P Sapre.
15. Annual General Meeting
The Annual General Meeting of the Company will be held at 12:00 pm on 9
September 2025 at 8-10 Hill Street, London W1J 5NG. Full details of the
agenda for this meeting are included in the Notice of the Annual General
Meeting on page 92 of the annual report.
16. Interim Dividend for the Year Ending 31 March 2026
The directors are pleased to announce the payment of an interim dividend for
the year ending 31 March 2026 of 2.00 pence per ordinary share ("Interim
Dividend").
The Interim Dividend will be paid on 25 July 2025 to those shareholders on the
Company's register at the close of business on 27 June 2025. The ex-dividend
date will be 26 June 2025.
The directors are not proposing a final dividend for the year ended 31 March
2025.
17. Dividend Re-investment Scheme
The Company operates a dividend re-investment scheme ("DRIS"). The latest
date for receipt of new or updated DRIS elections in respect of the Interim
Dividend is the close of business on 11 July 2025.
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
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