British Smaller Companies VCT2 plc · LSE:BSC

British Smaller Companies VCT2 — British Smaller Companies VCT — Investor Presentation (February 2014)

21 slides from British Smaller Companies VCT2's investor presentation, Feb 12, 2014

  1. Slide 1: Our Approach: Transforming small businesses

    Our Approach Transforming small businesses Investor Workshop 12 February 2014 Inside British Smaller Companies David Hall Managing Director YFM Equity Partners 1

  2. Slide 2: 2013-14 The backcloth

    2013-14 The backcloth Our Approach Last Year This Year  Economy  Economy o Worldwide – general growth o Mixed growth – US up, China slowing o Europe –fragile stability o Almost 12 months no Euro crisis o UK – no growth; spending cuts o Fast growing European Economy not yet bitten  VCT World  VCT

  3. Slide 3: Our Approach - Unchanged and for good reason

    Our Approach- Unchanged…and for good reason Our Approach  Don’t over pay; equity can create headroom  The opportunity to work with and influence change  See a lot but be highly selective  Learned from our experience; o Make changes sooner rather than later o Plan / manage realisations o As impor

  4. Slide 4: Total Return by Fundraising Round - BSC VCT plc

    Total Return by Fundraising Round Overall Return British Smaller Companies VCT plc Offer price (in DRIS) Pence Pence 1995/96 & 1996/97 Tax Year 100.0 228.0 1996/97 & 1997/98 Tax Year 100.0 227.7 1997/98 & 1998/99 Tax Year 105.0 226.6 2004/05 & 2005/06 Tax Year (C share) 100.0 198.3 2005-06 Tax year

  5. Slide 5: Total Return by Fundraising Round - BSC VCT2 plc

    Total Return by fundraising Round Overall Return British Smaller Companies VCT2 plc Offer price (in DRIS) Pence Pence 2000/01 & 2001/02 Tax Year 100.0 129.3 2001/02 & 2002/03 Tax Year 100.0 129.3 2009/10 & 2010/11 Tax year 77.3 91.3 2010/11 & 2011/12 Tax Year 70.3 84.9 2012 Tax Year 70.5 78.6 2012/1

  6. Slide 6: BSC Dividend History

    BSC Dividend History BSC Dividend History Average dividend of 5.55p per share for the five years to 30 September 2013 (this excludes a special dividend of 18.0 pence per share in respect of the partial realisation of the investment in Go Outdoors in August 2011) As at 30 September Past performance o

  7. Slide 7: BSC2 Dividend History

    BSC2 Dividend History BSC2 Dividend History Average dividend of 4.6p per share for the five years to 30 September 2013 * Past performance of the VCTs is no guide to future performance and may not be repeated. The value of an investment in the VCTs may go down as well as up and you may not get back t

  8. Slide 8: What drives dividends

    What drives dividends  Boards’ policies – objective increasing dividends over time  Deal with the tax man o Minimum of 85% of ‘Net Profit’ o 70% of ‘qualifying’ funds invested at all times (daily test)  Income dividends o Investment income: New deals 5-7% o Cost : Targets 2.3 - 2.5% o Minimum dis

  9. Slide 9: What drives dividends: Capital dividends - The 70% test

    What drives dividends Capital dividends – The 70% test £m Realise 6 Cost (4) Profit 2 £m Cost Proceeds Total Dividend Total NAV 50 <3 Years (10) 40 Unrealised Gain (10) Qualified Funds 30 (4) 6 32 (2) 30.0 Cash 4.5 6 10.5 (2) 8.5 Invested 25.5 (4) 21.5 21.5 80% 67.25% 71.7% 9

  10. Slide 10: Portfolio highlights

    Portfolio highlights Go Outdoors BSC Expands to 45 stores Douglas Gill BSC/BSC2 MBO Appoint chairman Seven Technologies BSC/BSC2 Acquisition of Datong Bagel Nash BSC/BSC2 Investment in new bakery Bluebell Telecom BSC/BSC2 Disposed of outbound call business Another year of sales growth 29th Showroom

  11. Slide 11: Converging Portfolios

    Converging Portfolios Sector BSC BSC2 Total DisplayPlan Holdings Limited Business services 3,935 2,119 6,054 GO Outdoors Limited Retails and Brands 5,373 - 5,373 Douglas Gill International Limited Retails and Brands 2,500 1,870 4,370 Mangar International Retails and Brands 2,460 1,640 4,100 Seven Te

  12. Slide 12: British Smaller Companies - EIS investments

    British Smaller Companies – EIS investments Company name Description Type of Dates of BSC BSC Institution Total Investment Investment EIS VCTs Funds Equity YFM Managed Funds £000 £000 £000 £000 Dryden Human International recruiter in the Development Feb, Mar, 249 120 350 719 Capital insurance sector

  13. Slide 13: Inside an unquoted investment: GTK MBO

    Inside an unquoted investment GTK: MBO Mar 13: First contact from introducer Mar- May 13: Initial meetings and indicative offer Jun 13: Final management presentation and offer letter Jul 13: Heads & Investment approved; due diligence providers chosen Aug 13: Due diligence and legal negotiation comme

  14. Slide 14: Investments Completed since last Offer

    Investments Completed since last Offer BSC BSC2 Total £’000 £’000 £’000 Seven Technologies 984 738 1,722 Gill Marine 2,500 1,870 4,370 GTK 1,750 1,150 2,900 Bagel Nash 584 390 974 Leengate Valves 1,401 934 2,335 Mangar 2,460 1,640 4,100 Other 310 349 659 TOTAL 9,989 7,071 17,060 14

  15. Slide 15: Utilising the cash: Since June 2013

    Utilising the cash: Since June 2013 £'000 £'000 £'000 BSC BSC2 Total Dividends 4,449 3,805 8,254 Share Buy Backs 329 144 473 Investment 9,989 7,071 17,060 Cash Utilised 14,767 11,020 25,787 15

  16. Slide 16: Dividend Re-investment Scheme - Number of shares

    Dividend Re-investment Scheme (DRIS) - Illustration Shareholder A and B both invest £10,000 (60% into BSC £6,000 / 40% into BSC2 £4,000) • Shareholder B joins DRIS • Target blended yield of 8.35% Fig 1 - Number of Shares at 31 March 2019 18,000 16,492 16,000 Number of shares 14,000 4,785 12,000 10,0

  17. Slide 17: Dividend Re-investment Scheme - Return on dividends

    Dividend Re-investment Scheme (DRIS) - Illustration Shareholder A and B both invest £10,000 (60% into BSC £6,000 / 40% into BSC2 £4,000) • Shareholder B joins DRIS • Target blended yield of 8.35% Fig 2 - 5 years to 31 March 2019 6,000 4,958 5,000 Return on dividends £ 70% 1,026 4,000 3,000 2,000 3,9

  18. Slide 18: Retail Distribution Review and Regulatory changes

    Retail Distribution Review and Regulatory changes  Purpose o Investors pay for advice o No hidden charges o Advice based on knowledge/experience not commission  New training thresholds  Doesn’t apply in 2013 to execution only/discount brokers  Impact?  Fee paid at point of investment?  Wealth

  19. Slide 19: Fundraising: £30m Joint Offers BSC VCT and BSC VCT2

    Fundraising £30m Joint Offers BSC VCT and BSC VCT2  £30 million Joint Offers  Investors choose, if not 60% BSC; 40% BSC2  Prospectus Top Up into Ordinary Shares  Current dividend targets 5.5pps BSC and 4.5pps BSC2  11.0% BSC and 13.6% BSC2 to higher rate tax payer  Existing investor bonus 1.5%

  20. Slide 20: VCTs some things for the future?

    VCTs some things for the future?  DRIS 20-25% now reinvested  Buy-backs and the 6 month rule  Direct investment on a levelling playing field? Bang on policy?  On average 4x more employment in all realised investments  Long term equity investment supports/fuels/enables growth  Tax benefits stil

  21. Slide 21: Risks to Consider

    Risks to Consider Risks to Consider Past performance is no guide to future performance and may not be repeated. The value of an investment in British Smaller Companies VCT plc, British Smaller Companies VCT2 plc (‘the Companies’) and British Smaller Companies EIS Fund (“the Fund”) may go down as wel

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