British Smaller

Sophisticated and complex high-risk tax-sensitive investments in small companies: handle with care
127tolmers
Posts: 19
Joined: November 22nd, 2016, 7:32 pm

British Smaller

Postby 127tolmers » November 28th, 2016, 7:54 am

http://www.investegate.co.uk/british-sm ... 04412654Q/

Big disposal of Go Outdoors, the biggest company in the portfolio for £14m at an uplift of 3.5p/share. I suspect a special dividend of 7p/share will be declared shortly.

BusyBumbleBee
Lemon Pip
Posts: 56
Joined: November 4th, 2016, 7:55 am

Re: British Smaller

Postby BusyBumbleBee » November 28th, 2016, 9:55 am

Well spotted, Tolmers. Most of the success of BSV has stemmed from this one investment and with its sale one has a slight concern that moving forward the returns will not be so 'stellar'

This is from the Annual report
At 31 March 2016 the investment portfolio was valued at GBP58.8 million (GBP55.5 million at 31 March 2015). Cash and gilt investments at 31 March 2016 were GBP36.1 million and represent 38 per cent of net assets (37 per cent at 31 March 2015).


So if they only distribute £7 million of the gain they swell their cash coffers too much - they need to do a dividend of 14 pence to keep the cash mountain to a reasonable amount.

runnygum
Posts: 9
Joined: November 4th, 2016, 9:35 pm

Re: British Smaller

Postby runnygum » December 2nd, 2016, 4:03 pm

Jolly good, I shall look forward to the 7-14p special :)

oxmatt
Posts: 8
Joined: November 5th, 2016, 6:54 am

Re: British Smaller

Postby oxmatt » December 6th, 2016, 10:32 am

16.5p including 14.5p special. I'll take that.

Kidman
Posts: 34
Joined: November 6th, 2016, 1:10 pm

Re: British Smaller

Postby Kidman » December 6th, 2016, 11:46 am

A EUR 5m non-prospectus fund-raising on 10 February 2017.

So if one wants to re-invest one's interim and special dividend there may be an option.

cprof
Posts: 3
Joined: November 16th, 2016, 8:35 am

Re: British Smaller

Postby cprof » December 6th, 2016, 12:01 pm

Note that BSC have DRIS that purchases @ 5% discount to NAV, as well as saving on fees, if you are planning to re-invest.

scotia
Posts: 48
Joined: November 4th, 2016, 8:43 pm

Re: British Smaller

Postby scotia » December 6th, 2016, 1:06 pm

So if they only distribute £7 million of the gain they swell their cash coffers too much - they need to do a dividend of 14 pence to keep the cash mountain to a reasonable amount
That was an impressive prediction BusyBumblebee!
Where did you purchase your Crystal Ball?

BusyBumbleBee
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Posts: 56
Joined: November 4th, 2016, 7:55 am

Re: British Smaller

Postby BusyBumbleBee » December 6th, 2016, 1:16 pm

cprof wrote:Note that BSC have DRIS that purchases @ 5% discount to NAV, as well as saving on fees, if you are planning to re-invest.


Hmm...

The special was in line with what I expected but still keeps their cash mountain at too large a percentage of total assets making me wary of investing more in this VCT. Which leaves me with a quandary as to whether to continue in the DRIS or not particularly as it is so large that I won't have enough income tax to reclaim. May have to transfer some into a nominee account or stop it altogether.

Any thoughts?

BusyBumbleBee
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Posts: 56
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Re: British Smaller

Postby BusyBumbleBee » December 6th, 2016, 1:20 pm

scotia wrote:So if they only distribute £7 million of the gain they swell their cash coffers too much - they need to do a dividend of 14 pence to keep the cash mountain to a reasonable amount
That was an impressive prediction BusyBumblebee!
Where did you purchase your Crystal Ball?


Obviously its not so good as you think - otherwise I would have posted this before my previous post! They still have too much cash and the warning is there in the report

While the existing investments should provide a reliable income stream until realisation, future returns will become more and more reliant on equity realisations which will mean a more volatile dividend stream for shareholders.

127tolmers
Posts: 19
Joined: November 22nd, 2016, 7:32 pm

Re: British Smaller

Postby 127tolmers » December 6th, 2016, 2:20 pm

British Smaller 2 have just changed brokers to Panmure Gordon.

http://www.investegate.co.uk/british-sm ... 06140840R/

I wonder if that portends a change in buyback policy, a tender offer or an overdue reduction in buyback discount from 10% to 5%.

Also British Smaller reported their half years today.

I am pleased to inform you that your Board has agreed to appoint Panmure Gordon (UK) Limited as corporate broker with effect from 1 January 2017. The Panmure Gordon team has a wealth of experience as broker to numerous VCTs and we look forward to working with them in the future. The Board would like to thank Nplus1 Singer for the work they have done as the Company's broker over many years.

http://www.investegate.co.uk/british-sm ... 03340839R/

Residual investment in GO Outdoors sold for £14.1 million on 27 November 2016 delivering a return of 37 times original cost over the life of the Company's investment. The gain over the valuation and net asset value ("NAV") at 30 September 2016 was £2.8 million, equivalent to 2.9 pence per ordinary share.

Interim dividend of 16.5 pence per ordinary share (including 14.5 pence arising from the realisation of GO Outdoors) to be paid on 18 January 2017.

Non-prospectus top-up to raise €5 million to be launched on 10 February 2017. (Note new allocation rules in response to shareholder concerns)

The underlying growth in the overall investment portfolio was £3.3 million, 5.5 per cent of its opening value.

Our experience to date suggests that new investment will need to focus on younger businesses which will almost certainly be unable to provide the same level of regular cash returns and income as the current portfolio. While the existing investments should provide a reliable income stream until realisation, future returns will become more and more reliant on equity realisations which will mean a more volatile dividend stream for shareholders.

The capital reserve and the revenue reserve are both distributable reserves. These reserves total £34,359,000, representing a decrease of £5,099,000 in the period since 31 March 2016. The directors also take into account the level of investment holding gains (losses) reserve and the future requirements of the Company when determining the level of dividend payments.

Of the potentially distributable reserves of £34,359,000 shown above, £1,195,000 relates to interest receivable from 2018 onwards, £466,000 related to preference dividends that will become distributable on the realisation of the investment, and £2,093,000 of cancelled share premium which will become distributable on 1 April 2018.

On filing the interim financial statements at Companies House, the reserves available for distribution will be £30,605,000.

scotia
Posts: 48
Joined: November 4th, 2016, 8:43 pm

Re: British Smaller

Postby scotia » December 6th, 2016, 7:22 pm

Busybumblebee asked
Any thoughts?

I'll still be going for the DRIS - I have no problems with sufficient tax to cover the rebate. I am still looking for more VCT investments in the current tax year, so getting some as a discounted DRIS is good news. Yes, I expect the performance of British Smaller (and other VCTs) to reduce in coming years, with the focus on the purchase of early-start companies, but with the core of reasonably mature companies which they still hold, I see them as a reasonably secure investment with a return (including the tax rebate) that is unlikely to be any less than cash or bonds. So possibly not an exciting investment, but I hope a reasonably safe one.

BusyBumbleBee
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Posts: 56
Joined: November 4th, 2016, 7:55 am

Re: British Smaller

Postby BusyBumbleBee » December 7th, 2016, 9:35 am

I more or less agree, Scotia, BUT the change of rules, the fact that most of the out-performance of this VCT stems from the asset they have just sold, their cash mountain and that it is quite difficult for it to invest in high interest loans doesn't make it top of my list.

I am looking at RM DIRECT LENDING RM SECURED IPO which is looking to give a 6.5% yield and seems to be investing in quite small companies

Specific return objective is a highly visible long term dividend
yield in excess of 6.5% (on the issue price) for the year to 31
December 2018 onwards. No performance fees.


see https://dzexi57u5vx1h.cloudfront.net/im ... tsheet.pdf

Kidman
Posts: 34
Joined: November 6th, 2016, 1:10 pm

Re: British Smaller

Postby Kidman » December 15th, 2016, 12:34 pm

I've been reading the interim report and accompanying letter and am dismayed by the ridiculous procedure BSV has come up with for their small non-prospectus fund-raising.
The completion of new investments and developing pipeline of investment opportunities is encouraging and in this context the Company has decided that it will undertake a non-prospectus top-up to raise €5 million to be launched on Friday 10 February 2017. In order to address a number of concerns raised by shareholders following last year's oversubscribed fundraising the Board has amended the application process. In particular, only postal applications will be accepted by the receiving agent and the fundraising will remain open to existing shareholders until Monday 6 March 2017. If the fundraising is fully subscribed at that date it will be closed and shares will be allotted by way of a ballot and the fundraising subsequently closed.

In other words, send in your application then sit back and wait a month to see if you are lucky in the ballot.

No pro-rata to existing shareholdings, no scale-down according to the number of priority applications. This company hasn't got a clue how to run a fund-raising that is fair to existing shareholders.

If anyone wants more BSV shares this financial year then they would do better to take advantage of the DRIS (if the deadline for so doing hasn't passed).

Retiringat51
Posts: 20
Joined: November 4th, 2016, 6:08 pm

Re: British Smaller

Postby Retiringat51 » December 15th, 2016, 5:55 pm

YFM joins Livingbridge in the Bobo the Clown Academy of Fundraising Fiasco.

naflod
Posts: 26
Joined: November 5th, 2016, 7:40 pm

Re: British Smaller

Postby naflod » December 15th, 2016, 7:20 pm

Hi Kidman

If anyone wants more BSV shares this financial year then they would do better to take advantage of the DRIS (if the deadline for so doing hasn't passed).


There is still plenty of time. I made the change the other way to pass on taking this dividend in BSV shares in order to diversify moer, probably in to Pembroke B.

According to note 14 of the six month figures, investors have until close of business on 4th January to make the election.

naflod

scotia
Posts: 48
Joined: November 4th, 2016, 8:43 pm

Re: British Smaller

Postby scotia » December 15th, 2016, 7:42 pm

No pro-rata to existing shareholdings, no scale-down according to the number of priority applications. This company hasn't got a clue how to run a fund-raising that is fair to existing shareholders.


I'm not sure that I agree with this sentiment. As I understand it, the offer will open to all current owners on 10th February, and all postal responses up to the 6th March will be considered equally valid. This avoids unfairness due to geographical location (as Livingbridge's policy did not). Now if the Offer is oversubscribed (by current owners only) then there will be a Lottery. This avoids (one of) the LivingBridge complaint(s) about scaling down which would require a part refund of a large number of cheques. With the British Smaller Cos Offer, only the lucky ones should get their cheques cashed. If at this stage the Offer has not been oversubscribed, then it will it be opened to non-owners on a first-come, first served basis.

Add this to the fact that current owners (myself included) can get an advantageous and guaranteed investment via DRIS of the generous Special Dividend, and I feel that we have been treated very fairly

Kidman
Posts: 34
Joined: November 6th, 2016, 1:10 pm

Re: British Smaller

Postby Kidman » December 15th, 2016, 9:23 pm

Scotia,
I am assuming this will be over-subscribed by existing shareholders. Indeed it may well be subscribed several times over which would mean many unhappy ballot losers. Those like yourself who suffered from postal delays in past offers could now suffer by being balloted out instead.

As for those non-owners who haven't got priority, all they have to do is buy one share in the market in time and then they join the existing shareholders for the priority period.

I agree that for many, DRIS is the answer.

Karellan
Posts: 37
Joined: November 4th, 2016, 2:42 pm

Re: British Smaller

Postby Karellan » December 16th, 2016, 8:19 am

I dont like the uncertainty of whether I am lucky so close to the end of the tax year. If I have to find another in under at short notice then it may not be quite what I would like.

scotia
Posts: 48
Joined: November 4th, 2016, 8:43 pm

Re: British Smaller

Postby scotia » December 16th, 2016, 11:28 am

I dont like the uncertainty of whether I am lucky so close to the end of the tax year. If I have to find another in under at short notice then it may not be quite what I would like.

I wholeheartedly agree with that sentiment!
I wonder how many of us are waiting for the Northern Offer. I wish that VCTS with small popular offers would make them earlier in the season.

127tolmers
Posts: 19
Joined: November 22nd, 2016, 7:32 pm

Re: British Smaller

Postby 127tolmers » December 16th, 2016, 5:39 pm

Just received a letter with the hard copy interim report.

A date for your diaries next year. On 3 May 2017 there is a YFM Investor Workshop at the Grand Connaught Rooms, London


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