Half Yearly Report

25 November 2015

BETTER CAPITAL PCC LIMITED

(the "Company")

INTERIM RESULTS UPDATE

Better Capital PCC Limited announces its 2015 interim results for both the 2009 Cell and the 2012 Cell.

2009 Cell Interim Results

· NAV at 30 September 2015: £264.2 million, NAV at 31 March 2015: £262.3 million, NAV at 30 September 2014: £225.8 million

· £210.0 million total capital raised

· £203.8 million net proceeds invested in Fund I

· £26.5 million/12.6 per cent. cumulative distributions to date

· 41.8 per cent. return from NAV growth and distributions since inception

· 6.2 per cent. annualised NAV total return including distributions

* Based on the weighted average issue price of ordinary shares and net of share issue costs, since inception.

** Annualised return since inception

· 4.4 years average holding period of portfolio companies

· 9 total platform investments

· 10 follow-on investments

· 2 good realisations - ATH Coal, Calyx Managed Services

· 2 poor realisations - Reader's Digest, Fairline

· £30.9 millionⱡ net debt across Fund I portfolio companies

ⱡ SPOT, a minority holding in Fund I excluded (net debt of £33.0 million)

2012 Cell Interim Results

· NAV at 30 September 2015: £263.3 million, NAV at 31 March 2015: £339.9 million, NAV at 30 September 2014: £354.1 million

· £355.5 million total capital raised

· £347.4 million net proceeds invested in Fund II

· £6.1 million/1.7 per cent. distribution to date

· £285.5 million/82.2 per cent. committed to date

· 22.6 per cent. value decline combined NAV and distributions since inception

· 6.6 per cent. annualised value decline combined NAV and distributions

· 0.78 times return on total capital so far

* Based on the weighted average issue price of ordinary shares and net of share issue costs, since inception.

** Annualised return since inception

· 6 total platform investments

· 1 follow-on investment

· 1 partial loss - City Link

· 2.0 years average holding period of portfolio companies

· £30.2 million net debt across Fund II portfolio companies

Chairman's Statement

Better Capital PCC Limited, including its two cells, the 2009 Cell and the 2012 Cell, today issues its Interim Report for the period ended 30 September 2015.

On 6 November 2015, the Company issued a trading statement in relation to the 2012 Cell, "that it had been advised by BECAP12 GP Limited ("Fund II GP"), the general partner of BECAP12 Fund LP ("Fund II"), of recent trading underperformance in certain of the Fund II portfolio companies" and consequently, "anticipated that the Net Asset Value at 30 September 2015, in respect of the 2012 Cell, will show a decline in the region of 20 per cent." 

Careful review and refinement by the Fund II GP in consultation with the Board has resulted in a reported decline of 22.1 per cent. This is shown in the summary below.

2012 Cell

1 Excludes an £8.9 million repayment held at SPV level2 Includes £3.1 million of cash held at SPV level

The 2012 Cell NAV, including accumulated distributions of £6.1 million (1.7 per cent. of funds raised), fell by £76.6 million in the period to £269.4 million, principally due to write downs in Everest, SPOT and CAV Aerospace. 

Everest and SPOT have both delivered disappointing trading results with sales performance well behind budgeted levels in the current year. Issues driving poor performance have been identified by the Fund II GP and shared with the Board. Consequent action plans are in progress. It is important to note that both companies remain profitable and are not subject to liquidity issues.

Following a short period of Fund II ownership, it became clear to the Fund II GP that the trading and operations at CAV Aerospace were significantly worse than understood at acquisition and a substantial warranty claim has been filed. The business continues to suffer considerable losses. It will require a further cash injection in the near term.

Greater detail on Fund II's investment activities, portfolio companies and valuation are set out in the Fund II GP's report below.

The 2012 Cell NAV per share was 75.96p at 30 September 2015 which compares to 98.06p at 31 March 2015 (102.16p at 30 September 2014). The 2012 Cell Adjusted NAV per share, which includes accumulated distributions, was 77.71p at 30 September 2015 which compares to 99.81p at 31 March 2015 (103.91p at 30 September 2014).

2009 Cell

1 This excludes £4.0 million of interest repaid during the period2 This excludes £0.5 million of interest repaid during the period

The 2009 Cell NAV, including accumulated distributions of £26.5 million (12.6 per cent. of funds raised) rose by £1.9 million, 0.7 per cent. in the period to £290.7 million including a net carry provision of £7.1 million.

Gardner remains the principal driver of NAV growth in the 2009 Cell, offset by write downs in Fairline and SPOT.

In September 2015, Fund I disposed of its equity interest in Fairline to Wessex Bristol for a £2.0 million secured deferred consideration. Faced with a weak market for its boats, the Fund I GP no longer considered the business had a feasible strategy to support going forward. The deferred consideration has been recognised as a receivable in Fund I's net assets attributable to the 2009 Cell.

Fund I's holding in SPOT has been written down, reflecting the group's trading underperformance and adjusted for a partial repayment of Fund I's short term loan. A comprehensive overview of the Fund I portfolio companies is set out in the Fund I GP's report below.

The 2009 Cell NAV per share was 127.77p at 30 September 2015 which compares to 126.86p at 31 March 2015 (109.19p at 30 September 2014). The 2009 Cell Adjusted NAV per share, which includes accumulated distributions, was 140.57p at 30 September 2015 which compares to 139.66p at 31 March 2015 (121.99p at 30 September 2014).

Better Capital team

Since my last report, there have been further personnel changes in Better Capital LLP, the Consultant to the Fund GPs. Mark Aldridge, one of the founders of Better Capital, has decided to step down as CEO. Mark remains a strong supporter of Better Capital and we wish him well.

Simon Pilling has replaced Mark as CEO and is leading the Consultant, in conjunction with his role as Head of Portfolio, which involves sitting as non-executive Chairman of Jaeger, SPOT and iNTERTAIN and sitting on the boards of m-hance and Omnico. The Consultant retains strong transacting capabilities, with Rob Asplin leading on the transaction side.

On the Portfolio side, the Consultant has boosted its team with the addition of Chris Horobin. Chris has proven experience in internet and digital retailing, having previously run QVC Japan and Sensen Taiwan as CEO of those businesses. In the near term, Chris is CEO at Jaeger and is providing valuable input on the strategic direction of Everest.

Jon Moulton is the Chairman of Omnico and remains on the boards of Gardner and CAV Aerospace.

In addition to the Better Capital team there are external persons with suitable experience at board level in place at CAV, iNTERTAIN and m-hance.

2009 Cell - Distributions

The Fund I GP has advised the Board that, save for a small balance to maintain Fund I's incidentals and portfolio requirements, it is anticipated that all cash surpluses arising from major disposals will be returned to the 2009 Cell. It is the Board's intention to distribute any such available cash to the investors of the 2009 Cell, save for a small balance to support the working capital requirement of the 2009 Cell.

2012 Cell - Cash

The principal concern of the Fund II GP is to maximise the return available to the 2012 Cell investor.

The Fund II GP has advised the Board that in respect of the utilisation of current cash balances (£39.1 million at the time of writing, some 11.0 per cent. of original subscribed capital) and of future cash inflow is as follows:

With that object to the fore, it is the Fund II GP's intention, after providing for the Cell and PCC costs, first to utilise any excess liquidity to purchase the shares of the 2012 Cell, if the opportunity arises to purchase such at an attractive discount to NAV. To the extent that this is not possible, the remaining liquidity will be available to support add-ons to the existing portfolio or, subject to consultation with the Board, particularly attractive new opportunities (until 30 June 2016 when the investment period ends) as they may arise.

Any cash surplus to the above objectives that is returned to the Company will be distributed to investors.

The Board's perspective

The Board recognises and shares investors' concerns regarding recent developments, particularly the underperformance of certain businesses within Fund II which have led to the significant write down of the 2012 Cell NAV and a further material fall in the 2012 Cell share price.

I noted in my annual report statement that the valuation of turnaround investments is necessarily subjective and therefore likely to give rise to volatility in NAV over time. Regardless, the Board is very disappointed that such a material write down has proven necessary and, on shareholders' behalf, it has engaged actively with the Consultant to review the operational, personnel and sectoral issues across the Funds' portfolios. The Board has received assurance from the Consultant that appropriate resource is being deployed to address these issues and that its team remains committed and determined to maximise the long term return to the Company's shareholders.

The Company's structure was designed with the intention that cash will be distributed to shareholders as investments are realised, rather than being reinvested as would be the case for many other listed private equity funds. In the near term this structure is most relevant to the 2009 Shareholders. Your Board is closely following the exit strategies of the Fund GPs in order to maximise returns for the benefit of shareholders.

With regard to the 2012 Fund, which is still in its investment period with meaningful cash resources, the Board has encouraged and is supportive of the Fund II GP's decision, stated above, that any excess Fund II liquidity will first be allocated to potential purchases of the 2012 Shares. The extent of such purchases will be dependent on the Fund II GP's assessment of what liquidity is "excess" and the availability of the 2012 Shares in the market at attractive discounts; although it is clearly important that sufficient cash is retained to protect and enhance the value of existing portfolio companies.

The Board would welcome increased direct engagement with the Company's shareholders and can be contacted via the Company Secretary or Numis, the Company's corporate broker.

Richard CrowderChairman24 November 2015

Statement of Responsibility and Other Information

Responsibility Statement

The Directors confirm that to the best of their knowledge:

· the condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union; and

· the Interim Financial Report meets the requirements of an interim management report (as defined below), and includes a fair review of the information required by:

a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first period of the financial year; and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties of the remaining six months of the year; and

b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first period of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the audited financial statements that could do so.

Interim management report

· Important events of the interim period

The important events that have occurred during the interim period and the key factors influencing the financial statements are all set out in this report, comprising: the Chairman's Statement, Fund I General Partner's Report, Investment Report of Fund I, Fund II General Partner's Report, Investment Report of Fund II and the Financial Statement sections.

· Principal risks

There are a number of risks that could have a material impact on the performance of the Company over the remaining six months of the financial year, thereby causing actual performance to differ materially from expectations.

The Board considers that the principal risks and uncertainties have not materially altered from those published in the Annual Report for the year ended 31 March 2015. The Company's principal risk relates to the financial and operational performance of the Fund I and Fund II portfolios.

The Company's principal risk factors are fully discussed in the Company's prospectuses, available on the Company's website www.bettercapital.gg.

The Directors of the Company are listed below and have been directors throughout the period.

By order of the Board

Richard Crowder

Chairman

24 November 2015

Independent Review Report to Better Capital PCC Limited

Introduction

We have been engaged by the Company to review the condensed set of financial statements of the Company in the interim financial report for the period ended 30 September 2015 which comprises the Company Condensed Statement of Financial Position, Company Condensed Statement of Comprehensive Income, Company Condensed Statement of Changes in Equity, Company Condensed Statement of Cash Flows and Company related notes.

We have read the other information contained in the interim financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors' responsibilities

The interim financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the interim financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in Note 2, the annual financial statements of the Company are prepared in accordance with IFRS as adopted by the European Union. The Company's condensed set of financial statements included in this interim financial report have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting' as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the Company's condensed set of financial statements in the interim financial report based on our review.

Our report has been prepared in accordance with the terms of our engagement to assist the Company in meeting its responsibilities in respect of interim financial reporting in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority and for no other purpose. No person is entitled to rely on this report unless such a person is entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the Company's condensed set of financial statements in the interim financial report for the six months ended 30 September 2015 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

BDO LimitedChartered AccountantsPlace du Pré, Rue du Pré, St Peter Port, Guernsey

24 November 2015

Condensed Statement of Financial Position

As at 30 September 2015

The unaudited condensed interim financial statements of the Company were approved and authorised for issue by the Board of Directors on 24 November 2015 and signed on their behalf by:

Richard Crowder Richard Battey

Chairman Director

The notes below form an integral part of the Company's condensed interim financial statements.

Condensed Statement of Comprehensive Income

For the six months ended 30 September 2015

All activities derive from continuing operations.

The notes below form an integral part of the Company's condensed interim financial statements.

Condensed Statement of Changes in Equity

For the six months ended 30 September 2015

There have been no transactions with owners during the period.

The notes below form an integral part of the Company's condensed interim financial statements.

Condensed Statement of Cash Flows

For the six months ended 30 September 2015

The notes below form an integral part of the Company's condensed interim financial statements.

Notes to the Condensed Interim Financial Statements

For the six months ended 30 September 2015

1. General information

Better Capital PCC Limited is a Closed-ended Investment Company, incorporated in, and controlled from Guernsey as a Protected Cell Company. It has an unlimited life and is registered with the GFSC as a Registered Closed-ended Collective Investment Scheme pursuant to the POI Law.

The Company maintains a separate cell account for each class of shares, to which the capital proceeds of issue and the income arising from the investment of these proceeds in the respective Fund are credited, and against which the expenses allocated are charged. In any redemption, shareholders are only entitled to their proportion of the net assets held in the cell relating to the particular shares.

The Company has two cells: 2009 Cell and 2012 Cell. The financial results for each cell can be found below.

2. Accounting policies

Basis of preparation

The unaudited company condensed financial information included in the interim financial report for the six months ended 30 September 2015 has been prepared in accordance with the DTRs and Listing Rules of the UK's FCA and IAS 34, 'Interim Financial Reporting' as adopted by the EU.

The interim financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Company's annual financial statements for the year to 31 March 2015, which are available on the Company's website www.bettercapital.gg. The annual financial statements have been prepared in accordance with EU adopted IFRS.

The Company does not operate in an industry where significant or cyclical variations, as a result of seasonal activity, are experienced during the financial period.

The same accounting policies and methods of computation are followed in the interim financial statements as in the annual financial statements for the year to 31 March 2015.

Standards, interpretations and amendments to published standards adopted in the period

There were no new standards applied during the period ended 30 September 2015.

Going concern

After making appropriate enquiries, the Directors have a reasonable expectation that the Company, and in turn Funds I and II, have adequate resources to continue in operational existence for the foreseeable future and do not consider there to be any threat to the going concern status of the Company. For this reason, they continue to adopt the going concern basis in preparing these interim financial statements.

Critical accounting judgement and estimation uncertainty

Use of estimates and judgements

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses.

The critical accounting judgements and estimation uncertainties for the 2009 Cell and 2012 Cell are stated on below.

Taxation

The Company and Cells are exempt from taxation in Guernsey.

3. Segmental reporting

For management purposes, the Company is organised into two main operating segments, being the 2009 Cell and the 2012 Cell. Full details of the 2009 Cell's and 2012 Cell's results are shown below.

4. Investment in Limited Partnerships

Total Investment:

The movement in fair value is derived from the fair value movements in the underlying investments held by Fund I and Fund II, net of income and expenses of Fund I and Fund II and their related special purpose vehicles.

The outstanding loans do not incur interest. The loans are expected to be repaid by way of distributions from the Funds. The Company is not entitled to demand repayment of the outstanding loans, however, the General Partner may, upon request by the Company, repay to the Company any amount of the outstanding loan. During the period £nil was repaid to the Company by Fund I (Six months to 30 September 2014: £0.5 million, Year to 31 March 2015: £0.5 million) and £nil by Fund II (Six months to 30 September 2014: £6.1 million, Year to 31 March 2015: £6.1 million).

Income distributions receivable from the Funds in relation to the period amounted to £nil (Six months to 30 September 2014: £1.8 million, Year to 31 March 2015: £3.0 million) which have been allocated as income based on discretionary allocation powers of the respective General Partners of the Funds as set out in the respective Limited Partnership Agreements. At the period end an aggregate £1.6 million (Six months to 30 September 2014: £2.6 million, Year to 31 March 2015: £3.8 million) remained outstanding.

In the financial statements of the Company, the fair value of the investments in Limited Partnerships are adjusted to reflect the fair value of the Cell's attributable valuation of net assets within Fund I and Fund II, as seen in more detail in Note 5.

5. Fair value

The level in the fair value hierarchy within which the financial assets or financial liabilities are categorised is determined on the basis of the lowest level of input that is significant to the fair value measurement.

Financial assets and financial liabilities are classified in their entirety into only one of the three levels.

The fair value hierarchy has the following levels:

- Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities.

- Level 2 - inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

- Level 3 - inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).

The only financial instruments carried at fair value are the investments in Fund I and Fund II which are fair valued at each reporting date.

The Company's investments in Fund I and Fund II have been classified within Level 3 as they have unobservable inputs and are not traded. Amounts classified as Level 3 for the period are £264.1 million for Fund I (30 September 2014: £225.3 million, 31 March 2015: £262.0 million) and £259.4 million for Fund II (30 September 2014: £350.9 million, 31 March 2015: £335.8 million).

Transfers during the period

There have been no transfers between levels during the period.

Valuation techniques

The value of the Cells' investments in the Funds is based on the value of each Cell's limited partner capital and loan accounts within each Fund. This is based on the components within the Funds, principally the value of the underlying investee companies. Any fluctuation in the value of the underlying investee companies will directly impact on the value of the Company's investment in the Funds.

When valuing the underlying investee companies, the GPs of each Fund review information provided by the underlying investee companies and other business partners and apply IPEV methodologies to estimate a fair value that is in adherence with the requirements of IFRS 13 'Fair Value Measurement' as at the reporting date.

Initially acquisitions are valued at price of recent investment. Once maintainable earnings can be identified, or reasonably estimated, the preferred method of valuation is the earnings multiple valuation technique, where a multiple that is an appropriate and reasonable indicator of value (given the size, risk profile and earnings growth prospects of the underlying company) is applied to the maintainable earnings of the company. Occasionally other methods, as deemed suitable by the GPs, may be used, such as revenue multiple, net assets, break-up value or discounted cash flows. The techniques used in determining the fair value of the Cells' investments are selected on an investment by investment basis so as to maximise the use of market based observable inputs.

The Board reviews and considers the fair value arrived at by the GPs before incorporating into the fair value of the investment adopted by the Company. The variety of valuation bases adopted, quality of management information provided by the underlying investee companies and the lack of liquid markets for the investments mean that there are inherent difficulties in determining the fair value of these investments that cannot be eliminated. Therefore the amounts realised on the disposal of investments may differ from the fair values reflected in these interim financial statements and the differences may be significant.

The significant unobservable inputs in the 2009 Cell and in the 2012 Cell are shown below.

6. Share capital

Core shares

Period ended 30 September 2015

Period ended 30 September 2014

Year ended 31 March 2015

Cell shares

Authorised:

The Cells are authorised to issue an unlimited amount of ordinary shares at £1 par value.

Period ended 30 September 2015

Period ended 30 September 2014

Year ended 31 March 2015

The two capital distributions (reductions of share capital) to date for the 2009 Cell total £26.5 million, being 12.6 per cent. of funds raised.

The one capital distribution (a reduction of share capital) to date for the 2012 Cell totals £6.1 million, being 1.7 per cent. of funds raised.

7. Related party transactions

The Company has four non-executive Directors. Mr Jon Moulton is a director and the sole shareholder of BECAP GP Limited, the general partner of the Fund I GP and BECAP12 GP Limited, the General Partner of the Fund II GP.

Annual remuneration for each Director is as follows: the Chairman receives £60,000, the Chairman of the audit committee receives £52,500, the Chairman of the management engagement, nomination and remuneration committee receives £50,000 and the other non-executive Director receives £45,000.

Directors' fees and expenses for the period to 30 September 2015 amounted to £105,000 (31 March 2015: £209,000, 30 September 2014: £105,000), of which £52,000 (31 March 2015: £52,000, 30 September 2014: £52,000) remained outstanding at the period end.

8. Earnings per share and net asset value per share

The earnings per share, net asset value per share and adjusted net asset value per share for the 2009 Cell and 2012 Cell are shown below.

9. Subsequent events

Subsequent events for 2009 Cell and 2012 Cell are detailed below.

Better Capital 2009 Cell

Investment policy summary

Better Capital 2009 Cell has invested in a portfolio of businesses which, when purchased, had significant operating issues and associated financial distress, and which have significant activities within the United Kingdom.

The 2009 Cell Investment policy is in the Company's prospectus, available on the Company's website www.bettercapital.gg.

General Partner's Report

Fund I is now in its development and realisation phase. The formal process to realise Santia is in advanced progress, with Gardner, the dominant investment, still on course to follow suit in 2016. Omnico and m-hance are work-in-progress but continue to demonstrate good potential.

Portfolio update

Gardner completed its August 2015 financial year marginally ahead of its EBITDA budget of £16.0 million (2014 audited EBITDA: £11.8 million) and is on track to deliver its EBITDA budget in Q1 2016. Cash generation remains good. Under Nick Sanders' leadership the business continues to enjoy considerable success in winning new work with existing and new customers and has continued to find areas in its cost base to drive incremental improvements, further underpinning its 2016 performance. Gardner's main focus now is to continue to demonstrate that it can maintain its excellent reputation for delivery and quality whilst delivering sales growth.

Gardner's valuation has been written up by £25.0 million, reflecting a £31.0 million improvement in the underlying value, offset by a £6.0 million repayment of capital and interest in the period. The valuation is based on an earnings approach, with maintainable EBITDA at c. £24.0 million, derived from the average of historic, current budget and next year's projected profits, benchmarked to transactions in a similar space to Gardner (range of EV/EBITDA: 8.2 times to 12.8 times). At 30 September, the business had net debt of £27.5 million. Exit preparation is underway with a view that the business will come to market in late 2016. We, the Fund I GP remain confident that Gardner will deliver a strong overall return to Fund I.

Steady progress continues to be made in m-hance, the remaining business in the Calyx Group. The business is on-course to more than double the December 2014 audited EBITDA of £0.5 million with revenue being broadly flat (2014 audited revenue: £16.8 million) due to variations in its product mix. The business's budget to December 2016 is expected to deliver incremental profits to the current year, through realised savings in the support base and continued growth in the CRM practice as seen over the last two years.

Microsoft Dynamics GP is still seen as a strong product for an on premises solution. The market is changing and many customers are looking for applications based on software as a service that operate via the cloud. m-hance is in advanced discussions with a major ERP provider to expand its offering to cater for this new area of demand.

The valuation for m-hance remains unchanged at £12.5 million. This has been derived using an earnings approach (range of EV/EBITDA: 8.1 times to 12.6 times), supported by a revenues approach, on the business's 2016 budgeted profits and revenue.

Trading in Santia is in line with expectations. The formal sale process for Santia is progressing at pace and is expected to conclude shortly at around the carrying value published, of £40.0 million which is unchanged from March 2015.

Omnico closed the financial year ended September 2015 with revenues materially below prior year (2014: £42.9 million), with revenues in Hardware almost halved offset by growth of 8 per cent. in Software. The Software business continues to enjoy profitable growth with notable wins in the period including SeaWorld and HMV, and a reasonable pipeline of opportunities both in the UK and in the US. However, Hardware has remained loss-making. A decision to radically downsize this division was reached in the summer and has been a major focus for the management team which will continue until Q1 of calendar year 2016. New funding totalling £4.7 million (£3.3 million in the period) has been provided to support this and the software initiatives which are expected to return Omnico to meaningful profitability in 2016.

Following a review of the management team structure, Mel Taylor has taken on the role of CEO. Mel has been instrumental in driving the on-going change programme in Omnico.

Omnico's valuation is unchanged at £25.0 million, supported using an earnings approach to valuation. Maintainable EBITDA is derived from the average of historic, current budget (year to September 2016) and future (year to September 2017) profits, against a range between 11.4 times to 17.5 times EBITDA, with the most comparable transaction being the acquisition of Micros by Oracle in September 2014.

An update on SPOT, a portfolio company 9.9 per cent. owned by Fund I is provided in the Fund II General Partner's Report below. The business performed significantly worse than expectations due to a combination of a lower return rate of previously lost Spicers' customer relationships and a weakness in general trading affecting both Spicers and OfficeTeam. Clear routes to address the issues have been identified and are underway. Fund I's holding in SPOT has been written down to £6.2 million reflecting the deterioration of profit expectation in the current year and a repayment of £1.1 million in July 2015. SPOT's valuation has been derived using an earnings approach, applied to the group's 2016 budgeted profits. The 2016 EBITDA is predicated on current trading conditions, augmented by further savings in its cost base and a modest growth in sales. At 30 September, the business had net debt of £33.0 million.

Investment activities in the period to 30 September 2015

During the period, Gardner repaid £6.0 million in a combination of capital and interest repayments, with an additional £2.0 million repaid post period end. Total repaid to date is £19.2 million from a total capital outlay of £41.0 million (46.8 per cent.).

Santia also repaid £0.5 million in interest in the period. Total repaid to date is £3.5 million from a total capital outlay of £15.0 million (23.3 per cent.).

The refinancing in SPOT which completed in the period enabled the group to return a total of £10.0 million across the Better Capital entities, of which £1.1 million was repaid to Fund I.

m-hance also returned £0.3 million to Fund I in the period, funded through internal cash resources.

Prior to its disposal, Fairline received £7.3 million of new investment to fund on-going losses, the development of the new 53-foot model and the transition towards a demand-led manufacturing model. The business was disposed of in September 2015 to Wessex Bristol, owners of Fletcher Boats for a deferred payment of £2.0 million*, with a secured first charge on all assets. This was very disappointing after the good progress in the spring but orders dried up despite considerable sales efforts. The only alternative route relied on considerable further funding and a marked improvement in a market where all UK participants are reporting weak results. We wish Fairline and its employees the very best under its new owners.

* the Fairline £2.0 million deferred consideration has been treated as a receivable in Fund I's net assets

Omnico also received new investments totalling £3.3 million in the period and further £1.4 million in October 2015. The funding was to support the large-scale restructuring of its loss-making hardware division.

Valuation

The overall portfolio carrying value rose by £6.2 million between 1 April 2015 and 30 September 2015. Gardner has been written up by a net £25.0 million reflecting strong current performance, offsetting the write down incurred on the sale of Fairline and the impairment on Fund I's holding in SPOT.

Cash and closing remarks

On 24 November 2015, Fund I had cash of £0.6 million. The current intention remains that surplus proceeds will be returned to the 2009 Cell as soon as each divestment is concluded, leaving a small balance to support portfolio requirements and incidentals.

Fund I's overall return is heavily dependent upon a good exit for Gardner and also importantly, in building value in Omnico. If these are achieved then a respectable overall outturn should be obtained.

Jon Moulton

Director

BECAP GP Limited

24 November 2015

Investment Report of Fund I

Gardner

Business description

A Tier-1 supplier of medium and high complexity machined metallic components to the aerospace industry (www.gardner-aerospace.com)

Investment details

\* This excludes £4.0 million of interest repaid during the period.

m-hance

Business description

Implements, deploys and manages enterprisewide business management software solutions (www.m-hance.com)

Investment details

Santia

Business description

Provider of consultancy and advisory health, safety and environmental services (www.santia.co.uk)

Investment details

\* This excludes £0.5 million of interest repaid during the period.

Omnico

Business description

Provider of omni-channel hardware, software and services to the retail, entertainment, hospitality and leisure sectors (www.omnicogroup.com)

Investment details

SPOT

Business description

Spicers is a leading office products and stationery wholesaler (www.spicers.co.uk)

OfficeTeam is a leading office products and services supplier (www.officeteam.co.uk)

Investment details

Portfolio summary and reconciliation

* Fund I holds its investments at cost in accordance with the terms of the Limited Partnership Agreement.

** 2009 Cell fair values its investment in Fund I in accordance with the accounting policies as set out in Note 2.

1 This excludes £4.0 million of interest repaid during the period

2 This excludes £0.5 million of interest repaid during the period

Summary income statement for the Partnership

Cash Management

As at 30 September 2015, Fund I had placed a total of £0.4 million (31 March 2015: £4.0 million, 30 September 2014: £0.8 million) of cash on instant access deposit with one bank. Fund I has in place a strict cash management policy that limits counterparty credit risk whilst simultaneously seeking to maximise returns.

INDEPENDENT REVIEW REPORT TO BETTER CAPITAL PCC LIMITED IN RESPECT OF THE 2009 CELL

Introduction

We have been engaged by the Company to review the condensed set of financial statements of the 2009 Cell, a cell of Better Capital PCC Limited, for the period ended 30 September 2015 which comprises the 2009 Cell Condensed Statement of Financial Position, the 2009 Cell Condensed Statement of Comprehensive Income, the 2009 Cell Condensed Statement of Changes in Equity, the 2009 Cell Condensed Statement of Cash Flows, and the 2009 Cell related notes.

We have read the other information contained in the interim financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors' responsibilities

The interim financial report is the responsibility of, and has been approved by, the Company's Directors. The Directors are responsible for preparing the interim financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in Note 2, the annual financial statements of the 2009 Cell are prepared in accordance with IFRS as adopted by the European Union. The 2009 Cell's condensed set of financial statements included in this interim financial report have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting' as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the 2009 Cell's condensed set of financial statements in the interim financial report based on our review.

Our report, including the conclusion, has been prepared in accordance with the terms of our engagement to assist the 2009 Cell in meeting its responsibilities in respect of interim financial reporting in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority and for no other purpose. No person is entitled to rely on this report unless such a person is entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability. 

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the 2009 Cell's condensed set of financial statements in the interim financial report for the six months ended 30 September 2015 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

BDO LimitedChartered AccountantsPlace du Pré, Rue du Pré, St Peter Port, Guernsey

24 November 2015

Condensed Statement of Financial Position

As at 30 September 2015