TIDMBVT
RNS Number : 0061N
Baronsmead Venture Trust PLC
27 May 2022
Baronsmead Venture Trust plc
Half-yearly report for the six months ended 31 March 2022
The Directors of Baronsmead Venture Trust plc are pleased to
announce the unaudited half-yearly financial report for the six
months to 31 March 2022. Copies of the half-yearly report can be
obtained from the following website: www.baronsmeadvcts.co.uk .
Our investment objective
-- Baronsmead Venture Trust plc (the "Company") is a tax
efficient listed company which aims to achieve long-term investment
returns for private investors, including tax-free dividends.
Investment policy
-- To invest primarily in a diverse portfolio of UK growth
businesses, whether unquoted or traded on AIM.
-- Investments are made selectively across a range of sectors in
companies that have the potential to grow and enhance their
value.
Dividend policy
-- The Board will, wherever possible, seek to pay two dividends
to shareholders in each calendar year, typically an interim in
September and a final dividend following the Annual General Meeting
in February.
-- The Board will use, as a guide, when setting the dividends
for a financial year, a sum representing 7 per cent. of the opening
NAV of that financial year.
Key elements of the business model
Access to an attractive, diverse portfolio
Baronsmead Venture Trust plc gives shareholders access to a
diverse portfolio of growth businesses.
The Company will make investments in growth businesses, whether
unquoted or traded on AIM, which are substantially based in the UK
in accordance with the prevailing VCT legislation. Investments are
made selectively across a range of sectors.
The Manager's approach to investing
The Manager endeavours to select the best opportunities and
applies a distinctive selection criteria based on:
-- Primarily investing in parts of the economy which are
experiencing long term structural growth
-- Businesses that demonstrate, or have the potential for, market leadership in their niche
-- Management teams that can develop and deliver profitable and sustainable growth
-- Companies with the potential to become an attractive asset
appealing to a range of buyers at the appropriate time to sell
In order to ensure a strong pipeline of opportunities, the
Manager invests in building deep sector knowledge and networks and
undertakes significant proactive marketing to target companies in
preferred sectors. This approach generates a network of potentially
suitable businesses with which the Manager maintains a relationship
ahead of possible investment opportunities.
The Manager as an influential shareholder
The Manager is an engaged and supportive shareholder (on behalf
of the Company) in both unquoted and significant quoted
investments.
For unquoted investments, representatives of the Manager often
join the investee board. The role of the Manager with investees is
to ensure that strategy is clear, the business plan can be
implemented and the management resources are in place to deliver
profitable growth. The aim is to build on the business model and
grow the company into an attractive target which can be sold or
potentially floated in the medium term.
Financial highlights
444.5p NAV total return to shareholders for every 100.0p invested at launch (April 1998).
NAV per share decreased 10.8 per cent. to 70.4p, before the
deduction of dividends, in the six months to 31 March 2022.
GBP37.5mn Funds raised in the period (before costs).
GBP11.2mn Realised proceeds in the period, returning 2.1x
cost.
Cash returned to shareholders
The table below shows the cash returned to shareholders that
invested in Baronsmead Venture Trust plc dependent on their
subscription cost, including the income tax available to be
reclaimed on the subscription.
Cumulative
dividends
Income Net cash
Cash invested tax reclaim invested paid(#)
(p) Return on
cash invested(#)
Year subscribed (p) (p) (p) (%)
1998 (April) 100.0 20.0 80.0 176.9 196.9
============== ============ ========== =========== ======================
1999 (May) 102.0 20.4 81.6 173.4 190.0
============== ============ ========== =========== ======================
2000 (February) 137.0 27.4 109.6 170.2 144.2
============== ============ ========== =========== ======================
2000 (March) 130.0 26.0 104.0 170.2 150.9
============== ============ ========== =========== ======================
2004 (October) - C shares* 100.0 40.0 60.0 125.6 165.6
============== ============ ========== =========== ======================
2009 (April) 91.6 27.5 64.1 109.0 149.0
============== ============ ========== =========== ======================
2012 (December) 111.8 33.5 78.3 83.5 104.7
============== ============ ========== =========== ======================
2014 (March) 103.8 31.1 72.7 66.0 93.6
============== ============ ========== =========== ======================
2016 (February) 102.8 30.8 72.0 51.5 80.1
============== ============ ========== =========== ======================
2017 (October) 94.8 28.4 66.3 33.5 65.4
============== ============ ========== =========== ======================
2019 (February) 84.2 25.3 58.9 27.0 62.1
============== ============ ========== =========== ======================
2019 (November) 76.8 23.0 53.8 19.5 55.4
============== ============ ========== =========== ======================
2020 (January) 82.4 24.7 57.7 19.5 53.7
============== ============ ========== =========== ======================
2020 (February) 80.1 24.0 56.1 16.0 50.0
============== ============ ========== =========== ======================
2020 (March) 63.8 19.1 44.7 16.0 55.1
============== ============ ========== =========== ======================
2020 (November) 75.2 22.6 52.6 13.0 47.3
============== ============ ========== =========== ======================
2020 (December) 78.0 23.4 54.6 13.0 46.7
============== ============ ========== =========== ======================
2021 (January) 81.3 24.4 56.9 13.0 46.0
============== ============ ========== =========== ======================
2021 (February) 78.8 23.6 55.2 9.5 42.1
============== ============ ========== =========== ======================
2021 (March) 80.9 24.3 56.6 9.5 41.7
============== ============ ========== =========== ======================
2021 (December) 83.1 24.9 58.2 6.5 37.8
============== ============ ========== =========== ======================
2022 (January) 82.4 24.7 57.7 6.5 37.9
============== ============ ========== =========== ======================
2022 (March) 72.6 21.8 50.8 3.0 34.1
============== ============ ========== =========== ======================
* Share dividend calculated using conversion ratio of 0.9657,
which is the rate the C shares were converted into ordinary
shares
*Includes interim dividend of 3.0p per share payable on 9
September 2022.
Chairman's statement
Fiona Miller Smith
Chairman
This is my first statement as Chair of Baronsmead Venture Trust
plc following my appointment in March 2022. I am delighted to have
been appointed Chair and look forward to working with both my Board
colleagues and the Manager for the long-term benefit of our
shareholders.
As mentioned in the Company's annual report and flagged in other
recent communications to shareholders, the Board anticipated
increased levels of volatility in public markets and greater levels
of uncertainty heading into 2022 as the economy continued to emerge
from COVID-19. This sentiment was further exacerbated by a step
change in geopolitical risk in Europe, slowing economic growth and
the expectation of a prolonged period of higher inflation.
These headwinds have been reflected predominately in the softer
performance of the AIM traded investments within the portfolio in
the six months to 31 March 2022. Despite the drop in the value of
the portfolio over the period, the Manager believes that, in
aggregate, the fundamentals of the underlying portfolio companies
remain robust and the growth prospects for the majority of investee
companies continue to be positive. The portfolio also remains
defensively positioned with high levels of diversification. The
portfolio contains over 80 direct investments, both quoted and
unquoted assets, and a bias towards sectors which have more
resilient, contracted or recurring revenue streams.
The Board is pleased to declare an interim dividend of 3.0p to
be paid on 9 September 2022 to shareholders on the register as of
12 August 2022. The dividend will be paid from realised capital
profits generated from the successful sales of portfolio companies.
Over the period, capital proceeds of GBP11.2mn were realised from
the sale, or partial sale, of four portfolio companies. The
combined return from these sales was 2.1x invested cost.
I must of course remind shareholders that payment dates and the
amount of future dividends depend on the level and timing of
profitable realisations and cannot be guaranteed.
Results
During the six months to 31 March 2022, the Company's NAV per
share decreased 10.8 per cent. from 78.9p to 70.4p after the
payment of a final dividend of 3.5p per share on 4 March 2022. The
table below breaks down the movement in NAV over the six
months.
Pence per
ordinary share
-------------------------------------------------------------- ----------------
NAV as at 1 October 2021 (after deducting the final dividend
of 3.5p) 78.9
-------------------------------------------------------------- ----------------
Valuation d ecrease (10.8 per cent.) (8.5)
-------------------------------------------------------------- ----------------
NAV as at 31 March 2022 70.4
-------------------------------------------------------------- ----------------
The 30 April 2022 NAV was 71.1p, a 1.0 per cent. increase from
31 March 2022.
Portfolio review
The table below provides a summary of each asset class and the
return generated during the period under review.
NAV* Number of investees % return in
Asset class (GBPmn) % of NAV* companies** the period***
Unquoted 48 22 35 (5)
--------- ---------- -------------------- ---------------
AIM- traded companies 64 29 51 (17)
--------- ---------- -------------------- ---------------
LF Gresham House UK
Micro Cap Fund 33 15 48 (16)
--------- ---------- -------------------- ---------------
LF Gresham House UK
Multi Cap Income Fund 8 4 46 (1)
--------- ---------- -------------------- ---------------
Gresham House UK Smaller
Companies Fund 13 5 44 (7)
--------- ---------- -------------------- ---------------
Liquid assets (#) 57 25 - -
--------- ---------- -------------------- ---------------
Total 223 100 224 -
--------- ---------- -------------------- ---------------
*By value at 31 March 2022.
**Includes investee companies with holdings by more than one
fund. Total number of individual companies held is 175.
***Return includes interest received on unquoted realisations
during the period.
(#) Represents cash, OEICs and net current assets.
The value of the unquoted portfolio decreased 5 per cent. in the
six months to 31 March 2022. The drop in value of the unquoted
portfolio was driven by a combination of softer trading performance
in several e-commerce assets and a general de-rating of valuation
multiples in the consumer and marketing services sectors. These
declines were partially offset by uplifts in healthcare investments
which continue to grow strongly and to benefit from the long-term
structural growth drivers in this market.
The value of the Company's portfolio of investments directly
held in AIM-traded companies decreased 17 per cent. In the six
months to 31 March 2022. The value of the Company's investment into
the LF Gresham House UK Micro Cap Fund ("Micro Cap") decreased by
16 per cent., the LF Gresham House UK Smaller Companies Fund
decreased by 7 per cent. and the LF Gresham House Multi Cap Income
Fund decreased by 1 per cent. This was primarily due to
volatility-driven negative sentiment surrounding inflationary
pressures, expectations of interest rate rises and the cost of
living squeeze in the UK. The ongoing war in Ukraine continues to
weigh-in on global equity markets, with the effect particularly
pronounced in UK and European equities. Despite this, the Board
strongly believes that our investments in the Company's quoted
portfolio can provide long term benefits for shareholders. For
example, the Company's investment in the Micro Cap fund has
achieved a ten year return of 306 per cent. and a return since its
inception in 2009 of 453 per cent.
Investments and divestments
The Company's investments and divestments during the period are
set out below.
Investments
I am pleased to report that the Company made five new
investments totalling GBP7.9mn and two follow-on investments with a
combined value of GBP1.7mn in the six months to 31 March 2022.
Below are descriptions of the new investments made:
-- Aptamer (quoted) - platform providing antibody alternatives
to the pharma industry across a range of applications.
-- Oberon (quoted) - corporate advisory business providing
advice, asset management and deal arrangement services.
-- Popsa (unquoted) - provider of a mobile app that lets users
design photo albums digitally and have them delivered in print.
-- Proximity Insight (unquoted) -platform used by front-line
sales associates of omni-channel retailers to better engage and
transact with their customers.
-- Skillcast (quoted) - provider of staff compliance training.
Following the period end, four further follow-on investments
were made, totalling GBP3.9mn, and a new unquoted investment of
GBP0.9mn was made into Bidnamic, a market leading provider of
Google shopping management software.
Realisations
Proceeds of GBP3.6m were received during the period from sales
of quoted investments, including:
-- Cerillion plc - top-slicing delivered proceeds of GBP1.2mn,
equating to a money multiple of 11.4x.
-- Cloudcall Group plc - takeover by Xplorer Capital Management
resulting in proceeds of GBP2.4mn and a money multiple of 0.9x.
From the unquoted portfolio, the sale of the investment in
Carousel successfully completed in February 2022. The sale returned
proceeds of GBP7.6mn, which, in addition to the loan-note interest
received during the lifetime of the investment, resulted in a total
gross money multiple of 5.0x original investment cost.
Fundraising
I am pleased to report that during the period the Company
successfully raised GBP37.5mn (before costs) through an offer for
subscription which became fully subscribed in February 2022. The
Board are pleased to welcome the new shareholders who invested for
the first time and to thank the existing shareholders who continue
to support the Company.
The Board will consider whether to raise new funds in the
2022/23 tax year. This will be determined by the Company's cashflow
and its anticipated requirements to fund new and follow-on
investments over the next two to three years. The Board appreciates
that shareholders would like plenty of notice of its fundraising
intentions and will ensure that shareholders are informed of any
such fundraising at the earliest practical time.
Venture capital industry
I would also like to draw attention to the UK Parliamentary
inquiry into the venture capital industry, launched in April 2022.
The Committee will be examining the regulation around venture
capital, the role of key bodies and how the industry can be
strengthened. The Board and Manager welcome the opportunity to
provide the inquiry with the information they are seeking on how
VCTs provide small UK businesses with funding to assist with their
growth and development.
Board succession
As announced on 15 February 2022, Peter Lawrence has retired as
Chairman of the Company. The Board would like to thank Mr Lawrence
for his dedication, wisdom and considerable contributions to the
Board since joining the Company. He has provided exemplary
leadership as the Company has grown, and we wish him all the very
best for the future.
Investment Manager
The Board is pleased to see the integration progress made by the
Investment Manager following the acquisition of the VCT business of
Mobeus Equity Partners LLP in September 2021. The Board believes
the enlarged team enhances the Manager's ability to identify, make
and manage attractive early-stage unquoted investments. This should
benefit the Company through more consistent and increased rates of
investment, which, in turn, should feed through to the delivery of
attractive long-term returns for the Company's shareholders.
Following the successful integration, Fund Manager Bevan Duncan
has decided to pursue a new career path as Chief Operating Officer
at an early stage, high growth technology company. The Board would
like to wish him every success in his next role and are reassured
by the depth and experience of the wider team to continue to
deliver for investors. Trevor Hope will be Managing Director for
the private equity team, working closely with Ken Wotton, Managing
Director of Public Equity, who continues to be responsible for the
quoted portfolio within the Baronsmead VCTs. Clive Austin remains
Managing Director of VCT portfolio with responsibility for
portfolio and asset management alongside Ed Wass, a highly
experienced portfolio partner.
Outlook
The macro-economic environment has undoubtedly become more
challenging over the past six months. The Board and Manager are
planning for further market volatility, ongoing pressure on
companies' operating margins due to rising costs and weaker
consumer demand together with supply chain disruption and shortages
of talent within portfolio companies. The Manager is regularly
engaging with portfolio company management teams to forecast cash
headroom, scenario plan and more generally reduce execution risk
over the next 12 months.
However, the portfolio remains highly diversified, and is
largely positioned in parts of the economy which the Board expects
will have long-term structural growth tailwinds. The volatility and
disruption also provide good opportunities to invest in earlier
stage, higher growth companies that are quickly moving to exploit
changes in their target markets. The Company remains suitably
capitalised and the Manager is well resourced to support investment
into new and existing portfolio companies, which will drive value
creation and ultimately dividend payments to shareholders over the
long-term.
Fiona Miller Smith
Chairman
26 May 2022
Investments in the period
Book cost
Company Location Sector Activity GBP'000
Unquoted investments
New
=================================================================================================
Popsa Holdings Mobile-first photobook
Ltd Surrey Technology app provider 3,120
=========== ============== =================================== =========
Platform for front-line
sales associates of omni-channel
Proximity Insight retailers to engage with
Holdings Ltd London Technology customers. 1,148
=========== ============== =================================== =========
Follow on
Provides real time life
Healthcare science intelligence as
Airfinity Ltd London & education a subscription service 960
=========== ============== =================================== =========
AI platform using advanced
behavioural analytics to
deliver tailored promotions
RevLifter Ltd London Technology to users 719
=========== ============== =================================== =========
Total unquoted investments 5,947
=========
AIM-traded Investments
New
Platform providing antibody
Aptamer Group Healthcare alternatives to the pharma
plc Yorkshire & education industry. 2,206
=========== ============== =================================== =========
Skillcast Group Healthcare Compliance e-learning and
plc London & education regulatory technology services 753
=========== ============== =================================== =========
Oberon Investments Business
Group plc London Services Corporate advisory business 658
=========== ============== =================================== =========
Total AIM-traded investments 3,617
=========
Total investments in the period 9,564
=========
Realisations in the period
Original
book cost Proceeds Overall
First investment (#) (++) multiple
Company date GBP'000 GBP'000 return
Unquoted realisations
==========
Carousel Logistics Full trade
Ltd sale Oct 13 1,910 7,636 5.0*
============ ================= ========== ======== ==========
Total unquoted realisations 1,910 7,636 5.0*
========== ======== ==========
AIM-traded realisations
==========
Cloudcall Group plc Take over Apr 14 2,630 2,373 0.9
============ ================= ========== ======== ==========
Market
Cerillion plc sale Nov 15 106 1,205 11.4
============ ================= ========== ======== ==========
Mi-Pay Group plc Liquidated Dec 05 800 11 0.0
============ ================= ========== ======== ==========
Total AIM-traded realisations 3,536 3,589 1.0
---------------------------------------------------------------- ---------- -------- ----------
Total realisations
in the period 5,446 11,225 2.1
---------- -------- ----------
# Residual book cost at realisation date.
++ Proceeds at time of realisation including interest.
* Includes interest/dividends received, loan note redemptions
and partial realisations accounted for in prior periods.
Deferred consideration of GBP15,000 was also received in
respect of Glide which had been sold in a prior period.
Responsibility statement of the Directors in respect of the
half-yearly financial report
Half-yearly report
The important events that have occurred during the period under
review, the key factors influencing the financial statements and
the principal uncertainties for the remaining six months of the
financial year are set out in the Chairman's statement and the
Strategic report.
The principal risks facing the Company are mostly unchanged
since the date of the Company's Annual Report for the financial
year ended 30 September 2021 and continue to be as set out in that
Report on pages 18 and 19.
Risks faced by the Company include but are not limited to; loss
of approval as a Venture Capital Trust, investment performance
risk, legislative risk, regulatory and compliance risk, operational
risk, and economic and political risk. The Board considers the
COVID-19 pandemic and the Russian
invasion of Ukraine to be factors which permeate these risks,
and their impacts for the remaining six months of the year continue
to be kept under review.
Responsibility statement
Each Director confirms that to the best of their knowledge:
-- the condensed set of financial statements has been prepared
in accordance with FRS 104 Interim Financial Reporting Standards
and gives a true and fair view of the assets, liabilities,
financial position and profit or loss of the Company.
-- This half-yearly report includes a fair review of the information required by:
a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules,
being an indication of important events that have occurred during
the first six months of the financial year and their impact on the
condensed set of financial statements; and a description of the
principal risks and uncertainties for the remaining six months of
the year; and
b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules,
being related party transactions that have taken place in the first
six months of the current financial year and that have materially
affected the financial position or performance of the Company
during that period; and any changes in the related party
transactions described in the last annual report that could do
so.
The half-yearly report was approved by the Board of Directors on
26 May 2022 and was signed on its behalf by Ms Fiona Miller Smith,
Chairman.
Fiona Miller Smith
Chairman
26 May 2022
Condensed Income Statement (unaudited)
For the six months to 31 March 2022
Six months to Six months to Year to 30 September
31 March 2022 31 March 2021 2021
Revenue Capital Total Revenue Capital Total Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
(losses) /gains
on investments 5 - (23,346) (23,346) - 31,241 31,241 - 49,591 49,591
Income 735 - 735 436 - 436 3,058 - 3,058
Investment management
fee (505) (1,513) (2,018) (471) (1,414) (1,885) (1,009) (3,028) (4,037)
Performance fee - - - - (286) (286) - (1,941) (1,941)
Other expenses (361) - (361) (342) - (342) (618) - (618)
--------------------- ----- -------- -------- -------- -------- -------- -------- -------- -------- --------
(Loss)/profit
before taxation (131) (24,859) (24,990) (377) 29,541 29,164 1,431 44,622 46,053
Taxation on ordinary
activities - - - - - - (104) 104 -
--------------------- ----- -------- -------- -------- -------- -------- -------- -------- -------- --------
(Loss)/profit
for the period,
being the total
comprehensive
income for the
period after
taxation (131) (24,859) (24,990) (377) 29,541 29,164 1,327 44,726 46,053
--------------------- ----- -------- -------- -------- -------- -------- -------- -------- -------- --------
Return per ordinary
share:
--------------------- ----- -------- -------- -------- -------- -------- -------- -------- -------- --------
Basic and Diluted 2 (0.05p) (8.54p) (8.59p) (0.15p) 11.72p 11.57p 0.51p 17.08p 17.59p
--------------------- ----- -------- -------- -------- -------- -------- -------- -------- -------- --------
All items in the above statement derive from continuing
operations.
There are no recognised gains and losses other than those
disclosed in the Income Statement.
The revenue column of the Income Statement includes all income
and expenses. The capital column accounts for the realised and
unrealised profit or loss on investments and the proportion of the
management fee charged to capital.
The total column of this statement is the unaudited Statement of
Total Comprehensive Income of the Company prepared in accordance
with the Financial Reporting Standard ("FRS"). The supplementary
revenue return and capital return columns are prepared in
accordance with the Statement of Recommended Practice issued by the
Association of Investment Companies ("AIC SORP").
Condensed statement of changes in equity
For the six months to 31 March 2022 (unaudited)
Distributable
Non-distributable reserves reserves
Called-up Share Revaluation Capital Revenue
share capital premium reserve reserve reserve Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 October 2021 29,501 76,711 68,763 46,248 1,640 222,863
Profit/(loss) on
ordinary activities
after taxation - - (28,972) 4,113 (131) (24,990)
Net proceeds of share
issues, share buybacks
& sale of shares
from treasury 3 4,704 31,724 - (850) - 35,578
Dividends paid 4 - - - (10,435) (307) (10,742)
At 31 March 2022 34,205 108,435 39,791 39,076 1,202 222,709
For the six months to 31 March 2021 (Unaudited)
Non-distributable reserves Distributable reserves
Called-up Share Revaluation Capital Revenue
share capital Premium reserve reserve reserve Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 October 2020 25,268 49,397 29,590 58,399 2,180 164,834
Profit/(loss) after
taxation - - 26,534 2,998 (377) 29,164
Net proceeds of share
issues, share buybacks
& sale of shares
from treasury 3 4,232 27,314 - (784) - 30,762
Dividends paid 4 - - - (8,177) (1,055) (9,232)
At 31 March 2021 29,500 76,711 56,133 52,436 748 215,528
For the year ended 30 September 2021 (Audited)
Non-distributable reserves Distributable reserves
Called-up Share Revaluation Capital Revenue
share capital premium reserve reserve reserve Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 October 2020 25,268 49,397 29,590 58,399 2,180 164,834
Profit after taxation - - 39,173 5,553 1,327 46,053
Net proceeds of share
issues, share buybacks
& sale of shares from
treasury 4,233 27,314 - (2,221) - 29,326
Dividends paid - - - (15,483) (1,867) (17,350)
At 30 September 2021 29,501 76,711 68,763 46,248 1,640 222,863
Condensed Balance Sheet
As at 31 March 2022 (Unaudited)
As at As at As at
31 March 31 March 30 September
2022 2021 2021
Notes GBP'000 GBP'000 GBP'000
Fixed assets
Unquoted investments 5 48,012 44,698 52,012
Traded on AIM 5 64,041 71,151 77,380
Collective investment vehicles 5 67,459 58,155 79,400
Listed on LSE 5 24 25 24
Investments 5 179,536 174,029 208,816
Current assets
Debtors 80 108 91
Cash at bank 44,304 42,849 17,453
44,384 42,957 17,453
Creditors (amounts falling
due within one year) (1,211) (1,458) (3,497)
Net current assets 43,173 41,499 14,047
Net assets 222,709 215,528 222,863
Capital and reserves
Called-up share capital 34,205 29,500 29,501
Share premium 108,435 76,711 76,711
Capital reserve 39,076 52,436 46,248
Revaluation reserve 5 39,791 56,133 68,763
Revenue reserve 1,202 748 1,640
Equity shareholders' funds 222,709 215,528 222,863
Net asset value per share 70.37p 79.16p 82.40p
Number of ordinary shares
in circulation 316,473,613 272,255,245 270,458,280
Condensed Statement of Cash Flows
For the six months to 31 March 2022 (unaudited)
Six Six
months months Year
to to to
31 March 31 March 30 September
2022 2021 2021
GBP'000 GBP'000 GBP'000
Net cash outflow from operating activities (3,765) (1,159) (1,057)
Net cash inflow/(outflow) from investing activities 6,076 11,497 (4,802)
Net cash inflow/(outflow) before financing
activities 2,311 10,338 (5,859)
Net cash inflow from financing activities 24,540 21,469 12,270
Increase in cash 26,851 31,807 6,411
Reconciliation of net cash flow to movement
in net cash
Increase in cash 26,851 31,807 6,411
Opening cash at bank and on deposit 17,453 11,042 11,042
Closing cash at bank and on deposit 44,304 42,849 17,453
Reconciliation of (loss) / profit before taxation
to net cash outflow from operating activities
(Loss)/profit before taxation (24,990) 29,164 46,053
(Losses)/gains on investments 23,346 (31,241) (49,591)
Changes in working capital and other non-cash
items (2,121) 918 2,481
Net cash outflow from operating activities (3,765) (1,159) (1,057)
Notes to the financial statements
For the six months to 31 March 2022 (Unaudited)
1 Basis of preparation
The condensed financial statements for the six months to 31
March 2022 comprise the unaudited statements set out on pages 10 to
13 together with the related notes on pages 14 to 17. The Company
applies FRS 102 and the AIC's Statement of Recommended Practice
('the SORP') for its annual financial statements. The condensed
financial statements for the six months to 31 March 2022 have
therefore been prepared in accordance with FRS 104 'Interim
Financial Reporting' and the principles of the SORP. They have been
prepared on a going concern basis. The accounts have been prepared
on the same basis as the accounting policies set out in the
Company's Annual Report and Financial Statements for the year ended
30 September 2021.
The financial information contained in this half-yearly
financial report does not constitute statutory accounts as defined
in sections 434 - 436 of the Companies Act 2006. The half-yearly
financial report for the six months ended 31 March 2022 and for the
six months ended 31 March 2021 have been neither audited nor
reviewed by the Company's auditors. The information for the year to
30 September 2021 has been extracted from the latest published
audited financial statements, which have been filed with the
Registrar of Companies. The report of the auditor for the audited
financial statements for the year to 30 September 2021 was: (i)
unqualified; (ii) did not include a reference to any matters to
which the auditor drew attention by way of emphasis without
qualifying their report; and (iii) did not contain a statement
under section 498 (2) or (3) of the Companies Act 2006.
No statutory accounts in respect of any period after 30
September 2021 have been reported on by the Company's auditors or
delivered to the Registrar of Companies.
Copies of the half-yearly financial report have been made
available to shareholders and are available from Gresham House, 80
Cheapside, London, EC2V 6EE.
2 Performance and shareholder returns
Return per share is based on a weighted average of 290,940,471
ordinary shares in issue (31 March 2021 - 252,148,059 ordinary
shares; 30 September 2021 - 261,864,661 ordinary shares).
Earnings for the first six months to 31 March 2022 should not be
taken as a guide to the results of the full financial year to 30
September 2022.
3. Called-up share capital
Allotted, called-up and fully paid:
Ordinary shares GBP'000
--------------------------------------------------------- -------
295,007,034 ordinary shares of 10p each listed at 30
September 2021 29,501
47,038,607 ordinary shares of 10p each issued during
the period 4,704
342,045,641 ordinary shares of 10p each listed at
31 March 2022 34,205
--------------------------------------------------------- -------
24,548,754 ordinary shares of 10p each held in treasury
at 30 September 2021 (2,455)
1,984,274 ordinary shares of 10p each repurchased during
the period and held in treasury (198)
961,000 ordinary shares of 10p each sold from treasury
during the period 96
25,572,028 ordinary shares of 10p each held in treasury
at 31 March 2022 (2,557)
--------------------------------------------------------- -------
316,473,613 ordinary shares of 10p each in circulation*
at 31 March 2022 31,648
--------------------------------------------------------- -------
* carrying one vote each
During the six months to 31 March 2022, the Company issued
47,038,607 shares at net proceeds of GBP36,428,000 (after costs).
During the same period, the Company purchased 1,984,274 shares to
be held in treasury at a cost of GBP1,506,000. The Company also
sold 961,000 treasury shares at a cost of GBP656,000. At 31 March
2022 the Company held 25,572,028 ordinary shares in treasury.
Shares may be sold out of treasury below Net Asset Value as long as
the discount at issue is narrower than the average discount at
which the shares were bought into treasury.
Excluding treasury shares, there were 316,473,613 ordinary
shares in issue at 31 March 2022 (31 March 2021 - 272,255,245
ordinary shares; 30 September 2021 - 270,458,280 ordinary
shares).
4. Dividends
The final dividend for the year ended 30 September 2021 of 3.5p
per share (3.4p capital, 0.1p revenue) was paid on 4 March 2022 to
shareholders on the register on 4 February 2022. The ex-dividend
date was 3 February 2022.
During the year to 30 September 2021, the Company paid an
interim dividend in September 2021 of 3.0p per share (2.7p capital,
0.3p revenue).
5. Investments
All investments are initially recognised subsequently measured
at fair value. Changes in fair value are recognised in the Income
Statement.
The methods of fair value measurement are classified into a
hierarchy based on reliability of the information used to determine
the valuation.
-- Level 1 - Fair value is measured based on quoted prices in an
active market.
-- Level 2 - Fair value is measured based on directly observable
current market prices or indirectly being derived from market
prices.
-- Level 3 - Fair value is measured using a valuation technique
that is not based on data from an observable market.
The valuation of unquoted investments contained within level 3
of the Fair Value hierarchy involves key assumptions dependent upon
the valuation methodology used. The primary methodologies applied
are:
- Cost of recent investment
- Earnings Multiple
- Offer Less 10 per cent
The earnings multiple approach involves more subjective inputs
than the cost of recent investment and offer approaches and
therefore presents a greater risk of over or under estimation. Key
assumptions for the earnings multiple approach are the selection of
comparable companies and the use of either historic or forecast
revenue or earnings, as considered most appropriate. Other
assumptions include the appropriateness of the discount magnitude
applied for reduced liquidity and other qualitative factors. These
assumptions are described in more detail in note 2.3 in the
Company's Report and Financial Statements for the year to 30
September 2021. The techniques used in the valuation of unquoted
investments have not changed materially since the date of that
Report.
Level 1 Level 2 Level 3
----------------------------- --------
Collective
Traded Traded investment
on AIM on LSE vehicles Unquoted Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------- --------- ----------- ---------- --------
Opening book cost 47,079 2,315 51,111 39,548 140,053
-------- --------- ----------- ---------- --------
Opening unrealised
appreciation/(depreciation) 30,301 (2,291) 28,289 12,464 68,763
-------- --------- ----------- ---------- --------
Opening fair value 77,380 24 79,400 52,012 208,816
-------- --------- ----------- ---------- --------
Movements in the
period:
-------- --------- ----------- ---------- --------
Purchases at cost 3,617 - 7,541 5,947 17,105
-------- --------- ----------- ---------- --------
Sale - proceeds (3,578) - (12,000) (7,461) (23,039)
-------- --------- ----------- ---------- --------
Sale - realised
gains/ (losses)
on sales 1,322 - - (1,766) (444)
-------- --------- ----------- ---------- --------
Unrealised gains
realised during
the period (396) - - 6,466 6,070
-------- --------- ----------- ---------- --------
Decrease in unrealised
appreciation (14,304) - (7,482) (7,186) (28,972)
-------- --------- ----------- ---------- --------
Closing fair value 64,041 24 67,459 48,012 179,536
-------- --------- ----------- ---------- --------
Closing book cost 48,044 2,315 46,652 42,734 139,745
-------- --------- ----------- ---------- --------
Closing unrealised
appreciation/(depreciation) 15,997 (2,291) 20,807 5,278 39,791
-------- --------- ----------- ---------- --------
Closing fair value 64,041 24 67,459 48,012 179,536
-------- --------- ----------- ---------- --------
Equity shares 64,041 24 - 25,778 89,843
-------- --------- ----------- ---------- --------
Preference Shares - - - 13,209 13,209
-------- --------- ----------- ---------- --------
Loan notes - - - 9,025 9,025
-------- --------- ----------- ---------- --------
Collective investment
vehicles - - 67,459 - 67,459
-------- --------- ----------- ---------- --------
Closing fair value 64,041 24 67,459 48,012 179,536
-------- --------- ----------- ---------- --------
6. Other required disclosures
6.1 Segmental reporting
The Company has one reportable segment being investing in
primarily a portfolio of UK growth businesses, whether unquoted or
traded on AIM.
6.2 Principal risks and uncertainties
The Company's financial instruments consist of equity and fixed
interest investments, cash balances and liquid resources. Its
principal risks are therefore market risk, price risk, credit risk
and liquidity risk. Other risks faced by the Company include loss
of approval as a Venture Capital Trust, legislative, investment
performance, economic, political and other external factors,
regulatory and compliance and operational risks. These risks, and
the way in which they are managed, are described in more detail in
the Principal Risks & Uncertainties table within the Strategic
Report section in the Company's Report and Financial Statements for
the year to 30 September 2021. The Board continues to regularly to
review the risk environment in which the Company operates.
6.3 Related parties
Gresham House Asset Management Ltd ('the Manager') manages the
investments of the Company. The Manager also provides or procures
the provision of secretarial, administrative and custodian services
to the Company. Under the management agreement, the Manager
receives a fee of 2.0 per cent. per annum of the net assets of the
Company. This is described in more detail under the heading 'The
management agreement' within the Strategic Report in the Company's
Annual Report and Financial Statements for the year to 30 September
2021. During the period the Company has incurred management fees of
GBP2,018,000 (31 March 2021 - GBP1,885,000; 30 September 2021 -
GBP4,037,000) and secretarial fees of GBP69,000 (31 March 2021 -
GBP62,000; 30 September 2021 - GBP126,000) payable to the Manager.
A performance fee of GBPnil has been accrued at 31 March 2022 (31
March 2021 - GBP286,000; 30 September 2021 - GBP1,941,000). This is
described in more detail under the heading 'Performance fees'
within the Strategic Report in the Company's Annual Report and
Financial Statements for the year to 30 September 2021.
A related party relationship exists between the Company and
Happy Days Consultancy Ltd, owing to the significant influence
deemed to be held over the operations of the company. As at 31
March 2022, the loan balance stood at GBP2,872,000, including
GBP918,000 of capitalised interest, as provided for in the
Agreement with the company.
6.4 Investment in associates
The Company has made the presumption that the following holding
is an investment in an associate, owing to the proportion of equity
held and representation on the board representing significant
influence over the operations of the company. The investment is
held as part of an investment portfolio, and is therefore measured
at fair value through profit and loss, as detailed in note 5 rather
than using the equity method, as permitted by Section 14 of FRS
102
Name Location Class of % of Equity Profit Net Assets Results
Shares held (GBPm) (GBPm) for year
ended
-------------- ---------- --------------- ------------ -------- ----------- ------------
Happy Days
Consultancy A Ordinary 31 December
Ltd UK & B Ordinary 29.2% (3.0) (12.7) 2020 (1)
(1) Latest published set of financial statements available at
Companies House.
6.5 Going Concern
After making enquiries and bearing in mind the nature of the
Company's business and assets, the Directors consider that the
Company has adequate resources to continue in operational existence
for the foreseeable future. In arriving at this conclusion, the
Directors have considered the Company's cash balances, the
liquidity of the Company's investments and the absence of any
gearing. The Directors are therefore also satisfied that the
Company has adequate financial resources to continue in operation
for at least the next 12 months and that, accordingly, it is
appropriate to adopt the going concern basis in preparing the
financial statements.
6.6 Post balance sheet events
The following events occurred between the balance sheet date and
the signing of these financial statements:
-- The 30 April 2021 NAV of 71.1p was announced on 6 May 2022.
At the date of publishing this report, the Board is unaware of any
matter that will have caused the NAV per share to have changed
significantly since the latest NAV.
-- Two follow-on investments, into Tribe and Panthera, completed
in April 2022 totalling GBP2.7mn.
-- Two further follow-on investments, into Yappy and Glisser,
completed in May 2022 totalling GBP1.2mn.
-- One new investment, into Bidnamic, completed in May 2022 totalling GBP0.9mn.
Corporate Information
Directors Registrars and Transfer Office
Fiona Miller Smith (Chairman) Computershare Investor Services
Les Gabb* PLC
Susannah Nicklin <DELTA> The Pavilions
Michael Probin Bridgwater Road
Bristol BS99 6ZZ
Secretary Tel: 0800 923 1533
Gresham House Asset Management
Ltd Brokers
Panmure Gordon & Co
Registered Office One New Change
5 New Street Square London EC4M 9AF
London EC41 3TW Tel: 020 7886 2500
Investment Manager Auditor
Gresham House Asset Management BDO LLP
Ltd 55 Baker Street
5 New Street Square London W1U 7EU
London EC4 3TW
Tel: 020 7382 0999 Solicitors
Dickson Minto
Registered Number Broadgate Tower
03504214 20 Primrose Street
London EC2A 2EW
VCT Status Adviser
PricewaterhouseCoopers LLP
1 Embankment Place
London WC2N 6RH
Website
www.baronsmeadvcts.co.uk
<DELTA> Senior Independent Director
* Chairman of the Audit Committee
Chairman of the Nomination Committee
Chairman of the Management Engagement and Remuneration
Committee
LEI: 213800VQ1PQHOJXDDQ88
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