TIDMBVT
RNS Number : 4622C
Baronsmead Venture Trust PLC
13 June 2023
Baronsmead Venture Trust plc
Half-yearly report for the six months ended 31 March 2023
The Directors of Baronsmead Venture Trust plc are pleased to
announce the unaudited half-yearly financial report for the six
months to 31 March 2023. 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 the Alternative
Investment Market ("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 financial year, typically an interim
dividend in September and a final dividend following the Annual
General Meeting.
-- 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
The Company 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, networks and
undertakes significant active 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
400.9p Net asset Value ("NAV") total return to shareholders for
every 100.0p invested at launch (April 1998).
NAV per share decreased 0.9 per cent. to 58.0p before deduction
of dividends in the six months to 31 March 2023.
GBP25.0mn raised in the period (before costs).
GBP4.3mn Investments made into two new and three follow-on
opportunities during the period (Unquoted: GBP3.2mn, Quoted :
GBP1.1mn).
Cash returned to shareholders by date of investment
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) 100.00 20.00 80.00 181.40 201.4
============== ============ ========== =========== ======================
1999 (May) 102.00 20.40 81.60 177.90 194.4
============== ============ ========== =========== ======================
2000 (February) 137.00 27.40 109.60 174.70 147.5
============== ============ ========== =========== ======================
2000 (March) 130.00 26.00 104.00 174.70 154.4
============== ============ ========== =========== ======================
2004 (October) - C shares* 100.00 40.00 60.00 130.00 170.0
============== ============ ========== =========== ======================
2009 (April) 91.60 27.48 64.12 113.50 153.9
============== ============ ========== =========== ======================
2012 (December) 111.80 33.54 78.26 88.00 108.7
============== ============ ========== =========== ======================
2014 (March) 103.80 31.14 72.66 70.50 97.9
============== ============ ========== =========== ======================
2016 (February) 102.80 30.84 71.96 56.00 84.5
============== ============ ========== =========== ======================
2017 (October) 94.76 28.43 66.33 38.00 70.1
============== ============ ========== =========== ======================
2019 (February) 84.20 25.26 58.94 31.50 67.4
============== ============ ========== =========== ======================
2019 (November) 76.80 23.04 53.76 24.00 61.3
============== ============ ========== =========== ======================
2020 (January) 82.40 24.72 57.68 24.00 59.1
============== ============ ========== =========== ======================
2020 (February) 80.10 24.03 56.07 20.50 55.6
============== ============ ========== =========== ======================
2020 (March) 63.80 19.14 44.66 20.50 62.1
============== ============ ========== =========== ======================
2020 (November) 75.20 22.56 52.64 17.50 53.3
============== ============ ========== =========== ======================
2020 (December) 78.00 23.40 54.60 17.50 52.4
============== ============ ========== =========== ======================
2021 (January) 81.30 24.39 56.91 17.50 51.5
============== ============ ========== =========== ======================
2021 (February) 78.80 23.64 55.16 14.00 47.8
============== ============ ========== =========== ======================
2021 (March) 80.90 24.27 56.63 14.00 47.3
============== ============ ========== =========== ======================
2021 (December) 83.10 24.93 58.17 11.00 43.2
============== ============ ========== =========== ======================
2022 (January) 82.40 24.72 57.68 11.00 43.3
============== ============ ========== =========== ======================
2022 (March) 72.60 21.78 50.82 7.50 40.3
============== ============ ========== =========== ======================
2023 (January) 64.25 19.28 44.97 4.50 37.0
============== ============ ========== =========== ======================
2023 (March) 62.65 18.80 43.85 1.75 32.8
============== ============ ========== =========== ======================
* C Share dividend calculated using conversion ratio of 0.9657,
which is the rate the c shares were converted into ordinary
shares.
* Includes proposed Interim dividend of 1.75p.
* Shares were allotted pursuant to the 2023 Offer at individual
prices for each investor in accordance with the allotment formula
as set out in each Offer's Securities Note.
1. Average effective offer price based on allotment prices
between 63.4p and 67.2p.2. Average effective offer price based on
allotment prices between 61.5p and 64.5p.
Chair's statement
Fiona Miller Smith
Chair
Over what has been a turbulent six months, the Company's net
asset value (NAV) declined slightly by 0.5p per share to 58.0p.
Continued weakness in the value of the Company's unquoted
investments was largely although not completely offset by the
modestly positive performance of the listed portfolio. This is
described more fully below, and highlights the benefits of the
Company's investment policy of having a combination of unquoted and
listed assets with the aim of providing a more consistent total
return to shareholders over the medium to long term. After the
period end, NAV recovered through further good performance of the
listed portfolio, as reported on below.
Over the six months to 31 March 2023, inflation in the UK
remained high and interest rates rose steadily. Consequently, UK
economic conditions continued to be challenging and this has
generated much uncertainty across the financial markets. This was
compounded in the first quarter of 2023 by the collapses of Silicon
Valley Bank and Credit Suisse in close succession which led to
fears of a more widespread banking sector contagion.
At the time of writing, it's fair to say that consumer and
business confidence remain fragile. In such an environment we might
expect there to be further weakness in the valuation of smaller
companies and this is particularly the case with the types of
business the VCT rules require the Company to invest in. However,
the Manager continues to believe 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 over the medium term.
Results
During the six months to 31 March 2023, the Company's NAV per
share decreased 0.9 per cent. from 58.5p to 58.0p after the payment
of a final dividend of 2.75p per share on 3 March 2023. The table
below breaks down the movement in NAV over the six months.
Pence per
ordinary share
-------------------------------------------------------------- ----------------
NAV as at 1 October 2022 (after deducting the final dividend
of 2.75p) 58.5
-------------------------------------------------------------- ----------------
Valuation d ecrease (0.9 per cent.) (0.5)
-------------------------------------------------------------- ----------------
NAV as at 31 March 2023 58.0
-------------------------------------------------------------- ----------------
The Board is pleased to report that over the two months to 31
May 2023, NAV was 59.1p per share, a 1.9 per cent. increase over
the NAV as at 31 March 2023. This was driven by firmer quoted
markets and further increases in the value of the Company's listed
investments.
Dividends
The Board is pleased to declare an interim dividend of 1.75p per
share to be paid on 8 September 2023 to shareholders on the
register as of 11 August 2023. The Board is aware that dividends
are an important part of the total return to the shareholders'
investment in the Company. As such, the Board is aiming to achieve
its dividend policy objective of an annual yield of 7.0 per cent.
based on the NAV at the beginning of the financial year. Having
said that, I must of course remind shareholders this is not a
guarantee and that payment dates and the amount of future dividends
depend on the level and timing of profitable realisations.
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 44 22 41 (14)
--------- ---------- -------------------- ---------------
AIM- traded companies 59 29 48 2
--------- ---------- -------------------- ---------------
LF Gresham House UK
Micro Cap Fund 29 14 48 7
--------- ---------- -------------------- ---------------
LF Gresham House UK
Multi Cap Income Fund 12 6 40 7
--------- ---------- -------------------- ---------------
LF Gresham House UK
Smaller Companies Fund 25 12 38 5
--------- ---------- -------------------- ---------------
Liquid assets (#) 34 17 N/A 2
--------- ---------- -------------------- ---------------
Total 203 100 215 (1)
--------- ---------- -------------------- ---------------
*By value at 31 March 2023.
**Includes investee companies with holdings by more than one
fund. Total number of individual companies held is 166.
***Return includes interest received on unquoted realisations
during the period.
(#) Represents cash, OEICs and net current assets. % return in
the period relates only to the OEICs.
The value of the unquoted portfolio decreased 13.6 per cent. in
the six months to 31 March 2023. The drop in value was driven by a
combination of lower benchmark market comparables and softening
trading performance of the investee companies as a result of the
decline in consumer confidence.
The value of the Company's portfolio of investments directly
held in AIM-traded companies increased 2.1 per cent. in the six
months to 31 March 2023. The value of the Company's investment into
the LF Gresham House UK Micro Cap Fund ("Micro Cap") increased by
7.4 per cent., the LF Gresham House UK Smaller Companies Fund
("Small Cap") increased by 4.6 per cent. and the LF Gresham House
Multi Cap Income Fund increased by 6.8 per cent. in the period.
This was primarily due to positive news flow across the portfolio
being well received by the markets with a number of trading updates
demonstrating better than expected financial performance. In the
Manager's regular reporting to the Board, the Directors were
pleased to learn that in the six months to 31 March 2023, 85.8 per
cent. of the companies in our listed portfolio have reported
positive news flow in terms of the financial performance. This is
very welcome news given the economic and political uncertainties we
are currently experiencing.
Investments
I am pleased to report that the Company made two new investments
totalling GBP1.3mn and three follow-on investments with a combined
value of GBP3.0mn in the six months to 31 March 2023. Below are
descriptions of the new investments made:
-- Cognassist (unquoted) -a platform for supporting those with learning needs.
-- Connect Earth (unquoted) - helps businesses track their carbon emissions.
-- Patchworks (unquoted) - a platform for connecting businesses' applications.
-- Oberon (quoted) - wealth advisory service for individuals and businesses.
-- Seeen (quoted) - a video technology business.
Following the period end, a total of GBP1.8mn was invested as
follows:
-- a new unquoted investment of GBP0.8mn in Dayrize, a platform
for assessing the sustainability of products,
-- a follow -- on investment of GBP0.6mn into Airfinity, which
is in our unquoted portfolio, and
-- a follow -- on investment of GBP0.4mn into Panthera
Biopartners, which is in our unquoted portfolio
Realisations
During the period both Glisser, a provider of conference and
educational software and CMME, a specialist mortgage broker, went
into administration. Both businesses had experienced very
challenging trading conditions over the past year and their
valuations had already been written down.
Following the period end, in the unquoted portfolio, Evotix was
acquired resulting in a gross money multiple of 0.7x original cost.
In addition, further proceeds from previous sales of unquoted
investments were received as follows:
-- deferred consideration from the sale of Key Travel in 2018,
resulting in a gross money multiple of 3.2x original cost, and
-- earn -- out consideration from the Pho realisation in 2021,
resulted in a gross money multiple of 3.1x original cost.
In the listed portfolio, the Manager continued to take profits
from partial sales of the Company's holding of Cerillion plc
resulting in proceeds of GBP0.5mn, and a gross money multiple of
15.8x original cost.
Fundraising
I am pleased to report that during the period the Company
successfully raised GBP25.0mn (before costs) through an offer for
subscription which became fully subscribed in March 2023. The
Directors are pleased to welcome the 873 new shareholders who
invested for the first time and to thank the 478 existing
shareholders who continue to support the Company.
The Board will consider whether to raise new funds in the
2023/24 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 ofnotice of its fundraising
intentions and will ensure that shareholders are informed of any
such fundraising at the earliest practical time.
Consumer Duty
The Financial Conduct Authority (FCA) has introduced the concept
of Consumer Duty, the rules and principles of which come into
effect in July 2023. Consumer Duty is an advance on the existing
concept of 'treating customers fairly' and looks to ensure good
outcomes for purchasers of investment products. As a listed entity,
Baronsmead Venture Trust plc, alongside other investment companies,
are not themselves subject to Consumer Duty.
Instead, in their role as promoter of and Investment Manager to
the Company, it is Gresham House, and any other FCA regulated
parties associated with your investment in the Company, that must
uphold the principles behind Consumer Duty. To that end, the Board
is working with Gresham House to review the information that should
be provided to assist investors and their advisers to discharge
their obligations under Consumer Duty.
VCT Regulation - Financial Heath Test
Since the various VCT rule changes in both 2015 and 2018, VCT
qualifying investments have become focussed on smaller, younger
companies. As a result, when the Manager makes a new investment,
they expect to make further follow-on investments as the investee
company progresses and where the business case for the investment
is justified. These follow-on investments are subject to the same
VCT compliance rules as new deals and both rely on certain criteria
being met, including the Financial Health Test.
The Financial Health Test is not something new and was primarily
introduced as an anti-abuse regulation. However, following
amendment to HMRC's guidance, there has been an effective
tightening of the interpretation of the Financial Health Test. This
is resulting in the restriction of potential follow-on VCT
investment to support certain portfolio companies. This has the
potential to negatively impact shareholders' returns as a result of
portfolio companies going into administration when they might
otherwise have gone on to be successful. Furthermore, as this is an
industry wide issue, this measure increases the uncertainties small
companies face at a particularly difficult time and may well result
in unnecessary job losses and hardship to employees and their
families and has the potential to reduce the overall tax efficiency
of the VCT scheme as a whole.
The Board continues to monitor developments in this area
carefully and supports the representations being made by the AIC
and the VCTA to HMRC and HM Treasury to seek a change to HMRC's
guidance in this area.
Outlook
The Board expects that market conditions will remain volatile
throughout 2023 as the economic and political backdrop remain
uncertain. While it is anticipated that inflation will gradually
start to fall later in the year, it remains stubbornly high, and
interest rates seem unlikely to fall and may rise further over the
coming months.
Against this the Company's portfolio remains highly diversified,
and is largely positioned in sectors which the Manager expect to
provide long -- term growth potential. We remain committed to
investing through the economic cycle as experience suggests that
this can produce superior returns over the longer term. This can
also provide an opportunity for the Company to make high quality
investments and build strategic stakes in businesses with great
potential at good prices. This applies to both
new investments and follow -- on investments in the portfolio.
The Manager continues to see a good pipeline of potential
investments and the Company remains suitably resourced to support
investment into new and existing portfolio companies.
Fiona Miller Smith
Chair
12 June 2023
Investments in the period
Book cost
Company Location Sector Activity GBP'000
Unquoted investments
New
====================================================================================================
Cognassit UK Newcastle Healthcare A platform for supporting
Ltd upon Tyne & Education those with learning needs 896
============ ============== ================================= =========
Connect Earth Business Helps businesses track
Ltd London Services their carbon emissions 447
============ ============== ================================= =========
Follow on
Patchworks Integration A platform for connecting
Ltd Nottingham Technology businesses applications 1,920
============ ============== ================================= =========
Total unquoted investments 3,263
=========
AIM-traded Investments
New
SEEEN plc London Technology A video technology business 609
============ ============== ================================= =========
Oberon Investments Business Wealth advisory service
Group plc London Services for individuals and businesses 471
============ ============== ================================= =========
Total AIM-traded investments 1,080
=========
Total investments in the period 4,343
=========
Realisations in the period
There were no realisations in the 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 Chair'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 2022 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, legislative risk,
investment performance risk, risk of economic, political and other
external factors, regulatory and compliance risk and operational
risk. The Board considers the aftermath of 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
12 June 2023 and was signed on its behalf by Ms Fiona Miller Smith,
Chair.
Fiona Miller Smith
Chair
12 June 2023
Condensed Income Statement
For the six months to 31 March 2023 (unaudited)
Six months to Six months to Year to 30 September
31 March 2023 31 March 2022 2022
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 on
investments 5 - (1,243) (1,243) - 23,346 23,346 - 43,626 43,626
Income 925 - 925 735 - 735 3,949 - 3,949
Investment
management
fee (437) (1,315) (1,752) (505) (1,513) (2,018) (967) (2,903) (3,870)
Other expenses (336) - (336) (361) - (361) (652) - (652)
----------------- ----- -------- -------- -------- -------- -------- -------- -------- ---------- ----------
Profit /(Loss)
before taxation 152 (2,558) (2,406) (131) (24,859) (24,990) 2,330 (46,529) (44,199)
Taxation
on ordinary
activities - - - - - - (229) 229 -
----------------- ----- -------- -------- -------- -------- -------- -------- -------- ---------- ----------
Profit/(loss)
for the period,
being the
total
comprehensive
income for
the period
after taxation 152 (2,558) (2,406) (131) (24,859) (24,990) 2,101 (46,300) (44,199)
----------------- ----- -------- -------- -------- -------- -------- -------- -------- ---------- ----------
Return per
ordinary
share:
----------------- ----- -------- -------- -------- -------- -------- -------- -------- ---------- ----------
Basic and
Diluted 2 0.05p (0.80p) (0.75p) (0.05p) (8.54p) (8.59p) 0.69p (15.25p) (14.56p)
----------------- ----- -------- -------- -------- -------- -------- -------- -------- ---------- ----------
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 2023 (Unaudited)
Distributable
Non-distributable reserves reserves
Called-up Share Revaluation Capital Revenue
share capital premium reserve reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 October 2022 34,205 108,435 16,912 31,786 2,487 193,825
(Loss)/profit on
ordinary activities
after taxation - - (2,307) (251) 152 (2,406)
Net proceeds of share
issues, share buybacks
& sale of shares
from treasury 3,674 18,970 - (1, 516) - 21,128
Dividends paid - - - (8,458) (663) (9,121)
At 31 March 2023 37,879 127,405 14,605 21,561 1,976 203,426
For the six months to 31 March 2022 (Unaudited)
Non-distributable reserves Distributable reserves
Called-up Share Revaluation Capital Revenue
share capital Premium reserve reserve reserve Total
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
(Loss)/ profit after
taxation - - (28,972) 4,113 (131) (24,990)
Net proceeds of share
issues, share buybacks
& sale of shares
from treasury 4,704 31,724 - (850) - 35,578
Dividends paid - - - (10,435) (307) (10,742)
At 31 March 2022 34,205 108,435 39,791 39,076 1,202 222,709
For the year ended 30 September 2022 (Audited)
Non-distributable reserves Distributable reserves
Called-up Share Revaluation Capital Revenue
share capital premium reserve reserve reserve Total
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
(Loss)/ profit after
taxation - - (51,851) 5,551 2,101 (44,199)
Net proceeds of share
issues, share buybacks
& sale of shares from
treasury 4,704 31,724 - (1,050) - 35,378
Dividends paid - - - (18,963) (1,254) (20,217)
At 30 September 2022 34,205 108,435 16,912 31,786 2,487 193,825
Condensed Balance Sheet
As at 31 March 2023 (Unaudited)
As at As at As at
31 March 31 March 30 September
2023 2022 2022
Notes GBP'000 GBP'000 GBP'000
Fixed assets
Unquoted investments 5 44,426 48,012 48,184
Traded on AIM 5 59,156 64,041 56,819
Collective investment vehicles 5 75,140 67,459 54,740
Listed on LSE 5 - 24 24
Investments 5 178,722 179,536 159,767
Current assets
Debtors 1,213 80 131
Cash at bank and on deposit 24,600 44,304 35,051
25,813 44,384 35,182
Creditors (amounts falling
due within one year) (1,109) (1,211) (1,124)
Net current assets 24,704 43,173 34,058
Net assets 203,426 222,709 193,825
Capital and reserves
Called-up share capital 37,879 34,205 34,205
Share premium 127,405 108,435 108,435
Capital reserve 21,561 39,076 31,786
Revaluation reserve 5 14,605 39,791 16,912
Revenue reserve 1,976 1,202 2,487
Equity shareholders' funds 203,426 222,709 193,825
Net asset value per share 57.96p 70.37p 61.29p
Number of ordinary shares
in circulation 350,947,945 316,473,613 316,218,166
Condensed Statement of Cash Flows
For the six months to 31 March 2023 (unaudited)
Six Six
months months Year
to to to
31 March 31 March 30 September
2023 2022 2022
GBP'000 GBP'000 GBP'000
Net cash outflow from operating activities (1,384) (3,765) (2,981)
Net cash (outflow)/inflow from investing activities (21,072) 6,076 5,713
Net cash (outflow)/inflow before financing
activities (22,456) 2,311 2,732
Net cash inflow from financing activities 12,005 24,540 14,866
(Decrease)/increase in cash (10,451) 26,851 17,598
Reconciliation of new cash flow to movement
in net cash
(Decrease)/increase in cash (10,451) 26,851 17,598
Opening cash at bank and on deposit 35,051 17,453 17,453
Closing cash at bank and on deposit 24,600 44,304 35,051
Reconciliation of loss on ordinary activities
before taxation to net cash outflow from operating
activities
Loss on ordinary activities before taxation (2,406) (24,990) (44,199)
Losses on investments 1,243 23,346 43,626
Changes in working capital and other non-cash
items (221) (2,121) (2,408)
Net cash outflow from operating activities (1,384) (3,765) (2,981)
Notes to the financial statements
For the six months to 31 March 2023 (Unaudited)
1 Basis of preparation
The condensed financial statements for the six months to 31
March 2023 comprise the unaudited statements set out on pages 13 to
16 together with the related notes on pages 17 to 21. The Company
applies FRS 102 and the AIC SORP for its annual financial
statements. The condensed financial statements for the six months
to 31 March 2023 have therefore been prepared in accordance with
FRS 104 'Interim Financial Reporting' and the principles of the AIC
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 2022.
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 2023 and for the
six months ended 31 March 2022 have been neither audited nor
reviewed by the Company's auditors. The information for the year to
30 September 2022 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 2022 has been
extracted from the latest published audited financial statements,
which have been filed with the Registrars of Companies. The report
of the auditor for the audited financial statements for the year to
30 September 2022 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 2022 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 321,742,586
ordinary shares in issue (31 March 2022 - 290,940,471 ordinary
shares; 30 September 2022 - 303,530,368 ordinary shares).
Earnings for the first six months to 31 March 2023 should not be
taken as a guide to the results of the full financial year to 30
September 2023.
3. Called-up share capital
Allotted, called-up and fully paid:
Ordinary shares GBP'000
--------------------------------------------------------- -------
342,045,641 ordinary shares of 10p each listed at 30
September 2022 34,205
36,739,031 ordinary shares of 10p each issued during
the period 3,674
378,784,672 ordinary shares of 10p each listed at
31 March 2023 37,879
--------------------------------------------------------- -------
25,827,475 ordinary shares of 10p each held in treasury
at 30 September 2022 (2,583)
2,742,252 ordinary shares of 10p each repurchased during
the period and held in treasury (274)
733,000 ordinary shares of 10p each sold from treasury
during the period 73
27,836,727 ordinary shares of 10p each held in treasury
at 31 March 2023 (2,784)
--------------------------------------------------------- -------
350,947,945 ordinary shares of 10p each in circulation*
at 31 March 2023 35,095
--------------------------------------------------------- -------
* Carrying one vote each.
During the six months to 31 March 2023, the Company issued
36,739,031 shares at net proceeds of 22,334,000 (after costs).
During the same period, the Company purchased 2,742,252 shares to
be held in treasury at a cost of GBP1,622,000. The Company also
sold 733,000 treasury shares at a cost of GBP416,000. At 31 March
2023 the Company held 27,836,727 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 350,947,945 ordinary
shares in issue at 31 March 2023 (31 March 2022 - 316,473,613
ordinary shares; 30 September 2022 - 316,218,166 ordinary
shares).
4. Dividends
The final dividend for the year ended 30 September 2022 of 2.75p
per share (2.55p capital, 0.2p revenue) was paid on 3 March 2023 to
shareholders on the register on 3 February 2023. The ex -- dividend
date was 2 February 2023.
During the year to 30 September 2022, the Company paid an
interim dividend on 9 September 2022 of 3.0p per share (2.7p
capital, 0.3p revenue).
5. Investments
All investments are initially recognised and 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 2022.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 48,212 2,315 42,931 49,397 142,855
-------- --------- ----------- ---------- --------
Opening unrealised
appreciation/(depreciation) 8,607 (2,291) 11,809 (1,213) 16,912
-------- --------- ----------- ---------- --------
Opening fair value 56,819 24 54,740 48,184 159,767
-------- --------- ----------- ---------- --------
Movements in the
period:
-------- --------- ----------- ---------- --------
Purchases at cost 1,080 - 38,669 3,263 43,012
-------- --------- ----------- ---------- --------
Sale - proceeds - (21,750) (1,064) (22,814)
-------- --------- ----------- ---------- --------
* realised gains on sales - - 1,064 1,064
-------- --------- ----------- ---------- --------
Change in unrealised
appreciation/ (depreciation) 1,257 (24) 3,481 (7,021) (2,307)
-------- --------- ----------- ---------- --------
Closing fair value 59,156 - 75,140 44,426 178,722
-------- --------- ----------- ---------- --------
Closing book cost 49,292 2,315 59,850 52,660 164,117
-------- --------- ----------- ---------- --------
Closing unrealised
appreciation/(depreciation) 9,864 (2,315) 15,290 (8,234) 14,605
-------- --------- ----------- ---------- --------
Closing fair value 59,156 - 75,140 44,426 178,722
-------- --------- ----------- ---------- --------
Equity shares 59,156 - - 16,756 75,912
-------- --------- ----------- ---------- --------
Preference Shares - - - 17,508 17,508
-------- --------- ----------- ---------- --------
Loan notes - - - 10,162 10,162
-------- --------- ----------- ---------- --------
Collective investment
vehicles - - 75,140 - 75,140
-------- --------- ----------- ---------- --------
Closing fair value 59,156 - 75,140 44,426 178,722
-------- --------- ----------- ---------- --------
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 and uncertainties table within the Strategic
report section in the Company's Report and Financial Statements for
the year to 30 September 2022. The Board continues to regularly
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
2022. During the period the Company has incurred management fees of
GBP1,753,000 (31 March 2022 - GBP2,018,000; 30 September 2022 -
GBP3,870,000) and secretarial fees of GBP74,000 (31 March 2022 -
GBP69,000; 30 September 2022 - GBP136,000) payable to the Manager.
A performance fee of GBPnil has been accrued at 31 March 2023 (31
March 2022 - GBPnil; 30 September 2022 - GBPnil). 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 2022.
6.4 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.
6.5 Post balance sheet events
The following events occurred between the balance sheet date and
the signing of these financial statements:
-- The 30 April 2023 NAV of 59.0p was announced on 5 May 2023
and the 31 May 2023 NAV of 59.1p was announced on 6 June 2023. 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.
-- 3 million shares were issued on 3 April 2023 at allotment
prices between 58.9p and 61.8p under the current offer.
-- Purchased 0.7 million Ordinary Shares of 10.0p on 5 April
2023 at a price of 54.3p per share to be held in Treasury.
-- Follow -- on investment into Airfnity Ltd completed in April 2023 totalling GBP0.6mn.
-- Follow -- on investment into Panthera Biopartners completed
in June 2023 totalling GBP0.4mn.
-- Two follow -- on investments, into Multi Cap, completed in
April and May 2023, totalling GBP2.5mn.
-- Two follow -- on investments, into Small Cap, completed in
April and May 2023, totalling GBP2.5mn.
-- One new investment, into Dayrize B.V., completed in May 2023 totalling GBP0.8mn.
-- Partial realisation in MXC Capital Ltd was made in April,
following a corporate action, realising proceeds of GBP0.01mn and
making a return of 0.6x cost.
-- Partial realisations in Cerillion plc were made in April and
May, realising proceeds of GBP0.5mn and making a return of 15.8x
cost.
-- Received deferred proceeds of GBP1.1mn from Pho in May 2023,
which was realised in July 2021, making a total return of 3.1x
cost.
-- Realised Evotix in May 2023, receiving proceeds of GBP0.7mn, making a return of 0.7x cost.
-- Received deferred proceeds of GBP0.3mn from Key Travel in May
2023, which was realised in May 2018, making a total return of 3.2x
cost.
Directors Registrars and Transfer Office
Fiona Miller Smith (Chair) 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 EC4A 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 W.S
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
Corporate Information
<DELTA> Senior Independent Director
* Chair of the Audit Committee
Chair of the Nomination Committee
Chair of the Management Engagement and Remuneration
Committee
LEI: 213800VQ1PQHOJXDDQ88
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END
IR BLGDLSUBDGXD
(END) Dow Jones Newswires
June 13, 2023 02:00 ET (06:00 GMT)
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