REG - Baronsmead Venture - Half-yearly Report
11/06/2024 07:00
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RNS Number : 8780R Baronsmead Venture Trust PLC 11 June 2024
Baronsmead Venture Trust plc
Half-yearly report for the six months ended 31 March 2024
The Directors of Baronsmead Venture Trust plc are pleased to announce the
unaudited half-yearly financial report for the six months to 31 March 2024.
Copies of the half-yearly report can be obtained from the following
website: www.baronsmeadvcts.co.uk (http://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 positive investment returns for
private investors, including tax-free dividends.
Investment policy(1)
· 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(2)
· 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 in
February/March.
· The Board will use, as a guide, when setting the dividends for a
financial year, a sum representing 7 per cent. of the opening net asset value
of that financial year.
1. This is a summary of the Company's investment policy that is set out on
page 99 of the Company's Annual Report and Financial Statements for the year
ended 30 September 2023.
2. This is a summary of the Company's dividend policy that is set out on
page 36 of the Company's Annual Report and Financial Statements for the year
ended 30 September 2023.
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 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
410.8p Net Asset Value ("NAV") total return to shareholders for every 100.0p
invested at launch (April 1998).
NAV per share increased 4.2 per cent. to 55.1p before the deduction of
dividends in the six months to 31 March 2024.
£25.0mn raised in the period (before costs).
£7.0mn Investments made into four new and six follow-on opportunities during
the period. (Unquoted: £6.1mn, Quoted: £0.9mn).
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.
Year subscribed Cash invested Income tax reclaim Cumulative dividends Return on cash invested(#)
(p) (p) Net cash invested paid(#) (%)
(p) (p)
1998 (April) 100.00 20.00 80.00 185.65 205.7
1999 (May) 102.00 20.40 81.60 182.15 198.6
2000 (February) 137.00 27.40 109.60 178.95 150.6
2000 (March) 130.00 26.00 104.00 178.95 157.7
2004 (October) - C Shares(‡) 100.00 40.00 60.00 134.10 174.1
2009 (April) 91.60 27.48 64.12 117.75 158.5
2012 (December) 111.80 33.54 78.26 92.25 112.5
2014 (March) 103.80 31.14 72.66 74.75 102.0
2016 (February) 102.80 30.84 71.96 60.25 88.6
2017 (October) 94.76 28.43 66.33 42.25 74.6
2019 (February) 84.20 25.26 58.94 35.75 72.5
2019 (November) 76.80 23.04 53.76 28.25 66.8
2020 (January) 82.40 24.72 57.68 28.25 64.3
2020 (February) 80.10 24.03 56.07 24.75 60.9
2020 (March) 63.80 19.14 44.66 24.75 68.8
2020 (November) 75.20 22.56 52.64 21.75 58.9
2020 (December) 78.00 23.40 54.60 21.75 57.9
2021 (January) 81.30 24.39 56.91 21.75 56.8
2021 (February) 78.80 23.64 55.16 18.25 53.2
2021 (March) 80.90 24.27 56.63 18.25 52.6
2021 (December) 83.10 24.93 58.17 15.25 48.4
2022 (January) 82.40 24.72 57.68 15.25 48.5
2022 (March) 72.60 21.78 50.82 11.75 46.2
2023 (January) 64.25(*) 19.28 44.97 8.75 43.6
2023 (March) 62.64(*) 18.79 43.85 6.00 39.6
2023 (April) 60.26* 18.08 42.18 6.00 40.0
2024 (January) 58.78* 17.63 41.15 4.25 37.2
2024 (February) 58.29* 17.49 40.80 1.75 33.0
2024 (March) 58.01* 17.40 40.61 1.75 33.0
(#) Includes interim dividend of 1.75p per share payable on 9 September 2024.
(‡) C Share dividend calculated using conversion ratio of 0.9657 which is
the rate the C shares were converted into ordinary shares.
* Average effective offer price. Shares were allotted pursuant to the 2023
& 2024 Offers at individual prices for each investor in accordance with
the allotment formula as set out in each Offer's Securities Note.
Chair's statement
I am pleased to announce that despite the volatile market conditions witnessed
over the last six months, the Company's net asset value increased by 2.2p per
share to 55.1p. As described more fully below, the strong performance of the
Company's listed portfolio outweighed the weakness in the value of the
Company's unquoted investments. Once again, this highlights the benefits of
the Company's investment policy of having a combination of unquoted and listed
assets. Performance in recent periods shows how this supports the Company's
aim of providing a more consistent total return to shareholders over the
medium to long term. After the period end, the NAV has continued to increase
through further good performance of the listed portfolio, as reported on
below.
As we enter the new quarter, consumer and business confidence remains fragile
with continued macroeconomic and geopolitical uncertainty expected to drive
market volatility over the coming months. However, your Board continues to
believe that, in aggregate, the fundamentals of the underlying portfolio
companies remain robust. Having said that, it is in the nature of VCT
qualifying investments that some portfolio companies will fail to achieve
their potential, despite the efforts of the Manager to mitigate these risks.
Results
During the six months to 31 March 2024, the Company's NAV per share increased
4.2 per cent. from 52.9p to 55.1p after the payment of the final dividend of
2.5p per share on 8 March 2024. The following table breaks down the movement
in NAV over the 6 months.
Pence per ordinary share
NAV as at 1 October 2023 (after deducting the final dividend of 2.5p) 52.9
Valuation increase (4.2 per cent.) 2.2
NAV as at 31 March 2024 55.1
The Board is pleased to report as at 31 May 2024, the NAV was 57.1p per share,
a 3.6 per cent. increase over the NAV as at 31 March 2024. This was driven by
firmer quoted markets and further increases in the value of the Company's
listed investments.
Dividends
The Board has declared an interim dividend of 1.75p per share to be paid on 9
September 2024 to shareholders on the register as of 9 August 2024. 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. 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.
Asset class NAV (£mn) % of NAV* Number of investee companies** % return in the period***
Unquoted 50 23 40 (4)
AIM- traded companies 63 29 44 9
WS Gresham House Equity Funds 73 34 90 8
Liquid assets(#) 29 14 N/A 2
Total 215 100 174 4
* By value at 31 March 2024.
** Includes investee companies held in more than one fund. Total number of
individual companies held is 160.
*** Return includes interest received on unquoted realisations during the
period.
(#)( )Represents cash, cash liquidity funds and net current assets. % return
in the period relates only to the cash liquidity funds.
The value of the unquoted portfolio decreased 3.6 per cent. in the six months
to 31 March 2024. The drop in value was driven by the reduction in value of
one key asset, with the remaining portfolio showing an increase in value over
the period. The Manager continues to focus on improving and sustaining
unquoted performance.
The value of the Company's portfolio of investments directly held in
AIM‑traded companies increased 8.6 per cent in the six months to 31 March
2024. The value of the Company's investment into the WS Gresham House Equity
Funds increased by 7.7 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.
Investments
In the six months to 31 March 2024, the Company made four new investments
totalling £4.4mn and six follow‑ on investments with a combined value of
£2.6mn. Descriptions of the new investments are as follows:
· Azarc (unquoted) - £0.7mn - Cross‑border customs automation
software provider.
· CitySwift (unquoted) - £0.9mn - Passenger transport data and
scheduling software provider.
· Ozone API (unquoted) - £1.9mn - Open banking software developer
· SciLeads (unquoted) - £0.9mn - Life Sciences data and lead
generation provider
Following the period end, a total of £2.1mn was invested in one new unquoted
investment, OnSecurity Technology, and follow‑on investments in three
unquoted companies, Rockfish, Yappy and Counting.
Realisations
In the listed portfolio, Gresham House was acquired via a recommended cash
offer resulting in a gross money multiple of 3.9x original cost. The Manager
also continued to take profits from partial sales of the Company's holding of
Cerillion resulting in proceeds of £3.4mn, and a gross money multiple of
21.0x original cost.
During the period, in the unquoted portfolio, Funding Xchange, a SME lending
marketplace, was acquired resulting in a gross money multiple of 0.1x original
cost and Armstrong Craven, a recruitment company, went into administration.
The business had experienced very challenging trading conditions over the past
year. Both of these investments had previously been written down to zero.
Fundraising
During the period, the Company successfully raised £25.0mn (before costs)
through an offer for subscription which became fully subscribed in March 2024.
The Directors want to welcome the 669 new shareholders who invested for the
first time and also thank the 491 existing shareholders who continue to
support the Company.
The Board will consider whether to raise new funds in the 2024/25 tax year.
This will be determined by the Company's cashflow, the overall balance of the
Company's portfolio, and its anticipated requirements and opportunities 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 the
Board's intention to raise new funds, as soon as it becomes practical.
VCT Regulation
Retirement Date of the UK Government's Venture Capital Schemes
The Government has paved the way for the extension of the availability of
upfront tax relief for subscriptions for new shares in VCTs from April 2025 to
April 2035 by including the relevant provisions in the Finance Act 2024.
Although the extension to the Sunset Clause remains subject to EU approval, it
is very welcome news and the Board is especially pleased that both the
government and the opposition remain so supportive of the EIS and VCT schemes
and for this extension of the sunset clause.
Financial Health Test
Following discussions between VCT representative bodies and government
officials, it would appear that HMRC is now prepared to consider a somewhat
broader application of a Financial Test when a VCT is making a follow‑on
investment. The Board continues to closely monitor developments in this area
and remains fully supportive of the representations being made by the
Association of Investment Companies ("AIC") and the Venture Capital Trust
Association ("VCTA").
Board Change
Susannah Nicklin has informed the Board that she wishes to step down from the
Board at the end of June 2024 due to an increase in her other work
commitments. Susannah has been a Director since February 2018 and before that
was a Director of Baronsmead VCT plc from May 2014 to February 2016. Her
insight and dedication to the Company have been of significant value to the
Company as well as our predecessor sister Company over the past 10 years. The
Board will miss her and would like to thank her for her input and expertise
and wish her continued success in her other ventures. I will be taking over
the role of Chair of Nomination Committee and Michael Probin will become our
Senior Independent Director when Susannah steps down.
The Board has started its search for a new Director and will keep shareholders
updated regarding this.
Outlook
The General Election has now been confirmed for 4(th) July in the UK. Whilst
this may create uncertainty for some of our investments, we look forward to
working with whichever government is elected to help maintain and improve the
VCT scheme given its vital role investing in small businesses that would
otherwise find it difficult to find funding. It has been encouraging to see
the AIC and the VCTA working in a cross party way to highlight the important
role that VCTs play in the funding landscape.
The Board expects that elevated macroeconomic and geopolitical uncertainty
will continue to drive market volatility over the coming months, and this has
the potential to impact our investments beyond the risks that would normally
be associated with investing in smaller companies.
Against this the Company's portfolio remains highly diversified and is largely
positioned in sectors which the Manager expects 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 sees a good pipeline of potential
investments and the Company remains focussed on ensuring that it and the
Manager are suitably resourced to support investment into new and existing
portfolio companies.
Fiona Miller Smith
Chair
10 June 2024
Investments in the period
Company Location Sector Activity Book cost £'000
Unquoted investments
New
Ozone Financial Technology Ltd London Technology Open banking infrastructure provider 1,867
Huddl Mobility Ltd (trading as CitySwift) Ireland Technology SaaS product for bus operators and local authorities to aggregate, cleanse and 949
access insight from data from across their bus networks
SciLeads Ltd London Technology A data‑intelligence platform that enables companies operating within Life 942
Science verticals to identify, track and convert potential customers
Azarc.io Inc London Technology Automating customs declarations 659
Follow-on
Patchworks Integration Ltd London Technology Leading integration platform for fast‑growing retail and ecommerce 840
businesses
Metrion Biosciences Ltd Cambridgeshire Healthcare & education Ion channel drug discovery and safety assessment services provider 486
Focal Point Positioning Ltd Cambridgeshire Technology A research and development focused technology business focusing on global 226
navigation and satellite systems
Orri Ltd London Healthcare & education Provider of intensive day care treatments for eating disorders 113
Total unquoted investments 6,082
AIM-traded investments
Follow-on
Eden Research plc Oxfordshire Business services Developer of biological fungicides and bio equivalents 732
PCI‑PAL plc London Technology Secure payment services provider 196
Total AIM-traded investments 928
Total investments in the period(#) 7,010
(#) Includes unquoted and AIM investments only.
Realisations in the period
Company First investment date Original book cost(#) £'000 Proceeds(‡) £'000 Overall multiple return (x)
IRR (%)
Unquoted realisations
Funding Xchange Ltd Full trade sale Nov 19 705 44 0.1 0.0
Armstrong Craven Ltd Written off Jun 13 543 - 1.1* 1.6
Total unquoted realisations 1,248 44
AIM-traded realisations
Cerillion plc Market sale Nov 15 161 3,377 21.0 44.3
Gresham House plc Takeover Nov 14 112 433 3.9 15.9
Total AIM - traded realisations 273 3,810
Total realisations in the period** 1,521 3,854
Liquidation proceeds of £114k were received during the period from InterQuest
Group plc, which was written off in September 2023.
(#) 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.
** Includes unquoted and AIM investments only.
Responsibility statement of the Directors in respect of the half-yearly 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 unchanged since the date of the
Company's Annual Report for the financial year ended 30 September 2023 and
continue to be as set out in that Report on pages 22 and 23.
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 conflicts in Ukraine and
the Middle East 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 10 June 2024
and was signed on its behalf by Ms Fiona Miller Smith, Chair.
Fiona Miller Smith
Chair
10 June 2024
Condensed income statement
For the six months to 31 March 2024 (Unaudited)
Six months to Six months to Year to
31 March 2024
31 March 2023
30 September 2023
Notes Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000
£'000
£'000
£'000
£'000
£'000
£'000
£'000
£'000
Gains/(losses) on investments 5 - 7,423 7,423 - (1,243) (1,243) - (3,428) (3,428)
Income 2,051 - 2,051 925 - 925 2,486 - 2,486
Investment management fee (417) (1,250) (1,667) (437) (1,315) (1,752) (885) (2,657) (3,542)
Other expenses (383) - (383) (336) - (336) (659) - (659)
Profit /(loss) before taxation 1,251 6,173 7,424 152 (2,558) (2,406) 942 (6,085) (5,143)
Taxation - - - - - - - - -
Profit/(loss) for the period, being the total comprehensive income for the 1,251 7,424 152 (2,558) (2,406) 942 (6,085) (5,143)
period
6,173
Return per ordinary share:
0.35p 1.72p 2.07p 0.05p (0.80p) (0.75p)
Basic and Diluted 2 0.28p (1.80p) (1.52p)
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 2024 (Unaudited)
Non-distributable reserves Distributable reserves
Called-up share capital Share Revaluation Capital Revenue
£'000 premium reserve reserve £'000 reserve
£'000 £'000 £'000 Total
£'000
At 1 October 2023 38,162 - 20,357 133,959 2,414 194,892
- - 5,358 815 1,251 7,424
Profit after taxation
Net proceeds of share issues, share buybacks & sale of shares from 4,284 20,036 - (2, 037) - 22,283
treasury
Dividends paid - - - (8,749) (364) (9,113)
Share premium cancellation costs - - - (4) - (4)
At 31 March 2024 42,446 20,036 25,715 123,984 3,301 215,482
For the six months to 31 March 2023 (Unaudited)
Non-distributable reserves Distributable reserves
Called-up share capital Share Revaluation Capital Revenue
£'000 premium reserve reserve £'000 reserve
£'000 £'000 £'000 Total
£'000
At 1 October 2022 34,205 108,435 16,912 31,786 2,487 193,825
- - (2,307) (251) 152 (2,406)
(Loss)/profit after taxation
Net proceeds of share issues, share buybacks & sale of shares from 3,674 18,970 - (1, 516) - 21,128
treasury
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 year ended 30 September 2023 (Audited)
Non-distributable reserves Distributable reserves Total
£'000
Called-up share capital Share Revaluation Capital Revenue
£'000 premium reserve reserve £'000 reserve
£'000 £'000 £'000
At 1 October 2022 34,205 108,435 16,912 31,786 2,487 193,825
Profit/(loss) after taxation - - 3,445 (9,530) 942 (5,143)
Net proceeds of share issues, share buybacks & sale of shares from 3,957 20,346 - (2,801) - 21,502
treasury
Dividends paid - - - (14,260) (1,015) (15,275)
Cancellation of share premium - (128,781) - 128,781 - -
Share premium cancellation costs - - - (17) - (17)
At 30 September 2023 38,162 - 20,357 133,959 2,414 194,892
Condensed balance sheet
As at 31 March 2024 (Unaudited)
As at As at
31 March
30 September 2023
Notes As at
2023 £'000
31 March
£'000
2024
£'000
Fixed assets
Unquoted investments 5 51,050 44,426 46,806
Traded on AIM 5 62,336 59,156 60,384
Collective investment vehicles 5 91,445 75,140 87,969
Investments 5 204,831 178,722 195,159
Current assets
Debtors 11,574 1,213 208
Cash at bank and on deposit 649 24,600 680
12,223 25,813 888
Creditors (amounts falling due within one year) (1,572) (1,109) (1,155)
Net current assets/(liabilities) 10,651 24,704 (267)
Net assets 215,482 203,426 194,892
Capital and reserves
Called-up share capital 3 42,446 37,879 38,162
Share premium 20,036 127,405 -
Capital reserve 123,984 21,561 133,959
Revaluation reserve 5 25,715 14,605 20,357
Revenue reserve 3,301 1,976 2,414
Equity shareholders' funds 215,482 203,426 194,892
Net asset value per share 55.07p 57.96p 55.44p
Number of ordinary shares in circulation 391,292,410 350,947,945 351,534,507
Condensed statement of cash flows
For the six months to 31 March 2024 (Unaudited)
Six months to Six months to Year to
31 March
31 March
30 September
2023
2024
2023
£'000
£'000 £'000
Net cash outflow from operating activities (1,171) (1,384) (2,352)
Net cash outflow from investing activities (1,473) (21,072) (38,257)
Net cash outflow before financing activities (2,644) (22,456) (40,609)
Net cash inflow from financing activities 2,613 12,005 6,238
Decrease in cash (31) (10,451) (34,371)
Reconciliation of new cash flow to movement in net cash
Decrease in cash (31) (10,451) (34,371)
Opening cash at bank and on deposit 680 35,051 35,051
Closing cash at bank and on deposit 649 24,600 680
Reconciliation of profit/(loss) before taxation
to net cash outflow from operating activities
Profit/(loss) before taxation 7,424 (2,406) (5,143)
(Gains)/losses on investments (7,423) 1,243 3,428
Changes in working capital and other non-cash items (1,172) (221) (637)
Net cash outflow from operating activities (1,171) (1,384) (2,352)
Notes to the financial statements
For the six months to 31 March 2024 (Unaudited)
1. Basis of preparation
The condensed financial statements for the six months to 31 March 2024
comprise the unaudited financial statements set out on pages 13 to 16 together
with the related notes on pages 17 to 20. 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 2024 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 financial
statements 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 2023.
The financial information contained in this half‑yearly report does not
constitute statutory accounts as defined in sections 434 - 436 of the
Companies Act 2006. The half‑yearly report for the six months ended
31 March 2024 and for the six months ended 31 March 2023 have been neither
audited nor reviewed by the Company's Auditor. The information for the year to
30 September 2023 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 2023 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 2023 have been reported on by the Company's
Auditor or delivered to the Registrar of Companies.
The Company's half yearly report has been made available on the Company's
website (www.baronsmeadvcts.co.uk (http://www.baronsmeadvcts.co.uk) ) and sent
to shareholders where requested.
2. Performance and shareholder returns
Return per share is based on a weighted average of 358,163,251 ordinary shares
in issue (31 March 2023 - 321,742,586 ordinary shares; 30 September 2023 -
337,263,955 ordinary shares).
Earnings for the first six months to 31 March 2024 should not be taken as a
guide to the results of the full financial year to 30 September 2024.
3. Called-up share capital
Allotted, called-up and fully paid:
Ordinary shares £'000
381,621,257 ordinary shares of 10p each listed at 30 September 2023 38,162
42,843,562 ordinary shares of 10p each issued during the period 4,284
424,464,819 ordinary shares of 10p each listed at 31 March 2024 42,446
30,086,750 ordinary shares of 10p each held in treasury at 30 September 2023 (3,009)
3,100,659 ordinary shares of 10p each repurchased during the period and held (310)
in treasury
15,000 ordinary shares of 10p each sold from treasury during the period 2
33,172,409 ordinary shares of 10p each held in treasury at 31 March 2024 (3,317)
391,292,410 ordinary shares of 10p each in circulation* at 31 March 2024 39,129
* Carrying one vote each.
During the six months to 31 March 2024, the Company issued 42,843,562 shares
at net proceeds of £23,925,000 (after costs). During the same period, the
Company purchased 3,100,659 shares to be held in treasury at a cost of
£1,650,000. The Company also sold 15,000 treasury shares at a cost of
£8,000. At 31 March 2024 the Company held 33,172,409 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 391,292,410 ordinary shares in issue at
31 March 2024 (31 March 2023 - 350,947,945 ordinary shares; 30 September
2023 - 351,534,507 ordinary shares).
4. Dividends
The final dividend for the year ended 30 September 2023 of 2.50p per share
(2.40p capital, 0.10p revenue) was paid on 8 March 2024 to shareholders on
the register on 9 February 2024. The ex‑dividend date was 8 February 2024.
During the year to 30 September 2023, the Company paid an interim dividend on
8 September 2023 of 1.75p per share (1.65p capital, 0.10p revenue).
An interim dividend of 1.75p per share has been declared for the year to 30
September 2024 and is payable on 9 September 2024 to shareholders on the
register as of 9 August 2024. The ex dividend date is 8 August 2024.
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 2023. 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
Traded Collective Total
on AIM investment £'000
£'000 vehicles Unquoted
£'000 £'000
Opening book cost 48,904 73,895 52,003 174,802
Opening unrealised appreciation/(depreciation) 11,480 14,074 (5,197) 20,357
Opening fair value 60,384 87,969 46,806 195,159
Movements in the year:
Transfer between levels (100) - 100 -
Purchases at cost 928 13,292 6,082 20,302
Sale - proceeds (3,810) (14,084) (159) (18,053)
- realised gains on sales 621 - 159 780
Unrealised gains/(losses) realised during the period 2,912 - (1,627) 1,285
Increase in unrealised appreciation/(depreciation) 1,401 4,268 (311) 5,358
Closing fair value 62,336 91,445 51,050 204,831
Closing book cost 49,455 73,103 56,558 179,116
Closing unrealised appreciation/(depreciation) 12,881 18,342 (5,508) 25,715
Closing fair value 62,336 91,445 51,050 204,831
Equity shares 62,336 - 22,325 84,661
Preference shares - - 19,428 19,428
Loan notes - - 9,297 9,297
Collective investment vehicles - 91,445 - 91,445
Closing fair value 62,336 91,445 51,050 204,831
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, traded on AIM or
collective investment vehicles.
6.2 Principal risks and uncertainties
The Company's financial instruments consist of equity and fixed interest
investments, shares in collective investment schemes, 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 2023. 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
2023. During the period the Company has incurred management fees of
£1,667,000 (31 March 2023 - £1,752,000; 30 September 2023 - £3,542,000)
and secretarial fees of £83,000 (31 March 2023 - £74,000; 30 September
2023 - £155,000) payable to the Manager. A performance fee of £nil has been
accrued at 31 March 2024 (31 March 2023 - £nil; 30 September 2023 -
£nil). 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 2023.
Under the terms of an Offer for Subscription, launched on 4 December 2023, the
Manager was entitled to fees of 4.50% of the investment amount received from
investors. This amount totalled £679,000 out of which all the costs
associated with the allotments were met.
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 2024 NAV of 55.8p was announced on 7 May 2024 and the 31
May 2024 NAV of 57.1p was announced on 6 June 2024. 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.
· Purchased 0.8mn Ordinary Shares of 10.0p on 2 April 2024 at a price of
52.5p per share to be held in Treasury.
· Purchased 1.3mn Ordinary Shares of 10.0p on 24 May 2024 at a price of
53.0p per share to be held in Treasury.
· One new investment, into OnSecurity Technology, completed in June
2024 totalling £1.2mn.
· Three follow‑on investments, into Yappy, Rockfish and Counting,
completed between April to May 2024, totalling £0.9mn.
· Partial realisations in Cerillion were made in May 2024,
realising proceeds of £1.5mn and making a return of 21.0x cost.
· Realised Gama Aviation in May 2024, receiving proceeds of £0.4mn
and making a return of 0.6x cost.
Directors Brokers
Fiona Miller Smith (Chair) Panmure Gordon & Co(‡)
Isabel Dolan(*) 40 Gracechurch Street
Susannah Nicklin(Δ†) London EC3V 0BT
Michael Probin(††) Tel: 020 7886 2500
Secretary Auditor
Gresham House Asset Management Ltd BDO LLP
55 Baker Street
Registered Office London W1U 7EU
5 New Street Square
London EC4A 3TW Solicitors
Howard Kennedy LLP
Investment Manager 1 London Bridge
Gresham House Asset Management Ltd London SE1 9BG
5 New Street Square
London EC4A 3TW VCT Status Adviser
Tel: 020 7382 0999 PricewaterhouseCoopers LLP
1 Embankment Place
Registered Number London WC2N 6RH
03504214
Website
Registrars and Transfer Office www.baronsmeadvcts.co.uk (http://www.baronsmeadvcts.co.uk/)
The City Partnership (UK) Ltd
The Mending Rooms
Park Valley Mills
Meltham Road
Huddersfield HD4 7BH
Tel: 01484 240 910
Corporate information
(Δ) Senior Independent Director
(*) Chair of the Audit Committee
(†) Chair of the Nomination Committee
(††) Chair of the Management Engagement and Remuneration Committee
(‡) Merger between Liberum and Panmure Gordon completed May 2024
LEI: 213800VQ1PQHOJXDDQ88
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