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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Baronsmead Second Venture Trust Plc | LSE:BMD | London | Ordinary Share | GB0030028103 | ORD 10P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 55.50 | 54.00 | 57.00 | 55.50 | 55.50 | 55.50 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Trust,ex Ed,religious,charty | -1.2M | -6.91M | -0.0192 | -28.91 | 200.12M |
TIDMBMD
RNS Number : 0896A
Baronsmead Second Venture Trust PLC
27 May 2021
Baronsmead Second Venture Trust plc
Half-yearly report for the six months ended 31 March 2021
The Directors of Baronsmead Second Venture Trust plc are pleased to announce the unaudited half-yearly financial report for the six months to 31 March 2021. Copies of the half-yearly report can be obtained from the following website: www.baronsmeadvcts.co.uk .
Our Investment Objective
-- Baronsmead Second Venture Trust plc 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 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 NAV of that financial year.
Key elements of the business model
Access to an attractive, diverse portfolio
Baronsmead Second 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 interesting 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 that the management resources are in place to deliver profitable growth. The intention is to build on the business model and grow the company into an attractive target able to be either sold or potentially floated in the medium term.
Financial Highlights
+18.4% Net Asset Value (NAV) per share increased 18.4 per cent. to 83.1p in the six months to 31 March 2021, before deduction of dividends.
371.9p NAV total return to shareholders for every 100.0p invested at launch (January 2001).
GBP9.9m Realised proceeds in the period, returning 3.0x cost.
GBP32.4m Funds raised in the period (before costs).
Cash returned to shareholders
The table below shows the cash returned to shareholders that invested in Baronsmead Second Venture Trust plc dependent on their subscription cost, including tax available to be reclaimed on the subscription.
Cumulative Net cash invested dividends Cash invested Income tax reclaim (p) paid # Return on cash Year subscribed (p) (p) (p) invested # (%) 2001 (January) 100.0 20.0 80.0 150.8 170.8 ============= ================== =================== =================== =================== 2005 (March) - C share* 100.0 40.0 60.0 107.6 147.6 ============= ================== =================== =================== =================== 2010 (March) 103.1 30.9 72.2 102.5 129.4 ============= ================== =================== =================== =================== 2012 (December) 117.4 35.2 82.2 84.5 102.0 ============= ================== =================== =================== =================== 2014 (March) 112.4 33.7 78.7 64.5 87.4 ============= ================== =================== =================== =================== 2016 (February) 107.2 32.2 75.0 48.0 74.8 ============= ================== =================== =================== =================== 2017 (October) 97.5 29.2 68.2 28.0 58.7 ============= ================== =================== =================== =================== 2019 (February) 85.3 25.6 59.7 20.5 54.0 ============= ================== =================== =================== =================== 2019 (November) 78.9 23.7 55.2 13.0 46.5 ============= ================== =================== =================== =================== 2020 (January) 84.8 25.4 59.4 13.0 45.3 ============= ================== =================== =================== =================== 2020 (February) 82.5 24.8 57.7 9.5 41.6 ============= ================== =================== =================== =================== 2020 (March) 64.3 19.3 45.0 9.5 44.8 ============= ================== =================== =================== =================== 2020 (November) 77.9 23.4 54.5 6.5 38.4 ============= ================== =================== =================== =================== 2020 (December) 80.9 24.3 56.6 6.5 38.1 ============= ================== =================== =================== =================== 2021 (January) 84.4 25.3 59.1 6.5 37.7 ============= ================== =================== =================== =================== 2021 (February) 82.2 24.7 57.5 3.0 33.7 ============= ================== =================== =================== =================== 2021 (March) 84.9 25.5 59.4 3.0 33.6 ============= ================== =================== =================== ===================
The total return could be higher for those shareholders who were able to defer a capital gain on subscription and the net sum invested may be less.
* Dividends paid to C shareholders post conversion have been adjusted by the conversion ratio (0.85642528).
# Includes interim dividend of 3.0p per share payable10 September 2021.
Chairman's statement
The six months to 31 March 2021 saw strong performance from our AIM-traded investments, which provided a 31.0 per cent. return in the period. There was also positive progress from our unquoted investments, including the successful realisation of Ten10.
I am delighted to report that, during the period, the Company successfully raised GBP32.4m, before costs, through its largest offer for subscription in the history of the fund.
The Board is also pleased to declare an interim dividend of 3.0p to be paid on 10 September 2021. The dividend will be paid from realised capital profits generated from the sale of portfolio companies.
Results
During the six months to 31 March 2021, the Company's NAV per share increased 18.4 per cent. from 70.2p to 83.1p after the payment of a final dividend of 3.5p per share on 5 March 2021. The table below shows this increase in NAV, which was due to a combination of a strong performance across the unquoted investments, AIM-traded investments and equity funds.
Pence per ordinary share ----------------------------------------------- ---------- NAV as at 1 October 2020 (after deducting the final dividend of 3.5p) 70.2 ----------------------------------------------- ---------- Valuation increase (18.4 per cent.) 12.9 ----------------------------------------------- ---------- NAV as at 31 March 2021 83.1 ----------------------------------------------- ----------
The 30 April 2021 NAV was 87.8p, a 5.7 per cent. increase driven by further uplifts in the value of the quoted portfolio during the month.
Portfolio review
The table below provides a summary of each asset class and the return generated during the period under review.
Results
NAV Number of % return in Asset class (GBPm) % of NAV* investees** the period*** Unquoted 52 22 35 12 -------- ---------- ------------- --------------- AIM and LSE-traded companies 94 40 42 31 -------- ---------- ------------- --------------- LF Gresham House UK Micro Cap Fund 31 13 48 32 -------- ---------- ------------- --------------- LF Gresham House UK Multi Cap Income Fund 4 2 47 15 -------- ---------- ------------- --------------- LF Gresham House UK Smaller Companies Fund 4 2 48 40 -------- ---------- ------------- --------------- Liquid assets(#) 52 21 - - -------- ---------- ------------- --------------- Total 237 100 - - -------- ---------- ------------- ---------------
* By value at 31 March 2021.
**Includes investee companies with holdings by more than one fund. Total number of individual companies held is 178.
***Return includes interest received on unquoted realisations during the period.
(#) Represents cash, OEICs and net current assets.
The value of the unquoted portfolio increased 12.4 per cent. in the six months to 31 March 2021. Continued trading momentum in software and e-commerce investments, together with a bounce back in demand within several businesses initially impacted by COVID-19, drove the portfolio performance. The gains recognised in these assets were partially offset by write downs in investments operating in the consumer, travel, or housing markets, which are still being negatively impacted by lockdown and
travel restrictions.
Public markets have continued to recover from lows 12 months ago, driven by the speed of the vaccination rollout, growth in economic activity and further Government support and investment programmes. Healthcare, education and technology investments were the key contributors to the strong performance of the direct AIM investments and the Equity Fund portfolios over the period. The AIM portfolio recorded growth of 31.0 per cent. in the period, outperforming relevant comparable indices, while the Micro Cap Fund, Multi Cap Income Fund and Smaller Companies Fund grew in value by 32.2, 15.0 and 40.1 per cent. over the period respectively.
Investments and Divestments
The Company's investments and divestments during the period are set out in the tables below.
Investments
I am pleased to report that the Company made four new investments totalling GBP5.6m and three follow-on investments with a combined value of GBP1.7m in the six months to 31 March 2021. Below are descriptions of the new investments made:
-- eConsult (unquoted) develops and operates a digital consultation platform used in both GP surgeries and hospitals.
-- RevLifter (unquoted) provides software that helps e-commerce companies optimise website conversion by offering tailored promotions to customers by using advanced behavioural analytics.
-- Counting Up (unquoted) is the leading UK provider of unified banking and accounting software to micro-businesses. Counting Up develops and operates the software which provides an all-in-one financial tool for small business users.
-- Metrion Biosciences (unquoted) is a UK-based Contract Research Organisation focused on delivering a range of high-quality ion channel drug discovery services.
Following the period end, a new quoted investment of GBP0.7m was made into Crimson Tide, a workforce management software-as-a-service provider.
The Investment Manager performs an assessment of environmental, social and governance ("ESG") factors and stewardship responsibilities in the selection of new investments and continues to monitor ESG considerations in its existing portfolio.
Realisations
Proceeds of GBP2.6m were received during the period from sales of quoted investments, including:
-- Cerillion plc - we reduced the position size by GBP1.9m, realising 4.2x the original sum invested.
-- Collagen Solutions plc - a full exit through a takeover offer for the company. The portfolio received GBP0.7m from the exit, realising 1.3x the original sum invested.
There continues to be good levels of liquidity in public markets and the Investment Manager has made a select number of divestments within the quoted portfolio where share prices have rallied strongly since the initial decline in markets, following the first national lockdown in March last year.
From the unquoted portfolio, the sale of the investment in Ten10 successfully completed in October 2020. The sale returned total proceeds of GBP7.3m resulting in a total money multiple of 3.7x original investment cost.
Following the end of the financial period there has been a takeover of Wey Education, resulting in the full realisation of the Company's investment, returning 13.6x cost and delivering proceeds of GBP7.1m.
COVID-19 impact
COVID-19 has had a material impact on UK businesses over the last year and has caused significant volatility and disruption to the global economy. The pandemic has presented operational risks for the Company, but these have been well managed and the Board continues to be pleased by the response and resilience of key service providers during this difficult time.
Although there are now several approved vaccines in circulation, there is still the risk of another wave of infections, which could lead to a further period of uncertainty and volatility in markets. We are encouraged by the Manager's ongoing engagement with portfolio companies and the focus on investing in businesses with strong fundamental characteristics which should continue to grow consistently through the economic cycle.
Dividends
The Board is pleased to declare an interim dividend of 3.0p per share for the year to 30 September 2021. This will be paid on 10 September 2021 to shareholders on the register as of 13 August 2021.
I must of course remind shareholders that the payment date and the amount of future dividends depends on the level and timing of profitable realisations and cannot be guaranteed.
Fundraising
During the period, the Company successfully raised GBP32.4m (before costs) through an offer for subscription which became fully subscribed in March 2021. The Directors are pleased to welcome the 1,000 new shareholders who invested for the first time and to thank the 940 existing shareholders who continue to support the Company.
The Board will consider whether to raise new funds in the 2021/22 tax year which will be determined by the Company's cashflow and its anticipated requirements to fund new investments over the next two. The Board appreciates that shareholders would like as much notice as possible of its fundraising intentions and will ensure that shareholders are informed as soon as possible.
Change of auditor
The audit and risk committee has considered the external audit arrangements and has held an audit tender process in early 2021. Following the conclusion of this process, the audit committee has appointed BDO LLP as the Company's auditor and KPMG LLP will retire with effect from 28 May 2021. KPMG's resignation letter will be sent to the Company's shareholders alongside this half-yearly report.
Director changes
We are pleased to have appointed Graham McDonald as a new independent Non-Executive Director at the Company's Annual General Meeting in February 2021. Graham was the former Global Head of Private Equity and Venture Capital at Aberdeen Standard Investments and we believe that his extensive private equity experience and market knowledge will be invaluable to our Company.
Shareholder scam warning
We are aware that some of our shareholders have received unsolicited phone calls or correspondence concerning their investment in the Company.
Shareholders are advised to be very wary of any unsolicited advice, offers to buy shares at a discount or offers for free company reports.
Please note that none of the Investment Manager, Company or the Company's Registrar, Computershare, would make unsolicited telephone calls to shareholders. Any calls made would relate only to official documentation already circulated to shareholders and never in respect of investment "advice".
If you are in any doubt about the veracity of an unsolicited phone call, please call either the Company or the Registrar at the numbers provided below.
Outlook
The economic outlook in the UK continues to improve as COVID-19 restrictions ease and consumer confidence recovers. The March Budget also included an extension of Government support and investment in infrastructure and the technology sector to help rebuild the UK economy. While most economic commentators expect the economy to rebound strongly over the next two quarters, the longer-term impact of the pandemic remains uncertain. Any additional wave of the virus could lead to the reintroduction of restrictions and the possibility of further volatility in both public markets and revenues within some portfolio companies. However, the Board continues to believe that the portfolio is well positioned to deliver robust investment performance over the long-term and the Company remains well capitalised to actively support the high growth, entrepreneurial businesses which will be key in driving a sustainable economic recovery.
Sarah Fromson
Chairman
27 May 2021
Investments in the period
Book cost Company Location Sector Activity GBP'000 Unquoted investments New =============================================================================================== Online consultation provider Healthcare used by GP practices and eConsult Ltd Surrey & Education hospitals 2,599 =========== ============== ================================= ======== Ion channel drug discovery Metrion Biosciences Healthcare and safety assessment services Ltd Cambridge & Education provider 1,192 =========== ============== ================================= ======== Business Banking and accounting software Counting Ltd London Services for small business 1,059 =========== ============== ================================= ======== A-I platform using advanced behavioural analytics to deliver tailored promotions Revlifter Ltd London TMT to users 779 =========== ============== ================================= ======== Follow On =============================================================================================== Business Glisser Ltd London Services Audience engagement software 794 =========== ============== ================================= ======== Equipsme (Holdings) Business SME health insurance plans Ltd London Services provider 238 =========== ============== ================================= ======== Total unquoted investments 6,661 ======== AIM-traded investments Follow on CloudCall Group Cloud software and integrated plc Leicester TMT communications 606 =========== ============== ================================= ======== Total AIM-traded investments 606 ======== Total investments in the period 7,267 ========
Realisations in the period
First Original Proceeds Overall investment book cost ++ multiple Company date GBP'000 GBP'000 return Unquoted realisations Full trade Ten10 Group Limited sale Feb 15 2,331 7,254 3.7 * ============= ============ ========== ======== ========= Total unquoted realisations 2,331 7,254 3.7 * ========================== ========== ======== ========= AIM-traded realisations Cerillion plc Market sale Nov 15 460 1,924 4.2 ============= ============ ========== ======== ========= Collagen Solutions plc Takeover Mar 17 551 716 1.3 ============= ============ ========== ======== ========= Total AIM-traded realisations 1,011 2,640 2.6 ========================== ========== ======== ========= Total realisations in the period 3,342 9,894 3.0 ========================== ========== ======== ========= 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 .
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 substantially unchanged since the date of the Company's Annual Report for the financial year ended 30 September 2020 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 Brexit to be factors which permeate these risks, and their impact is considered within the relevant risk within the Annual Report.
Responsibility statement
Each director confirms that to the best of our knowledge:
-- the condensed set of nancial 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 rst six months of the nancial year and their impact on the condensed set of nancial 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 rst six months of the current nancial year and that have materially affected the nancial position or performance of the entity 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 27 May 2021 and was signed on its behalf by Ms Sarah Fromson, Chairman.
Sarah Fromson
Chairman
27 May 2021
Condensed Income Statement
For the six months to 31 March 2021 (Unaudited)
Six months to Six months to Year to 31 March 2021 31 March 2020 30 September 2020 --------------------- ----- 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 --------------------- ----- -------- -------- -------- -------- -------- -------- -------- -------- -------- Gains/(losses) on investments 5 - 37,141 37,141 - (15,852) (15,852) - 8,680 8,680 Income 566 - 566 519 - 519 4,008 - 4,008 Investment management fee (661) (1,983) (2,644) (529) (1,586) (2,115) (1,078) (3,235) (4,313) Other expenses (377) - (377) (362) - (362) (674) - (674) --------------------- ----- -------- -------- -------- -------- -------- -------- -------- -------- -------- (Loss)/profit
before taxation (472) 35,158 34,686 (372) (17,438) (17,810) 2,256 5,445 7,701 Taxation on ordinary activities - - - - - - (275) 275 - --------------------- ----- -------- -------- -------- -------- -------- -------- -------- -------- -------- (Loss)/profit for the period, being the total comprehensive income for the period after taxation (472) 35,158 34,686 (372) (17,438) (17,810) 1,981 5,720 7,701 --------------------- ----- -------- -------- -------- -------- -------- -------- -------- -------- -------- Return per ordinary share: Basic and Diluted 2 (0.18p) 13.23p 13.05p (0.16p) (7.35p) (7.51p) 0.82p 2.36p 3.18p --------------------- ----- -------- -------- -------- -------- -------- -------- -------- -------- --------
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 2021 (Unaudited)
Non-distributable reserves Distributable Reserves ----------------------- Share Revaluation Capital Revenue Called-up share capital premium reserve reserve reserve Total Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 ----------------------- ----- ----------------------- -------- ----------- ----------- ----------- ------------ At 1 October 2020 27,146 46,775 30,890 75,290 2,216 182,317 Profit/(loss) after taxation - - 31,462 3,696 (472) 34,686 Net proceeds of share issues, share buybacks & sale of shares from treasury 3 4,060 27,459 - (1,608) - 29,911 Dividends paid 4 - - - (8,354) (1,232) (9,586) ----------------------- ----- ----------------------- -------- ----------- ----------- ----------- ------------ At 31 March 2021 31,206 74,234 62,352 69,024 512 237,328 ----------------------- ----- ----------------------- -------- ----------- ----------- ----------- ------------
For the six months to 31 March 2020 (Unaudited)
Non-distributable reserves Distributable Reserves ----------------------- Called-up share Share Revaluation Capital Revenue capital premium reserve reserve reserve Total Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 ----------------------- ------ ---------------------- -------- ----------- ----------- ----------- ------------ At 1 October 2019 24,802 31,191 25,492 92,316 1,575 175,376 Loss after taxation - - (13,985) (3,453) (372) (17,810) Net proceeds of share issues & share buybacks 2,345 15,584 - (1,911) - 16,018 Dividends paid - - - (7,407) (1,093) (8,500) ------------------------------- ---------------------- -------- ----------- ----------- ----------- ------------ At 31 March 2020 27,147 46,775 11,507 79,545 110 165,084 ------------------------------- ---------------------- -------- ----------- ----------- ----------- ------------
For the year ended 30 September 2020 (Audited)
Non-distributable reserves Distributable reserves -------------------------- Share Revaluation Capital Revenue Called-up share capital premium reserve reserve reserve Total Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 -------------------------- ------ ----------------------- -------- ----------- ----------- ----------- -------- At 1 October 2019 24,802 31,191 25,492 92,316 1,575 175,376 Profit after taxation - - 5,398 322 1,981 7,701 Net proceeds of share issues, share buybacks & sale of shares from treasury 2,344 15,584 - (2,782) - 15,146 Other costs charged to capital - - - (1) - (1) Dividends paid - - - (14,565) (1,340) 15,905) ---------------------------------- ----------------------- -------- ----------- ----------- ----------- -------- At 30 September 2020 27,146 46,775 30,890 75,290 2,216 182,317 ---------------------------------- ----------------------- -------- ----------- ----------- ----------- --------
Condensed Balance Sheet
As at 31 March 2021 (Unaudited)
As at As at 31 March 31 March As at 2021 2020 30 September 2020 Notes GBP'000 GBP'000 GBP'000 ------------------------------------------------ ----- Fixed assets Unquoted investments 5 52,113 45,107 46,442 Traded on AIM 5 94,364 61,218 74,081 Collective investment vehicles 5 54,503 46,317 59,367 Listed on LSE 5 36 - 42 ------------------------------------------------ ----- --------------- --------------- ------------------ Investments 5 201,016 152,642 179,932 Current assets Debtors 110 2,258 571 Cash at bank 37,767 11,543 3,108 ------------------------------------------------ ----- --------------- --------------- ------------------ 37,877 13,801 3,679 Creditors (amounts falling due within one year) (1,565) (1,359) (1,294) ------------------------------------------------ ----- --------------- --------------- ------------------ Net current assets 36,312 12,422 2,385 ------------------------------------------------ ----- --------------- --------------- ------------------ Net assets 237,328 165,084 182,317 ------------------------------------------------ ----- --------------- --------------- ------------------ Capital and reserves Called-up share capital 31,206 27,147 27,146 Share premium 74,234 46,775 46,775 Capital reserve 69,024 79,545 75,290 Revaluation reserve 5 62,352 11,507 30,890 Revenue reserve 512 110 2,216 ------------------------------------------------ ----- --------------- --------------- ------------------ Equity shareholders' funds 237,328 165,084 182,317 ------------------------------------------------ ----- --------------- --------------- ------------------ Net asset value per share 83.07p 66.44p 73.74p Number of ordinary shares in circulation 258,692,452 248,485,874 247,251,570
Condensed Statement of cash flows
For the six months to 31 March 2021 (Unaudited)
Six Six months to months to Year to 31 March 2021 31 March 2020 30 September 2020 GBP'000 GBP'000 GBP'000 ------------------------------------------------------------ Net cash outflow from operating activities (1,670) (1,919) (1,339) Net cash inflow/(outflow) from investing activities 16,050 (3,127) (6,023) Equity dividends paid (9,586) (8,500) (15,905) ------------------------------------------------------------ ---------------- ------------------ ------------------ Net cash inflow/(outflow) before financing activities 4,794 (13,546) (23,267) Net cash inflow from financing activities 29,865 14,097 15,383 ------------------------------------------------------------ ---------------- ------------------ ------------------ Increase/(decrease) in cash 34,659 551 (7,884) ------------------------------------------------------------ ---------------- ------------------ ------------------ Reconciliation of net cash flow to movement in net cash Increase/(decrease) in cash 34,659 551 (7,884) Opening cash at bank and on deposit 3,108 10,992 10,992 ------------------------------------------------------------ ---------------- ------------------ ------------------ Closing cash at bank and on deposit 37,767 11,543 3,108 ------------------------------------------------------------ ---------------- ------------------ ------------------ Reconciliation of profit/(loss) before taxation to net cash outflow from operating activities Profit/(loss) before taxation 34,686 (17,810) 7,701 Gains/(losses) on investments (37,141) 15,852 (8,680) Changes in working capital and other non-cash items 785 39 (360) ------------------------------------------------------------ ---------------- ------------------ ------------------ Net cash outflow from operating activities (1,670) (1,919) (1,339) ------------------------------------------------------------ ---------------- ------------------ ------------------
Notes to the financial statements
For the six months to 31 March 2021 (Unaudited)
1. Basis of preparation
The condensed financial statements for the six months to 31 March 2021 comprise the unaudited financial statements together with the related notes. 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 2021 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 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 2020.
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 2021 and for the six months ended 31 March 2020 have been neither audited nor reviewed by the Company's auditors. The information for the year to 30 September 2020 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 2020 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 2020 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, Octagon Point, 5 Cheapside, London EC2V 6AA.
2. Performance and shareholder returns
Return per share is based on a weighted average of 265,723,554 ordinary shares in issue (31 March 2020 - 237,173,550 ordinary shares; 30 September 2020 - 242,461,220 ordinary shares).
Earnings for the first six months to 31 March 2021 should not be taken as a guide to the results of the full financial year to 30 September 2021.
3. Called-up share capital
The below table details the movement in called-up share capital during the period.
Allotted, called-up and fully paid:
Ordinary shares GBP'000 --------------------------------------------------------- ------- 252, 2271,466,654 ordinary shares of 10p each listed at 30 September 2020 27,146 40,593,158 ordinary shares of 10p each issued during the period 4,060 312,059,812 ordinary shares of 10p each listed at 31 March 2021 31,206 --------------------------------------------------------- ------- 24,215,084 ordinary shares of 10p each held in treasury at 30 September 2020 (2,421) 2,672,276 ordinary shares of 10p each repurchased during the period and held in treasury (268) 520,000 ordinary shares of 10p each sold from treasury during the period 52 26,367,360 ordinary shares of 10p each held in treasury at 31 March 2021 (2,637) --------------------------------------------------------- ------- 285,692,452 ordinary shares of 10p each in circulation* at 31 March 2021 28,569 --------------------------------------------------------- ------- * carrying one vote each
During the six months to 31 March 2021, the Company issued 40,593,158 shares at net proceeds of GBP31,515,000 (after costs). During the same period, the Company purchased 2,672,276 shares to be held in treasury at a cost of GBP2,005,000 (including costs). The Company also sold 520,000 shares from treasury for proceeds of GBP401,000. At 31 March 2021, the Company held 26,367,360 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 285,692,452 ordinary shares in issue at 31 March 2021 (31 March 2020 - 248,485,874 ordinary shares; 30 September 2020 - 247,251,570 ordinary shares).
4. Dividends
The final dividend for the year ended 30 September 2020 of 3.5p per share (3.05p capital, 0.45p revenue) was paid on 5 March 2021 to shareholders on the register on 5 February 2021. The ex-dividend date was 4 February 2021.
During the year to 30 September 2020, the Company paid an interim dividend on 11 September 2020 of 3.0p per share (2.9p capital, 0.1p 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:
- Rebased Cost - Earnings Multiple - Offer Less 10 per cent.
The earnings multiple approach involves more subjective inputs than the Rebased Cost 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 2020. 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 Listed investment on AIM on AIM on LSE vehicles Unquoted Total GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 --------- ---------- Opening book cost 54,095 6,513 3,429 45,418 39,587 149,042 Opening unrealised appreciation/(depreciation) 17,433 (3,960) (3,387) 13,949 6,855 30,890 ---------------------------------- -------- --------- --------- ----------- ---------- -------- Opening fair value 71,528 2,553 42 59,367 46,442 179,932 ---------------------------------- -------- --------- --------- ----------- ---------- -------- Movements in the period: Transfer between levels 6,513 (6,513) - - - - Purchases at cost 606 - - 1,500 6,661 8,767 Sale - proceeds (2,640) - - (15,453) (6,731) (24,824) - realised gains/(losses) on sales 100 - - - (2) 98 Unrealised gains realised during the year 1,481 - - - 4,100 5,581 Increase/(decrease) in unrealised appreciation/ (depreciation) 16,776 3,960 (6) 9,089 1,643 31,462 ---------------------------------- -------- --------- --------- ----------- ---------- -------- Closing fair value 94,364 - 36 54,503 52,113 201,016 ---------------------------------- -------- --------- --------- ----------- ---------- -------- Closing book cost 60,155 - 3,429 31,465 43,615 138,664 Closing unrealised appreciation/(depreciation) 34,209 - (3,393) 23,038 8,498 62,352 ---------------------------------- -------- --------- --------- ----------- ---------- -------- Closing fair value 94,364 - 36 54,503 52,113 201,016 ---------------------------------- -------- --------- --------- ----------- ---------- -------- Equity shares 94,364 - 36 - 30,452 124,852 Preference Shares - - - - 7,864 7,864 Loan notes - - - - 13,797 13,797 Collective investment vehicles - - - 54,503 - 54,503 ---------------------------------- -------- --------- --------- ----------- ---------- -------- Closing fair value 94,364 - 36 54,503 52,113 201,016 ---------------------------------- -------- --------- --------- ----------- ---------- --------
The AIM-traded investments held in Level 2 as at 30 September 2020 have been transferred to Level 1 after recent trading activity in the period.
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 assets consist of equity and fixed interest investments, shares in collective investment schemes, cash 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 Annual Report and Accounts for the year to 30 September 2020. The Board continues to regularly review the risk environment in which the Company operates.
The COVID-19 pandemic has presented the Company with immediate risks in respect of the performance and valuation of portfolio companies and operational risks such as the resilience of third party providers. These risks are discussed further in the Chairman's statement.
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, accounting, administrative and custodian services to the Company. Under the management agreement, the Manager receives a fee of 2.5 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 Accounts for the year ended 30 September 2020. During the period the Company has incurred management fees of GBP2,644,000 (31 March 2020 - GBP2,115,000; 30 September 2020 - GBP4,313,000) and secretarial and accounting fees of GBP71,000 (31 March 2020 - GBP87,000; 30 September 2020 - GBP175,000) payable to the Manager. No performance fee has been accrued at 31 March 2021 (31 March 2020 - GBPnil; 30 September 2020 - 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 2020.
A related party relationship exists between Baronsmead Second Venture Trust and Happy Days Consultancy Limited, owing to the significant influence deemed to be held over the operations of the company. As at 31 March 2021, the loan balance stood at GBP6,617,000, including GBP2,855,000 of capitalised interest, as provided for in the Agreement with the company.
A related party relationship exists between Baronsmead Venture Trust and Storyshare Holdings Limited, owing to the significant influence held over the operations of the company.
6.4 Investment in associates
The Company has made the presumption that the following holdings are investments in associates, owing to the proportion of equity held and representation on the board representing significant influence over the operations of the company. The investments held are held as part of an investment portfolio, and are therefore measured at fair value through profit and loss, as detailed in note 7 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 (GBPm) (GBPm) for year held ended Happy Days 31 December Consultancy UK A Ordinary 30.8 (1.3) (9.7) 2019(1)
(1) Latest published set of financial statements available at Companies House.
6.5 Going Concern
The Board has considered a detailed assessment of the company's ability to meet its liabilities as they fall due, including stress and liquidity tests which modelled the effects of substantial falls in markets and significant reductions in market liquidity (including further stressing the current economic conditions caused by the COVID-19 pandemic) on the Company's assets and liabilities. In light of the results of these tests, the Company's cash balances, the liquidity of the Company's investments and the absence of any gearing, the Directors are 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 87.8p was announced on 07 May 2021. 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.
-- Full realisation: a takeover of Wey Education completed on 25 May 2021, realising proceeds of GBP7.1m and returning 13.6x invested cost.
Corporate Information Registrars and Transfer Office Directors Computershare Investor Services PLC Sarah Fromson (Chair) The Pavilions Malcolm Groat* Bridgwater Road Graham McDonald Bristol BS99 6ZZ Tim Farazmand (#) Tel: 0800 923 1534 Secretary Brokers Gresham House Asset Management Ltd Panmure Gordon & Co One New Change Registered Office London EC4M 9AF 5 New Street Square Tel: 020 7886 2500 London EC41 3TW Auditor Investment Manager BDO LLP Gresham House Asset Management Ltd 55 Baker Street 5 New Street Square London London EC41 3TW W1U 7EU 020 3875 9862 Registered Number Solicitors 04115341 Dickson Minto W.S. Broadgate Tower 20 Primrose Street London EC2A 2EW VCT Status Adviser PricewaterhouseCoopers LLP 1 Embankment Place London WC2N 6RH Website www.baronsmeadvcts.co.uk Chair of the Nomination Committee. * Senior Independent Director and Chairman of the Audit & Risk Committee. (#) Chairman of the Management Engagement and Remuneration Committee.
LEI 2138008D3WUMF6TW8C28
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May 27, 2021 10:35 ET (14:35 GMT)
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