TIDMBMD
RNS Number : 0043N
Baronsmead Second Venture Trust PLC
27 May 2022
Baronsmead Second Venture Trust plc
Half-yearly report for the six months ended 31 March 2022
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 2022. 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 (the "Company") is a tax
efficient listed company which aims to achieve long-term investment
returns for private investors, including tax free dividends.
Investment policy
-- To invest primarily in a diverse portfolio of UK growth
businesses, whether unquoted or traded on AIM.
-- Investments are made selectively across a range of sectors in
companies that have the potential to grow and enhance their
value.
Dividend policy
-- The Board will, where 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.
-- 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.
Strategic report
Financial highlights
-11.9% Net Asset Value (NAV) per share decreased 11.9% per cent.
to 74.2p in the six months to 31 March 2022, before deduction of
dividends, in the sixth months to 31 March 2022.
359.3p NAV total return to shareholders for every 100.0p
invested at launch (January 2001).
GBP13.7mn Realised proceeds in the period, returning 2.1x
cost.
GBP37.5m 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 the income tax available to be
reclaimed on the subscription.
Cumulative dividends
Cash invested Income tax reclaim Net cash invested paid (#)
Year subscribed (p) (p) (p) (p) Return on cash invested (#) (%)
2001 (January) 100.0 20.0 80.0 157.3 177.3
============== =================== =================== ===================== ================================
2005 (March) - C
share* 100.0 40.0 60.0 113.2 153.2
============== =================== =================== ===================== ================================
2010 (March) 103.1 30.9 72.2 109.0 135.7
============== =================== =================== ===================== ================================
2012 (December) 117.4 35.2 82.2 91.0 107.5
============== =================== =================== ===================== ================================
2014 (March) 112.4 33.7 78.7 71.0 93.2
============== =================== =================== ===================== ================================
2016 (February) 107.2 32.2 75.0 54.5 80.8
============== =================== =================== ===================== ================================
2017 (October) 97.5 29.2 68.2 34.5 65.4
============== =================== =================== ===================== ================================
2019 (February) 85.3 25.6 59.7 27.0 61.7
============== =================== =================== ===================== ================================
2019 (November) 78.9 23.7 55.2 19.5 54.7
============== =================== =================== ===================== ================================
2020 (January) 84.8 25.4 59.4 19.5 53.0
============== =================== =================== ===================== ================================
2020 (February) 82.5 24.8 57.7 16.0 49.4
============== =================== =================== ===================== ================================
2020 (March) 64.3 19.3 45.0 16.0 54.9
============== =================== =================== ===================== ================================
2020 (November) 77.9 23.4 54.5 13.0 46.7
============== =================== =================== ===================== ================================
2020 (December) 80.9 24.3 56.6 13.0 46.1
============== =================== =================== ===================== ================================
2021 (January) 84.4 25.3 59.1 13.0 45.4
============== =================== =================== ===================== ================================
2021 (February) 82.2 24.7 57.5 9.5 41.6
============== =================== =================== ===================== ================================
2021 (March) 84.9 25.5 59.4 9.5 41.2
============== =================== =================== ===================== ================================
2021 (December) 88.1 26.4 61.7 6.5 37.4
============== =================== =================== ===================== ================================
2022 (January) 87.1 26.1 61.0 6.5 37.5
============== =================== =================== ===================== ================================
2022 (March) 76.6 23.0 53.6 3.0 33.9
============== =================== =================== ===================== ================================
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 payable 9
September 2022.
Chairman's statement
The six months to 31 March 2022 saw an increased level of
volatility in public markets due to greater levels of uncertainty
heading into 2022. Investor fears were exacerbated by a rise in
geopolitical risk in Europe as Russia invaded Ukraine, slowing
economic growth and increasing expectations of a prolonged period
of higher inflation driven by higher commodity prices.
These headwinds have been reflected mainly in the softer
performance of the AIM traded investments within the portfolio in
the six months to 31 March 2022. Despite the drop in the value of
the portfolio over the period, the Manager believes that - in
aggregate - the fundamentals of the underlying portfolio companies
remain robust and the growth prospects for the majority of investee
companies continue to be positive.
The Board is also pleased to declare an interim dividend of 3.0p
to be paid on 9 September 2022 to shareholders on the register as
of 12 August 2022. The dividend will be paid from realised capital
profits generated from the successful sales of portfolio companies.
Over the period, capital proceeds of GBP13.7mn were realised from
the sale, or partial sale, of four portfolio companies. The
combined return from these sales was 2.1x invested cost.
I must, of course, remind shareholders that payment dates and
the amount of future dividends depend on the level and timing of
profitable realisations and cannot be guaranteed.
Results
During the six months to 31 March 2022, the Company's NAV per
share decreased 11.9 per cent. from 84.3p to 74.2p after the
payment of a final dividend of 3.5p per share on 4 March 2022. The
table below breaks down the movement in NAV over the six
months.
Pence per
ordinary
share
----------------------------------------------- ----------
NAV as at 1 October 2021 (after deducting the
final dividend of 3.5p) 84.3
----------------------------------------------- ----------
Valuation decrease (11.9 per cent.) (10.1)
----------------------------------------------- ----------
NAV as at 31 March 2022 74.2
----------------------------------------------- ----------
The 30 April 2022 NAV was 75.1p, a 1.2 per cent. increase driven
by slightly firmer quoted markets.
Portfolio review
The table below provides a summary of each asset class and the
return generated during the period under review.
NAV
* Number of % return
Asset class (GBPm) % of NAV* investees** in the period***
Unquoted 54 22 35 (5)
-------- ---------- ------------- ------------------
AIM and LSE-traded
companies 84 35 49 (18)
-------- ---------- ------------- ------------------
LF Gresham House
UK Micro Cap Fund 29 12 48 (16)
-------- ---------- ------------- ------------------
LF Gresham House
UK Multi Cap Income
Fund 13 6 46 (1)
-------- ---------- ------------- ------------------
LF Gresham House
UK Smaller Companies
Fund 6 2 44 (10)
-------- ---------- ------------- ------------------
Liquid assets(#) 57 23 - -
-------- ---------- ------------- ------------------
Total 243 100 222 -
-------- ---------- ------------- ------------------
* By value at 31 March 2022.
**Includes investee companies with holdings by more than one
fund. Total number of individual companies held is 173.
***Return includes interest received on unquoted realisations
during the period.
(#) Represents cash, OEICs and net current assets.
The value of the unquoted portfolio decreased 5 per cent. in the
six months to 31 March 2022. The drop in value of the unquoted
portfolio was driven by a combination of softer trading performance
in several e-commerce assets and a general de-rating of valuation
multiples in the consumer and marketing services sectors. These
declines were partially offset by uplifts in healthcare investments
which continue to grow strongly and to benefit from the long-term
structural growth drivers in this market.
The value of the Company's portfolio of investments directly
held in AIM-traded companies decreased 18 per cent. in the six
months to 31 March 2022. The value of the Company's investment into
the LF Gresham House UK Micro Cap Fund decreased by 16 per cent.,
the LF Gresham House UK Smaller Companies Fund decreased by 10 per
cent. and the LF Gresham House Multi Cap Income Fund decreased by 1
per cent. This was primarily driven by negative investor sentiment
surrounding inflationary pressures, expectations of interest rate
rises and the cost-of-living squeeze in the UK. The implications of
the ongoing war in Ukraine continue to impact negatively on global
equity markets, with a particularly pronounced effect on UK and
European equities.
Investments and divestments
The Company's investments and divestments during the period are
set out below.
Investments
I am pleased to report that the Company made five new
investments totalling GBP8.5mn and two follow-on investments with a
combined value of GBP1.8mn in the six months to 31 March 2022.
Below are descriptions of the new investments made:
-- Aptamer (quoted) - platform providing antibody alternatives
to the pharma industry across a range of applications.
-- Oberon (quoted) - corporate advisory business providing
advice, asset management and deal arrangement services.
-- Popsa (unquoted) - provider of a mobile app that lets users
design photo albums digitally and have them delivered in print.
-- Proximity Insight (unquoted) - platform used by front-line
sales associates of omni-channel retailers to better engage and
transact with their customers.
-- Skillcast (quoted) - provider of staff compliance training.
During the period the Company also invested GBP4.1mn into the LF
Gresham House UK Multi Cap Income Fund and GBP1.4mn into the LF
Gresham House Smaller Companies Fund.
Following the period end, four further follow-on investments
were made, totalling GBP4.3mn and a new unquoted investment of
GBP0.9mn was made into Bidnamic, a market leading provider of
Google shopping management software.
Realisations
Proceeds of GBP4.4m were received during the period from sales
of quoted investments, including:
-- Cerillion plc - top-slicing delivered proceeds of GBP1.5mn,
equating to a money multiple of 11.4x.
-- Cloudcall Group plc - takeover by Xplorer Capital Management
resulting in proceeds of GBP2.9mn and a money multiple of 0.9x.
From the unquoted portfolio, the sale of the investment in
Carousel successfully completed in February 2022. The sale returned
proceeds of GBP9.3mn, which, in addition to the loan-note interest
received during the lifetime of the investment, resulted in a total
gross money multiple of 5.0x original investment cost.
Venture capital industry
I would also like to draw attention to the UK Parliamentary
inquiry into the venture capital industry, launched in April 2022.
The Committee will be examining the regulation around venture
capital, the role of key bodies and how the industry can be
strengthened. The Board and Manager welcome the opportunity to
provide the inquiry with the information they are seeking on how
VCTs provide small UK businesses with funding to assist with their
growth and development.
Fundraising
I am pleased to report that, during the period, the Company
successfully raised GBP37.5mn (before costs) through an offer for
subscription which became fully subscribed in February 2022. The
Board are pleased to welcome the 1,811 new shareholders who
invested for the first time and to thank the 524 existing
shareholders who continue to support the Company.
The Board will consider whether to raise new funds in the
2022/23 tax year. This will be determined by the Company's cashflow
and its anticipated requirements to fund new and follow-on
investments over the next two to three years. The Board appreciates
that shareholders would like plenty of notice of its fundraising
intentions and will ensure that shareholders are informed of any
such fundraising at the earliest practical time.
Investment Manager
The Board is pleased to see the integration progress made by the
Investment Manager following the acquisition of the VCT business of
Mobeus Equity Partners LLP in September 2021. The Board believes
the combined platform enhances the Manager's ability to source,
invest in and manage attractive early-stage unquoted investments.
The Board believes that this will benefit the Company through more
consistent and increased rates of investment which will ultimately
support the delivery of attractive long-term performance and
dividends for the Company's shareholders. We note that the
Baronsmead VCTs retain their distinctive approach as hybrid VCTs;
investing across the spectrum of fast growing, small, quoted and
unquoted companies.
Following the successful integration, Fund Manager Bevan Duncan
has decided to pursue a new career path as Chief Operating Officer
at an early stage, high growth technology company. The Board would
like to wish him every success in his next role and are reassured
by the depth and experience of the wider team to continue to
deliver for investors. Trevor Hope will be Managing Director for
the private equity team, working closely with Ken Wotton, Managing
Director of Public Equity, who continues to be responsible for the
quoted portfolio within the Baronsmead VCTs. Clive Austin remains
Managing Director of VCT portfolio with responsibility for
portfolio and asset management alongside Ed Wass, a highly
experienced portfolio partner.
Outlook
The macro-economic environment has undoubtedly become more
challenging over the past six months. The Board and Manager are
planning for further market volatility, ongoing pressure on
companies' operating margins due to rising costs and weaker
consumer demand, together with supply chain disruption and
shortages of talent within portfolio companies. The Manager is
regularly engaging with portfolio company management teams to
forecast cash levels and expected usage rates, to plan for stress
scenarios and, more generally, to reduce execution risk over the
next 12 months.
We note that the portfolio remains highly diversified, with over
80 direct holdings, and is largely positioned in parts of the
economy which the Board expects will see long-term structural
growth. The volatility and disruption also provide good
opportunities to invest in earlier stage, higher growth companies
that are quickly moving to exploit changes in their target markets.
The Company remains suitably capitalised and the Manager is well
resourced to support investment into new and existing portfolio
companies, which are expected to create value and provide
attractive dividend payments to shareholders over the
long-term.
Sarah Fromson
Chairman
26 May 2022
Investments in the period
Book
cost
Company Location Sector Activity GBP'000
Unquoted investments
New
======================================================================================================
Mobile-first photobook app
Popsa Holdings Ltd Surrey Technology provider 3,379
=========== ============== ================================= ========
Platform for front-line sales
associate of omni-channel
Proximity Insight Holdings retailers to engage with
Ltd London Technology customers 1,152
=========== ============== ================================= ========
Follow on
Provides real time life science
Healthcare intelligence as a subscription
Airfinity Ltd London & education service 1,039
=========== ============== ================================= ========
AI platform using advanced
behavioural analytics to
deliver tailored promotions
RevLifter Ltd London Technology to users 779
=========== ============== ================================= ========
Total unquoted investments 6,349
========
AIM-traded investments
New
Platform providing antibody
Healthcare alternatives to the pharma
Aptamer Group plc Yorkshire & education industry 2,390
=========== ============== ================================= ========
Healthcare Compliance e-learning and
Skillscast Group Plc London & Education regulatory technology services 817
=========== ============== ================================= ========
Oberon Investments Business
Group plc London services Corporate advisory business 742
=========== ============== ================================= ========
Total AIM-traded investments 3,949
========
Total investments in the period 10,298
========
Realisations in the period
First Original Proceeds Overall
investment book cost (++) multiple
Company date GBP'000 GBP'000 return
Unquoted realisations
Full trade
Carousel Logistics Ltd sale Oct 13 2,336 9,333 5.0*
============= ============ ========== ========== =========
Total unquoted realisations 2,336 9,333 5.0*
========================== ========== ========== =========
AIM-traded realisations
CloudCall Group plc Take over Apr 14 3,214 2,900 0.9
============= ============ ========== ========== =========
Cerillion plc Market sale Jul 15 129 1,474 11.4
============= ============ ========== ========== =========
Mi-Pay Group plc Liquidated Nov 12 800 11 0.0
============= ============ ========== ========== =========
Total AIM-traded realisations 4,143 4,385 1.1
========================== ========== ========== =========
Total realisations in the
period 6,479 13,718(#) 2.1
========================== ========== ========== =========
Residual book cost at realisation date.
(++) Proceeds at time of realisation including interest.
*Includes interest/dividends received, loan note redemptions and partial
realisations accounted for in prior periods .
(#) Deferred consideration of GBP15,000 was also received in respect
of Glide which had been sold in a prior period.
Responsibility statement of the Directors in respect of the
half-yearly financial report
Half-yearly report
The important events that have occurred during the period under
review, the key factors influencing the financial statements and
the principal uncertainties for the remaining six months of the
financial year are set out in the Chairman's statement and the
Strategic report.
The principal risks facing the Company are substantially
unchanged since the date of the Company's Annual Report for the
financial year ended 30 September 2021 and continue to be as set
out in that Report on pages 18 and 19.
Risks faced by the Company include but are not limited to; loss
of approval as a Venture Capital Trust, investment performance
risk, legislative risk, regulatory and compliance risk, operational
risk, and economic and political risk. The Board considers the
COVID-19 pandemic and the Russian invasion of Ukraine to be factors
which permeate these risks, and their impacts for the remaining six
months of the year continue to be kept under review.
Responsibility statement
Each director confirms that to the best of 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
26 May 2022 and was signed on its behalf by Ms Sarah Fromson,
Chairman.
Sarah Fromson
Chairman
26 May 2022
Condensed income statement
For the six months to 31 March 2022 (Unaudited)
Six months to Six months to Year to
31 March 2022 31 March 2021 30 September 2021
--------------------- -----
Revenue Capital Total Revenue Capital Total Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- ----- -------- -------- -------- -------- -------- -------- -------- -------- --------
(Losses)/gains on
investments 5 - (27,719) (27,719) - 37,141 37,141 - 59,071 59,071
Income 961 - 961 566 - 566 3,821 - 3,821
Investment
management fee (706) (2,116) (2,822) (661) (1,983) (2,644) (1,424) (4,272) (5,696)
Other expenses (359) - (359) (377) - (377) (665) - (665)
--------------------- ----- -------- -------- -------- -------- -------- -------- -------- -------- --------
(Loss)/profit
before taxation (104) (29,835) (29,939) (472) 35,158 34,686 1,732 54,799 56,531
Taxation on
ordinary
activities - - - - - - (108) 108 -
--------------------- ----- -------- -------- -------- -------- -------- -------- -------- -------- --------
(Loss)/profit for
the period, being
the total
comprehensive
income for the
period after
taxation (104) (29,835) (29,939) (472) 35,158 34,686 1,624 54,907 56,531
--------------------- ----- -------- -------- -------- -------- -------- -------- -------- -------- --------
Return per ordinary
share:
Basic and Diluted 2 (0.04p) (10.04p) (10.07p) (0.18p) 13.23p 13.05p 0.59p 19.96p 20.55p
--------------------- ----- -------- -------- -------- -------- -------- -------- -------- -------- --------
All items in the above statement derive from continuing
operations.
There are no recognised gains and losses other than those
disclosed in the Income Statement.
The revenue column of the Income Statement includes all income
and expenses. The capital column accounts for the realised and
unrealised profit or loss on investments and the proportion of the
management fee charged to capital.
The total column of this statement is the unaudited Statement of
Total Comprehensive Income of the Company prepared in accordance
with the Financial Reporting Standard ("FRS"). The supplementary
revenue return and capital return columns are prepared in
accordance with the Statement of Recommended Practice issued by the
Association of Investment Companies ("AIC SORP").
Condensed statement of changes in equity
For the six months to 31 March 2022 (Unaudited)
Non-distributable reserves Distributable reserves
------------------
Called-up share Revaluation Revenue
capital Share reserve Capital reserve Total
Notes GBP'000 premium GBP'000 GBP'000 reserve GBP'000 GBP'000 GBP'000
------------------ ----- ------------------ ---------------- ----------- ---------------- -------- ------------
At 1 October 2021 31,206 74,231 77,481 63,698 1,758 248,374
(Loss)/profit
after taxation - - (34,540) 4,705 (104) (29,939)
Net proceeds of
share issues,
share buybacks &
sale of shares
from treasury 3 4,583 31,868 - (1,050) - 35,401
Dividends paid 4 - - - (10,465) (308) (10,773)
------------------ ----- ------------------ ---------------- ----------- ---------------- -------- ------------
At 31 March 2022 35,789 106,099 42,941 56,888 1,346 243,063
------------------ ----- ------------------ ---------------- ----------- ---------------- -------- ------------
For the six months to 31 March 2021 (Unaudited)
Non-distributable reserves Distributable reserves
------------------
Called-up share Revaluation Revenue
capital Share reserve Capital reserve Total
Notes GBP'000 premium GBP'000 GBP'000 reserve 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 year ended 30 September 2021 (Audited)
Non-distributable reserves Distributable reserves
------------------
Called-up share Revaluation Revenue
capital Share reserve Capital reserve Total
Notes GBP'000 premiumGBP'000 GBP'000 reserve GBP'000 GBP'000 GBP'000
------------------ ------ ------------------ --------------- ----------- ---------------- -------- ------------
At 1 October 2020 27,146 46,775 30,890 75,290 2,216 182,317
Profit after taxation - - 46,591 8,316 1,624 56,531
Net proceeds of share
issues, share buybacks &
sale of shares from
treasury 4,060 27,456 - (3,908) - 27,608
Dividends paid - - - (16,000) (2,082) (18,082)
-------------------------- ------------------ --------------- ----------- ---------------- -------- ------------
At 30 September 2021 31,206 74,231 77,481 63,698 1,758 248,374
-------------------------- ------------------ --------------- ----------- ---------------- -------- ------------
Condensed balance sheet
As at 31 March 2022 (Unaudited)
As at As at
31 March 31 March As at
2022 2021 30 September 2021
Notes GBP'000 GBP'000 GBP'000
------------------------------------------------ -----
Fixed assets
Unquoted investments 5 53,887 52,113 59,971
Traded on AIM 5 83,916 94,364 102,394
Collective investment vehicles 5 60,053 54,503 75,701
Listed on LSE 5 34 36 34
------------------------------------------------ ----- --------------- --------------- ------------------
Investments 5 197,890 201,016 238,100
Current assets
Debtors 106 110 109
Cash at bank 46,647 37,767 12,312
------------------------------------------------ ----- --------------- --------------- ------------------
46,753 37,877 12,421
Creditors (amounts falling due within one year) (1,580) (1,565) (2,147)
------------------------------------------------ ----- --------------- --------------- ------------------
Net current assets 45,173 36,312 10,274
------------------------------------------------ ----- --------------- --------------- ------------------
Net assets 243,063 237,328 248,374
------------------------------------------------ ----- --------------- --------------- ------------------
Capital and reserves
Called-up share capital 35,789 31,206 31,206
Share premium 106,099 74,234 74,231
Capital reserve 56,888 69,024 63,698
Revaluation reserve 5 42,941 62,352 77,481
Revenue reserve 1,346 512 1,758
------------------------------------------------ ----- --------------- --------------- ------------------
Equity shareholders' funds 243,063 237,328 248,374
------------------------------------------------ ----- --------------- --------------- ------------------
Net asset value per share 74.2p 83.07p 87.77p
Number of ordinary shares in circulation 327,596,768 285,692,452 282,974,085
Condensed statement of cash flows
For the six months to 31 March 2022 (Unaudited)
Six Six
months to months to Year to
31 March 2022 31 March 2021 30 September 2021
GBP'000 GBP'000 GBP'000
------------------------------------------------------------
Net cash outflow from operating activities (2,536) (1,670) (1,850)
Net cash inflow from investing activities 12,689 16,050 1,083
Net cash before financing activities 10,153 14,380 (767)
Net cash inflow from financing activities 24,182 20,279 9,971
------------------------------------------------------------ ------------------ ---------------- ------------------
Increase in cash 34,335 34,659 9,204
------------------------------------------------------------ ------------------ ---------------- ------------------
Reconciliation of net cash flow to movement in net cash
Increase in cash 34,335 34,659 9,204
Opening cash at bank and on deposit 12,312 3,108 3,108
------------------------------------------------------------ ------------------ ---------------- ------------------
Closing cash at bank and on deposit 46,647 37,767 12,312
------------------------------------------------------------ ------------------ ---------------- ------------------
Reconciliation of (loss)/ profit/ before taxation to net
cash outflow from operating activities
(Loss)/profit before taxation (29,939) 34,686 56,531
Gains/(losses) on investments 27,719 (37,141) (59,071)
Changes in working capital and other non-cash items (316) 785 690
------------------------------------------------------------ ------------------ ---------------- ------------------
Net cash outflow from operating activities (2,536) (1,670) (1,850)
------------------------------------------------------------ ------------------ ---------------- ------------------
Notes to the financial statements
For the six months to 31 March 2022 (Unaudited)
1. Basis of preparation
The condensed financial statements for the six months to 31
March 2022 comprise the unaudited 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 2022 have therefore been prepared in
accordance with FRS 104 'Interim Financial Reporting' and the
principles of the SORP. They have been prepared on a going concern
basis. The 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
2021.
The financial information contained in this half-yearly
financial report does not constitute statutory accounts as defined
in sections 434 - 436 of the Companies Act 2006. The half-yearly
financial report for the six months ended 31 March 2022 and for the
six months ended 31 March 2021 have been neither audited nor
reviewed by the Company's auditors. The information for the year to
30 September 2021 has been extracted from the latest published
audited financial statements, which have been filed with the
Registrar of Companies. The report of the auditor for the audited
financial statements for the year to 30 September 2021 was: (i)
unqualified; (ii) did not include a reference to any matters to
which the auditor drew attention by way of emphasis without
qualifying their report; and (iii) did not contain a statement
under section 498 (2) or (3) of the Companies Act 2006. No
statutory accounts in respect of any period after 30 September 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, 80
Cheapside, London, EC2V 6EE.
2. Performance and shareholder returns
Return per share is based on a weighted average of 297,083,965
ordinary shares in issue (31 March 2021 - 265,723,554 ordinary
shares; 30 September 2021 - 275,054,819 ordinary shares).
Earnings for the first six months to 31 March 2022 should not be
taken as a guide to the results of the full financial year to 30
September 2022.
3. Called-up share capital
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, 3312,059,812 ordinary shares of 10p each listed
at 30 September 2021 31,206
45,829,661 ordinary shares of 10p each issued during
the period 4,583
357,889,473 ordinary shares of 10p each listed at
31 March 2022 35,789
--------------------------------------------------------- -------
229,085,727 ordinary shares of 10p each held in treasury
at 30 September 2021 (2,909)
2,090,978 ordinary shares of 10p each repurchased during
the period and held in treasury (209)
884,000 ordinary shares of 10p each sold from treasury
during the period 88
30,292,705 ordinary shares of 10p each held in treasury
at 31 March 2022 (3,030)
--------------------------------------------------------- -------
327,596,768 ordinary shares of 10p each in circulation*
at 31 March 2022 32,759
--------------------------------------------------------- -------
* carrying one vote each
During the six months to 31 March 2022, the Company issued
45,829,661 shares at net proceeds of GBP36,451,000 (after costs).
During the same period, the Company purchased 2,090,978 shares to
be held in treasury at a cost of GBP1,689,000 (including costs).
The Company also sold 884,000 shares from treasury for proceeds of
GBP639,000. At 31 March 2022, the Company held 30,292,705 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 327,596,768 ordinary
shares in issue at 31 March 2022 (31 March 2021 - 285,692,452
ordinary shares; 30 September 2021 - 282,974,085 ordinary
shares).
4. Dividends
The final dividend for the year ended 30 September 2021 of 3.5p
per share (3.4p capital, 0.1p revenue) was paid on 4 March 2022 to
shareholders on the register on 4 February 2022. The ex-dividend
date was 3 February 2022.
During the year to 30 September 2021, the Company paid an
interim dividend on 10 September 2021 of 3.0p per share (2.7p
capital, 0.3p revenue).
5. Investments
All investments are initially recognised subsequently measured
at fair value. Changes in fair value are recognised in the Income
Statement.
The methods of fair value measurement are classified into a
hierarchy based on reliability of the information used to determine
the valuation.
-- Level 1 - Fair value is measured based on quoted prices in an active market.
-- Level 2 - Fair value is measured based on directly observable
current market prices or indirectly being derived from market
prices.
-- Level 3 - Fair value is measured using a valuation technique
that is not based on data from an observable market.
The valuation of unquoted investments contained within level 3
of the Fair Value hierarchy involves key assumptions dependent upon
the valuation methodology used. The primary methodologies applied
are:
- Cost of recent investment
- Earnings Multiple
- Offer less 10 per cent.
The earnings multiple approach involves more subjective inputs
than the cost of recent investment and offer approaches and
therefore presents a greater risk of over or under estimation. Key
assumptions for the earnings multiple approach are the selection of
comparable companies and the use of either historic or forecast
revenue or earnings, as considered most appropriate. Other
assumptions include the appropriateness of the discount magnitude
applied for reduced liquidity and other qualitative factors. These
assumptions are described in more detail in Note 2.3 in the
Company's Report and Financial Statements for the year to 30
September 2021. The techniques used in the valuation of unquoted
investments have not changed materially since the date of that
report.
Level 1 Level 2 Level 3
Collective
Traded Listed investment
on AIM on LSE vehicles Unquoted Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------------- -------- ----------- ---------- --------
Opening book cost 63,064 3,429 48,404 45,722 160,619
Opening unrealised
appreciation/(depreciation) 39,330 (3,395) 27,297 14,249 77,481
----------------------------------------------- -------- --------- ----------- ---------- --------
Opening fair value 102,394 34 75,701 59,971 238,100
----------------------------------------------- -------- --------- ----------- ---------- --------
Movements in the period:
Purchases at cost 3,949 - 5,699 6,349 15,997
Sale - proceeds (4,374) - (15,000) (9,114) (28,488)
* realised gains/(losses) on sales 1,037 - - (1,585) (548)
Unrealised (losses)
/ gains realised during
the period 111 - - 7,528 7,369
Decrease in unrealised
depreciation (19,201) - (6,347) (8,992) (34,540)
----------------------------------------------- -------- --------- ----------- ---------- --------
Closing fair value 83,916 34 60,053 53,887 197,890
----------------------------------------------- -------- --------- ----------- ---------- --------
Closing book cost 63,787 3,429 39,103 48,630 154,949
Closing unrealised
appreciation/(depreciation) 20,129 (3,395) 20,950 5,257 42,941
----------------------------------------------- -------- --------- ----------- ---------- --------
Closing fair value 83,916 34 60,053 53,887 197,890
----------------------------------------------- -------- --------- ----------- ---------- --------
Equity shares 83,916 34 - 25,225 109,175
Preference Shares - - - 18,160 18,160
Loan notes - - - 10,502 10,502
Collective investment
vehicles - - 60,053 - 60,053
----------------------------------------------- -------- --------- ----------- ---------- --------
Closing fair value 83,916 34 60,053 53,887 197,890
----------------------------------------------- -------- --------- ----------- ---------- --------
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 2021. 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, 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 Investment Management Agreement' within the Strategic
Report in the Company's Annual Report and Accounts for the year
ended 30 September 2021. During the period the Company has incurred
management fees of GBP2,822,000 (31 March 2021 - GBP2,644,000; 30
September 2021 - GBP5,696,000) and secretarial and accounting fees
of GBP76,000 (31 March 2021 - GBP71,000; 30 September 2021 -
GBP143,000) payable to the Manager. No performance fee has been
accrued at 31 March 2022 (31 March 2021 - GBPnil; 30 September 2021
- 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
2021.
A related party relationship exists between the Company and
Happy Days Consultancy Ltd, owing to the significant influence
deemed to be held over the operations of the company. As at 31
March 2022, the loan balance stood at GBP3,510,000, including
GBP1,122,000 of capitalised interest, as provided for in the
Agreement with the company.
6.4 Investment in associates
The Company has made the presumption that the following 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
5 rather than using the equity method, as permitted by Section 14
of FRS 102:
Name Location Class % of Equity Profit Net Assets Results
of Shares (GBPm) (GBPm) for year
held ended
Happy Days A Ordinary 31 December
Consultancy UK & B Ordinary 35.7 (3.0) (12.7) 2020(1)
(1) Latest published set of financial statements available at
Companies House.
6.5 Going concern
After making enquiries, and bearing in mind the nature of the
Company's business and assets, the Directors consider that the
Company has adequate resources to continue in operational existence
for the foreseeable future. In arriving at this conclusion, the
Directors have considered the Company's cash balances, the
liquidity of the Company's investments and the absence of any
gearing. The Directors are therefore also satisfied that the
Company has adequate financial resources to continue in operation
for at least the next 12 months and that, accordingly, it is
appropriate to adopt the going concern basis in preparing the
financial statements.
6.6 Post balance sheet events
The following events occurred between the balance sheet date and
the signing of these financial statements:
-- The 30 April 2022 NAV of 75.1p was announced on 06 May 2022.
At the date of publishing this report, the Board is unaware of any
matter that will have caused the NAV per share to have changed
significantly since the latest NAV.
-- Two follow-on investments into Tribe and Panthera, completed
in April 2022 totalling GBP2.9mn.
-- Two further follow-on investments, into Yappy and Glisser,
completed in May 2022 totalling GBP1.4mn
-- One new investment, into Bidnamic, completed in May 2022, totalling GBP0.9mn.
Corporate Information Registrars and Transfer Office
Computershare Investor Services plc
Directors The Pavilions
Sarah Fromson (Chair) Bridgwater Road
Malcolm Groat* Bristol BS99 6ZZ
Graham McDonald Tel: 0800 923 1534
Tim Farazmand (#)
Brokers
Secretary Panmure Gordon & Co
Gresham House Asset Management Ltd One New Change
London EC4M 9AF
Registered Office Tel: 020 7886 2500
5 New Street Square
London EC41 3TW Auditor
BDO LLP
Investment Manager 55 Baker Street
Gresham House Asset Management Ltd London
5 New Street Square W1U 7EU
London EC41 3TW
020 7382 0999
Solicitors
Registered Number Dickson Minto W.S.
04115341 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 Committee.
(#) Chairman of the Management Engagement
and Remuneration Committee.
LEI 2138008D3WUMF6TW8C28
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