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Baronsmead Second VT (BMD)

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Friday 25 May, 2018

Baronsmead Second VT

Half-year Report

RNS Number : 2565P
Baronsmead Second Venture Trust PLC
25 May 2018
 

Baronsmead Second Venture Trust plc

Half-Yearly report for the six months ended

31 March 2018

 

The Directors announce the unaudited half-yearly financial report for the six months to 31 March 2018.

 

Copies of the half-yearly report can be obtained from the following website: www.baronsmeadvcts.co.uk.

 

Our Investment Objective

 

Baronsmead Second Venture Trust is a tax efficient listed company which aims to achieve long-term investment returns for private investors.

 

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 of Baronsmead Second Venture Trust has the objective to maintain a minimum annual dividend level of around 4.5p per ordinary share if possible, but this depends primarily on the level of realisations achieved and cannot be guaranteed.

 

Shareholder choice

 

The Board wishes to provide shareholders with a number of choices that enable them to utilise their investment in Baronsmead Second Venture Trust in ways that best suit their personal investment and tax planning requirements and in a way that treats all shareholders equally.

 

Fund raising | From time to time the Company seeks to raise additional funds by issuing new shares at a premium to the latest published net asset value to account for issue costs. This enables shareholders seeking additional investments to do so with taxation relief.

 

Dividend Reinvestment Plan lieu of cash dividends. Approximately 1,115,000 shares were bought in this way during the six months to 31 March 2018.

 

Buy back of shares | From time to time the Company buys its own shares through the market in accordance with its share price discount policy. Subject to certain conditions, the Company seeks to maintain a mid market share price discount of approximately 5 per cent to net asset value. In the six months to 31 March 2018, 3,245,000 shares were bought back representing 1.4 per cent of the shares in issue at 31 March 2018 at prices which represent an average 5.0 per cent discount to the latest published net asset value at the time the shares were bought back. By providing support to market pricing, this helps those shareholders who need to realise their investment.

 

Secondary market | The Company's shares are listed on the London Stock Exchange and can be bought or sold by shareholders using a stockbroker or authorised share dealing service in the same way as shares of any other listed company. Approximately 450,000 shares were bought by investors in the Company's existing shares in the six months to 31 March 2018.

 

Financial Headlines

 

·      311.3p - NAV total return to shareholders for every 100.0p invested at launch.

 

·      £23m - funds raised in the period (before costs).

 

·      (0.6%) - Net asset value ("NAV") per share decreased 0.6 per cent. to 89.6p in the six month period ended 31 March 2018.

 

 

Cash returned to shareholders by date of investment 

 

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.

 

Year subscribed

Cash invested

(p)

Income tax reclaim

(p)

 

Net cash invested

(p)

Cumulative dividends

paid

 (p)*

Return on cash invested (%)

2001 (January)

100.0

20.0

80.0

127.3

147.3

2005 (March) - C share*

100.0

40.0

60.0

87.5

127.5

2010 (March)

103.1

30.9

72.2

79.0

106.6

2012 (December)

117.4

35.2

82.2

61.0

82.0

2014 (March)

112.4

33.7

78.7

41.0

66.5

2016 (February)

107.2

32.2

75.0

24.5

52.9

2017 (October)

97.5

29.2

68.2

4.5

34.6

 

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).

 

 

Chairman's Statement 

The six months to 31 March 2018 saw two successful realisations from our unquoted investments and a period of relative stability in the performance and valuation of the portfolio as a whole despite some market volatility.

 

During the period the Company successfully raised £23m (before costs) through an offer for subscription which closed on 20 December 2017.

 

Results

During the six months to 31 March 2018, the Company's NAV per share decreased 0.6 per cent from 90.10p to 89.55p after the payment of a final dividend of 4.5p per share on 2 February 2018.

 

 

Pence per ordinary
share

NAV as at 1 October 2017

(after deducting the final dividend of 4.5p)

90.10

Valuation decrease (0.6 per cent)

(0.55)

NAV as at 31 March 2018

89.55

 

The decrease in NAV of 0.6 per cent. was primarily the result of a period of volatility in the quoted markets and a reduction in value of In the Style Fashion. However, steady progress was made across most of the mature unquoted investments.

 

Over the six months to 31 March 2018, our unquoted investments delivered an increase in their valuations of 1.9 per cent after allowing for losses on underperforming investments. There has been an increased period of uncertainty in the quoted markets particularly in the second half of the period under review, and the value of our AIM-traded and other listed investments decreased by 1.9 per cent. However, our investment in LF Livingbridge UK Micro Cap Fund ("Micro Cap Fund") increased by 4.5 per cent and our investment in LF Livingbridge UK Multi Cap Income Fund ("Multi Cap Income Fund") increased by 3.6% demonstrating some resilience against the market volatility.

 

Dividends

A final dividend of 4.5p per share was paid on 2 February 2018, having been approved at the AGM on 30 January 2018.

 

The Board aims to maintain a minimum annual dividend level of around 4.5p per ordinary share and in the past 10 years has paid a minimum of 7.5p in each financial year. Going forward the Board will wherever possible seek to pay two dividends to Shareholders in each calendar year.

 

It is of course important to remind shareholders that the payment date and amount of future dividends depends significantly on the level and timing of profitable realisations and cannot be guaranteed and inevitably there will be variations in the amounts and dates that dividends are paid.

 

Portfolio Review

 

At 31 March 2018, the Company's investment portfolio was valued at £160m and comprised investments in 68 unquoted and AIM-traded companies. The Company's investments in the Micro Cap Fund and Multi Cap Income Fund provide investment exposure to an additional 56 AIM-traded and fully listed companies.

 

Investment and Divestments

 

The Company's investments and divestments during the period are set out in the tables below.

 

The Investment Manager, with the support of the Board, took time to consider how best to deploy funds under the new VCT rules, introduced in November 2015 and further enhanced in the Autumn Budget in 2017. As I have advised previously the rule changes have required the Manager to adapt its investment strategy to focus on the provision of development capital to younger companies to enable them to grow their businesses organically rather than through acquisition. I am now pleased to report that following the 7 new investments made in the 2017 financial year, the Company made 3 new investments totalling £1.5m and two follow-on investments totalling £0.8m in the six months to 31 March 2018. The new investments included PCI-PAL, a secure cloud payment solutions provider, Beeks Financial Cloud Group, a provider of specialist hosting and connectivity solutions to financial institutions, and Fusion Antibodies, a specialist healthcare services provider. Follow on investments were made into SilkFred, a fast fashion e-tailer and CloudCall Group, a cloud based telephony software integrated with CRM system.

 

During the period, a total of £14.9m was realised from the full and partial sales of both unquoted and quoted investments. Full realisations included one of our longest standing unquoted investments, Crew Clothing Holdings, a clothing brand specialising in active, outdoor and casual wear at 2.3x cost and Eque2, an unquoted investment which provides software to the construction industry at 3.0x cost. Additionally, one recent unquoted investment, In the Style Fashion, has been fully provided for in the period.

 

 

Fundraising

 

The Board appreciates that shareholders would like as much notice as possible of its fundraising intentions so that they can plan their financial affairs accordingly. Accordingly, the Board will consider whether to raise new funds in the 2018/19 tax year which will be determined by the Company's cashflow and its anticipated requirements to fund new investments over the next two years. The Board ordinarily seeks to raise funds during January and February, having informed shareholders of its fundraising intentions in November when its annual results are published, or earlier if practicable.

 

 

VCT Legislation and Policy Review

 

Following the Patient Capital Review in the summer of 2017, legislative changes to VCTs included in the 2017 Autumn Budget were limited and were primarily to ensure that VCT funding was appropriately targeted. As discussed at our AGM in January the investment rules continue to seek to ensure that VCTs invest in younger, earlier stage companies and the funding is used for organic growth and development of those companies. Importantly, there was no change to the tax incentives for investors.

 

In summary, in our opinion the 2017 Patient Capital Review and Autumn Budget were positive for the VCT industry and your Board and the Investment Manager are hopeful that the status quo will now remain for a number of years.

 

Outlook

 

As Brexit negotiations continue with the backdrop of political uncertainty, the UK economy remains relatively resilient. We have witnessed greater market uncertainty since the beginning of the year but despite this the Company's portfolio remains diverse and continues to make steady progress.

 

The Board is mindful that the new VCT rules have refocussed VCTs towards younger earlier stage companies. While these companies may be less resilient to economic shocks and downturns and inevitably have a higher risk of failure, our Manager has over 20 years of experience of investing in smaller companies. While the new investments are expected to introduce greater variations in returns, the Company has a diverse portfolio of older more established businesses with low levels of debt. It is our belief that it is these investments which will determine returns and liquidity over the medium term and will provide the stability required while the newer, earlier stage portfolio develops.

 

Anthony Townsend

Chairman

25 May 2018

 

Summary Investment Portfolio

 

 

Investment Diversification at 31 March 2018

 

 

Sector by value

 

Percentage

 

 

Business Services

30%

Consumer Markets

12%

Healthcare & Education

19%

Technology, Media & Telecommunications ("TMT")

39%

 

 

Total assets by value

 

Percentage

 

 

Unquoted - loan stock

16%

Unquoted - equity

10%

AIM & collective investment vehicles

74%

 

 

Time investments held by value

 

Percentage

 

 

Less than 1 year

3%

Between 1 and 3 years

14%

Between 3 and 5 years

33%

Greater than 5 years

50%

 

Investments in the period

 

Company

Sector

Activity

Book cost

£'000

Unquoted investments

Follow on

SilkFred Ltd

London

Consumer Markets

Online Fashion market place

275

Total unquoted investments

275

AIM-traded investments

New

Fusion Antibodies plc

Belfast

Healthcare & Education

Development of antibodies for both therapeutic and diagnostic applications

550

PCI-PAL plc

London

TMT*

Secure payment services provider

495

Beeks Financial Cloud Group plc

Renfrewshire

TMT*

Cloud hosting services for the financial trading sector

413

Follow on

 

 

 

 

CloudCall Group plc

Leicestershire

TMT*

Cloud based telephony platform

549

Total AIM-traded investments

2,007

Total investments in the year

2,282

 

* Technology, Media & Telecommunications ("TMT").

 

Realisations in the period

 

Company

 

 

First

investment

date

Proceeds‡

£'000

Overall

multiple

return*

Unquoted realisations

Crew Clothing Holdings Limited

 

Trade sale

Nov 06

5,362

2.3

Eque2 Limited

 

Trade sale

Apr 13

5,129

3.0

Kirona Limited

 

Partial loan repayment

Dec 14

1,201

1.2

Xention Pharma Limited

 

Write off

Jul 05

0

0.0

Total unquoted realisations

 

 

 

11,692

 

AIM-traded realisations

EG solutions plc

 

Scheme of arrangement

May 05

2,728

1.4

Plant Impact plc

 

Scheme of arrangement

Feb 15

493

0.3

Ubisense Group plc

 

Market sale

Jun 11

28

0.2

Total AIM-traded realisations

 

 

 

3,249

 

Total realisations in the year

 

 

 

14,941

 

Deferred consideration of £60,000 was received in respect of Kingsbridge Risk Solutions, which had been sold in a prior period.

 

‡ 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 £9,000 was received in respect of Kingsbridge Risk Solutions which had been sold in a prior period.

 

Independent Review Report to Baronsmead Second Venture Trust plc

 

Conclusion

 

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2018 which comprises the Condensed Income Statement, Condensed Statement of Changes in Equity, Condensed Balance Sheet, Condensed Statement of Cash Flows and the related explanatory notes.

 

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half yearly financial report for the six months ended 31 March 2018 is not prepared, in all material respects, in accordance with FRS 104 Interim Financial Reporting and the Disclosure Guidance and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA").

 

 

Scope of review

 

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. We read the other information contained in the half-yearly financial report and consider whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

 

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

 

Directors' responsibilities

 

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA.

 

As disclosed in note 1, the annual financial statements of the Company are prepared in accordance with UK Accounting Standards and applicable law (UK Generally Accepted Accounting Practice), including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland. The directors are responsible for preparing the condensed set of financial statements included in the half-yearly financial report in accordance with FRS 104 Interim Financial Reporting.

 

Our responsibility

 

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

 

The purpose of our review work and to whom we owe our responsibilities.

 

This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the DTR of the UK FCA. Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached.

 

John Waterson

for and on behalf of KPMG LLP

Chartered Accountants

Saltire Court

20 Castle Terrace

Edinburgh EH1 2EG

25 May 2018

 

Responsibility Statement of the Directors in respect of the Half-Yearly Financial Report

 

We confirm that to the best of our knowledge:

·      the condensed set of financial statements has been prepared in accordance with FRS 104 Interim Financial Reporting

·      the interim management report includes a fair review of the information required by:

 

a)  DTR 4.2.7R of the Disclosure Guidance and Transparency Rules , being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

 

b)  DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

 

On behalf of the Board,

 

Anthony Townsend

Chairman

 

25 May 2018

 

 

Condensed Income Statement (unaudited)

For the six months to 31 March 2018

 

 

 

Notes

Six months to
31 March 2018

Six months to
31 March 2017

Year  to
30 September 2017

Revenue

£'000

Capital

£'000

Total

£'000

Revenue

£'000

Capital

£'000

Total

£'000

Revenue

£'000

Capital

£'000

Total

£'000

Unrealised gains on movement in fair value of investments

7

-

140

140

-

6,569

6,569

-

12,987

12,987

Realised (losses)/gains on disposal of investments

 

7

-

(2,636)

(2,636)

-

83

83

-

251

251

Income

 

3,954

-

3,954

1,239

-

1,239

3,119

-

3,119

Investment management fee

 

(602)

(1,805)

(2,407)

(526)

(1,578)

(2,104)

(1,092)

(3,276)

(4,368)

Other expenses

 

(367)

-

(367)

(604)

-

(604)

(832)

-

(832)

Profit/(loss) on ordinary activities before taxation

 

2,985

(4,301)

(1,316)

109

5,074

5,183

1,195

9,962

11,157

Taxation on ordinary activities

 

(205)

205

-

-

-

-

-

-

-

Profit/(loss) for the period, being

total comprehensive

income for the period

 

2,780

(4,096)

(1,316)

109

5,074

5,183

1,195

9,962

11,157

Return per ordinary share:

 

 

 

 

 

 

 

 

 

 

Basic and Diluted

2

1.30p

(1.91p)

(0.61p)

0.06p

2.75p

2.81p

0.63p

5.20p

5.83p

 

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 in November 2014 and updated in January 2017 and February 2018 by the Association of Investment Companies ("AIC SORP").

 

 

Condensed Statement of Changes in Equity (unaudited)

For the six months to 31 March 2018

 

 

 

Non-distributable reserves

Distributable reserves

 

Notes

Called-up share capital

£'000

Share

premium

£'000

Revaluation

reserve

£'000

Capital

reserve £'000

Revenue

reserve

£'000

Total

£'000

At 1 October 2017

 

20,904

-

38,412

125,783

1,590

186,689

(Loss)/profit after taxation

 

-

-

(3,055)

(1,041)

2,780

(1,316)

Net proceeds of share issues, share buybacks & sale of shares from treasury

4

2,375

20,080

-

(2,536)

-

19,919

Share premium cancellation costs

4

-

-

-

3

-

3

Dividends paid

6

-

-

-

(8,653)

(1,205)

(9,858)

At 31 March 2018

 

23,279

20,080

35,357

113,556

3,165

195,437

 

 

 

For the six months to 31 March 2017

Notes

Non-distributable reserves

Distributable reserves

 

Called-up share capital

£'000

Share

Premium

£'000

Revaluation

reserve

£'000

Capital

reserve

£'000

Revenue

reserve

£'000

Total

£'000

At October 2016

 

16,196

81,466

24,357

18,394

495

140,908

Shares issued following the acquisition of

Baronsmead VCT5 plc

 

4,708

38,245

-

-

-

42,953

Profit/(loss) after taxation

 

-

-

6,621

(1,547)

109

5,183

Net cost of share buybacks

 

-

-

-

(342)

-

(342)

Dividends paid

6

-

-

-

(5,887)

(100)

(5,987)

At 31 March 2017

 

20,904

119,711

30,978

10,618

504

182,715

 

 

 

For the year to 30 September 2017

 

Non-distributable reserves

Distributable reserves

 

Notes

Called-up share capital

£'000

Share

Premium

£'000

Revaluation

reserve

£'000

Capital

Reserve

 £'000

Revenue

reserve

£'000

Total

£'000

As at 1 October 2016

 

16,196

81,466

24,357

18,394

495

140,908

Shares issued following the acquisition of Baronsmead VCT5 plc

 

4,708

38,245

-

-

-

42,953

Cancellation of share premium

 

(119,711)

-

119,711

-

-

Share premium cancellation costs

 

-

-

-

(29)

-

(29)

Profit/(loss) after taxation

 

-

-

14,055

(4,093)

1,195

11,157

Net cost of share buybacks

 

-

-

-

(2,313)

-

(2,313)

Dividends paid

6

-

-

-

(5,887)

(100)

(5,987)

At 30 September 2017

 

20,904

-

38,412

125,783

1,590

186,689

 

 

 

Condensed Balance Sheet (unaudited)

As at 31 March 2018

 

                                                                                                         

Notes

 

As at

31 March

2018

£'000

As at

31 March

2017

£'000

As at
30 September 2017

£'000

Fixed assets

 

 

 

 

Unquoted investments                                                                        

7

50,729

60,304

61,163

Traded on AIM                                                                                    

7

84,848

86,485

87,711

Collective investment vehicle                                                              

7

59,855

34,548

38,490

 

 

 

 

 

Investments                                                                                         

7

195,432

181,337

187,364

 

 

 

 

 

Current assets

 

 

 

 

Debtors

 

652

195

260

Cash at bank and on deposit

 

780

2,711

515

 

 

1,432

2,906

775

Creditors (amounts falling due within one year)

 

(1,427)

(1,528)

(1,450)

 

 

 

 

 

Net current assets

 

5

1,378

(675)

 

 

 

 

 

Net assets

 

195,437

182,715

186,689

 

 

 

 

 

Capital and reserves

 

 

 

 

Called-up share capital

 

23,279

20,904

20,904

Share premium

 

20,080

119,711

-

Capital reserve

 

113,556

10,618

125,783

Revaluation reserve                                                                           

7

35,357

30,978

38,42

Revenue reserve

 

3,165

504

1,590

 

 

 

 

 

Equity shareholders' funds

 

195,437

182,715

186,689

 

 

 

 

As at

31 March

2018

As at

31 March

2017

As at
30 September 2017

Net asset value per share

89.55p

91.56p

94.60p

Number of ordinary shares in circulation

218,252,975

199,553,707

197,344,707

 

 

 

 

Condensed Statement of Cash Flows (unaudited)

For the six months to 31 March 2018

 

 

 

 

Six
months to

31 March 2018

£'000

Six
months to

31 March 2017

£'000

Year to
30 September 2017

£'000

Net cash inflow/(outflow) from operating activities

1,281

(1,370)

(2,154)

Net cash outflow from investing activities

(11,058)

(18,968)

(18,409)

Equity dividends paid

(9,858)

(5,987)

(5,987)

Net cash outflow before financing activities

(19,635)

(26,325)

(26,550)

Net cash inflow from financing activities

19,900

4,926

2,955

 

 

 

 

Increase/(decrease) in cash

265

(21,399)

(23,595)

Reconciliation of net cash flow to movement in net cash

 

 

 

Increase/(decrease) in cash

265

(21,399)

(23,595)

Opening cash position

515

24,110

24,110

 

 

 

 

Closing cash at bank and on deposit

780

2,711

515

Reconciliation of (loss)/ profit on ordinary activities before taxation to net cash inflow/(outflow) from operating activities

 

 

 

(Loss)/ profit on ordinary activities before taxation

(1,316)

5,183

11,157

(Losses)/gains on investments

2,496

(6,652)

(13,238)

Changes in working capital and other non-cash items

101

99

(73)

Net cash inflow/(outflow) from operating activities

1,281

(1,370)

(2,154)

 

Notes

 

1. The condensed financial statements for the six months to 31 March 2018 comprise the unaudited statements set out together with the related notes below. The Company applies FRS 102 and the AIC's Statement of Recommended Practice issued in November 2014 and updated in January 2017 and February 2018 ('the SORP') for its annual Financial Statements. The condensed financial statements for the six months to 31 March 2018 have therefore been prepared in accordance with FRS 104 'Interim Financial Reporting' and the principles of the SORP. They have also been prepared on a going concern basis. The accounts have been prepared on the same basis as the accounting policies set out in the Company's Annual Report and Financial Statements for the year ended 30 September 2017.

 

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 information for the year to 30 September 2017 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 2017 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 2017 have been reported on by the Company's auditors or delivered to the Registrar of Companies.

 

2. Return per share is based on a weighted average of 214,509,435 ordinary shares in issue (31 March 2017 - 184,194,122 ordinary shares; 30 September 2017 - 191,452,309 ordinary shares).

 

3. Earnings for the first six months to 31 March 2018 should not be taken as a guide to the results of the full financial year to 30 September 2018.

 

4. During the six months to 31 March 2018, the Company issued 23,753,268 shares at net proceeds of £22,455,000 (including costs). During the same period, the Company purchased 3,245,000 shares to be held in treasury at a cost of £2,883,000 and sold 400,000 shares from treasury for £347,000. At 31 March 2018, the Company held 14,538,214 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.

 

5. Excluding treasury shares, there were 218,252,975 ordinary shares in circulation at 31 March 2018 (31 March 2017 - 199,553,707 ordinary shares; 30 September 2017 - 197,344,707 ordinary shares).

 

6. The final dividend in relation for the year ended 30 September 2017 of 4.50p per share (3.95p capital, 0.55p revenue) was paid on 2 February 2018 to shareholders on the register on 5 January 2018. The ex-dividend date was 4 January 2018. During the year to 30 September 2017, the Company paid an interim dividend on 31 March 2017 of 3.00p per share (2.95p capital, 0.05p revenue).

 

7. All investments are initially recognised and subsequently measured at fair value. Changes in fair value are recognised in the Income Statement.

 

The methods of fair value measurement are classified into a hierarchy based on reliability of the information used to determine the valuation.

Level 1 - Fair value is measured based on quoted prices in an active market.

Level 2 - Fair value is measured based on directly observable current market prices or indirectly being derived from market prices.

Level 3 - Fair value is measured using a valuation technique that is not based on data from an observable market.

 

 

Level 1

Level 2

Level 3

 

Traded

on AIM

£'000

Collective

investment

vehicles

£'000

Traded

on AIM

£'000

Unquoted

£'000

Total

£'000

Opening book cost

67,670

28,325

3,429

49,528

148,952

Opening unrealised appreciation/(depreciation)

18,450

10,165

(1,838)

11,635

38,412

Opening valuation

86,120

38,490

1,591

61,163

187,364

Movements in the year:

 

 

 

 

 

Transfer between levels

2,075

-

(2,075)

-

-

Purchases at cost

2,007

24,750

-

275

27,032

Sale - proceeds

(3,249)

(4,400)

-

(8,819)

(16,468)

- realised gains on sales

(731)

-

-

(1,905)

(2,636)

Unrealised gains realised during the period

885

-

-

2,310

3,195

(Decrease)/ increase in unrealised appreciation

(3,899)

1,015

2,124

(2,295)

(3,055)

Closing valuation

83,208

59,855

1,640

50,729

195,432

Closing book cost

68,657

48,675

1,354

41,389

160,075

Closing unrealised appreciation

14,551

11,180

286

9,340

35,357

Closing valuation

83,208

59,855

1,640

50,729

195,432

Equity shares

83,208

-

1,640

18,678

103,526

Loan notes

-

-

-

32,051

32,051

Collective Investment vehicles

-

59,855

-

-

59,855

Closing valuation

83,208

59,855

1,640

50,729

195,432

 

CentralNic Group plc has been changed to a Level 3 investment due to a suspension of trading during the period. TLA Worldwide plc has been changed to a Level 1 investment due to a lift on the suspension of trading during the period.

There has been no significant change in the risk analysis as disclosed in the Company's Annual Report and Accounts to 30 September 2017.

 

8. The Company has one reportable segment being investing in primarily a portfolio of UK growth businesses, whether unquoted or traded on AIM.

 

9. Copies of the half-yearly financial report have been made available to shareholders and are available from the Registered Office of the Company at 100 Wood Street, London EC2V 7AN.

 

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, 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 ended 30 September 2017. The Company's principal risks and uncertainties have not changed materially since the date of that report.

 

Related Parties

 

Livingbridge VC LLP ('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 2017. During the period the Company has incurred management fees of £2,407,000 (31 March 2017 - £2,104,000; 30 September 2017 - £4,368,000) and secretarial and accounting fees of £82,000 (31 March 2017 -£80,000; 30 September 2017 - £162,000) payable to the Manager.

 

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 liquidity of the Company and its ability to meet obligations as they fall due for a period of at least twelve months from the date that these financial statements were approved. As at 31 March 2018 the Company held cash and readily realisable securities totalling £36,620,000 including £35,840,000 held in Sterling Liquidity Funds. Cash flow projections have been reviewed and show that the Company has sufficient funds to meet both its contracted expenditure and its discretionary cash outflows in the form of the share buyback programme and dividend policy. The Company has no external loan finance in place and therefore is not exposed to any gearing covenants.

 

Corporate Information

 

Directors

Anthony Townsend (Chairman)

John Davies

Malcolm Groat

Ian Orrock

 

Secretary

Livingbridge VC LLP

 

Registered Office

100 Wood Street

London EC2V 7AN

 

Investment Manager

Livingbridge VC LLP

100 Wood Street

London EC2V 7AN

020 7506 5717

 

Registered Number

04115341

 

Registrars and Transfer Office

Computershare Investor Services PLC

The Pavilions

Bridgwater Road

Bristol BS99 6ZZ

Tel: 0800 923 1534

 

Brokers

Panmure Gordon & Co

One New Change

London EC4M 9AF

Tel: 020 7886 2500

 

Auditor

KPMG LLP

Saltire Court

20 Castle Terrace

Edinburgh EH1 2EG

 

Solicitors

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

 

 

 

National Storage Mechanism

 

A copy of the Half-Yearly Report will be submitted shortly to the National Storage Mechanism ("NSM") and will be available for inspection at the NSM, which is situated at: www.morningstar.co.uk/uk/NSM.

 

 END

 

Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on this announcement (or any other website) is incorporated into, or forms part of, this announcement.


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
 
END
 
 
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