Annual Financial Report

Baronsmead Venture Trust PLC

22 December 2023

 

Baronsmead Venture Trust plc

Annual Report and Audited Financial Statements

for the year ended 30 September 2023

The Directors of Baronsmead Venture Trust plc are pleased to announce the Annual Financial Report for the year ended 30 September 2023. The Annual Report and Financial Statements can be obtained from the following website: www.baronsmeadvcts.co.uk

Financial Highlights

·      Net Asset Value ("NAV") per share decreased 2.3 per cent to 57.2p, before the deduction of dividends, for the financial year ended 30 September 2023.

·      NAV total return of 395.6p to shareholders for every 100.0p invested at launch (April 1998).

·      Annual tax free dividend yield of 7.3 per cent based on 4.25p dividends paid (including proposed final dividend of 2.5p) and opening NAV of 58.5p.

·      £10.4million of investments made into six new investments and eight follow-on opportunities during the year.

Our investment objective

Baronsmead Venture Trust plc (the "Company") is a tax efficient listed company which aims to achieve long‑term positive investment returns for private investors, including tax‑free dividends.

Investment policy

·      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 policy1

·      The Board will, wherever possible, seek to pay two dividends to shareholders in each calendar year, typically an interim in September and a final dividend following the Annual General Meeting in February/March.

·      The Board will use, as a guide, when setting the dividends for a financial year, a sum representing 7 per cent of the opening net asset value of that financial year.

1 This is a summary of the Company's Dividend Policy that is set out in the full Annual Report.

Key elements of the business model

Access to an attractive, diverse portfolio

The Company gives shareholders access to a diverse portfolio of growth businesses.

The Company will make investments in growth businesses, whether unquoted or traded on AIM, which are substantially based in the UK in accordance with the prevailing VCT legislation. Investments are made selectively across a range of sectors.

The Manager's approach to investing

The Manager endeavours to select the best opportunities and applies a distinctive selection criteria based on:

·      Primarily investing in parts of the economy which are experiencing long term structural growth.

·      Businesses that demonstrate, or have the potential for, market leadership in their niche.

·      Management teams that can develop and deliver profitable and sustainable growth.

·      Companies with the potential to become an attractive asset appealing to a range of buyers at the appropriate time to sell.

In order to ensure a strong pipeline of opportunities, the Manager invests in building deep sector knowledge and networks and undertakes significant proactive marketing to target companies in preferred sectors. This approach generates a network of potentially suitable businesses with which the Manager maintains a relationship ahead of possible investment opportunities.

The Manager as an influential shareholder

The Manager is an engaged and supportive shareholder (on behalf of the Company) in both unquoted and significant quoted investments.

For unquoted investments, representatives of the Manager often join the investee board.

The role of the Manager with investees is to ensure that strategy is clear, the business plan can be implemented and the management resources are in place to deliver profitable growth. The intention is to build on the business model and grow the company into an attractive target which can be sold or potentially floated in the medium term.

STRATEGIC REPORT

CHAIR'S STATEMENT

The economic environment over the 12 months to 30 September 2023 remained challenging. Consumer and business confidence continued to be affected by persistently high inflation and rising interest rates. During the year, the Net Asset Value per share decreased by 1.3p per share (2.3 per cent) from 58.5p to 57.2p before the payment of 4.25p dividends per share.

In the short term, the weight of economic opinion suggests that UK inflation, and therefore interest rates, may have peaked. The Manager is therefore hopeful that the economic uncertainty of the last few years will start to diminish from early 2024, although any improvement in the external environment may take some time to feed through to businesses more generally. The approach of the Manager is to invest into its chosen sectors throughout the economic cycle into both unquoted and AIM‑listed companies, avoiding making large macro‑economic predictions and rather focusing on the quality of the underlying businesses and their management teams. Your Board believes this strategy can provide greater consistency of investment returns over the medium to long term.

Results

	Pence per ordinary share
NAV as at 1 October 2022 (after final dividend)	58.54
Valuation decrease (-2.3 per cent)	(1.35)
NAV as at 30 September 2023 before dividends	57.19
Less: Interim dividend paid on 8 September 2023	(1.75)
Proposed final dividend of 2.5p payable, after shareholder approval, on 8 March 2024	(2.50)
Illustrative NAV as at 30 September 2023 after proposed dividend	52.94

Portfolio review

At 30 September 2023, the Company's investment portfolio was valued at £107 million and comprised 84 direct investments, of which 37 are in unquoted companies and 47 are in quoted companies. The Company's investments in three Gresham House Equity Funds¹ were valued at £68 million at 30 September. These investments provide investment exposure to an additional 75 AIM‑ traded and fully listed companies spreading investment risk across a highly diversified portfolio of 159 companies.

The value of the Company's unquoted investments decreased by 14 per cent during the year. This is clearly very disappointing and stems from weaker trading conditions and lower valuations based on the market valuation of comparable companies. On the other hand, the Company's portfolio of AIM‑listed and other quoted investments was more resilient and increased by 3 per cent during the year. To put this in context, the FTSE AIM All Share Index decreased by 9.9 per cent over the same period.

1. WS Gresham House UK Micro Cap Fund ("Micro Cap"), WS Gresham House UK Multi Cap Income Fund ("Multi Cap") and WS Gresham House UK Smaller Companies Fund ("Small Cap").

Investments and divestments

Against this backdrop, your Board is once again pleased to report that the Manager continues to see attractive opportunities for investment. During the year, the Company deployed a total of £10.4 million in 14 companies in both new and follow‑on investments. Further details of these investments are included in the Manager's review in the full Annual Report. As we have communicated to shareholders previously, the requirement to make investments in earlier stage companies may result in greater volatility of returns over time. However, the more mature, established portfolio of existing investments should assist in sustaining returns and dividends for shareholders as the new portfolio develops and grows.

The priority for portfolio companies is to face any difficult trading conditions in a controlled way and focus on their investment fundamentals. The Manager has the experience in portfolio and talent management to assist portfolio companies and actively engages with portfolio companies to achieve this.

There was one full realisation in the unquoted portfolio during the year with proceeds of £0.7 million received

from the realisation of Evotix, for a gross money multiple of 0.7x cost. In addition to this, the Key Travel Loan Notes matured for £0.3 million and a gross money multiple of 3.2x cost along with deferred earn‑out consideration of £1.1 million from the sale of Pho for a gross money multiple of 3.1x cost. In the listed portfolio, the Manager has also continued its approach of profitable partial realisations of Cerillion during the year, resulting in the receipt of proceeds of £0.5 million at an aggregate of 15.8x original invested cost in this listed company.

Dividends

The Board is pleased to declare a final dividend of 2.5p per share for the year to 30 September 2023, payable on 8 March 2024. This is in addition to the 1.75p interim dividend paid in September and means that the total dividends for the year are 4.25p. This is a 7.3 per cent yield based on the opening NAV of 58.5p and meets the target policy of 7 per cent of the NAV at the start of the year. Including the proposed final dividend of 2.5p per share, tax free dividends paid since launch in 1998 now total 183.9p per share, 81.0p of which has been paid over the past 10 years.

Unclaimed Dividends

The Company's Registrar was holding £1.1 million in unclaimed dividends as at 30 September 2023. Of this amount, £0.1 million was unclaimed for over 12 years. Any shareholders who have not been able to claim their dividends are requested to contact the Company's Registrar. Their contact details can be found in the full Annual Report.

Under the terms of the Company's Articles of Association, any dividends unclaimed for a period of 12 years after having become due for payment shall, if the Board so resolves, be forfeited and shall cease to remain owing by the Company. Additionally, under the terms of the shareholders that it is their responsibility to keep their Company's Articles of Association, I would like to remind address, and for those who receive their dividends by bank transfer, their bank account details, up to date by informing the Company's Registrar of any changes.

Environmental, Social and Governance ("ESG") matters

Environmental, social and governance analysis is embedded into the Company's investment processes by the Manager in order to build and protect long‑term value for investors. A framework based on ten key ESG themes in each portfolio is used to structure analysis, monitor and report on ESG risks and opportunities across their lifecycle. Further information in relation to the Manager's integration of ESG factors in the management of the Company's portfolio can be found in the full Annual Report.

VCT Regulations - Retirement Date of the UK Government's Venture Capital Schemes

When EU State Aid approval of the UK's VCT and EIS schemes was given in 2015, a "retirement date" was introduced for the schemes whereby in the absence of new or amended legislation investors will no longer be able to claim upfront income tax relief on subscriptions for new VCT shares made after 5 April 2025.

In November 2023, in the Autumn Statement, the Government announced that legislation will be introduced as part of the Finance Act 2023 to move the retirement date to 6 April 2035. This is very welcome news. Your Board would like to thank the Treasury Select Committee for their thorough and interesting report on the Venture Capital Market published in July 2023. This report was broadly positive about VCTs and urged the government to act to remove the uncertainty being caused by the imminence of the original retirement date of April 2025. We would like to thank the Manager for their representations made through the VCTA and the AIC for the representations they made to government and officials concerning the retirement date.

We believe VCTs have provided and will continue to provide valuable investments in early stage, high growth UK companies that would not otherwise be made, while providing the UK taxpayer with good value for money with the various tax benefits VCTs provide to their investors.

Acquisition of the Investment Manager, Gresham House

Further to the announcement on 17 July 2023 about the acquisition of the Investment Manager by Searchlight Capital Partners L.P., the acquisition has now completed, and Gresham House plc delisted from the London Stock Exchange on 20 December 2023, to become a privately owned company.

The acquisition is expected to have minimal impact on the Company and business is continuing as usual.

For further information please visit the website link: https://greshamhouse.com/about/.

Consumer Duty

The FCA's Consumer Duty came into force on 31 July 2023 and, in summary, requires firms to which this applies to act to deliver good outcomes for their retail customers. The Consumer Duty regulations apply to the regulated and ancillary activities of all FCA authorised firms under the Financial Services and Markets Act 2000, the Payment Services Regulations 2017 and the Electronic Money Regulations 2011. The Company is not a FCA authorised firm and accordingly does not fall within scope of these regulations. However, the Company's Manager, Gresham House, being an FCA authorised firm, is covered by the regulations and the Board is cognisant of the Manager's obligations to comply with the Consumer Duty. The Board receives regular updates from the Manager on the delivery of its obligations under the Consumer Duty.

Succession planning

During the year, the Board began the process of implementing its succession plan with Isabel Dolan joining the Board. Isabel has over 25 years' experience working with growth companies as a corporate financier, equity investor, lender and Finance Director and I am very much looking forward to working with her.

Our current Audit Chair, Les Gabb, will be retiring with effect from 31 December 2023. Les has served as a director of Baronsmead VCT plc from May 2014 and then continued as a director of Baronsmead Venture Trust plc after the merger in 2016. I would like to thank Les for his dedication and hard work during this time and wish him all the best in his future endeavours.

Fundraising

On 4 December 2023, the Company launched an offer for subscription to raise £15 million (before costs) with an additional £10 million over‑allotment facility available if required. Investing throughout an economic cycle is a key part of the Company's investment strategy, with the additional funds raised being deployed in smaller UK companies at what the Manager believes to be an advantageous time.

Annual General Meeting ("AGM")

I look forward to meeting as many shareholders as possible at the next AGM, to be held at 1.30 pm on 5 March 2024. The Manager will deliver a presentation at 11.30am followed by some light refreshments at 12.30pm. Shareholders are invited to attend an introductory presentation by the Company Chair, Ms Fiona Miller Smith, followed by a Q&A session from 1.00pm. The formal business of the AGM will then start at 1.30pm. The Company intends to hold this AGM in person again, however, we will also live stream the event for any shareholders who do not wish, or are unable, to attend in person. Registration details for the live stream will be included in the Notice of AGM and on the Baronsmead Venture Trust website.

Outlook

The geopolitical and economic outlook is likely to remain challenging and any recovery in the next year is likely to be slow and fragile. Inflation in the UK remained high throughout the year under review although the reduction in the headline rate of inflation post period end is welcome and hopefully this will lead in turn to a reduction in interest rates and a return of more benign and less volatile economic conditions.

The portfolio remains highly diversified and the Board continues to believe it is a good time to be investing in earlier stage, innovative and high growth potential businesses. The Manager is actively seeking to complete new investments, believing that this is a propitious time in the economic cycle ahead of the typical up swing that follows the uncertain times of the past few years. We remain confident that the Manager is suitably positioned to provide the necessary levels of support to the portfolio companies and remains focussed on retaining, recovering and helping to grow value in existing and future investee companies.

Fiona Miller Smith

Chair

21 December 2023

MANAGER'S REVIEW

Equity markets continued to experience high levels of volatility during the year brought about by geopolitical and macroeconomic uncertainty with downward pressure on growth company multiples. Against this backdrop, the portfolio, whilst well diversified, with exposure to 159 quoted and unquoted companies, has delivered a decrease in net asset value per share of 2.3 per cent over the year.

PORTFOLIO REVIEW

Overview

The closing net assets of £195 million were invested as follows:

Asset class	NAV (£mn)	% of NAV*	Number of investees**	% return in the year***
Unquoted	46	24	37	(14)
AIM-traded companies	61	31	47	3
WS Gresham House UK Micro Cap Fund	28	15	45	5
WS Gresham House UK Multi Cap Income Fund	16	8	42	7
WS Gresham House UK Smaller Companies Fund	24	12	40	2
Liquid assets♯	20	10	N/A	4
Totals	195	100	211	(2)

* By value as at 30 September 2023.

** Includes investee companies held in more than one fund. Total number of individual companies held is 159.

***Return includes interest received on unquoted realisations during the year.

# Represents cash, OEICs and net current assets. % return in the period relates only to the OEICs.

The tables below show the breakdown of new investments and realisations over the course of the year and below is a commentary on some of the key highlights in both the unquoted and quoted portfolios.

Investment activity - Unquoted and Quoted

The Company's investment strategy is primarily focused on companies operating in parts of the economy that we believe are benefiting from long‑term structural growth trends and in sectors where we have deep expertise and networks.

During the year, £10.4 million was invested into 14 companies including six new additions to the portfolio and eight follow‑on investments.

Five new unquoted investments totalling £3.4 million were completed during the year into Branchspace, Cognassist, Connect Earth, Dayrize B.V. and Mable Therapy.

Below are descriptions of the new investments made;

·      Branchspace is a provider of software and consulting services to airlines/carriers to enhance their digital and ecommerce offerings.

·      Cognassist is a provider of neurodiversity assessment and support software.

·      Connect Earth is a provider of a proprietary environmental database that estimates carbon emissions.

·      Dayrize is a provider of a rapid product‑level sustainability impact assessment software tool for retailers and Consumer Packaged Goods companies.

·      Mable Therapy is a digital platform offering mental health counselling and speech and language therapy to children.

One new AIM quoted of £0.9 million was made during the year:

·      Tan Delta Systems is a manufacturer of oil condition analysis sensors that detect and measure wear and contamination in industrial applications.

The Company made follow‑on investments totalling £6.0 million into eight existing portfolio companies, three quoted and five unquoted, during the year. This is consistent with the investment strategy of continuing to back the Company's high potential assets with further capital to support future growth. We anticipate the level of follow‑on investment will continue to grow as the capital hungry earlier stage portfolio continues to mature.

Unquoted Portfolio

Performance

The unquoted portfolio decreased in value by 14 per cent during the year. The macroeconomic environment remained challenging for the Company's portfolio companies although some stability has been seen in market multiples in more recent months. UK businesses have seen both demand and operating margins come under pressure due to marked increases in inflation and interest rates. Such macroeconomic conditions have not been faced by management teams in a generation, however Gresham House's experienced non‑executive directors and portfolio consultants continue to support the portfolio's companies during these turbulent times.

Orri and SecureCloud+ were the two investments that made the biggest positive contribution in the year. Orri, a provider of intensive out‑patient care for adults with eating disorders, delivered year on year revenue growth, in excess of 20 per cent. The company opened a new site and drew down a further VCT loan in the period which is expected to support continuing growth in the coming year. SecureCloud+ is a specialist IT managed services company specifically serving the Ministry of Defence and related contractors. The company delivered both revenue and profit growth in the period, growing EBITDA, in particular by over 40 per cent. A focus on maintaining margins for new contract wins in a growing market helped SecureCloud+ deliver a very encouraging performance. It is now well set to continue on its positive trajectory. Overall performance was also positively impacted by the receipt of the maximum deferred consideration relating to the earnout arrangements on Pho, a divestment completed in a previous period. In line with our valuation policy, this was only recognised on receipt.

The largest detractors from performance were in the healthcare and B2C ecommerce sectors. Panthera Biopartners, an independent site management organisation which provides patient recruitment services to clinical research organisations, pharma and biotech companies, struggled to scale its operations and deliver a growing number of contracts as profitably as it had previously. This resulted in a significantly loss‑making year and the requirement for further funding. Since then the company has started to deliver profitable revenue growth. Yappy is an e‑commerce business that provides personalised products to companion pet owners. It struggled to acquire customers at a cost that would deliver sufficient lifetime value to support a profitable business once significant scale was achieved. As a result, the company has pivoted its strategy to exploit its proprietary personalisation software, but this new strategy remains in its early stages of development.

As Investment Manager we remain highly engaged with the management teams within the portfolio, sharing insight and best practice to help them manage risk and spot opportunities in a quickly changing environment. We have continued to invest in our portfolio and in‑house talent teams, alongside our extensive network of earlier stage, high growth company experts. This will ensure we are well positioned to help the companies that the Company invests in to navigate the challenges they face whilst also continuing to develop and scale.

Divestments

There was one full realisation in the unquoted portfolio during the year with proceeds of £0.7 million received from the realisation of Evotix, for a gross multiple of 0.7x cost. In addition to this, the Key Travel Loan Notes matured for £0.3 million taking the gross money multiple to 3.2x cost along with deferred earn‑out consideration of £1.1 million from the sale of Pho for a gross money multiple of 3.1x cost.

Quoted Portfolio (AIM-traded investments)

Performance

The quoted portfolio delivered positive absolute performance of 3 per cent during the year, despite the significant geopolitical and macroeconomic uncertainty in the markets. For reference the AIM market in the UK fell 10 per cent over the same period. Despite the adverse share price performances from many of the portfolio companies, the majority of the AIM portfolio remains in good financial health and is exposed to structural growth areas providing some insulation from the deteriorating economic conditions.

The best performing investments sit within the software sector with Cerillion, a provider of billing and charging software to the telecoms industry continuing to deliver strong revenue and profit growth with the release of their interim results stating +20 per cent organic growth with record margins and strong Free Cash Flow generation. In addition, Netcall, a provider of cloud contact centre and business process automation software, demonstrated ongoing strong trading driven by demand for cloud services and robust new customer acquisition.

The largest detractors from performance were both in the healthcare and education sector with Aptamer, a developer of a platform technology with applications in the therapeutic and diagnostic areas of healthcare, experiencing share price weakness after the release of a trading update indicating a significant downgrade to full year revenue expectations. The company consequently considered funding options and the CEO resigned. Anpario, an international manufacturer and distributor of natural animal feed additives for animal health, nutrition and biosecurity, also suffered share price weakness following a profit warning indicating a significant reduction in full year EBITDA due to raw material costs, Covid in China and delays in shipment.

We closely monitor the AIM portfolio with a rolling programme of independent reviews of top AIM holdings and broadly continue to be positive on the long‑term investment prospects of these companies. Many of the larger quoted investments have been long‑term holdings. These companies are typically profitable, cash generative businesses with low levels of financial gearing and continue to have attractive long‑term growth prospects.

Divestments

The opportunity to crystallise further gains was taken for Cerillion; over the course of the year proceeds of £0.5 million were realised at 15.8x cost.

Seven companies which were impacted by difficult trading conditions entered into administration during the year and have subsequently been recognised as realised losses. In aggregate, the impact on NAV per share for the year was a decrease of 0.7per cent, with the majority of the losses recognised in prior years.

Collective Investment Vehicles

The Manager believes that the Company's investments in Micro Cap, Multi Cap and Small Cap remain a core component of the Company's portfolio construction for funds awaiting investment in VCT qualifying companies. These investments provide shareholders with additional diversification through exposure to an additional 75 underlying companies, as well as access to the potential returns available from a larger and more established group of companies that fall within the Manager's core area of expertise.

Over the year Micro Cap delivered a positive return of 5 per cent, Multi Cap delivered a positive return of 7 per cent and the Small Cap fund delivered a positive return of 2 per cent.

Micro Cap and Multi Cap continue to be both highly rated by independent ratings agencies. Micro Cap's cumulative performance is currently top quartile within the IA UK Smaller Companies sector and is the fifth best performing fund over the past 10 years. Multi Cap's cumulative performance has remained the best performer within the IA UK Equity Income sector since launch in June 2017 and is the second best performer over five years. Small Cap has also achieved top quartile cumulative performance since launch in 2019 and is the fifth best performing fund over the past three years.

Liquid assets (cash and near cash)

The Company held cash and liquidity OEICs of approximately £21 million at the year‑end. This asset class is conservatively managed to take minimal or no capital risk. The average 7 day yield on the liquidity OEICs was 5.17 per cent at the end of the year.

ESG highlights

Following the year end, we commenced our latest ESG survey of our unquoted portfolio companies, to identify how these companies think about ESG and which ESG data is already being reported and monitored. Further details on our ESG approach and policies can be found in the full Annual Report.

Third party independent valuations

During the year, the Company engaged the services of Lincoln International and Kroll to conduct independent third party valuations as a means of managing the Board's risk in respect of a systematic error regarding the valuation of one or more of the material VCT portfolio assets. It was agreed that valuation responsibility is, and will remain, with the Investment Manager and that this does not constitute outsourcing of any part of the valuation. The Investment Manager uses these independent valuations in conjunction with their own valuations to provide independent assurance and risk mitigation to the Board and the Board continues to support this.

Levelling up

On 18 July 2023, the House of Commons Treasury Committee published its report (the "Report") on Venture Capital, which includes growth capital funding provided by Venture Capital Trusts, which was broadly positive. MPs recommended that venture capital firms and their investment companies should collect and publish their diversity statistics. The Report also considered the allocation of investment capital to the various regions of the UK.

The Company and the Investment Manager have long supported the creation of opportunities for everyone across the UK through its investment portfolio.

The investment due diligence process for any proposed new investment includes a consideration of the board structure and composition as part of the Manager's governance considerations within the ESG Decision Tool.

We have considered the findings of the Report and set out for the first time the relevant metrics pertaining to the Company's portfolio of unquoted investments as at 30 September 2023, Gresham House plc and the Gresham House Strategic Equity division, responsible for managing the public and private equity portfolios managed or advised by the Manager.

Table 1 below shows that the portfolio companies were predominantly founded by males, or groups of male founders, with 14 per cent being founded by all females or groups of mixed male and female founders.

Table 1 - Portfolio company founders

All male	86%
Female/mixed gender	14%

Table 2 - Portfolio company board composition1

All male	85%
Female	15%

Table 2 above shows that board composition within the portfolio was similarly predominantly male, with 15 per cent of board members being female, after excluding representatives of Gresham House.

Table 3 - Allocation of capital by region2

London and South East	65%
Other regions	35%

Table 3 above shows the regions of the UK where the Company's capital has been invested, with the majority of capital being invested in London and/or the South East.

As of the end of 2023, the Company is in the process of signing up to the Investing in Women Code. This is a commitment to support the advancement of female entrepreneurship in the United Kingdom by improving female entrepreneurs' access to tools, resources and finance from the financial services sector.

1.        Excluding Gresham House representatives.

2. Based on cost of investment.

In September 2023, the Manager hosted its first female‑ led event bringing together innovators, investors, and advisers to foster relationships and share learnings.

Table 4 below shows the gender diversity within Gresham House as at 30 September 2023.

Table 4 - Gresham House gender diversity1

Male	62%
Female	38%

Table 5 - Gresham House strategic equity division gender diversity2

Male	70%
Female	30%

1. As at 30 September 2023.

2. As at 30 September 2023.

Gresham House released their Diversity, Equity & Inclusion("DEI") strategy at the start of 2022 to help understand the changing landscape of DEI. Included within the strategy are initiatives to improve DEI such as carrying out unconscious bias training for all employees; evolving Human Resources systems to include DEI data which is now shared quarterly with our Group Management Committee and divisional heads and developing clear DEI guidelines for recruiters.

During the year Gresham House have promoted or actively attended a number of events targeted at women entrepreneurs and the senior women from across Gresham House have all attended a 12‑week external Resilient Women's Leadership Programme to develop their capability to lead.

Gresham House is committed to improving the diversity of its investment teams, the management teams of the investee companies that they support and increasing the amount and number of investments across the UK

Outlook

The UK economic outlook remains uncertain but the investment portfolio is well diversified and the opportunity to invest and support growth in entrepreneurial earlier‑stage businesses remains strong. Our focus on investing in parts of the economy which are experiencing structural growth and in sectors where we have extensive talent networks and domain expertise. We have an experienced team working closely with the portfolio companies to help them navigate the challenges that lie ahead.

The exit environment is likely to remain subdued, resulting in longer average investment hold times, but also providing further portfolio re‑investment opportunities. Previous evidence has shown that investing throughout the economic cycle has the potential to yield strong returns and we are seeing a number of opportunities, both new deals and further investment into the existing portfolio, which have the potential to drive shareholder value over the medium term.

Gresham House Asset Management Ltd

Investment Manager

21 December 2023

Investments in the year

Company	Location	Sector	Activity	Book cost £'000
Unquoted investments New
Cognassist UK Ltd	Newcastle upon Tyne	Healthcare & education	A platform for supporting those with learning needs	896
Dayrize B.V.	Amsterdam	Technology	A rapid product-level sustainability impact assessment software tool for retailers and Consumer Packaged Goods ("CPG") companies	757
Mable Therapy Ltd	Leeds	Healthcare & education	Digital health platform for speech therapy & counselling for children and young adults	670
Branchspace Ltd	London	Technology	Specialist digital retailing consultancy and software provider to the aviation and travel industry	659
Connect Earth Ltd	London	Business services	Helps businesses track their carbon emissions	447
Follow-on
Patchworks Integration Ltd	London	Technology	A platform for connecting businesses' applications	1,920
TravelLocal Ltd	London	Consumer Markets	Online travel agent specialising in tailor‑made holidays	634
Airfinity Ltd	London	Healthcare & education	Provides real time life science intelligence as a subscription service	624
Panthera Biopartners Ltd	Lancashire	Healthcare & education	Recruitment services for clinical trials	443
Orri Ltd	London	Healthcare & education	Provider of intensive day care treatments for eating disorders	227
Total unquoted investments				7,277
AIM-traded investments New
Tan Delta Systems plc	South Yorkshire	Business services	Supplier of real‑time oil condition monitoring sensors	918
Follow-on
Crossword Cybersecurity plc*	London	Technology	Commercialisation of university research‑based cyber security software and consulting	960
Oberon Investments Group plc	London	Business services	Wealth advisory service for individuals and businesses	609
SEEN plc	London	Technology	A video technology business	609
Total AIM-traded investments				3,096
Total investments in the year#				10,373

*Investment in to unquoted convertible loan note.

#includes Unquoted and AIM investments only.

Realisations in the year

Company		First Investment date	Original book cost# £'000	Proceeds‡ £'000	Overall multiple return
Unquoted realisations
Evotix Ltd	Full trade sale	Jul 21	375	702	0.7*
Key Travel Ltd	Escrow loan note maturity	Jun 13	209	313	3.2**
Glisser Ltd	Written off	Nov 19	1,585	-	-
Rezatec Ltd	Written off	Jan 20	1,380	-	-
Vinoteca Ltd	Written off	Sep 19	934	-	-
CMME Group Ltd	Written off	Apr 15	931	-	-
Your Welcome Ltd	Written off	Aug 18	914	-	-
Total unquoted realisations			6,328	1,015
AIM-traded and LSE listed realisations
Cerillion plc	Market sale	Nov 15	34	541	15.8
MXC Capital Ltd	Tender offer	May 15	24	15	0.6
Hawkwing plc	Written off	Nov 11	1,466	-	-
InterQuest Group plc	Written off	Feb 07	620	-	-
Total AIM-traded realisations			2,144	555
Total realisations in the year			8,472	1,570

Earn out proceeds of £1.1mn were received during the year from Pho, which was realised in July 2021, making a total return of 3.1x cost.

# Residual book cost at realisation date.

‡ Proceeds at time of realisation including interest.

* Original investment was £1.0 million and following a restructuring in July 2021, the residual book cost was £0.4 million.

** Includes interest/dividends received, loan note redemptions and partial realisations accounted for in prior periods.

Final Dividend

Subject to shareholder approval at the AGM, a final dividend of 2.5p per share will be paid on 8 March 2024 to shareholders on the register at 9 February 2024. The ex-dividend date will be 8 February 2024.

Annual General Meeting

The AGM will be held on 5 March 2024 at Butchers' Hall, 87 Bartholomew Close, London, EC1A 7EB. The Manager will deliver a presentation at 11.30am, followed by some light refreshments at 12.30pm, after which the Chair will present a review of the year at 1.00pm. Formal business of the AGM will start at 1.30pm. The Company intends to hold this AGM in person, however, we will also live stream the event for any shareholders who do not wish, or are unable, to attend in person. A separate Notice convening the AGM will be posted to shareholders and will be separate to the Annual Report. The Notice will include an explanation of the items to be considered at the AGM and will be uploaded to the Company's website in due course.

Further Information

The Annual Report and Accounts for the year ended 30 September 2023 will be available today on www.baronsmeadvcts.co.uk.

Each of the above documents will be submitted shortly in full unedited text to the Financial Conduct Authority's National Storage Mechanism and will be available for inspection at data.fca.org.uk/#/nsm/nationalstoragemechanism in accordance with DTR 6.3.5(1A) of the Financial Conduct Authority's Disclosure Guidance and Transparency Rules.

LEI: 213800VQ1PQHOJXDDQ88

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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.

 

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