Half-year Report

RNS Number : 8900O

Baronsmead Venture Trust PLC

04 June 2020

 

Baronsmead Venture Trust plc

Half-yearly report for the six months ended 31 March 2020

The Directors of Baronsmead Venture Trust plc are pleased to announce the unaudited half-yearly financial report for the six months to 31 March 2020.  Copies of the half-yearly report can be obtained from the following website:  www.baronsmeadvcts.co.uk  

Our Investment Objective

· Baronsmead Venture Trust is a tax efficient listed company which aims to achieve long-term investment returns for private investors, including tax-free dividends.

Investment Policy

· To invest primarily in a diverse portfolio of UK growth businesses, whether unquoted or traded on AIM.

· Investments are made selectively across a range of sectors in companies that have the potential to grow and enhance their value.

Dividend Policy

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

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

Shareholder Choice
The Board wishes to provide shareholders with a number of choices that enable them to utilise their investment in Baronsmead 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 | The Company offers a Dividend Reinvestment Plan which enables shareholders to purchase additional shares through the market in lieu of cash dividends. Approximately 964,000 shares were bought in this way during the six months to 31 March 2020.

· 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.

·   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.

Financial Headlines

£25m Funds raised in the period (£24.2m after costs)

349.1p Net Asset Value ("NAV") total return to shareholders for every 100.0p invested at launch (April 1998)

3.0p Interim dividend declared to be paid 11 September 2020

(8.6)% NAV per share decreased 8.6 per cent to 65.4p in the six months to 31 March 2020, before deduction of dividends.

Cash returned to shareholders by date of investment

The table below shows the cash returned to shareholders that invested in Baronsmead Venture Trust plc dependent on their subscription cost, including the income tax available to be reclaimed on the subscription.

Year subscribed	Cash invested  (p)	Income tax reclaim (p)	Net cash invested (p)	Cumulative dividends paid#  (p)	Return on cash invested# (%)
1998 (Apr)	100.0	20.0	80.0	163.9	183.9
1999 (May)	102.0	20.4	81.6	160.4	177.3
2000 (Feb)	137.0	27.4	109.6	157.2	134.7
2000 (Mar)	130.0	26.0	104.0	157.2	140.9
2004 (Oct) - C shares*	100.0	40.0	60.0	113.0	153.0
2009 (Apr)	91.6	27.5	64.1	96.0	134.8
2012 (Dec)	111.8	33.5	78.3	70.5	93.1
2014 (Mar)	103.8	31.1	72.7	53.0	81.1
2016 (Feb)	102.8	30.8	72.0	38.5	67.5
2017 (Oct)	94.8	28.4	66.3	20.5	51.6
2019 (Feb)	84.2	25.3	58.9	14.0	46.6
2019 (Nov)	76.8	23.0	53.8	6.5	38.5
2020 (Jan)	82.4	24.7	57.7	6.5	37.9
2020 (Feb)	80.1	24.0	56.1	3.0	33.7
2020 (Mar)	63.8	19.1	44.7	3.0	34.7

* Share dividend calculated using conversion ratio of 0.9657, which is the rate the C shares were converted into ordinary shares.

# includes interim dividend of 3.0 per share payable 11 September 2020.

Chairman's Statement

The six months to 31 March 2020 produced an unprecedented challenge for the portfolio as the spread of COVID-19 accelerated and the UK went into lockdown. Gresham House, the Investment Manager, has been working closely with investee companies to help them navigate through the highly disruptive and uncertain environment. While the value of the portfolio has been adversely affected, the Manager has been pleased with the response from the portfolio company management teams to the crisis. We are also encouraged by the follow-on investments that are being made to continue supporting the growth plans of our ambitious and innovative investee companies.

The Board is pleased to declare an interim dividend of 3p to be paid in September 2020. The dividend will be paid from realised capital profits generated from portfolio companies.

RESULTS

During the six months to 31 March 2020, the Company's NAV per share decreased 8.6 per cent. from 71.6p to 65.4p after the payment of a final dividend of 3.5p per share on 6 March 2020. The fall in NAV was a result of both the exposure to falling equity markets through the AIM listed holdings and Equity Fund investments, and a decrease in value of a number of unquoted companies due to the impact of COVID-19.

The table below shows the impact of the market volatility in February and March following a strong performance in the portfolio during the first quarter of the financial year.

NAV 30 Sep 191	Performance	NAV 31 Dec 191	Performance	NAV 31 Mar 20
71.6p	7.7%	77.1p	(15.2%)	65.4p

  ¹ Adjusted for 2019 final dividend paid 6 March 2020

The 30 April 2020 NAV was 69.9p, a 6. 9 per cent increase, following a material recovery in the value of the quoted portfolio during the month.

PORTFOLIO REVIEW

The table below provides a summary of each asset class and the return during the period.

Asset class	NAV (£m)	% of NAV	Number of investees	% return during the period
Unquoted	39	26	32	(13)
AIM- traded companies	47	31	47	(7)
LF Gresham House UK Micro Cap Fund	22	15	44	(13)
LF Gresham House UK Multi Cap Income Fund	3	2	47	(10)

Gresham House ("The Investment Manager") has undertaken a thorough review of each investment to identify risks and prioritise activity across the portfolio. The Investment Manager is engaging with the management teams within the portfolio to proactively share insight and best practice, as well as providing access to operational and financial support.

The impact within the u nquoted portfolio has been most significant across our multi-site casual dining and nursery chain businesses. Investments in consumer travel and fashion have also seen a material decline in demand. The Investment Manager is working actively with our unquoted portfolio companies to help them develop short term plans to mitigate the impact of the current crisis. The Investment Manager has worked closely with each of these businesses to develop plans to reduce costs and preserve cash to weather the storm. Conversely, the technology and healthcare businesses in the portfolio have been more resilient and are now starting to take advantage of new opportunities driven by the changes in consumer demand and ways of working.

The direct AIM investments and our Equity Fund portfolios each experienced a material reduction in share prices between mid-February and mid-March, reflecting deteriorating sentiment and uncertainty about the economy, corporate earnings and in some cases, balance sheet resilience. The weighting of the quoted portfolio towards the technology and healthcare sectors, which have proven more resilient to the early impact of COVID-19, has enabled share prices to recover materially towards the end of the period and further during April 2020.

The Investment Manager's assessment of the quoted portfolio shows that the health of the majority of companies is robust. Many of the larger quoted investments have been long-term holdings and are well known to the Investment Manager. These companies are typically profitable, cash generative businesses with low levels of financial gearing and continue to have attractive long-term growth prospects.

INVESTMENTS AND DIVESTMENTS

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

Investments

I am pleased to report that the Company made three new investments totalling £2.3m and four follow-on investments totalling £1.2m in the six months to 31 March 2020. Below are descriptions of the new investments made:

· Rezatec Ltd (unquoted) has developed a data-as-a-service platform which analyses satellite imagery and other geospatial data to deliver actionable insight to customers who own and operate distributed land-based assets such as utility providers and forestry managers.

·   Glisser Ltd (unquoted) is a slide sharing and audience response software platform for live and virtual events, driving higher audience engagement and allowing organisers to measure event effectiveness.

· Funding Xchange (unquoted) connects SME borrowers and lenders using its own technology platform. It also sells the lending data back into banks to automate their underwriting decisions.

Following the period end, further follow on investments have been made into four investments totalling £1.9m.

Realisations

As reported in the Annual Accounts, the investment in CR7 was sold for nil proceeds in October 2019. CR7 required further investment beyond the levels expected and rather than invest, the shareholders agreed to sell the business to a strategic trade buyer. The investment was fully provided for during the last financial year.

Proceeds of £ 4 . 3 m were received during the period from sales of quoted investments, including:

· Synnovia - a producer of technical plastic components, fully exited after a takeover approach from Camelot Capital Partners and delivered a 1.3x return on cost; and

· Ideagen - a provider of governance, risk and compliance software, a partial sale to realise profits, delivering a 5.5x return on cost.

Given the ongoing uncertainty, the Investment Manager expects the sale of unquoted investments to be delayed or put on hold.

The sale of Glide was successfully completed on 31 May 2020, however, the sale process for this business was well progressed before the COVID-19 crisis. The sale delivered total proceeds of £ 6.2m for a total gross money multiple of 2.6x cost. This return is in addition to the 4.8x return made on the original partial exit in 2013 and represents a strong long-term investment return for shareholders.

There continues to be liquidity in the public markets and the Investment Manager has made a select number of divestments within the quoted portfolio where share prices have rallied strongly since the initial fall during March.

Following the end of the financial period, partial realisations have been made in CentralNic Group plc realising proceeds of £ 0.6m and 2.5x return on cost and Bioventix plc realising proceeds of £ 0.2m and a 16.4x return on cost. In addition to the partial divestment in the six month period to 31 March 2020, further sales have been made in Ideagen plc realising proceeds of £2.5m and a 6.3x return on cost .

COVID-19 OPERATIONAL RISKS

In addition to the investment portfolio risks facing the Company due to C OVID -19, the current pandemic has presented operational risks for the Company in respect to the resilience of third party service providers. The Board has appreciated the swift response of key service providers including the Investment Manager (Gresham House), the Registrar (Computershare) and Link Asset Services who provide both Company Secretarial support and fund administration to the Company. All key service providers have been able to implement their business continuity plans and move to working from home in line with Government advice.

DIVIDENDS

The Board is pleased to declare an interim dividend of 3p per share for the year to 30 September 2020. This will be paid on 11 September 2020 to shareholders on the register as of 14 August 2020.

In September 2019, the Board announced a change to the dividend policy. The updated policy targets an annual dividend yield based on 7 per cent of the NAV at the start of the financial year. The Company has good levels of realised reserves to fund future dividends and the Investment Manager continues to focus on consistently selling investments and generating realised profits across the portfolio.

I must of course remind shareholders that the payment date and the amount of future dividends depends on the level and timing of profitable realisations and cannot be guaranteed . I nevitably, as in the past, there will be variations in the amounts and dates on which dividends are paid.

FUNDRAISING

During the period, the Company successfully raised £25m (before costs) through an offer for subscription which became fully subscribed in March 2020. The Directors are pleased to welcome the 685 new shareholders who invested for the first time and to thank the 730 existing shareholders who continue to support the Company.

The Board will consider whether to raise new funds in the 2020/21 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 appreciates that shareholders would like as much notice as possible of its fundraising intentions and will ensure that shareholders are informed as soon as possible.

OUTLOOK

The impact of COVID-19 has been significant for us all, across our personal and business lives. The Board has been reassured by the swift reaction of the Investment Manager and their support given to Investee Companies.

While COVID-19 presents an unprecedented challenge to the country and economy, the Board believes that Baronsmead is well prepared to play its role in the economic recovery by continuing to support entrepreneurial, high growth SMEs. We remain focused on delivering value for shareholders and providing support to our existing portfolio companies while continuing to identify new, attractive investment opportunities.

Peter Lawrence

Chairman

3 June 2020

Investment Portfolio at 31 March 2020

Sector by value	Percentage
Business Services	23%
Consumer Markets	10%
Healthcare & Education	19%
Technology, Media & Telecommunications ("TMT")	48%

Total assets by value	Percentage
Unquoted - loan notes	12%
Unquoted - equity	14%
AIM - quoted	31%
Collective investment vehicles	17%
Cash liquidity funds	18%
Net current assets	8%

Time investments held by value	Percentage
Less than 1 year	7%
Between 1 and 3 years	16%
Between 3 and 5 years	17%
Greater than 5 years	60%

Investments in the period

Company	Location	Sector	Activity	Book cost £'000
Unquoted investments New
Rezatec Ltd	Oxfordshire	TMT	A geospatial data analytics business selling into the forestry and utilities sector worldwide	1,380
Glisser Ltd	London	Business Services	Audience response software	587
Funding Xchange Ltd	London	Business Services	SME lending marketplace	352
Follow on
Storyshare Holdings Ltd	London	TMT	Business App Developer	470
Tribe Digital Holdings Pty Ltd	London	TMT	Influencer marketing platform	247
Munnypot Ltd	West Sussex	TMT	Automated online investment platform	223
Total unquoted investments				3,259
Quoted Investments
Follow on
Eden Research Plc	Gloucestershire	Business Services	Developer of biological fungicides and bio equivalents	225
Total quoted investments				225
Total investments in the period				3,484

Realisations in the period

Company		First investment date	Book cost £'000	Proceeds £'000	Overall multiple return
Unquoted realisations
CR7 Services Limited	Write Off	Aug 14	1,808	0	0.0
Total unquoted realisations			1,808	0
Quoted realisations
Synnovia plc	Takeover	Nov 07	1,586	1,990	1.3
Ideagen plc	Market sale	Jan 13	348	1,899	5.5
STM Group plc	Market sale	Mar 08	199	132	0.7
Synectics plc	Market sale	Dec 09	518	289	0.6
APC Technology Group plc#	Exchange	Sep 14	79	22	0.3
Brady plc	Market sale	Dec 10	352	12	0.0
MXC Capital Ltd	Repurchase	May 15	5	5	0.9
Total quoted realisations			3,087	4,349
Total realisations in the period			4,895	4,349
#APC shares were received as part of an exchange; book cost of APC shares when received is listed here.

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 fi nancial 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 fi rst six months of the fi nancial year and their impact on the condensed set of fi 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 fi rst six months of the current fi nancial year and that have materially affected the fi 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 Financial Report was approved by the Board of Directors and the above responsibility statement was signed on its behalf by:

Peter Lawrence

Chairman

3 June 2020

Condensed Income Statement (unaudited)

For the six months to 31 March 2020

		Six months to 31 March 2020			Six months to 31 March 2019			Year to 30 September 2019
	Notes	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Losses on investments	7	-	(13,269)	(13,269)	-	(12,316)	(12,316)	-	(16,181)	(16,181)
Income		369	-	369	1,125	-	1,125	2,665	-	2,665
Investment management fee		(363)	(1,088)	(1,451)	(369)	(1,106)	(1,457)	(735)	(2,204)	(2,939)
Other expenses		(331)	-	(331)	(326)	-	326	(597)	-	(597)
(Loss)/profit on ordinary activities before taxation		(325)	(14,357)	(14,682)	430	(13,422)	(12,992)	1,333	(18,385)	(17,052)
Taxation on ordinary activities		-	-	-	-	-	-	(61)	61	-
(Loss)/profit on ordinary activities after taxation		(325)	(14,357)	(14,682)	430	(13,422)	(12,992)	1,272	(18,324)	(17,052)
Return per ordinary share:
Basic and Diluted	2	(0.15p)	(6.65p)	(6.80p)	0.22p	(6.88p)	(6.66p)	0.64p	(9.22p)	(8.58p)

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 (unaudited)

For the six months to 31 March 2020

		Non-distributable reserves			Distributable reserves		Total £'000
	Notes	Called-up share capital £'000	Share premium  £'000	Revaluation reserve £'000	Capital reserve £'000	Revenue reserve £'000
At 1 October 2019		22,053	28,397	26,909	72,401	1,309	151,069
Loss after taxation		-	-	(11,945)	(2,412)	(325)	(14,682)
Net proceeds of share issues, share buybacks & sale of shares from treasury	4	3,215	21,000	-	(1,265)	-	22,950
Dividends paid	6 6	-	-	-	(7,100)	(665)	(7,765)
At 31 March 2020		25,268	49,397	14,964	61,624	319	151,572

For the six months to 31 March 2019		Non-distributable reserves			Distributable reserves		Total £'000
	Notes	Called-up share capital £'000	Share premium  £'000	Revaluation reserve £'000	Capital reserve £'000	Revenue reserve £'000
At 1 October 2018		20,628	18,154	50,283	83,004	3,406	175,475
(Loss)/profit after taxation		-	-	(11,468)	(1,954)	430	(12,992)
Net proceeds of share issues, share buybacks & sale of shares from treasury		1,425	10,243	-	(1,540)	-	10,128
Dividends paid			-	-	(6,135)	(3,067)	(9,202)
At 31 March 2019		22,053	28,397	38,815	73,375	769	163,409

For the year to 30 September 2019		Non-distributable reserves			Distributable reserves		Total £'000
	Notes	Called-up share capital £'000	Share premium  £'000	Revaluation reserve £'000	Capital reserve £'000	Revenue reserve £'000
At 1 October 2018		20,628	18,154	50,283	83,004	3,406	175,475
(Loss)/profit after taxation		-	-	(23,374)	5,050	1,272	(17,052)
Net proceeds of share issues & share buybacks		1,425	10,243	-	(3,783)	-	7,885
Dividends paid		-	-	-	(11,870)	(3,369)	(15,239)
At 30 September 2019		22,053	28,397	26,909	72,401	1,309	151,069

Condensed Balance Sheet (unaudited)

As at 31 March 2020

	Notes	As at 31 March 2020 £'000	As at  31 March 2019 £'000	As at 30 September 2019 £'000
Fixed assets
Unquoted investments	7	38,894	43,812	41,681
Traded on AIM	7	46,570	63,702	54,241
Collective investment vehicles	7	53,117	55,572	46,793
Investments	7	138,581	163,086	142,715
Current assets
Debtors		2,297	93	176
Cash at bank and on deposit		11,801	1,211	9,792
		14,098	1,304	9,968
Creditors (amounts falling due within one year)		(1,107)	(981)	(1,614)
Net current assets		12,991	323	8,354
Net assets		151,572	163,409	151,069
Capital and reserves
Called-up share capital		25,268	22,053	22,053
Share premium		49,397	28,397	28,397
Capital reserve		61,624	73,375	72,401
Revaluation reserve	7	14,964	38,815	26,909
Revenue reserve		319	769	1,309
Equity shareholders' funds		151,572	163,409	151,069

	As at 31 March 2020 £'000	As at  31 March 2019 £'000	As at 30 September 2019 £'000
Basic net asset value per share	65.43p	80.02p	75.05p
Number of ordinary shares in circulation	231,667,817	204,201,568	201,285,693

Condensed Statement of Cash Flows (unaudited)

For the six months to 31 March 2020

	Six months to 31 March 2020 £'000	Six months to 31 March 2019 £'000	Year to 30 September 2019 £'000
Net cash outflow from operating activities	(1,327)	(1,154)	(1,472)
Net cash (outflow)/inflow from investing activities	(9,852)	347	17,566
Equity dividends paid	(7,765)	(9,202)	(15,239)
Net cash (outflow)/inflow before financing activities	(18,944)	(10,009)	855
Net cash inflow from financing activities	20,953	10,130	7,847
Increase in cash	2,009	121	8,702
Reconciliation of net cash flow to movement in net cash
Increase in cash	2,009	121	8,702
Opening cash at bank and on deposit	9,792	1,090	1,090
Closing cash at bank and on deposit	11,801	1,211	9,792
Reconciliation of loss on ordinary activities before taxation to net cash outflow from operating activities
Loss on ordinary activities before taxation	(14,682)	(12,992)	(17,052)
Losses on investments	13,269	12,316	16,181
Changes in working capital and other non-cash items	86	(478)	(601)
Net cash outflow from operating activities	(1,327)	(1,154)	(1,472)

Notes

1.  The condensed financial statements for the six months to 31 March 2020 comprise the unaudited statements set out above together with the related notes below. 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 2020 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 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 2019.

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 2019 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 2019 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 2019 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 215,978,185 ordinary shares in issue (31 March 2019 - 194,979,148 ordinary shares; 30 September 2019 - 198,747,709 ordinary shares).

3.  Earnings for the first six months to 31 March 2020 should not be taken as a guide to the results of the full financial year to 30 September 2020.

4. During the six months to 31 March 2020, the Company issued 32,152,130 shares at net proceeds of £24,215,249 ( after   costs). During the same period, the Company purchased 1,770,006 shares to be held in treasury at a cost of £1,265,330. At 31 March 2020, the Company held 21,017,988 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 231,667,817 ordinary shares in issue at 31 March 2020 (31 March 2019 - 204,201,568 ordinary shares; 30 September 2019 - 201,285,693 ordinary shares).

6.  The final dividend for the year ended 30 September 2019 of 3.5p per share (3.20p capital, 0.30p revenue) was paid on 6 March 2020 to shareholders on the register on 7 February 2020. The ex-dividend date was 6 February 2020. During the year to 30 September 2019, the Company paid an interim dividend in September 2019 of 3.0p per share (3.0p capital).

7. 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 assumption dependent upon the valuation methodology used. The primary methodologies applied are:

-  Rebased Cost

-  Earnings Multiple

-  Offer Less 10 per cent

The earnings multiple approach involves more subjective inputs than the Rebased Cost and Offer approaches and therefore presents a greater risk of over or under estimation. Key assumptions for the Multiples approach are the selection of comparable companies and the use of either historic or forecast 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 2019. The techniques used in the valuation of unquoted investments have not changed materially since the date of that Report. 

	Level 1	Level 2		Level 3
	Traded on AIM £'000	Traded  on AIM £'000	Collective investment vehicles £'000	Traded on AIM £'000	Unquoted £'000	Total £'000
Opening book cost	45,024	6,520	33,091	-	31,171	115,806
Opening unrealised appreciation/(depreciation)	3,347	(650)	13,702	-	10,510	26,909
	48,371	5,870	46,793	-	41,681	142,715
Movements in the period:
Transfer between levels	3,471	(6,520)	-	2,315	734	-
Purchases at cost	225	-	21,500	-	3,259	24,984
Sale - proceeds	(4,349)	-	(11,500)	-	-	(15,849)
- realised (losses)/gains on sales	(25)	-	-	-	-	(25)
Unrealised (losses)/gains realised during the period	508	-	-	-	(1,808)	(1,300)
(Decrease)/increase in unrealised appreciation	(1,642)	650	(3,676)	(2,304)	(4,972)	(11,944)
Closing valuation	46,559	-	53,117	11	38,894	138,581
Closing book cost	44,854	-	43,091	2,315	33,356	123,616
Closing unrealised appreciation/(depreciation)	1,705	-	10,026	(2,304)	5,538	14,965
Closing valuation	46,559	-	53,117	11	38,894	138,581
Equity shares	46,559	-	-	11	18,472	65,042
Preference Shares	-	-	-	-	2,144	2,144
Loan notes	-	-	-	-	18,278	18,278
Collective investment vehicles	-	-	53,117	-	-	53,117
Closing valuation	46,559	-	53,117	11	38,894	138,581

Two investments held, MXC Capital Ltd (previously Level 1) and Mi-Pay Group plc (previously Level 2) were transferred to Level 3 following their delisting from AIM. The investment in Hawkwing plc (previously Level 1) has been transferred to Level 3 following a temporary suspension from trading on AIM. The investments held in Level 2 as at 30 September 2019 have been transferred to Level 1 after recent trading activity in 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 2019.

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 Gresham House Octagon Point, 5 Cheapside London EC2V 6AA

Principal Risks and Uncertainties

The Company's financial instruments consist of equity and fixed interest investments, cash balances 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 Report and Financial Statements for the year to 30 September 2019. The Board continues to regularly review the risk environment in which the Company operates. Other than the impact of the COVID-19 pandemic, there have been no significant changes to the key risks described in that report.

The COVID-19 pandemic has presented the Company with additional immediate risks in respect of the performance and valuation of portfolio companies and operational risks such as the resilience of third party providers. These risks are discussed in detail in the Chairman's statement.

Investment in Associates

The company has made the assumption that the following holding is an investment in an associate, owing to the proportion of equity held and representation on the board representing significant influence over the operations of the company. The investment is held as part of an investment portfolio, and is therefore measured at fair value through profit and loss, as detailed in note 7 rather than using the equity method, as permitted by Section 14 of FRS 102:

Name	Location	Class of Shares held	% of Equity	Profit (£m)	Net Assets (£m)	Results for year ended
Happy Days Consultancy	UK	A Ordinary	25.7	(1.9)	(8.2)	31 December 20181

¹ Latest published set of financial statements available at Companies House. 31 December 2019 financial statements due at Companies House by 30 September 2020.

Related Parties

Gresham House Asset Management Ltd ('the Manager') manages the investments of the Company. The Manager also provides or procures the provision of secretarial, administrative and custodian services to the Company. Under the management agreement, the Manager receives a fee of 2.0 per cent per annum of the net assets of the Company. This is described in more detail under the heading 'The management agreement' within the Strategic Report in the Company's Annual Report and Financial Statements for the year to 30 September 2019. During the period the Company has incurred management fees of £1,451,000 (31 March 2019 - £1,475,000; 30 September 2019 - £2,939,000) and secretarial fees of £77,500 (31 March 2019 - £75,000; 30 September 2019 - £152,000) payable to the Manager. No performance fee has been accrued at 31 March 2020 (31 March 2019 - £nil; 30 September 2019 - £nil). This is described in more detail under the heading 'Performance fees' within the Strategic Report in the Company's Annual Report and Financial Statements for the year to 30 September 2019.

A related party relationship exists between Baronsmead Venture Trust and Happy Days Consultancy Limited, owing to the significant influence deemed to be held over the operations of the company. As at 31 March 2020, the loan balance stood at £5, 153 ,000, including £2, 075 ,000 of capitalised interest, as provided for in the Agreement with the company.

Going Concern

The Board has considered a detailed assessment of the company's ability to meet its liabilities as they fall due, including stress and liquidity tests which modelled the effects of substantial falls in markets and significant reductions in market liquidity (including further stressing the current economic conditions caused by the COVID-19 pandemic) on the Company's assets and liabilities. In light of the results of these tests, the Company's cash balances, the liquidity of the Company's investments and the absence of any gearing, the Directors are satisfied that the Company has adequate financial resources to continue in operation for at least the next 12 months and that, accordingly, it is appropriate to adopt the going concern basis in preparing the financial statements.

Post balance sheet events

The following events occurred between the balance sheet date and the signing of these financial statements:

· The C OVID -19 pandemic continues to adversely impact the UK and world economy. This has had an effect on both the unquoted and quoted portfolios which have been reflected in the fair value of the investments at 31 March 2020. As the full impact of the pandemic and Government restrictions is unknown, there may be further information that emerges but the impact of this could not be known at 31 March 2020.

The 30 April 2020 NAV of 69.9p was announced on 12 May 2020. 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.

· Three partial realisations: Ideagen plc realising proceeds of £2.5m and a return of 6.3x cost, Centralnic Group plc realising proceeds of £0. 6 m and a return of 2.5x cost and Bioventix plc realising proceeds of £0.2m and a return of 16.4x cost.

· Full realisation: Glide Ltd was sold on 31 May 2020 realising proceeds of £6. 2 m and a return of 2.6x cost.

· Four follow on investments, totalling £1.9m

Corporate Information

Directors Peter Lawrence (Chairman) Valerie Marshall# Les Gabb* Susannah Nicklin † Secretary Gresham House Asset Management Ltd Registered Office 5 New Street Square London EC41 3TW Investment Manager Gresham House Asset Management Ltd 5 New Street Square London EC41 3TW 0207 3875 9862 Registered Number 03504214

Registrars and Transfer Office Computershare Investor Services PLC The Pavilions Bridgwater Road Bristol BS99 6ZZ Tel: [phone] Brokers Panmure Gordon & Co One New Change London EC4M 9AF Tel: [phone] Auditors KPMG LLP Saltire Court 20 Castle Terrace Edinburgh EH1 2EG Solicitors Dickson Minto Broadgate Tower 20 Primrose Street London EC2A 2EW VCT Status Adviser PricewaterhouseCoopers LLP 1 Embankment Place London WC2N 6RH Website www.baronsmeadvcts.co.uk

# Senior Independent Director and Chairman of the Nomination Committee

*Chairman of the Audit Committee

† Chairman of the Management Engagement and Remuneration Committee

 

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