Final Results

RNS Number : 0224L

Braveheart Investment Group plc

26 July 2011

 



26 July 2011

Braveheart Investment Group plc

Preliminary Results for the year ended 31 March 2011

Key Points

Operational:

·     Acquired London-based Envestors Ltd

·     Enlarged Group now has offices in Perth, Yorkshire, London and Jersey, with franchise operations in Manchester and Dubai

·     Three different levels of investment service now offered to business angels, high net worth and family office investors

·     Envestors led £3.69m financing for client companies since acquisition

·     Instigated banking partnership with HSBC Bank plc

·     Further direct investment of £1.66m by the Group and its clients made into 11 portfolio companies

·     Client exit portfolio showing an internal rate of return of 30% (2010: 30%)

·     Overall client portfolio (being both realised and unrealised investments) showing an internal rate of return of 22% (2010: 23%)

Financial:

·     First exit of an investment funded by IPO proceeds, generating a realised gain of £168,000 (2010: £nil)

·     Investment management and consultancy fee income increases 63% to £926,000 (2010: £568,000)

·     Excluding unrealised portfolio movements, the loss before tax fell 20% to £862,000 (2010: £1.08m).

·     Net unrealised loss on revaluation of portfolio investments of £444,000 (2010: gain of £316,000)

·     Including unrealised portfolio movements, the loss before tax increases 70% to £1,306,000 (2010: £767,000)

·     Cash utilisation in the year decreases to £831,000 (2010: £1.75m)

·     Cash balances of £643,000 (2010: £1.47m)

·     Net assets per share of 30.66 pence (2010: 40.25 pence)

Events since the year end:

·     Placed 4,132,574 shares raising £950,000 (before expenses)

·     Facilitated the strategically required exit of two major institutional shareholders

·     Viking Fund Managers Ltd appointed by North East Access to Finance to develop a network of angel investors operating across the North East of England

·     Envestors led a further £1.95m financing for client companies

Garry S Watson OBE, Chairman said:

"The integration of Envestors is well advanced and the focus of our effort is now to use the greater capacity of the Group to achieve a material increase in fee income.  My colleagues and I are confident that, taken as a whole, the portfolio is robust, with a number of companies exhibiting impressive growth, and we anticipate that further realisations will be achieved in the future. Valuable foundations for growth have been laid, which we believe gives us the platform that we need to expand, and we will seek to utilise them to the full.  At the same time we will nurture our investment portfolio with the expectation that good realisations will be secured."

Geoffrey C B Thomson, Chief Executive Officer said:

"We will continue to move our investment management business towards profitability, we will continue to look for value realisations from our portfolio and we will continue to grow our business overall."

For further information please visit www.braveheartinvestmentgroup.co.uk or contact:

Braveheart Investment Group plc                           

Geoffrey Thomson, Chief Executive                      

Tel: [phone]                                                            

[e-mail]               

Seymour Pierce Limited

John Cowie, Freddy Crossley (Nominated Adviser)

Paul Jewell, Marianne Woods (Corporate Broking)

Tel: [phone]

[e-mail]

Media inquiries

Allerton Communications (for Braveheart)

Peter Curtain

Tel: [phone]

[e-mail]

CHAIRMAN'S STATEMENT

I have pleasure in providing shareholders with my Statement which accompanies the results of the Group for the year ended 31 March 2011.

Four Years On

This is my fifth Chairman's Statement since we raised capital from institutional investors and introduced our shares to trading on the AIM Market in March 2007.

The purpose of that move was to facilitate the growth of our fee business, both in terms of the depth of services that we provide for informal investment and our geographical reach, and to finance increased investment from our own balance sheet into our portfolio companies.

Soon after listing we announced our first acquisition, that of W L Ventures (latterly renamed Caledonia Portfolio Realisations), and in 2009 we expanded into Yorkshire and the North East of England through the acquisition of Viking Fund Managers. In October 2010, as reported in our recent Interim Statement, we extended our activities into London, the Home Counties and the Channel Islands by acquiring Envestors with its proven success in managing private angel investment.

We have also built our directly held investment portfolio, and during the year we saw the first realisation of an investment made from our IPO proceeds.

Post year-end, in June, we completed a re-structuring of our capital base, placing the holdings of two major institutional shareholders and at the same time raising approximately £950,000 (pre-expenses) of new capital to support our operations and growth.

The implications of Envestors joining the Group and the changes in our capital structure are explained below and in reports from my executive colleagues.

Results

Total fee-based revenue and finance income for the year ended 31 March 2011 increased to £958,000 (2010: £602,000).  Additionally, we recorded a gain on the realisation referred to above of £168,000.

Total operating costs increased 18% to £1,988,000 (2010: £1,685,000), resulting in a loss before unrealised movements in portfolio investments of £862,000 (2010: £1,083,000).

However, one of the challenges we face in presenting our figures is that bottom line results may include short-term movements in the valuation of unrealised portfolio investments that do not reflect management's expectations on ultimate disposal.  Several of our portfolio investments were refinanced on terms adversely affecting our current carrying value, while some under-performing investments were culled from the portfolio during the year. The net unrealised movement on the revaluation of portfolio investments was a loss of £444,000 compared with a gain of £316,000 in 2010, disguising performance at an operating level.

After taking account of portfolio movements, the loss after tax was £ 1,306,000 (2010: £767,000) equating to a loss per share of 9.06 pence (2010: 5.61 pence).

Cash utilisation in the year decreased to £831,000 (2010: £1.75m) and the Group ended the year with cash balances of £643,000 (2010: £1,474,000), which were subsequently increased upon completion of our capital placing.

Capital Structure

Over the past year we have been conscious of the need to resolve the future of two major shareholdings, that of Bank of Scotland, which had been acquired by Lloyds Banking Group plc, and of the former Kenmore Property Group.  As noted in my opening remarks, we successfully concluded arrangements for the placing of these shares at the same time as a placing of new shares, and we are pleased to welcome a number of new investors to the Group.

Next Steps

The acquisition of Envestors is an important step in the implementation of our growth strategy, both in strategic terms and specifically to spearhead an increase in Group income.  Braveheart has faced the classic situation of a small company requiring to break out of the confines of its earlier existence, namely the need to expand and develop its executive team, with a consequent increase in overhead costs, to enable that to be achieved.  The integration of Envestors is well advanced, as our CEO describes in his Report, and the focus of our effort is now to use the greater capacity of the Group to achieve a material increase in fee income. 

Investment Portfolio

There have been some frustrations in the management of our portfolio over the past year.  A disposal of our holding in Im-Sense Ltd, the photographic enhancement software business, resulted in a pleasing investment gain but the progress of certain other investments has been slower than we had hoped for.  Nonetheless my colleagues and I are confident that, taken as a whole, the portfolio is robust, with a number of companies exhibiting impressive growth, and we anticipate that further realisations will be achieved in the future.

Board, Management and Staff

 There were no changes in our Board of Directors during the year.

Braveheart is fortunate in having a loyal and dedicated management and staff who have worked skilfully on various initiatives that have been undertaken.  It is a tribute to them that we have enjoyed a further year during which compliance requirements have been scrupulously observed and I would like to thank everyone for their hard work.

Prospects

The next year will not be an easy one, as prospects for economic growth in our home market remain muted.  Valuable foundations for growth have been laid, which we believe gives us the platform that we need to expand, and we will seek to utilise them to the full.  At the same time we will nurture our investment portfolio with the expectation that good realisations will be secured.

Garry S Watson

Chairman

CHIEF EXECUTIVE OFFICER'S REPORT

We live in interesting times and much has happened to our company since I penned my last annual CEO report. 

We have a coalition government which has been in power for a little over a year and which is firmly behind the need to encourage investment in Small and Medium Sized Enterprises (SMEs) in order to deliver sustainable economic recovery.  This has been evidenced by a number of new or extended financing initiatives announced by HM Treasury and/or the Department for Business Innovation and Skills (BIS):  these include enhanced Enterprise Investment Scheme (EIS) tax breaks, a new Business Angel Co-investment Fund for England, an extension of the Enterprise Finance Guarantee loan scheme and more public money for Enterprise Capital Funds.  All of these are expected to impact our business in a positive way and I give further details below. 

There were two landmark events for us in the last year:  The first was that we achieved our maiden exit of an investment funded by IPO proceeds.  When we came to the market in 2007 we did so on the back of the track record of investment returns that we had produced for clients.  The IPO gave us the cash to invest from our own balance sheet, and hence build up a key asset in terms of shareholder value.  Since the investments were made we have nurtured the portfolio with particular emphasis on what we term our 'gazelle' companies.  It was gratifying that we were able to achieve an exit from an investment that had its own challenges, and was not in the gazelle category, at a good price in July last year.  Our portfolio is now maturing and we are looking forward to more exits in the foreseeable future.  The recent uptick in technology valuations is helpful to our case and whilst interim 'fair value' measurements of assets for accounting purposes may not always look attractive (as discussed below), it is the value on exit that  matters. 

The second event was the acquisition of Envestors.  This was our third and largest acquisition to date and demonstrably scales our investment management business - one of our strategic aims as reported previously.  As a group we now provide a comprehensive service offering across the early and growth stage venture capital market.  This offering encompasses three key investor products for business angels, high net worth individuals and family offices, all of which utilise tax breaks provided by EIS:  our assisted portfolio service, our self-build portfolio service and our fully managed fund service. We do not believe any other investment manager offers such a comprehensive service in the UK.  In addition, we are active in the Channel Islands and we have a franchise business in Dubai.  In total we now operate investment networks in Scotland, the North East of England (a recent contract award), Yorkshire, Manchester, London, the Channel Islands and Dubai.  These networks are financed through a variety of means ranging from our own financial resources, contractual arrangements with the public sector, and franchises.  

Since the year end we have completed a share placing (the Placing) which has provided additional capital of just under £1m to the Group.  At the same time we managed to achieve an exit for two institutional shareholders who were required to realise their investment in the Group for strategic reasons.   This Placing and the removal of the share 'overhang' gives us confidence going forward for two reasons:  firstly it provides additional working capital and mitigates against us taking sub-optimal exits due to cash flow requirements.  Secondly, we have introduced a new group of shareholders who are primarily family offices.  These shareholders have joined us because they have a strategic interest in the space we occupy and also see co-investment opportunities going forward.  It is particularly pleasing that we raised a high proportion of the funding ourselves through our own contacts.  We thank the new shareholders for their support and look forward to working with them.

 I now turn to the financial performance of the business.  The results are somewhat like the proverbial curates egg - good in parts.  Whilst there are encouraging signs on fee income, which grew 63%, and at the operating level, where we reduced our losses by 20%, the carrying value of our portfolio has suffered and has led to an overall disappointing performance.  As I note above, the carrying value of the portfolio may not be fully reflective of its future market potential and this is an ongoing issue we will continue to wrestle with.  I believe we have controlled our cash well and geared it as much as possible given the financial climate. 

Since acquiring Envestors, we have enlarged the Management Board and it now comprises the three Group executive directors (myself, Carolyn Smith and Colin Grant), the two directors of Viking Fund Managers (Andrew Burton and Viv Hallam) and the three directors of Envestors (being Oliver Woolley, Scott Haughton and Bob Taylor).  This group meets monthly and in addition to operational matters, it provides an important source of feedback on market opportunities for our Group plc Board.

At the start of this report I mentioned various government initiatives that are particularly aimed at SMEs.  This is our marketplace and these initiatives will impact our business in a positive way:  The Scottish Co-investment Fund has been operating since 2003 and the new £50m Business Angel Co-investment Fund for England is modelled on its Scottish counterpart. We were instrumental in establishing the former and, working closely with others, we have been instrumental in establishing the latter.  Whilst the amount of money committed by the Government to the new fund is relatively modest, this is a start and it is up to us, as members of the advisory board of the fund, to make sure that it is an operational success. 

Various welcome modifications were made to EIS in the budget - the most important of these was the increase to 50% in income tax relief, and for every pound invested 30 pence can now be claimed back. EIS is now an asset class in its own right but it is not a 'wrapped' product and we still find that advisers have difficulty with it and are hesitant to recommend it to clients.  More work needs to be done by industry bodies in promoting this highly effective scheme. 

As an Enterprise Finance Guarantee approved lender we were pleased to see that the scheme has recently been extended in quantum and lifespan. We are looking at various scenarios whereby we might use this scheme to provide specialist finance to SMEs that would otherwise not be able to secure working or loan capital. 

Our strategy for the next year is 'more of the same' but in an enlarged way.  That means we will continue to grow our investment management business towards profitability, we will continue to look for value realisations from our portfolio and we will continue to grow our business.  The last of these will be by a combination of increased geographic footprint, extension of our service offering, and by way of M&A should opportunities present themselves.  

In closing I would like to thank our staff for their continued commitment to the Group and their hard work over the year.   

Geoffrey C B Thomson

Chief Executive Officer

Consolidated Statement of Comprehensive Income

for the year ended 31 March 2011

			2011	2010
	Notes		£	£
Fee revenue			925,781	568,241
Unrealised (loss)/profit on the fair value movements of investments			(464,029)	611,186
Movement on contingent consideration			20,314	(295,392)
Realised profit on the disposal of investment			168,365	-
Finance revenue			31,629	33,541
Total income			682,060	917,576
Employee benefits expense			(1,291,280)	(1,230,188)
Other operating costs			(692,543)	(452,769)
Finance costs			(4,369)	(1,774)
Total costs			(1,988,192)	(1,684,731)
Loss before tax			(1,306,132)	(767,155)
Tax	3		-	-
Total loss and total comprehensive loss for the year			(1,306,132)	(767,155)
Loss attributable to:
Equity holders of the parent			(1,305,815)	(775,513)
Minority interest			(317)	8,358
			(1,306,132)	(767,155)
Loss per share			Pence	Pence
- basic and diluted	4		(9.06)	(5.61)

All revenues and losses arise from continuing operations.

Consolidated Statement of Financial Position

as at 31 March 2011

			2011	2010
	Notes		£	£
ASSETS
Non-current assets
Goodwill	6		987,105	327,064
Other intangibles	7		121,951	-
Property, plant and equipment			28,646	31,367
Investments at fair value through profit or loss	8		3,978,621	4,530,747
Other receivables			54,112	-
			5,170,435	4,889,178
Current assets
Trade and other receivables			182,106	101,907
Cash and cash equivalents			643,203	1,473,943
			825,309	1,575,850
Total assets			5,995,744	6,465,028
LIABILITIES
Current liabilities
Trade and other payables			(244,722)	(126,036)
Contingent consideration	9		(592,420)	(592,819)
Deferred income			(14,202)	(20,230)
Borrowings			(6,629)	(10,696)
			(857,973)	(749,781)
Non-current liabilities
Contingent consideration	9		(574,378)	(78,822)
Borrowings			(41,664)	(35,205)
			(616,042)	(114,027)
Total liabilities			(1,474,015)	(863,808)
Net assets			4,521,729	5,601,220
EQUITY
Called up share capital			294,988	278,316
Merger reserve			316,101	140,783
Retained earnings			3,919,926	5,191,090
Equity attributable to owners of the Parent			4,531,015	5,610,189
Non-controlling interest			(9,286)	(8,969)
Total equity			4,521,729	5,601,220

Consolidated Statement of Cash Flows

for the year ended 31 March 2011

			2011	2010
			£	£
Operating activities
Loss before tax			(1,306,132)	(767,155)
Adjustments to reconcile loss before tax to net cash flows from operating activities
Depreciation of property, plant and equipment			9,631	13,333
Amortisation of intangibles			6,418	-
Share-based payments expense			34,651	46,902
Decrease/(increase) on the fair value movements of investments			464,029	(611,186)
Gain on disposal of equity investments			(168,365)	-
Acquisition of subsidiaries			(45,267)	-
Loss on disposal of property, plant and equipment			5,561	-
Interest income			(31,629)	(33,541)
(Increase)/decrease in trade and other receivables			(12,055)	198,414
(Decrease)/increase in trade and other payables			(18,310)	115,551
Net cash flow from operating activities			(1,061,468)	(1,037,682)
Investing activities
Acquisition of subsidiaries (net of cash acquired)			-	(124,349)
Net cash and cash equivalents acquired on acquisition			15,257	(52,137)
Proceeds from sale of equity investments			315,006	-
Increase in investments			(112,656)	(557,400)
Purchase cost of property, plant and equipment			(7,811)	-
Interest received			31,629	33,541
Net cash flow from investing activities			241,425	(700,345)
Financing activities
Capital element of hire purchase contract			(10,697)	(9,874)
Net cash flow from financing activities			(10,697)	(9,874)
Net decrease in cash and cash equivalents			(830,740)	(1,747,901)
Cash and cash equivalents at the beginning of the year			1,473,943	3,221,844
Cash and cash equivalents at the end of the year			643,203	1,473,943

Consolidated Statement of Changes in Equity

for the year ended 31 March 2011

	Attributable to owners of the Parent
	Share Capital	Merger Reserve	Retained Earnings	Total	Non-controlling interest	Total Equity
	£	£	£	£	£	£
At 1 April 2009	268,078	-	5,919,701	6,187,779	(17,327)	6,170,452
Issue of new share capital	10,238	140,783	-	151,021	-	151,021
Share-based payments	-	-	46,902	46,902	-	46,902
Transactions with owners	10,238	140,783	46,902	197,923	-	197,923
Loss and total comprehensive loss for the year	-	-	(775,513)	(775,513)	8,358	(767,155)
At 1 April 2010	278,316	140,783	5,191,090	5,610,189	(8,969)	5,601,220
Issue of new share capital	16,672	175,318	-	191,990	-	191,990
Share-based payments	-	-	34,651	34,651	-	34,651
Transactions with owners	16,672	175,318	34,651	226,641	-	226,641
Loss and total comprehensive loss for the year	-	-	(1,305,815)	(1,305,815)	(317)	(1,306,132)
At 31 March 2011	294,988	316,101	3,919,926	4,531,015	(9,286)	4,521,729

NOTES

1. This preliminary announcement was approved for issue by a duly appointed and authorised committee of the Board of Directors on 25 July 2011.

2. Basis of preparation

The financial information set out in this announcement does not constitute statutory financial statements for the years ended 31 March 2011 or 31 March 2010. Statutory accounts for the years ended 31 March 2011 and 31 March 2010 have been reported on by the Independent Auditors. The Independent Auditors' Reports on the Annual Report and Financial Statements for 2011 and 2010 were unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under s.498(2) or s.498(3) of the Companies Act 2006. The accounting policies adopted in this announcement have been consistently applied to all the years presented and are consistent with the policies used in the preparation of the statutory accounts for the period ended 31 March 2010. The statutory financial statements for the year ended 31 March 2010 have been delivered to the Registrar of Companies. The statutory financial statements for the year ended 31 March 2011 will be delivered to the Registrar of Companies following the Company's Annual General Meeting.

3. Tax

The charge to tax is arrived at as follows:

	2011	2010
	£	£
UK corporation tax	-	-
Deferred tax	-	-
Tax in the statement of comprehensive income	-	-

The effective tax rate for the year is 21% (2010: 21%). The Group's deferred tax assets, other than those relating to short term timing differences, are not recognised in accordance with Group policy.

4. Loss per Share

Loss per share is calculated by dividing the loss attributable to equity holders of Braveheart Investment Group plc of £1,305,815 (2010: £775,513) by the weighted average number of ordinary shares in issue during the year ended 31 March 2011 of 14,412,495 (2010: 13,824,665).

5. Business combination

On 5 October 2010 the Company acquired 100% of the issued share capital of Envestors Ltd, a company based in the UK, Envestors itself having acquired the business and assets of its predecessor business Envestors LLP on 4 October 2010. The total cost of the acquisition comprised the components stated below:

	£
Purchase price:
Initial consideration	104,074
Contingent consideration	570,329
Total cost of acquisition	674,403

The cost of the acquisition excludes legal and other fees of £45,267 which have been charged to the statement of comprehensive income in accordance with IFRS 3 Revised.

The initial consideration was settled by the issue of 442,870 ordinary shares. Contingent consideration, which is also expected to be settled in shares, is based on Group turnover for the years ending 31 March 2011, 31 March 2012 and 31 March 2013 which is directly attributable to Envestors together with certain run-off fund management income for the years ending 31 March 2014 and 31 March 2015.

At initial recognition, all consideration settled, or expected to be settled, in shares was fair valued in accordance with IFRS 3 Revised by reference to the Company's share price at the acquisition date. Initial consideration was fair valued at £104,074 and contingent consideration was fair valued at £570,329. Under IFRS 3 Revised, future changes to the fair value of contingent consideration are applied to the statement of comprehensive income.

The allocation of the acquisition cost to the assets and liabilities of Envestors at the acquisition date is as follows:

	Carrying Value	Fair   Value
	£	£
Goodwill (note 6)	615,161	615,161
Intangible assets (note 7)	128,369	128,369
Property, plant and equipment	4,660	4,660
Trade and other receivables	69,335	69,335
Cash and cash equivalents	15,257	15,257
Trade and other payables	(158,379)	(158,379)
Net assets	674,403	674,403
Fair value of cost of acquisition		674,403
Goodwill		-

No additional goodwill was generated on the company's acquisition of Envestors since the business acquired was essentially identical to that in the previous day's transaction where Envestors acquired the business of Envestors LLP. At initial recognition of that transaction, consideration was fair valued in line with the Company's acquisition of Envestors, establishing the valuation of goodwill and intangible assets.

Such goodwill that arose on the acquisition by Envestors of the business of Envestors LLP can be attributed to future revenue synergies and the value of the personnel of Envestors, which cannot be recognised as an intangible asset under IAS 38.

From the date of acquisition, Envestors has contributed £300,536 revenue and £141,621 loss to the revenue and net loss of the Group. Envestors predecessor business was a limited liability partnership which distributed all earnings therefore had the acquisition notionally taken place at the start of the period, the consolidated fee revenue for the period would have been £1,168,119 and the consolidated total income for the period would have been £924,398 but the loss for the period would have been the same as that reported herein.

6. Goodwill

	VFM	Envestors	Total
	£	£	£
At 1 April 2009	-	-	-
Arising on initial recognition of acquisition	395,970	-	395,970
(Decrease) in period	(68,906)	-	(68,906)
At 31 March 2010	327,064	-	327,064
Acquired on acquisition (note 5)	-	615,161	615,161
Increase in period	44,880	-	44,880
At 31 March 2011	371,944	615,161	987,105

The acquisition of VFM has been accounted for under IFRS 3. At initial recognition, contingent consideration settled, or to be settled, in shares was fair valued by reference to the Company's share price at the acquisition date. The movement in goodwill in the period since acquisition is primarily due to movements in the fair value of contingent consideration resulting from movements in the Company's share price.

The acquisition of Envestors has been accounted for under IFRS 3 Revised. At initial recognition, consideration settled, or to be settled, in shares was fair valued by reference to the Company's share price at the acquisition date. Under IFRS 3 Revised, future changes to the fair value of contingent consideration are applied to the statement of comprehensive income, and accordingly goodwill will remain constant unless impaired.

At the end of the reporting period, the Group assessed the recoverable amount of the above goodwill associated with each of the VFM and Envestors cash-generating units (both being part of the Group's only operating segment), and determined that goodwill was not impaired.

 7. Intangible assets

	Brand	Database	Total
Group	£	£	£
Cost
At 1 April 2009 and 31 March 2010	-	-	-
Acquired on acquisition (note 5)	66,869	61,500	128,369
At 31 March 2011	66,869	61,500	128,369

Accumulated depreciation                             

At 1 April 2009 and 31 March 2010	-	-	-
Depreciation	3,343	3,075	6,418
At 31 March 2011	3,343	3,075	6,418

Net Book Value

At 31 March 2011	63,526	58,425	121,951
At 31 March 2010	-	-	-

Intangible assets acquired on acquisition first arose on the acquisition by Envestors of the business of Envestors LLP (as described in note 5), and comprise Envestors' brand and database of high-net-worth investor contacts. The brand has been valued using the 'relief from royalty' method and the database using the 'cost to recreate' method.

All intangible assets are depreciated at 10% straight line over 10 years.

8. Investments at Fair Value through Profit or Loss

	Level 1	Level 2		Level 3
	Equity investments in quoted companies	Equity investments in unquoted companies	Debt investments in unquoted companies	Equity investments in unquoted companies	Debt investments in unquoted companies	Total
Group	£	£	£	£	£	£
At 1 April 2009	15,652	-	-	3,017,026	227,834	3,260,512
Additions at Cost	-	-	-	348,533	310,516	659,049
Conversions	-	-	-	100,872	(100,872)	-
Change in Fair Value	19,369	-	-	734,870	(143,053)	611,186
At 31 March 2010	35,021	-	-	4,201,301	294,425	4,530,747
Additions at Cost	-	-	-	77,389	35,267	112,656
Disposals	-	-	-	(200,753)	-	(200,753)
Conversions	-	-	-	239,117	(239,117)	-
Change in Fair Value	17,609	-	-	(521,063)	39,425	(464,029)
At 31 March 2011	52,630	-	-	3,795,991	130,000	3,978,621

The Group classifies its investments using a fair value hierarchy. Classification within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant investment as follows:

·     Level 1 - valued using quoted prices in active markets for identical assets

·     Level 2 - valued by reference to valuation techniques using observable inputs other than quoted prices included within Level 1

·     Level 3 - valued by reference to valuation techniques using inputs that are not based on observable market data

All unquoted investments have been classified within Level 3, their respective valuations having been calculated using a number of valuation techniques and assumptions, notwithstanding that the basis of the valuation methodology used most commonly by the Group is 'price of most recent investment'. 

The Group's investments are held either by the Company, Strathclyde Innovation Fund LP and Caledonia Portfolio Realisations Ltd (CPR).The acquisition of CPR in 2007 included contingent consideration based on future exit values of its investment portfolio. At 31 March 2011 unrealised movements in respect of the CPR portfolio investments has resulted in a decrease of £20,314 (2010: increase of £295,392) in the contingent consideration liability.

9.  Contingent consideration

Short term contingent consideration of £592,420 (2010: £592,819) comprises (i) £123,701 (2010: £87,916) being the fair value of the consideration due at 31 March 2011 in respect of the acquisition of VFM, and will be satisfied by the issue of 399,034 ordinary shares of 2 pence each in the Company (2010: 390,737 shares), and (ii) £468,719 (2010: £504,903) being the sum due on future exit values of the CPR portfolio. No short term consideration is payable in respect of the acquisition of Envestors.

Long term contingent consideration of £574,378 (2010: £78,822) represents (i) £574,378 (2010: £nil) being the fair value of long term contingent consideration due in respect of the acquisition of Envestors. Other than as noted above, no further consideration (2010: £78,822) remains payable in respect of the acquisition of VFM.

10. Events after the reporting date

On 24 June 2011 the company raised approximately £950,000 (before expenses) via the placing of 4,132,574 ordinary shares of 2 pence each at an issue price of 23 pence each.

11. Availability of statutory financial statements

Copies of the full statutory financial statements will be mailed to shareholders no later than 19 August 2011 from which date they will also be available from the Company's offices at Cherrybank Gardens, Perth PH2 0PF and on its website at www.braveheartinvestmentgroup.co.uk

Disclaimer

This Preliminary Announcement contains certain forward-looking statements, which reflect the knowledge of, and information available to, the directors at the date of preparation of this announcement. By their nature, these statements involve risk and uncertainty because they relate to events and depend on circumstances that may or may not occur in the future and there are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements.

 

END

 

 

FR SEFFMIFFSEFW