Final Results

Braveheart Investment Group plc 18 June 2007 18 June 2007 Braveheart Investment Group plc ('Braveheart' or the 'Group') Preliminary Results Braveheart (AIM: BRH), the technology commercialisation and investment management company, which was admitted to AIM on 30 March 2007, announces maiden preliminary results for the year to 31 March 2007. Highlights: • Successful admission to AIM following a £5.7 million placing net of costs • 14 investments totalling £4 million made in the year made by the Group and on behalf of clients • 2 exits/listings achieved • Eleksen Group plc floated on AIM in May 2006 with initial market capitalisation of £20 million • Vibration Technology Ltd sold to Sercel SA for £32 million in September 2006 • Total revenue increased 9.5% to £587,399 • Non recurring costs relating to IPO of £123,544 contributed to a loss for the year, after adjustment for taxation of £156,896 in line with expectations • Strathclyde Innovation Fund, a £12 million unique partnership with Strathclyde University, announced Post Year End / Flotation Events • Further exit achieved through the June 2007 £32 million Capital Pub Company IPO • First acquisition and investments completed as a quoted company: • Further investments in Edinburgh Robotics Ltd and Spiral Gateway Ltd • WL Ventures Ltd acquired enlarging the portfolio to 32 companies • £25 million partnership fund with Edinburgh University, the largest such deal in Scotland to date, announced today. Commenting, Geoffrey Thomson, Chief Executive, said: 'The past year has been transformational for our company. The recent IPO has provided us with the resources to implement our strategic plans of contributing capital to dedicated university funds, increasing investment from our own balance sheet and making acquisitions where there is demonstrable value to be added. Looking ahead, we are exploring a number of opportunities and are confident we are well placed to achieve growth and profitability in the future. 'Today, we have also announced the creation of our second dedicated university fund, a £25 million partnership with the University of Edinburgh, which is the largest such agreement signed to date in Scotland. The University of Edinburgh is ranked fifth in the UK and first in Scotland for research income. This new fund will enable us to extend our ability to make proprietary investments, whilst supporting some of Scotland's most exciting and innovative technology.' For further information, please contact: Braveheart Investment Group: Geoffrey Thomson, Chief Executive Tel: 01738 587555 Tavistock Communications: Tel: 020 7920 3150 Richard Sunderland, Simon Hudson, Rachel Drysdale rdrysdale@tavistock.co.uk Chairman's Statement The year to 31 March 2007 has been one of transformation for the Group and I am delighted to provide my first report for Braveheart as a quoted company. On 30 March our shares were admitted to the AIM market of the London Stock Exchange, following a placing which extended our investor base and provided additional capital that will allow us implement our growth plans. Braveheart differs from other technology commercialisation companies in that we have dual income streams. The first is from our growing investment management business and the second is from capital realisations arising out of balance sheet investments. I believe this combination will lead to superior shareholder returns. Ongoing Operations Braveheart has made good progress during the year under review, notwithstanding the inevitable distractions and the amount of management time allocated to our postponed but successful IPO. We have taken a number of steps to increase our access to high quality investment opportunities by strengthening our relationships with universities in Scotland and, immediately after the close of the year, completing our first acquisition. Balance sheet investment rose by £725,155 compared with £259,318 in the previous year. Results The results are in line with expectations and follow the loss reported in our AIM Admission Document for the nine months to 31 December 2006. They do not reflect a complete picture of the underlying performance of the business in that they include non recurring costs of £123,544, relating to our IPO activities, which we are required to write-off against revenue. They also reflect the effect of a temporary diversion in management time away from the day-to-day running of the business to focus on the IPO and the investment in our infrastructure which will enable us to operate on a bigger landscape and take on the fiduciary responsibilities associated with a public company. For the year under review, total revenue increased 9.5% to £587,399. The loss for the year, after adjustment for taxation, was £156,896 compared with a profit of £126,260 in the previous year. The Board is confident that with the IPO complete, the Group is in a good position to achieve growth and profitability in the future. IPO Following the postponement of the Company's IPO in June 2006, due to adverse market conditions, we successfully joined AIM in March of this year, raising £5.7 million net of costs. This has provided us with the resources to implement our strategic plans by way of contributing capital to dedicated university funds, increasing the scale of investment from our own balance sheet and completing acquisitions where it can be demonstrated that we can add value. We also now have the facility to return to market when further capital is required. Strategic Initiatives In February, we announced the formation of the Strathclyde Innovation Fund ('SIF'), a £12 million fund which is a partnership between the Company, the University of Strathclyde, and others. It is expected to secure a valuable pipeline of investment opportunities going forward. We already have a strong record of working with the University. The first closing of SIF is scheduled for autumn 2007. Today we have announced the formation of a partnership with the University of Edinburgh to create a £25 million fund dedicated to commercialising intellectual property emanating from the University. Many shareholders will know that we have already invested in two University of Edinburgh spin-outs that have subsequently become quoted companies. We are delighted to be strengthening our ties with Scotland's largest university. In early April, following the close of our financial year, an agreement was concluded with West Lothian Council for the acquisition of WL Ventures, now renamed Caledonia Portfolio Realisations Ltd ('CPR'). CPR owns a portfolio of some ten technology investments. We will consider providing follow-on funding, where there are opportunities to create value. As with all our investments, we will also use our network of high net worth entrepreneurs to support these portfolio companies as they grow. The consideration for the purchase comprised an upfront cash payment together with a share of profits upon the realisation of each investment. Earlier investment in embryonic businesses is providing a stream of opportunities for mainstream investment, as intellectual property is converted into proven technology, and further investment is needed to demonstrate that such technology is commercial. Acquisitions such as CPR will increase the scale and diversity of our portfolio and further opportunities to acquire similar portfolios are being sought. Board, Management and Staff There were no changes within the Board during the year but management was strengthened further. The executive team now consists of two directors and seven members of staff. A share incentive scheme was approved during the year, with participation open to all executive staff and members of the Board. This is, in part, performance related. The members of our staff represent our greatest asset. They operate as a closely knit team and I wish to acknowledge their hard work, dedication and skill. Our Clients and Investors Many of the Company's investment clients, who are successful entrepreneurs in their own right, provide their services as non-executive directors and chairmen of our portfolio companies. These services are critical to the success of those ventures and to Braveheart in terms of increasing shareholder value. We seek to maximise the effectiveness of their contribution through regular progress reviews and by way of seminars that examine the options for resolving typical problems and encourage peer networking. I would like to thank them all for their important contribution. I would also like to take this opportunity to extend a warm welcome to our new institutional shareholders and those clients who are now shareholders for the first time. In particular, I welcome Kenmore Property Group, as a cornerstone investor, and extend my appreciation to the Bank of Scotland, whose ongoing support has been invaluable. Dividends No dividend has been paid or is being proposed. It is the Board's intention that in future, subject to the availability of distributable reserves, regular dividends should be paid out of management profits and special dividends should be paid where there are meaningful capital profits realised from the disposal of investments held in the balance sheet. Prospects The Board is confident that as a consequence of the strategic initiatives that have and are being taken, the Company is increasingly well positioned with regard to investment opportunities in intellectual property based businesses. Its growing investment portfolio provides a pool from which it can identify the most likely winners that can be supported, with both capital and management, through to profitable realisation. Garry S Watson Chairman 18 June 2007 Group Income Statement Year ended Year ended 31 March 31 March 2007 2006 (unaudited) £ £ Revenue 538,686 519,458 Realised profit on the disposal of investments 78,152 5,060 Unrealised profit/(loss) on the revaluation of investments (82,372) 10,105 Finance revenue 48,713 17,009 ------------------------ Total income 583,179 551,632 Staff costs (472,400) (265,269) Other operating costs (274,430) (150,802) ------------------------ Total costs (746,830) (416,071) Profit/(loss) before taxation (163,651) 135,561 Tax (charge)/credit 6,755 (14,301) ------------------------ Profit/(loss) for the period (156,896) 121,260 ======================== Earnings/(loss) per share Pence Pence - basic (0.016) 0.020 - diluted (0.016) 0.015 Group Balance Sheet Unaudited As at As at 31 March 31 March 2007 2006 £ £ ASSETS Non-current assets Property, plant and equipment 26,217 29,072 Investments at fair value through profit or loss 896,156 311,431 Deferred tax asset 5,056 25,838 Current assets Trade and other receivables 61,602 165,258 Current tax asset 24,577 - Cash and cash equivalents 6,481,751 746,461 ------------------------- Total assets 7,495,359 1,278,060 ========================= LIABILITIES Current liabilities Trade and other payables (242,370) (88,981) Current tax liability - (24,888) Deferred income (38,770) (35,808) ------------------------- Total liabilities (281,140) (149,677) ------------------------- NET ASSETS 7,214,219 1,128,383 ========================= EQUITY Called up share capital 268,078 127,692 Share premium account 7,001,588 896,593 Retained earnings (55,447) 104,098 ------------------------- Total equity 7,214,219 1,128,383 ========================= Unaudited Group Cash Flow Statement Year ended Year ended 31 March 31 March 2007 2006 Operating activities £ £ Profit/(loss) before tax (163,651) 135,561 Adjustments to reconcile profit before tax to net cash flows from operating activities Depreciation of property, plant and equipment 7,662 7,535 Share-based payments expense - 17,185 (Increase)/decrease on the revaluation of investments 82,372 (10,105) Loss on disposal of property, plant and equipment 1,344 163 Interest income (48,713) (17,009) Increase in investments (667,097) (256,068) Decrease/(increase) in trade and other receivables 103,656 (51,738) Increase in trade and other payables 156,549 60,337 Tax paid (24,577) - ------------------------- Net cash flows from operating activities (552,455) (114,139) ------------------------- Investing activities Purchase cost of property, plant and equipment (6,151) (9,982) Interest received 48,713 17,009 ------------------------- Net cash flows used in investing activities 42,562 7,027 ------------------------- Financing activities Proceeds from issue of shares 6,968,350 739,290 Transaction costs of issue of shares (722,969) (39,508) Repayment of capital element of hire purchase contract (198) (1,086) ------------------------- Net cash flows used in financing activities 6,245,183 698,696 ========================= Net increase in cash and cash equivalent 5,735,290 591,584 Cash and cash equivalent as at 1 April 746,461 154,877 ------------------------- Cash and cash equivalent as at 31 March 6,481,751 746,461 ========================= Statement of Changes in Equity for the year ended 31 March 2006 Group Share Capital Share Premium Retained Total Earnings £ £ £ £ Balance at 1 April 114,914 209,589 (44,746) 279,757 Issue of new share capital 12,778 726,512 - 739,290 Expenses paid in connection with share issue - (39,508) - (39,508) Profit for the year - - 121,260 121,260 Share-based payments - - 17,185 17,185 Share-based payments - deferred tax - - 10,399 10,399 ---------------------------------------------------- Balance as at 31 March 127,692 896,593 104,098 1,128,383 ==================================================== Statement of Changes in Equity for the year ended 31 March 2007 (unaudited) Group Share Capital Share Premium Retained Earnings Total £ £ £ £ Balance at 1 April 127,692 896,593 104,098 1,128,383 Exercise of options 60,566 522,153 - 582,719 Issue of new share capital 79,820 6,305,811 - 6,385,631 Expenses paid in connection with share issue - (722,969) - (722,969) (Loss) for the year - - (156,896) (156,896) Share-based payments - current tax - - 7,750 7,750 Share-based payments - deferred tax - - (10,399) (10,399) -------------------------------------------------------------- Balance as at 31 March 268,078 7,001,588 (55,447) 7,214,219 ============================================================== NOTES 1 Basis of preparation The Group's financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 1985. The principal accounting policies adopted by the Group and by the Company are set out in the following notes. The Company has taken advantage of the provision of s230 of the Companies Act 1985 not to publish its own Income Statement. The financial statements are presented in sterling and all values are rounded to the nearest pound (£) except when otherwise indicated. 2 Revenue Revenue is attributable to the principal activities of the Group. All revenue arose within the United Kingdom and the Channel Islands. Group Group 2007 2006 £ £ Deal fees 460,448 434,371 Client subscriptions 78,238 71,187 Facilitation fee - 13,900 --------------------- 538,686 519,458 ===================== 3 Profit/(loss) for the year Profit/(loss) for the year has been arrived at after charging: Group Group 2007 2006 £ £ Depreciation of property,plant and equipment 7,662 7,535 Lease payments recognised as an operating lease (office rent) 45,000 38,898 Loss on the disposal of plant, property and equipment 1,344 163 Auditors remuneration: 28,250 6,000 - audit - audit of the parent company 3,000 3,000 - taxation compliance 6,540 2,500 - corporate finance services 32,770 - - other services - 5,043 ================== 4 Taxation on profit on ordinary activities 2007 2006 £ £ UK corporation tax (17,138) 24,888 Deferred tax 10,383 (10,587) ------------------- Tax charge/(credit) in the income statement (6,755) 14,301 =================== Tax relating to items charged or credited to equity Deferred tax: share-based payments 10,399 (10,399) Current tax: share-based payments (7,750) - ------------------- Tax charge/(credit) in equity 2,649 (10,399) =================== Reconciliation of total tax charge Profit before tax (163,651) 135,561 ------------------- Tax on profit on ordinary activities at the rate of 19% (31,094) 25,757 Expenses not deductible for tax purposes 12,645 1,149 Tax relief on share-based payments - (10,689) Unprovided deferred tax 13,493 2,066 Reduction in unutilised tax losses - (5,141) Prior year adjustment (311) - Other (1,488) 1,159 ------------------- Total tax reported in the income statement (6,755) 14,301 =================== Deferred tax The deferred tax included in the balance sheet is as follows: 2007 2006 £ £ Deferred tax liability Accelerated capital allowances 1,747 3,160 Revaluation of investments - 2,157 ------------------- Total deferred tax liability 1,747 5,317 ------------------- Deferred tax asset Short term timing differences (6,803) (6,803) Share-based payments - (24,352) ------------------- Total deferred tax asset (6,803) (31,155) ------------------- Total deferred tax as reported in the balance sheet (5,056) (25,838) =================== 5 Earnings/(loss) per share Basic earnings/(loss) per share have been calculated by dividing the earnings attributable to Shareholders by the weighted average number of ordinary shares in issue during the period. Diluted earnings/(loss) per share adjusts for share options granted where the exercise price is less than the average price of the ordinary shares during the period. The calculations of earnings/(loss) per share are based on the following profit/ (loss) and numbers of shares in issue: 2007 2006 £ £ Profit/(loss) for the year (156,896) 121,260 --------------------- Weighted average number of ordinary shares in issue: For basic earnings per ordinary share 9,412,875 6,011,900 Dilutive effect of exercisable options - 1,827,935 --------------------- 9,412,875 7,839,835 ===================== The weighted average number of ordinary shares in issue in 2006 has been adjusted to reflect the subdivision (ordinary shares of 10p each were subdivided into 2p ordinary shares) that occurred on 16 May 2006. 6 Investments at fair value through profit or loss Unlisted AIM Listed Total £ £ £ Valuation at 1 April 2006 306,525 4,906 311,431 Revaluation of assets (15,314) 3,955 (11,359) --------------------------------- Cost at 1 April 2006 291,211 8,861 300,072 Additions at cost 519,722 205,433 725,155 Transfers (70,141) 70,141 - Disposals - Proceeds - (136,210) (136,210) - Gain on disposal - 78,152 78,152 --------------------------------- Cost at 31 March 2007 740,792 226,377 967,169 Unrealised gain/(loss) on the revaluation of assets (20,481) (50,532) (71,013) --------------------------------- Valuation at 31 March 2007 720,311 175,845 896,156 ================================= 7 Investment in subsidiary The Company holds an investment in its subsidiary company Braveheart Ventures Ltd, totalling £224,190 and consisting of 100% of the issued 10p ordinary share capital and 100% of the issued redeemable preference shares. Braveheart Ventures Ltd is a company registered in Scotland. 8 Share Capital Authorised 2007 2006 £ £ 2,000,000 ordinary shares of 10p each - 200,000 33,645,000 ordinary shares of 2p each 672,900 - Allotted, called up and fully paid 1,276,919 ordinary shares of 10p each - 127,692 13,403,895 ordinary shares of 2p each 268,078 - ===================== 9. General These are the first annual accounts prepared under International Financial Reporting Standards (IFRS). The effect of the Group's conversion from UK GAAP to IFRS has already been communicated to shareholders in the Group's Placing and Admission to AIM document in March 2007. These are not the company's full statutory accounts. The last statutory accounts filed were for the year ended 31 March 2006 with an unqualified audit opinion; The accounts are unaudited pending audit clearance on the statutory accounts. This information is provided by RNS The company news service from the London Stock Exchange

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