Interim Results

Braveheart Investment Group plc 03 December 2007 Embargoed 0700hrs 3 December 2007 Braveheart Investment Group plc ('Braveheart' or 'the Company') Interim Results Braveheart Investment Group plc (AIM: BRH) the technology commercialisation and investment management company, which was admitted to AIM on 30 March 2007, announces interim results for the six months to 30 September 2007. Highlights • Acquisition of W L Ventures Ltd - first acquisition since IPO • Agreement with the University of Edinburgh to create a £25m fund for spin-outs and licensing opportunities • £32m AIM flotation of Capital Pub Company plc • Over £1.2m invested in five spin-out technology businesses by the Group and its clients • Appointment of Ken Brown as non-executive director • Portfolio now comprises 31 companies • Revenue from investment management operations, including bank interest, increased 87% to £451,000 (2006: £241,000) • Pre-tax profit of £143,000 (2006: loss of £130,000) • Cash balances of £5.9m Commenting, Geoffrey Thomson, Chief Executive, said: 'The IPO in March has enabled Braveheart to accelerate its growth. Our portfolio now consists of 31 companies and together with our clients, we invested £1.2m in five technology businesses over the period, a significant increase on previous years. 'Coupled with the announcement of the launch of our second dedicated university fund, Braveheart is increasing its access to intellectual property emanating from key academic institutions, an integral part of our strategy for growth. We have been greatly encouraged by our progress to date and will continue to look for innovative investment opportunities.' For further information, please contact: Braveheart Investment Group: Geoffrey Thomson, Chief Executive Tel: 01738 587555 Tavistock Communications: Simon Hudson, Rachel Drysdale Tel: 020 7920 3150 rdrysdale@tavistock.co.uk Chairman's and Chief Executive's Statement We are pleased to report to shareholders on progress achieved during the six months ended 30 September 2007. Overview In the six months since Braveheart's shares commenced trading on AIM we have accelerated our pace of development: We made our first acquisition, namely W L Ventures Ltd with its portfolio of ten investments; this company is now known as Caledonia Portfolio Realisations Ltd (CPR). Together with our clients, we invested £1.2m in five technology businesses over the period. We have also agreed terms for a number of other investments which we expect to complete between now and the end of our fiscal year. In June, one of our portfolio companies, Capital Pub Company plc, listed on AIM with a market capitalisation of £32m. In June we announced a £25m fund dedicated to commercialising intellectual property developed within the University of Edinburgh. This is the largest such fund announced in Scotland to date. We expect to achieve a first closing of this fund in the middle of 2008. Additionally, the first closing of the £12m Strathclyde Innovation Fund, which was announced in February 2007, is due before our fiscal year end. Both funds, which will be managed by the Group, will have the first right of refusal to invest in intellectual property opportunities emanating from the respective universities, and are unique in their approach. As noted in our annual report we are focused on our three-tier strategy: • Increasing direct investment into portfolio companies; • Setting up commercial partnerships with academic institutions where we can secure access to intellectual property; and • Looking for opportunities where we can add value to under-performing assets. Board We are delighted to welcome Ken Brown to the Board. Ken has been Finance Director of Kenmore Property Group since 1999. His expertise in M&A, together with his experience in setting up special purpose financing vehicles, will be valuable to us as we go forward. Financial Review Revenue from investment management operations, including bank interest, was £451,000, an increase of 87% over the £241,000 in the same period last year. Unrealised profit on the revaluation of investments amounted to £185,000 compared with an unrealised loss of £42,000 in the same period last year. There was no profit or loss from the disposal of investments, which compares with a profit of £12,000 in the corresponding period. Operating profit before share-based payments was £167,000 compared with a loss of £130,000 in the same period last year. Pre-tax profit was £143,000 compared with a pre-tax loss of £130,000 (including IPO costs of £60,000 that could not be written off against the share premium account) in the corresponding period. Cash in hand at the period end amounted to £5.9m. At the time of writing there is a high degree of uncertainty in the financial markets. The directors consider that the Group's cash reserves place the business in a strong position to take advantage of opportunities that may present themselves in such market conditions. Operational Review We have been busy over the summer months and have now integrated the CPR portfolio. As a result we now have 31 companies in the portfolio and have increased the resources allocated to portfolio monitoring. During the period under review, we completed investments in five companies. Since the end of September we have completed a further two investments. Strategy The Board believes that shareholder value can best be enhanced through scaling up the Company's business. We intend to achieve this on a UK-wide basis by steadily expanding our rights to invest in intellectual property whilst growing our investment management business. Outlook Our business has to be viewed on a medium to long term basis given our focus on early stage technology investments. The Board is encouraged by the Company's achievements to date and believes that the investment portfolio will continue to deliver good value to shareholders. Garry S Watson Geoffrey C B Thomson Chairman Chief Executive Officer Group Interim Income Statement for the six months ended 30 September 2007 Six months Six months ended ended Year ended 30 Sep 2007 30 Sep 2006 31 Mar 2007 (unaudited) (unaudited) (audited) Notes £'000 £'000 £'000 -------------------------------------------------------------------------------- Revenue 281 217 538 Realised profit on the disposal of investments - 12 78 Unrealised profit/(loss) on the revaluation of investments 185 (42) (82) Finance revenue 170 24 49 -------------------------------------------------------------------------------- Total income 636 211 583 -------------------------------------------------------------------------------- Staff costs (318) (221) (473) Other operating costs (175) (120) (274) -------------------------------------------------------------------------------- Total costs (493) (341) (747) -------------------------------------------------------------------------------- Profit/(loss) before taxation 143 (130) (164) Tax credit 2 - 11 7 -------------------------------------------------------------------------------- Profit/(loss) for the period 143 (119) (157) -------------------------------------------------------------------------------- Earnings/(loss) per share Pence Pence Pence -------------------------------------------------------------------------------- - basic 3 1.25 (1.50) (1.67) -------------------------------------------------------------------------------- All of the operations of the Group are continuing. Group Interim Balance Sheet as at 30 September 2007 As at As at As at 30 Sep 2007 30 Sep 2006 31 Mar 2007 (unaudited) (unaudited) (audited) £'000 £'000 £'000 -------------------------------------------------------------------------------- ASSETS Non-current assets Property, plant and equipment 25 25 26 Investments at fair value through profit or (loss) 1,441 408 896 Deferred tax asset 5 2 5 -------------------------------------------------------------------------------- Total non-current assets 1,471 435 927 -------------------------------------------------------------------------------- Current assets Trade and other receivables 116 92 86 Cash and cash equivalents 5,906 1,082 6,482 -------------------------------------------------------------------------------- Total current assets 6,022 1,174 6,568 Total assets 7,493 1,609 7,495 -------------------------------------------------------------------------------- LIABILITIES Current liabilities Trade and other payables (76) (64) (242) Deferred income (29) (4) (39) -------------------------------------------------------------------------------- Total liabilities (105) (68) (281) Net assets 7,388 1,541 7,214 -------------------------------------------------------------------------------- EQUITY Called up share capital 268 188 268 Share premium account 7,008 1,378 7,001 Retained earnings 112 (25) (55) -------------------------------------------------------------------------------- Total equity 7,388 1,541 7,214 -------------------------------------------------------------------------------- Group Interim Cash Flow Statement for the six months ended 30 September 2007 Six months Six months ended ended Year ended 30 Sep 2007 30 Sep 2006 31 Mar 2007 (unaudited) (unaudited) (audited) £'000 £'000 £'000 -------------------------------------------------------------------------------- Operating activities Profit/(loss) before tax 143 (130) (164) Adjustments to reconcile profit before tax to net cash flows from operating activities Depreciation of property, plant and equipment 4 3 8 Share-based payments expense 24 - - (Increase)/decrease on the revaluation of investments (185) 42 82 Loss on disposal of property, plant and equipment - - 1 Interest income (170) (24) (49) Increase in investments (360) (139) (667) Decrease/(increase) in trade and other receivables (30) 73 104 Increase/(decrease) in trade and other payables (176) (56) 156 Tax paid - - (24) -------------------------------------------------------------------------------- Net cash flows from operating activities (750) (231) (553) -------------------------------------------------------------------------------- Investing activities Purchase cost of property, plant and equipment (3) - (6) Interest received 170 24 49 -------------------------------------------------------------------------------- Net cash flows from investing activities 167 24 43 -------------------------------------------------------------------------------- Financing activities Proceeds from issue of shares - 583 6,968 Transaction costs of issue of shares 7 (41) (723) -------------------------------------------------------------------------------- Net cash flows from financing activities 7 542 6,245 -------------------------------------------------------------------------------- Net increase/(decrease) in cash and cash equivalent (576) 335 5,735 Cash and cash equivalent at the start of the period 6,482 747 747 -------------------------------------------------------------------------------- Cash and cash equivalent at the end of the period 5,906 1,082 6,482 -------------------------------------------------------------------------------- Group Interim Statement of Changes in Equity for the six months ended 30 September 2007 Share Share Retained capital premium earnings Total £'000 £'000 £'000 £'000 -------------------------------------------------------------------------------- At 1 April 2006 128 896 104 1,128 Exercise of options 60 523 - 583 Expenses paid in connection with share issue - (41) - (41) (Loss) for the period - - (119) (119) Share-based payments - deferred tax - - (10) (10) -------------------------------------------------------------------------------- At 30 September 2006 (unaudited) 188 1,378 (25) 1,541 Issue of new share capital 80 6,305 - 6,385 Expenses paid in connection with share issue - (682) - (682) (Loss) for the period - - (38) (38) Share-based payments - current tax - - 8 8 -------------------------------------------------------------------------------- At 31 March 2007 (audited) 268 7,001 (55) 7,214 Expenses paid in connection with share issue - 7 - 7 Profit for the period - - 143 143 Share-based payments - - 24 24 At 30 September 2007 (unaudited) 268 7,008 112 7,388 -------------------------------------------------------------------------------- Notes to the Interim Financial Statements 1 Basis of preparation The interim financial information in this document does not comprise statutory accounts for the purpose of section 240 of the Companies Act 1985. The comparatives for the full year ended 31 March 2007 are not the Group's full statutory accounts for that year. A copy of the statutory accounts for the year has been delivered to the Registrar of Companies. The auditors' report on those accounts, which were prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union, was unqualified and did not contain a statement under sections 237(2) or 237(3) of the Companies Act 1985. This interim financial information is the unaudited interim consolidated financial statements (the 'interim financial statements') of Braveheart Investment Group plc, a company incorporated in the United Kingdom and registered in Scotland, and its subsidiaries (together referred to as the 'Group') for the six-month period ended 30 September 2007 (the 'interim period'). The interim financial statements have not been audited or reviewed by the Company's auditors. The interim financial statements have been prepared in accordance with existing Group accounting policies, set out in the Group's 2007 Annual Report and Accounts. The presentation of the interim financial statements is consistent with the Annual Report and Accounts 2007. These interim financial statements were approved by the Board and authorised for issue on 30 November 2007. 2 Taxation No provision for corporation tax is required in the period due to the availability of tax losses. 3 Earnings/(loss) per share Basic earnings/(loss) per share have been calculated by dividing the profit/ (loss) for the period by the weighted average number of ordinary shares in issue during the period. There were no potentially dilutive share options over ordinary shares in the Group outstanding at the period end and therefore the dilutive earnings per share is equal to the basic earnings per share. The calculations of earnings/(loss) per share are based on the following profit/ (loss) and numbers of shares in issue: Six months Six months ended ended Year ended 30 Sep 2007 30 Sep 2006 31 Mar 2007 (unaudited) (unaudited) (audited) £'000 £'000 £'000 -------------------------------------------------------------------------------- Profit/(loss) for the period 143 (119) (157) -------------------------------------------------------------------------------- Weighted average number of ordinary shares in issue: - for basic earnings per ordinary share 11,408,385 7,898,735 9,412,875 - for diluted earnings per ordinary share 11,408,385 7,898,735 9,412,875 -------------------------------------------------------------------------------- 4 Business combination On 4 April 2007, the Group acquired the entire issued share capital of W L Ventures Ltd, now known as Caledonia Portfolio Realisations Ltd (CPR), an unlisted company based in Scotland specialising in making investments in technology businesses. The acquisition included a deferred element of consideration based on future exit values of the portfolio and has been accounted for using the purchase method of accounting. From the date of acquisition, CPR has contributed £282,000 to the net profit of the Group. The interim financial statements include the results of CPR from the date of acquisition. The fair value of the identifiable assets and liabilities of CPR at the date of acquisition were: Fair value recognised on Previous acquisition carrying value (unaudited) (unaudited) £'000 £'000 -------------------------------------------------------------------------------- Investments 50 631 Cash 70 70 120 701 Trade payables 70 70 Net assets 50 631 Consideration 50 -------------------------------------------------------------------------------- Shareholder communications A copy of this interim report will be sent to shareholders and is available on request from the Company's registered office at The Cherrybank Centre, Cherrybank Gardens, Perth PH2 0PF. A copy has also been posted on the Company's website. This information is provided by RNS The company news service from the London Stock Exchange

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