Posting of Results and Notice of AGM

RNS Number : 8622X

Braveheart Investment Group plc

02 September 2015

 

Braveheart Investment Group plc

('Braveheart', the 'Company' or the 'Group')

Posting of audited results for the year ended 31 March 2015

Notice of Annual General Meeting

The Company is pleased to announce that it is today posting its audited report and accounts for the year ended 31 March 2015 to shareholders. It is also posting notice of its annual general meeting ("Notice of AGM"), to be held at the offices of Grant Thornton, 7 Exchange Crescent, Edinburgh EH3 8AN at 10:15 a.m. on 24 September 2015. Copies of the final report and accounts and the Notice of AGM are also available to view on the Company's website at http://www.braveheartgroup.co.uk/ 

The audited report and accounts do not differ materially from the unaudited preliminary results released by the Company on 24 August 2015, aside from the inclusion of the CEO's statement, the relevant text of which is set out below.

Further information:

Braveheart Investment Group plc

Jeremy Delmar-Morgan, Chairman                                                                  Tel: [phone]

Trevor Brown, CEO

Sanlam Securities UK Limited (Nominated Adviser and Broker to Braveheart)

Lindsay Mair/James Thomas                                                                            Tel: [phone]

Chief Executive Officer's Report

I am pleased to make my first report as CEO to shareholders for the 12 months ended 31 March 2015.

Overview

This year has seen a steady performance from our fund management businesses, an exit from one of our portfolio companies, and the commencement of a cost reduction and streamlining review of all our operations which is continuing after the end of the year under review. Within our directly held portfolio we expect further realisations although given the nature of investments in small unquoted companies the timing and value of such realisations is difficult to predict.

In Northern Ireland, Paul Millar's team at WhiteRock Capital Partners LLP (WhiteRock) continue to make progress and the Growth Loan Fund is now well established in the funding landscape. We are now three years into our ten year fund management contract and we have made loans to 76 companies. The portfolio comprises businesses from many different industries and is well diversified. Along with our partners, NEL Fund Managers Ltd and Clarendon Fund Managers Ltd, we are currently looking at ways of expanding the business in Ireland.

In Yorkshire, Andrew Burton heads up the team at Viking Fund Managers Ltd (Viking) and in our role as fund manager of the Finance Yorkshire Equity Fund, we hit our target of full investment by the due date of 31 December 2014. As at the start of the five year management period which commenced on 1 January this year, the portfolio comprised 39 companies. We are working hard to return cash to the fund partners as per our long-term commitments. Andrew will join the Board as Director after the AGM and on behalf of the Board I welcome him and look forward to working together over the coming months.

In due course a new round of fund management tenders will be sought for the next suite of regional funds. In the intervening period, Finance Yorkshire has put in place an interim term fund which is now in operation. 

Our wholly owned company Strathtay Ventures Ltd (Strathtay) is based at our head office in Perth and during the year under review it achieved an exit from our investment in Cascade Technologies Holdings Ltd (Cascade).  We were delighted to be able to send c£2m back to around 40 of our private clients with five investors receiving over £100,000 each. Our own investment return is noted within the Portfolio section. Strathtay also manages the Lachesis Fund, a £10m seed fund for universities in the East Midlands. This fund is now in wind-up mode and we are in the process of finalising the long term disposal options for our clients.

During the year under review, we established a partnership with Crowdcube Ventures Ltd and established the Crowdcube Venture Fund (CCVF). However, post year-end we terminated this relationship and immediately thereafter announced a new partnership with Seedrs, one of the market leaders in the crowd-funding space. Over 90% of investors in the CCVF transferred with us and we are now investing that money in Seedrs backed transactions. Strathtay is also working on further new fund mandates and we are pleased with the initial progress made in this new partnership.

Portfolio

We now have an aggregate investment portfolio of over 125 companies which are held through the various funds we manage on behalf of our clients and via our directly owned investments. We currently have a total of 18 companies where we hold a direct investment (referred to as our directly held portfolio) and these investments are a key balance sheet asset of the Group. This portfolio is becoming increasingly mature and a number of our companies are approaching the point where we believe a realisation is feasible. Our investment in Cascade Technologies Holdings Ltd was realised when the business was sold by way of a trade sale in December 2014.

We are currently looking at exits for a number of other businesses and are working closely with the relevant management teams to achieve optimal values. 

The directly held portfolio comprises investments in the following businesses: 

Portfolio Company	Description of business
Braveheart Investment Group Company portfolio
AppShare Ltd¹	Web collaboration software design
Atlas Genetics Ltd	Rapid 'point-of-care' molecular diagnostic equipment
Biopta Ltd	Contract research services for drug and tissue measurement
Conjunct Ltd	Optical communications components
Design LED Products Ltd	Lighting display technology based on LEDs
Dimensional Imaging Ltd	3D and 4D facial performance systems
EctoPharma Ltd²	Therapeutic healthcare pesticides
mLED Ltd1	Solid-state optical micro-projection systems
NiTech Solutions Ltd	Designs manufacturing solutions for chemical and process industries
Phase Focus Ltd	Lensless microscope technology
Pyreos Ltd	Infrared sensor arrays and components for commercial applications
Vascular Flow Technologies Ltd	Cardiovascular medical devices
Traak Systems Ltd	Intelligent self-learning RFID identification and sensor network solutions
Ryboquin Company Ltd²	Commercialisation of patented technologies in human cancer medicine
Caledonia Portfolio Realisations portfolio
Bloxx Ltd	Web filtering and internet filtering software
Leading Software Ltd	IT services
Scalar Technologies Ltd	Thin film measurement
Verbalis Ltd	Language translation software
Ryboquin Company Ltd	Commercialisation of patented technologies in human cancer medicine
EctoPharma Ltd	Therapeutic healthcare pesticides

¹ Also a Strathclyde Innovation Fund portfolio company

² Also a CPR portfolio company 

Financial Review

During the year we commenced a comprehensive review of our cost base, and implemented a restructuring of head office operations. This exercise has continued post year-end and we expect to further reduce our annual central costs during the course of the financial year ending 31 March 2016.

Income Statement

Fee-based revenue is generated by both Strathtay Ventures Ltd and Viking Fund Managers Ltd. WhiteRock Capital Partners LLP is a three-way partnership and income for the Group from this venture is generated by way of head-office recovery of costs and a profit share which, for the year under review was £66,000. Therefore the principal revenue from the Group's continuing operations principally comprises investment management fees, with total revenue during the year being £1,864,000 (2014: £2,044,000).

Finance income was £14,000 (2014: £4,000), this being interest on outstanding loan notes within the directly held portfolio.

As at 31 March 2014, the fair value of the Group's directly held portfolio of 20 companies was £3,725,000. During the year the Group made investments of £15,000 into one existing portfolio company and £45,000 into the NI Growth Loan Fund. As previously noted, the investment in Cascade was realised showing a return of £414,000. As at 31 March 2015 the fair value of the investment portfolio of the remaining 18 companies was £2,478,000, resulting in an aggregate unrealised revaluation loss of £1,080,000 (2014: unrealised revaluation gain of £111,000).

The Group's directly held portfolios are held either by the Company, Strathclyde Innovation Fund LP, or Caledonia Portfolio Realisations Ltd (CPR). There is a decrease in contingent consideration of £136,000 (2014: increase in contingent consideration of £97,000) payable on future exit values of CPR portfolio companies. 

Total income for continuing operations for the year ended 31 March 2015, including realised gains and unrealised revaluation gains and losses, was £1,144,000, a decrease from £2,062,000 in 2014.

The average number of employees decreased by 9 during the period under review. Employee benefits expense for continuing operations was £1,394,000 (2014: £1,381,000), including redundancy costs of £75,000. Other operating and finance costs decreased to £518,000 (2014: £666,000).

Excluding unrealised portfolio movements and contingent consideration, the profit before tax for continuing operations was £177,000 (2014: profit of £1,000). The total loss after tax and amounts attributable to non-controlling interests for continuing operations decreased to £768,000 (2014: profit of £15,000), equivalent to a loss per share of 2.78 pence (2014: profit per share of 0.08 pence).

Financial Position

Net assets at 31 March 2015 were £3,388,000 (2014: £4,012,000), equivalent to 12.52 pence per share (2014: 15.51 pence) the decrease reflecting trading results and the new share issue during the financial year.

The Group's net assets include goodwill of £752,000 (2014: £752,000). The carrying value of goodwill has been reviewed during the year and in light of current projections of future performance the Directors do not believe the assets are impaired.

In August we completed a small placing of 1,185,000 shares which raised £130,000.

At the year end the Group had cash balances of £503,000 (2014: £159,000). There were no material borrowings.

A summary analysis of the Group's performance is as follows:

	2015	2014
	£'000	£'000
Investment management revenue	1,864	2,044
Finance income	13	4
Income before portfolio movements	1,877	2,048
Change in fair value of investments and movement in contingent consideration	(734)	14
Total income for continuing operations	1,143	2,062
Employee benefits expense (including share based payments)	(1,394)	(1,381)
Other operating and finance costs	(517)	(666)
Total costs for continuing operations	(1,911)	(2,047)
(Loss)/profit before tax for continuing operations	(768)	15
(Loss)/profit after tax and amount	(768)	15
Net results for the year from discontinued operations	-	(823)
Total loss and total comprehensive loss for the year	(768)	(808)
Opening cash balance	159	39
Increase in portfolio investments	(60)	(71)
Proceeds from sale of equity investments	414	-
Other activities	(140)	(59)
New share issue	130	250
Closing cash balance	503	159
Net assets	3,388	4,012
Net assets per share	12.52 pence	15.51 pence

Outlook and Strategy

We commenced a detailed review of our operating costs and implemented some significant initial cost savings during the year under review. This process is continuing and, in coming months we will be reviewing all our operations with the objective of identifying which of those activities we can best concentrate our resources upon to most productive effect for our shareholders. With a large percentage of Group revenue flowing from contracted fund management services, a strong balance sheet with net cash and minimal debt, and a determined Board, we are confident that we have the means to implement necessary change.

Key Performance Indicators (KPIs) for Continuing Operations

The KPIs we use to monitor business performance, which given the nature of our business are primarily financial measures, are:

	2015	2014
Net assets ('£000)	3,387	4,012
Cash balance (£'000)	503	159
(Loss)/profit after tax attributable to equity holders (£'000)	(739)	15
Investments made by Group (£'000)	60	71
Investments made by Group (number of companies)	2	1
Realised gain on sale of Group investments (£'000)	211	-
Net unrealised movement on revaluation of Group investments (£'000)	(1,080)	111
Funds under management (£m)	125	121

 

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