BARONSMEAD SECOND VENTURE TRUST PLC

Quarterly Report • May 27, 2022

National Storage Mechanism | Additional information

RNS Number : 0043N

Baronsmead Second Venture Trust PLC

27 May 2022

Baronsmead Second Venture Trust plc

Half-yearly report for the six months ended 31 March 2022

The Directors of Baronsmead Second Venture Trust plc are pleased to announce the unaudited half-yearly financial report for the six months to 31 March 2022. Copies of the half-yearly report can be obtained from the following website: www.baronsmeadvcts.co.uk

Our investment objective

·      Baronsmead Second Venture Trust plc (the "Company") 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, where possible, seek to pay two dividends to shareholders in each calendar year, typically an interim dividend in September and a final dividend following the Annual General Meeting in February.

·      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.

Key elements of the business model

Access to an attractive, diverse portfolio

Baronsmead Second Venture Trust plc gives shareholders access to a diverse portfolio of growth businesses.

The Company will make investments in growth businesses, whether unquoted or traded on AIM, which are substantially based in the UK in accordance with the prevailing VCT legislation. Investments are made selectively across a range of sectors.

The Manager's approach to investing

The Manager endeavours to select the best opportunities and applies a distinctive selection criteria based on:

·       Primarily investing in parts of the economy which are experiencing long-term structural growth.

·       Businesses that demonstrate, or have the potential for, market leadership in their niche.

·       Management teams that can develop and deliver profitable and sustainable growth.

·       Companies with the potential to become an attractive asset appealing to a range of buyers at the appropriate time to sell.

In order to ensure a strong pipeline of opportunities, the Manager invests in building deep sector knowledge and networks and undertakes significant proactive marketing to interesting target companies in preferred sectors. This approach generates a network of potentially suitable businesses with which the Manager maintains a relationship ahead of possible investment opportunities.

The Manager as an influential shareholder

The Manager is an engaged and supportive shareholder (on behalf of the Company) in both unquoted and significant quoted investments. For unquoted investments, representatives of the Manager often join the investee board. The role of the Manager with investees is to ensure that strategy is clear, the business plan can be implemented and that the management resources are in place to deliver profitable growth. The intention is to build on the business model and grow the company into an attractive target able to be either sold or potentially floated in the medium term.

Strategic report

Financial highlights

-11.9% Net Asset Value (NAV) per share decreased 11.9% per cent. to 74.2p in the six months to 31 March 2022, before deduction of dividends, in the sixth months to 31 March 2022.

359.3p NAV total return to shareholders for every 100.0p invested at launch (January 2001).

£13.7mn Realised proceeds in the period, returning 2.1x cost.

£37.5m Funds raised in the period (before costs).

Cash returned to shareholders

The table below shows the cash returned to shareholders that invested in Baronsmead Second 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# (%)
2001 (January)	100.0	20.0	80.0	157.3	177.3
2005 (March) - C share*	100.0	40.0	60.0	113.2	153.2
2010 (March)	103.1	30.9	72.2	109.0	135.7
2012 (December)	117.4	35.2	82.2	91.0	107.5
2014 (March)	112.4	33.7	78.7	71.0	93.2
2016 (February)	107.2	32.2	75.0	54.5	80.8
2017 (October)	97.5	29.2	68.2	34.5	65.4
2019 (February)	85.3	25.6	59.7	27.0	61.7
2019 (November)	78.9	23.7	55.2	19.5	54.7
2020 (January)	84.8	25.4	59.4	19.5	53.0
2020 (February)	82.5	24.8	57.7	16.0	49.4
2020 (March)	64.3	19.3	45.0	16.0	54.9
2020 (November)	77.9	23.4	54.5	13.0	46.7
2020 (December)	80.9	24.3	56.6	13.0	46.1
2021 (January)	84.4	25.3	59.1	13.0	45.4
2021 (February)	82.2	24.7	57.5	9.5	41.6
2021 (March)	84.9	25.5	59.4	9.5	41.2
2021 (December)	88.1	26.4	61.7	6.5	37.4
2022 (January)	87.1	26.1	61.0	6.5	37.5
2022 (March)	76.6	23.0	53.6	3.0	33.9

The total return could be higher for those shareholders who were able to defer a capital gain on subscription and the net sum invested may be less.

* Dividends paid to C shareholders post conversion have been adjusted by the conversion ratio (0.85642528).

Includes interim dividend of 3.0p per share payable 9 September 2022.

Chairman's statement

The six months to 31 March 2022 saw an increased level of volatility in public markets due to greater levels of uncertainty heading into 2022. Investor fears were exacerbated by a rise in geopolitical risk in Europe as Russia invaded Ukraine, slowing economic growth and increasing expectations of a prolonged period of higher inflation driven by higher commodity prices.

These headwinds have been reflected mainly in the softer performance of the AIM traded investments within the portfolio in the six months to 31 March 2022. Despite the drop in the value of the portfolio over the period, the Manager believes that - in aggregate - the fundamentals of the underlying portfolio companies remain robust and the growth prospects for the majority of investee companies continue to be positive.

The Board is also pleased to declare an interim dividend of 3.0p to be paid on 9 September 2022 to shareholders on the register as of 12 August 2022. The dividend will be paid from realised capital profits generated from the successful sales of portfolio companies. Over the period, capital proceeds of £13.7mn were realised from the sale, or partial sale, of four portfolio companies. The combined return from these sales was 2.1x invested cost.

I must, of course, remind shareholders that payment dates and the amount of future dividends depend on the level and timing of profitable realisations and cannot be guaranteed.

Results

During the six months to 31 March 2022, the Company's NAV per share decreased 11.9 per cent. from 84.3p to 74.2p after the payment of a final dividend of 3.5p per share on 4 March 2022. The table below breaks down the movement in NAV over the six months.

	Pence per ordinary share
NAV as at 1 October 2021 (after deducting the final dividend of 3.5p)	84.3
Valuation decrease (11.9 per cent.)	(10.1)
NAV as at 31 March 2022	74.2

The 30 April 2022 NAV was 75.1p, a 1.2 per cent. increase driven by slightly firmer quoted markets.

Portfolio review

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

Asset class	NAV* (£m)	% of NAV*	Number of investees**	% return in the period***
Unquoted	54	22	35	(5)
AIM and LSE-traded companies	84	35	49	(18)
LF Gresham House UK Micro Cap Fund	29	12	48	(16)
LF Gresham House UK Multi Cap Income Fund	13	6	46	(1)
LF Gresham House UK Smaller Companies Fund	6	2	44	(10)
Liquid assets#	57	23	-	-
Total	243	100	222	-

*By value at 31 March 2022.

**Includes investee companies with holdings by more than one fund. Total number of individual companies held is 173.

***Return includes interest received on unquoted realisations during the period.

Represents cash, OEICs and net current assets.

The value of the unquoted portfolio decreased 5 per cent. in the six months to 31 March 2022. The drop in value of the unquoted portfolio was driven by a combination of softer trading performance in several e-commerce assets and a general de-rating of valuation multiples in the consumer and marketing services sectors. These declines were partially offset by uplifts in healthcare investments which continue to grow strongly and to benefit from the long-term structural growth drivers in this market.

The value of the Company's portfolio of investments directly held in AIM-traded companies decreased 18 per cent. in the six months to 31 March 2022. The value of the Company's investment into the LF Gresham House UK Micro Cap Fund decreased by 16 per cent., the LF Gresham House UK Smaller Companies Fund decreased by 10 per cent. and the LF Gresham House Multi Cap Income Fund decreased by 1 per cent. This was primarily driven by negative investor sentiment surrounding inflationary pressures, expectations of interest rate rises and the cost-of-living squeeze in the UK. The implications of the ongoing war in Ukraine continue to impact negatively on global equity markets, with a particularly pronounced effect on UK and European equities.

Investments and divestments

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

Investments

I am pleased to report that the Company made five new investments totalling £8.5mn and two follow-on investments with a combined value of £1.8mn in the six months to 31 March 2022. Below are descriptions of the new investments made:

·      Aptamer (quoted) - platform providing antibody alternatives to the pharma industry across a range of applications.

·      Oberon (quoted) - corporate advisory business providing advice, asset management and deal arrangement services.

·      Popsa (unquoted) - provider of a mobile app that lets users design photo albums digitally and have them delivered in print.

·      Proximity Insight (unquoted) - platform used by front-line sales associates of omni-channel retailers to better engage and transact with their customers.

·      Skillcast (quoted) - provider of staff compliance training.

During the period the Company also invested £4.1mn into the LF Gresham House UK Multi Cap Income Fund and £1.4mn into the LF Gresham House Smaller Companies Fund.

Following the period end, four further follow-on investments were made, totalling £4.3mn and a new unquoted investment of £0.9mn was made into Bidnamic, a market leading provider of Google shopping management software.

Realisations

Proceeds of £4.4m were received during the period from sales of quoted investments, including:

·      Cerillion plc - top-slicing delivered proceeds of £1.5mn, equating to a money multiple of 11.4x.

·      Cloudcall Group plc - takeover by Xplorer Capital Management resulting in proceeds of £2.9mn and a money multiple of 0.9x.

From the unquoted portfolio, the sale of the investment in Carousel successfully completed in February 2022. The sale returned proceeds of £9.3mn, which, in addition to the loan-note interest received during the lifetime of the investment, resulted in a total gross money multiple of 5.0x original investment cost.

Venture capital industry

I would also like to draw attention to the UK Parliamentary inquiry into the venture capital industry, launched in April 2022. The Committee will be examining the regulation around venture capital, the role of key bodies and how the industry can be strengthened. The Board and Manager welcome the opportunity to provide the inquiry with the information they are seeking on how VCTs provide small UK businesses with funding to assist with their growth and development.

Fundraising

I am pleased to report that, during the period, the Company successfully raised £37.5mn (before costs) through an offer for subscription which became fully subscribed in February 2022. The Board are pleased to welcome the 1,811 new shareholders who invested for the first time and to thank the 524 existing shareholders who continue to support the Company.

The Board will consider whether to raise new funds in the 2022/23 tax year. This will be determined by the Company's cashflow and its anticipated requirements to fund new and follow-on investments over the next two to three years. The Board appreciates that shareholders would like plenty of notice of its fundraising intentions and will ensure that shareholders are informed of any such fundraising at the earliest practical time.

Investment Manager

The Board is pleased to see the integration progress made by the Investment Manager following the acquisition of the VCT business of Mobeus Equity Partners LLP in September 2021. The Board believes the combined platform enhances the Manager's ability to source, invest in and manage attractive early-stage unquoted investments. The Board believes that this will benefit the Company through more consistent and increased rates of investment which will ultimately support the delivery of attractive long-term performance and dividends for the Company's shareholders. We note that the Baronsmead VCTs retain their distinctive approach as hybrid VCTs; investing across the spectrum of fast growing, small, quoted and unquoted companies.

Following the successful integration, Fund Manager Bevan Duncan has decided to pursue a new career path as Chief Operating Officer at an early stage, high growth technology company. The Board would like to wish him every success in his next role and are reassured by the depth and experience of the wider team to continue to deliver for investors. Trevor Hope will be Managing Director for the private equity team, working closely with Ken Wotton, Managing Director of Public Equity, who continues to be responsible for the quoted portfolio within the Baronsmead VCTs. Clive Austin remains Managing Director of VCT portfolio with responsibility for portfolio and asset management alongside Ed Wass, a highly experienced portfolio partner.

Outlook

The macro-economic environment has undoubtedly become more challenging over the past six months. The Board and Manager are planning for further market volatility, ongoing pressure on companies' operating margins due to rising costs and weaker consumer demand, together with supply chain disruption and shortages of talent within portfolio companies. The Manager is regularly engaging with portfolio company management teams to forecast cash levels and expected usage rates, to plan for stress scenarios and, more generally, to reduce execution risk over the next 12 months.

We note that the portfolio remains highly diversified, with over 80 direct holdings, and is largely positioned in parts of the economy which the Board expects will see long-term structural growth. The volatility and disruption also provide good opportunities to invest in earlier stage, higher growth companies that are quickly moving to exploit changes in their target markets. The Company remains suitably capitalised and the Manager is well resourced to support investment into new and existing portfolio companies, which are expected to create value and provide attractive dividend payments to shareholders over the long-term.

Sarah Fromson

Chairman

26 May 2022

Investments in the period

Company	Location	Sector	Activity	Book cost £'000
Unquoted investments New
Popsa Holdings Ltd	Surrey	Technology	Mobile-first photobook app provider	3,379
Proximity Insight Holdings Ltd	London	Technology	Platform for front-line sales associate of omni-channel retailers to engage with customers	1,152
Follow on
Airfinity Ltd	London	Healthcare & education	Provides real time life science intelligence as a subscription service	1,039
RevLifter Ltd	London	Technology	AI platform using advanced behavioural analytics to deliver tailored promotions to users	779
Total unquoted investments				6,349
AIM-traded investments New
Aptamer Group plc	Yorkshire	Healthcare & education	Platform providing antibody alternatives to the pharma industry	2,390
Skillscast Group Plc	London	Healthcare & Education	Compliance e-learning and regulatory technology services	817
Oberon Investments Group plc	London	Business services	Corporate advisory business	742
Total AIM-traded investments				3,949
Total investments in the period				10,298

Realisations in the period

Company			First investment date	Original book cost† £'000	Proceeds‡ £'000	Overall multiple return
Unquoted realisations
Carousel Logistics Ltd		Full trade sale	Oct 13	2,336	9,333	5.0*
Total unquoted realisations				2,336	9,333	5.0*
AIM-traded realisations
CloudCall Group plc		Take over	Apr 14	3,214	2,900	0.9
Cerillion plc		Market sale	Jul 15	129	1,474	11.4
Mi-Pay Group plc		Liquidated	Nov 12	800	11	0.0
Total AIM-traded realisations				4,143	4,385	1.1
Total realisations in the period				6,479	13,718#	2.1
	†Residual book cost at realisation date. ‡Proceeds at time of realisation including interest. *Includes interest/dividends received, loan note redemptions and partial realisations accounted for in prior periods. #Deferred consideration of £15,000 was also received in respect of Glide which had been sold in a prior period.

Responsibility statement of the Directors in respect of the half-yearly financial report

Half-yearly report

The important events that have occurred during the period under review, the key factors influencing the financial statements and the principal uncertainties for the remaining six months of the financial year are set out in the Chairman's statement and the Strategic report.

The principal risks facing the Company are substantially unchanged since the date of the Company's Annual Report for the financial year ended 30 September 2021 and continue to be as set out in that Report on pages 18 and 19.

Risks faced by the Company include but are not limited to; loss of approval as a Venture Capital Trust, investment performance risk, legislative risk, regulatory and compliance risk, operational risk, and economic and political risk. The Board considers the COVID-19 pandemic and the Russian invasion of Ukraine to be factors which permeate these risks, and their impacts for the remaining six months of the year continue to be kept under review.

Responsibility statement

Each director confirms that to the best of our knowledge:

·      the condensed set of financial statements has been prepared in accordance with FRS 104 Interim Financial Reporting Standards and gives a true and fair view of the assets, liabilities, financial position and profit or loss of the Company.

·      This half-yearly 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 first six months of the financial year and their impact on the condensed set of financial 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 first six months of the current financial year and that have materially affected the financial 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 report was approved by the Board of Directors on 26 May 2022 and was signed on its behalf by Ms Sarah Fromson, Chairman.

Sarah Fromson

Chairman

26 May 2022

Condensed income statement

For the six months to 31 March 2022 (Unaudited)

	Notes	Six months to 31 March 2022			Six months to 31 March 2021			Year to 30 September 2021
Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
(Losses)/gains on investments	5	-	(27,719)	(27,719)	-	37,141	37,141	-	59,071	59,071
Income		961	-	961	566	-	566	3,821	-	3,821
Investment management fee		(706)	(2,116)	(2,822)	(661)	(1,983)	(2,644)	(1,424)	(4,272)	(5,696)
Other expenses		(359)	-	(359)	(377)	-	(377)	(665)	-	(665)
(Loss)/profit  before taxation		(104)	(29,835)	(29,939)	(472)	35,158	34,686	1,732	54,799	56,531
Taxation on ordinary activities		-	-	-	-	-	-	(108)	108	-
(Loss)/profit for the period, being the total comprehensive income for the period after taxation		(104)	(29,835)	(29,939)	(472)	35,158	34,686	1,624	54,907	56,531
Return per ordinary share:
Basic and Diluted	2	(0.04p)	(10.04p)	(10.07p)	(0.18p)	13.23p	13.05p	0.59p	19.96p	20.55p

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

For the six months to 31 March 2022 (Unaudited)

		Non-distributable reserves			Distributable reserves
Notes	Called-up share capital £'000	Share premium £'000	Revaluation reserve £'000	Capital reserve £'000	Revenue reserve £'000	Total £'000
At 1 October 2021		31,206	74,231	77,481	63,698	1,758	248,374
(Loss)/profit after taxation		-	-	(34,540)	4,705	(104)	(29,939)
Net proceeds of share issues, share buybacks & sale of shares from treasury	3	4,583	31,868	-	(1,050)	-	35,401
Dividends paid	4	-	-	-	(10,465)	(308)	(10,773)
At 31 March 2022		35,789	106,099	42,941	56,888	1,346	243,063

For the six months to 31 March 2021 (Unaudited)

		Non-distributable reserves			Distributable reserves
Notes	Called-up share capital £'000	Share premium £'000	Revaluation reserve £'000	Capital reserve £'000	Revenue reserve £'000	Total £'000
At 1 October 2020		27,146	46,775	30,890	75,290	2,216	182,317
Profit/(loss) after taxation		-	-	31,462	3,696	(472)	34,686
Net proceeds of share issues, share buybacks & sale of shares from treasury	3	4,060	27,459	-	(1,608)	-	29,911
Dividends paid	4	-	-	-	(8,354)	(1,232)	(9,586)
At 31 March 2021		31,206	74,234	62,352	69,024	512	237,328

For the year ended 30 September 2021 (Audited)

		Non-distributable reserves			Distributable reserves
Notes	Called-up share capital £'000	Share premium£'000	Revaluation reserve £'000	Capital reserve £'000	Revenue reserve £'000	Total £'000
At 1 October 2020		27,146	46,775	30,890	75,290	2,216	182,317
Profit after taxation		-	-	46,591	8,316	1,624	56,531
Net proceeds of share issues, share buybacks & sale of shares from treasury		4,060	27,456	-	(3,908)	-	27,608
Dividends paid		-	-	-	(16,000)	(2,082)	(18,082)
At 30 September 2021		31,206	74,231	77,481	63,698	1,758	248,374

Condensed balance sheet

As at 31 March 2022 (Unaudited)

	Notes	As at 31 March 2022 £'000	As at 31 March 2021 £'000	As at 30 September 2021 £'000
Fixed assets
Unquoted investments	5	53,887	52,113	59,971
Traded on AIM	5	83,916	94,364	102,394
Collective investment vehicles	5	60,053	54,503	75,701
Listed on LSE	5	34	36	34
Investments	5	197,890	201,016	238,100
Current assets
Debtors		106	110	109
Cash at bank		46,647	37,767	12,312
		46,753	37,877	12,421
Creditors (amounts falling due within one year)		(1,580)	(1,565)	(2,147)
Net current assets		45,173	36,312	10,274
Net assets		243,063	237,328	248,374
Capital and reserves
Called-up share capital		35,789	31,206	31,206
Share premium		106,099	74,234	74,231
Capital reserve		56,888	69,024	63,698
Revaluation reserve	5	42,941	62,352	77,481
Revenue reserve		1,346	512	1,758
Equity shareholders' funds		243,063	237,328	248,374
Net asset value per share		74.2p	83.07p	87.77p
Number of ordinary shares in circulation		327,596,768	285,692,452	282,974,085

Condensed statement of cash flows

For the six months to 31 March 2022 (Unaudited)           

	Six months to 31 March 2022 £'000	Six months to 31 March 2021 £'000	Year to 30 September 2021 £'000
Net cash outflow from operating activities	(2,536)	(1,670)	(1,850)
Net cash inflow from investing activities	12,689	16,050	1,083
Net cash before financing activities	10,153	14,380	(767)
Net cash inflow from financing activities	24,182	20,279	9,971
Increase in cash	34,335	34,659	9,204
Reconciliation of net cash flow to movement in net cash
Increase in cash	34,335	34,659	9,204
Opening cash at bank and on deposit	12,312	3,108	3,108
Closing cash at bank and on deposit	46,647	37,767	12,312
Reconciliation of (loss)/ profit/ before taxation to net cash outflow from operating activities
(Loss)/profit before taxation	(29,939)	34,686	56,531
Gains/(losses) on investments	27,719	(37,141)	(59,071)
Changes in working capital and other non-cash items	(316)	785	690
Net cash outflow from operating activities	(2,536)	(1,670)	(1,850)

Notes to the financial statements

For the six months to 31 March 2022 (Unaudited)

1.         Basis of preparation

The condensed financial statements for the six months to 31 March 2022 comprise the unaudited financial statements together with the related notes. 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 2022 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 financial statements 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 2021.

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 half-yearly financial report for the six months ended 31 March 2022 and for the six months ended 31 March 2021 have been neither audited nor reviewed by the Company's auditors. The information for the year to 30 September 2021 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 2021 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 2020 have been reported on by the Company's auditors or delivered to the Registrar of Companies.

Copies of the half-yearly financial report have been made available to shareholders and are available from Gresham House, 80 Cheapside, London, EC2V 6EE.

2.         Performance and shareholder returns

Return per share is based on a weighted average of 297,083,965 ordinary shares in issue (31 March 2021 - 265,723,554 ordinary shares; 30 September 2021 - 275,054,819 ordinary shares).

Earnings for the first six months to 31 March 2022 should not be taken as a guide to the results of the full financial year to 30 September 2022.

3.         Called-up share capital

The below table details the movement in called-up share capital during the period.

Allotted, called-up and fully paid:

Ordinary shares	£'000
252, 3312,059,812 ordinary shares of 10p each listed at 30 September 2021	31,206
45,829,661 ordinary shares of 10p each issued during the period	4,583
357,889,473 ordinary shares of 10p each listed at 31 March 2022	35,789
229,085,727 ordinary shares of 10p each held in treasury at 30 September 2021	(2,909)
2,090,978 ordinary shares of 10p each repurchased during the period and held in treasury	(209)
884,000 ordinary shares of 10p each sold from treasury during the period	88
30,292,705 ordinary shares of 10p each held in treasury at 31 March 2022	(3,030)
327,596,768 ordinary shares of 10p each in circulation* at 31 March 2022	32,759
*carrying one vote each

During the six months to 31 March 2022, the Company issued 45,829,661 shares at net proceeds of £36,451,000 (after costs). During the same period, the Company purchased 2,090,978 shares to be held in treasury at a cost of £1,689,000 (including costs). The Company also sold 884,000 shares from treasury for proceeds of £639,000. At 31 March 2022, the Company held 30,292,705 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.

Excluding treasury shares, there were 327,596,768 ordinary shares in issue at 31 March 2022 (31 March 2021 - 285,692,452 ordinary shares; 30 September 2021 - 282,974,085 ordinary shares).

4.         Dividends

The final dividend for the year ended 30 September 2021 of 3.5p per share (3.4p capital, 0.1p revenue) was paid on 4 March 2022 to shareholders on the register on 4 February 2022. The ex-dividend date was 3 February 2022.

During the year to 30 September 2021, the Company paid an interim dividend on 10 September 2021 of 3.0p per share (2.7p capital, 0.3p revenue).

5.         Investments

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

-     Cost of recent investment

-     Earnings Multiple

-     Offer less 10 per cent.

The earnings multiple approach involves more subjective inputs than the cost of recent investment and offer approaches and therefore presents a greater risk of over or under estimation. Key assumptions for the earnings multiple approach are the selection of comparable companies and the use of either historic or forecast revenue or 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 2021. 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	Listed on LSE £'000	Collective investment vehicles £'000	Unquoted £'000	Total £'000
Opening book cost	63,064	3,429	48,404	45,722	160,619
Opening unrealised appreciation/(depreciation)	39,330	(3,395)	27,297	14,249	77,481
Opening fair value	102,394	34	75,701	59,971	238,100
Movements in the period:
Purchases at cost	3,949	-	5,699	6,349	15,997
Sale - proceeds	(4,374)	-	(15,000)	(9,114)	(28,488)
- realised gains/(losses) on sales	1,037	-	-	(1,585)	(548)
Unrealised (losses) / gains realised during the period	111	-	-	7,528	7,369
Decrease in unrealised depreciation	(19,201)	-	(6,347)	(8,992)	(34,540)
Closing fair value	83,916	34	60,053	53,887	197,890
Closing book cost	63,787	3,429	39,103	48,630	154,949
Closing unrealised appreciation/(depreciation)	20,129	(3,395)	20,950	5,257	42,941
Closing fair value	83,916	34	60,053	53,887	197,890
Equity shares	83,916	34	-	25,225	109,175
Preference Shares	-	-	-	18,160	18,160
Loan notes	-	-	-	10,502	10,502
Collective investment vehicles	-	-	60,053	-	60,053
Closing fair value	83,916	34	60,053	53,887	197,890

6.         Other required disclosures

6.1        Segmental reporting

The Company has one reportable segment being investing in primarily a portfolio of UK growth businesses, whether unquoted or traded on AIM.

6.2           Principal risks and uncertainties

The Company's assets consist of equity and fixed interest investments, shares in collective investment schemes, cash and liquid resources. Its principal risks are therefore market risk, price 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 Annual Report and Accounts for the year to 30 September 2021. The Board continues to regularly review the risk environment in which the Company operates.

6.3          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, accounting, administrative and custodian services to the Company. Under the management agreement, the Manager receives a fee of 2.5 per cent. per annum of the net assets of the Company. This is described in more detail under the heading 'The Investment Management Agreement' within the Strategic Report in the Company's Annual Report and Accounts for the year ended 30 September 2021. During the period the Company has incurred management fees of £2,822,000 (31 March 2021 - £2,644,000; 30 September 2021 - £5,696,000) and secretarial and accounting fees of £76,000 (31 March 2021 - £71,000; 30 September 2021 - £143,000) payable to the Manager. No performance fee has been accrued at 31 March 2022 (31 March 2021 - £nil; 30 September 2021 - £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 2021.

A related party relationship exists between the Company and Happy Days Consultancy Ltd, owing to the significant influence deemed to be held over the operations of the company. As at 31 March 2022, the loan balance stood at £3,510,000, including £1,122,000 of capitalised interest, as provided for in the Agreement with the company.

6.4          Investment in associates

The Company has made the presumption that the following holdings are investments in associates, owing to the proportion of equity held and representation on the board representing significant influence over the operations of the company. The investments held are held as part of an investment portfolio, and are therefore measured at fair value through profit and loss, as detailed in note 5 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 & B Ordinary	35.7	(3.0)	(12.7)	31 December 20201

1Latest published set of financial statements available at Companies House.

6.5          Going concern

After making enquiries, and bearing in mind the nature of the Company's business and assets, the Directors consider that the Company has adequate resources to continue in operational existence for the foreseeable future. In arriving at this conclusion, the Directors have considered the Company's cash balances, the liquidity of the Company's investments and the absence of any gearing. The Directors are therefore also 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.

6.6          Post balance sheet events

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

·      The 30 April 2022 NAV of 75.1p was announced on 06 May 2022. 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.

·      Two follow-on investments into Tribe and Panthera, completed in April 2022 totalling £2.9mn.

·      Two further follow-on investments, into Yappy and Glisser, completed in May 2022 totalling £1.4mn

·      One new investment, into Bidnamic, completed in May 2022, totalling £0.9mn.

Corporate Information Directors Sarah Fromson (Chair)† Malcolm Groat* Graham McDonald Tim Farazmand# 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 020 7382 0999 Registered Number 04115341 † Chair of the Nomination Committee. * Senior Independent Director and Chairman of the Audit Committee. #Chairman of the Management Engagement and Remuneration Committee.

Registrars and Transfer Office Computershare Investor Services plc The Pavilions Bridgwater Road Bristol BS99 6ZZ Tel: 0800 923 1534 Brokers Panmure Gordon & Co One New Change London EC4M 9AF Tel: 020 7886 2500 Auditor BDO LLP 55 Baker Street London W1U 7EU Solicitors Dickson Minto W.S. Broadgate Tower 20 Primrose Street London EC2A 2EW VCT Status Adviser PricewaterhouseCoopers LLP 1 Embankment Place London WC2N 6RH Website www.baronsmeadvcts.co.uk

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