Interim / Quarterly Report • Mar 31, 2017
Interim / Quarterly Report
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Half-yearly report for the six months ended 31 March 2017
Baronsmead Second Venture Trust is a tax efficient listed company which aims to achieve long-term investment returns for private investors.
The Board of Baronsmead Second Venture Trust has the objective to maintain a minimum annual dividend of 4.5p per ordinary share if possible, but this depends primarily on the level of realisations achieved and cannot be guaranteed.
Following final shareholder approval on 30 November 2016 Baronsmead Second Venture Trust plc ("BSVT") acquired the assets of Baronsmead VCT 5 plc ("BVCT5") in consideration for the issue of new BSVT Shares for BVCT5 shareholders. This is the first set of accounts since BSVT and BVCT5 were combined and it is important to note the comparative prior year figures relate to the original BSVT plc.
The Board wishes to provide shareholders with a number of choices that enable them to utilise their investment in Baronsmead Second Venture Trust in ways that best suit their personal investment and tax planning requirements and in a way that treats all shareholders equally.
Net asset value ("NAV") per share increased 2.6 per cent. to 94.56p in the six month period ended 31 March 2017, before deduction of dividends.
Dividends totalled 3.0p in the six month period ended 31 March 2017.
NAV total return to shareholders for every 100.0p invested at launch.
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 | 122.8 | 142.8 |
| 2005 (March) – C share | 100.0 | 40.0 | 60.0 | 83.7 | 123.7 |
| 2010 (March) | 103.1 | 30.9 | 72.2 | 74.5 | 102.2 |
| 2012 (December) | 117.4 | 35.2 | 82.2 | 56.5 | 78.1 |
| 2014 (March) | 112.4 | 33.7 | 78.7 | 36.5 | 62.5 |
| 2016 (February) | 107.2 | 32.2 | 75.0 | 20.0 | 48.7 |
* Dividends paid to C shareholders post conversion have been adjusted by the conversion ratio (0.85642528).
I am pleased to report a 2.6 per cent. (2.39p) increase in NAV per share for the six months to 31 March 2017 before dividend payments. An interim dividend of 3.0p per share was paid on 31 March 2017 in lieu of the dividend that would have otherwise been paid in June 2017 following the publication of these results.
Anthony Townsend Chairman
On 30 November 2016, the Company acquired the assets of BVCT5 in exchange for the issue of New Shares to BVCT5 shareholders. At 31 March 2017, the NAV was £182.7m making the Company one of the largest VCTs in the industry.
This is the first set of accounts prepared since the Company's merger with BVCT5 and as a result, the comparative figures in the accounts only relate to the Company prior to the merger and are therefore not a true comparison to the period under review.
During the six months to 31 March 2017, the Company's NAV per share increased 2.6 per cent. from 92.17p to 94.56p before dividends.
| Pence per ordinary share |
|
|---|---|
| NAV as at 1 October 2016 | 92.17 |
| Valuation uplift (2.6 per cent.) | 2.39 |
| NAV as at 31 March 2017 before dividends | 94.56 |
| Less: | |
| Interim dividend paid to the shareholders on 31 March 2017 |
(3.00) |
| NAV as at 31 March 2017 after dividends | 91.56 |
At 31 March 2017, following the merger with BVCT5, the Company's investment portfolio was valued at £147m and comprised investments in 71 unquoted and AIM-traded companies. In addition, the Company's investment in CF Livingbridge UK Micro Cap Fund ("Micro Cap Fund", previously Wood Street Microcap Investment Fund) provides investment exposure to a further £18m in 44 AIM-traded and fully listed companies.
The increase in NAV of 2.6 per cent. was the result of steady progress across the investment portfolio with particularly noteworthy contributions from our AIM-traded investments and from the Micro Cap Fund. As BVCT5's investment portfolio had a relatively higher weighting to these assets, their acquisition as part of the merger has contributed to the return for all of the Company's shareholders over the period under review.
The Company's investments and divestments during the period are set out in the tables on page 8.
The new VCT rules introduced in November 2015 have required the Investment Manager to adapt its investment strategy to focus on the provision of development capital to younger companies to enable them to grow their businesses organically rather than through acquisition. The new rules dictate that these companies will be younger and smaller than those in which the Company has previously invested and, as a result, they may need to be held for longer periods. This may lead to some increased volatility of returns within a portfolio but the Manager remains confident that the returns will enable the Company to continue to fulfil its investment objective and dividend policy.
This transition has taken some time to achieve as the Manager has had to consider how best to deploy funds in what are undoubtedly higher risk investments whilst maintaining its investment quality standards. This has resulted in fewer new investments than its usual pace would have generated. The Board has been supportive of this approach as to have deployed funds too quickly in the early stages of the transition could have proved expensive in terms of a loss of capital and a reduction in the long-term return to shareholders.
I am now pleased to report that either side of the period end the Company made two new unquoted investments as well as three investments in AIM-traded companies. This resulted in the Company investing a total of £2.1m during the period under review and £3.3m since then. The Board is also encouraged to note that the pipeline of potential new investments is improving and anticipates the deployment of further funds in new investments over the course of the Summer.
An interim dividend of 3.0p per share was paid on 31 March 2017 in lieu of the dividend that would otherwise have been paid in June 2017 following the publication of the Company's results for the six months to 31 March 2017. The Board aims to sustain a minimum annual dividend level of around 4.5p per ordinary share, although over the past 10 years dividend payments have been at least 7.5p per share per annum. As a result, in the ordinary course of events the Board expects to declare a further dividend for the financial year to 30 September 2017, which would be paid following shareholder approval at the Company's next AGM. However, the timing and level of future dividends depends significantly on the level and timing of profitable realisations and cannot be guaranteed; inevitably there will be variations in the dividends paid year on year.
Acquisition proposals with respect to the Company's merger with BVCT5 were published on 17 October 2016 and the merger completed on 30 November 2016. Following the transfer of all of BVCT5's assets and liabilities to the Company, BVCT5 shareholders received approximately 0.838803 new shares in the Company ("New Shares") for every BVCT5 share held by them (rounded down to the nearest whole share). In aggregate, 47.1m shares were issued to BVCT5 shareholders in consideration for approximately £43.0 million of assets.
The Company and BVCT5 each raised new funds in the 2015/16 tax years but did not do so in the 2016/17 tax year. The Board will be considering whether to raise new funds in the 2017/18 tax year. This decision will be determined by the Company's cashflow and its anticipated requirements to fund new investments over the next two years. The Board appreciates that shareholders would like as much notice as possible of its fundraising intentions so that they can plan their financial affairs accordingly. Ordinarily, the Board would seek to raise funds in January / February having informed shareholders of its fundraising intentions in November when its annual results to 30 September 2017 are published. However, if it becomes appropriate to raise new funds earlier than this, the Board will ensure that shareholders are informed as soon as possible.
Legislative changes to VCTs included in the March 2017 Budget were limited to technical changes to the rules concerning the restructuring of investments. In addition, the Government's venture capital schemes (SEIS, EIS and VCTs) will be included in the recently announced Patient Capital Review which aims "to ensure that high growth businesses can access the long-term capital that they need to fund productivity enhancing investment". This will provide the VCT industry with the opportunity to demonstrate that the existing tax reliefs encourage investment and entrepreneurship and are effective, well targeted, and provide excellent value for money for UK taxpayers. The Manager and Board will be fully engaged throughout this process, with a view to informing the conclusions of the Review and any policy recommendations that might be brought forward.
Despite signs of a slowdown in the wider economy, as the impact of a much-weakened sterling finally begins to work its way through to the consumer, there are no signs yet of a deterioration in performance in the portfolio. The Company's investee companies continue to make steady progress with the fulfilment of their business plans, although as always some will do better than others.
The outlook for the rest of 2017 remains uncertain, with the potential for macro and geopolitical events to impact sentiment and create market volatility. However, the Manager continues to focus on areas of secular growth and companies that have the potential to grow profits even without a tailwind from the wider economy.
All of these factors are reflected in the valuation of the Company's investments in the NAV at 30 April 2017 which has grown by a further 1.35p per share, to 92.91p per share. Whilst changes in market sentiment may impact the valuation of investments in the short term and the unexpected general election may result in a slowdown of business transactions over the coming months, the diversity and quality of the Company's portfolio should continue to deliver consistent returns for shareholders over the medium to long term.
24 May 2017
| Business Services | 27% |
|---|---|
| Consumer Markets | 17% |
| Healthcare & Education | 14% |
| Technology, Media & | |
| Telecommunications ("TMT") | 42% |
Total assets by value
| Unquoted – loan stock | 24% |
|---|---|
| Unquoted – equity | 9% |
| AIM | 47% |
| Collective investment vehicles |
19% |
| Net current assets (principally cash) |
1% |
| Less than 1 year | 2% |
|---|---|
| Between 1 and 3 years | 23% |
| Between 3 and 5 years | 33% |
| Greater than 5 years | 42% |
| Company | Location | Sector | Activity | Book cost £'000 |
|---|---|---|---|---|
| Unquoted investments New |
||||
| Custom Materials Ltd | London | Consumer Markets | Retailer of customisable products | 275 |
| Total unquoted investments | 275 | |||
| AIM-traded investments New |
||||
| FreeAgent Holdings plc | Edinburgh | TMT* | Online Accounting Software | 788 |
| Collagen Solutions plc | London | Healthcare & Education |
Develops and manufactures medical grade collagen | 412 |
| Follow on | ||||
| CloudCall Group plc | Leicestershire | TMT* | Cloud based telephony platform | 599 |
| Total AIM-traded investments | 1,799 | |||
| Total investments in the period | 2,074† |
* Technology, Media & Telecommunications ("TMT").
† All investments with the exception of Collagen Solutions and Custom Materials were made prior to BSVT acquiring the assets of BVCT5 on 30 November 2016. Hence, the book cost of new investments shown (except for Collagen Solutions and Custom Materials) relate only to the investments made by BSVT. BSVT acquired the BVCT5 investment portfolio (total £39,138,000) on 30 November 2016.
| Company | First investment date |
Proceeds £'000 |
Overall multiple return |
|
|---|---|---|---|---|
| Unquoted realisations | ||||
| CR7 Services Ltd | Part trade sale | Aug 14 | 13 | 0.0 |
| Total unquoted realisations | 13 | |||
| AIM-traded realisations | ||||
| Ubisense Group plc | Part market sale | Jun 11 | 33 | 0.3 |
| Total AIM-traded realisations | 33 | |||
| Total realisations in the period | 46 |
Deferred consideration of £60,000 was received in respect of Kingsbridge Risk Solutions, which had been sold in a prior period.
No realisations were made before the acquisition of the BVCT5 investment portfolio and proceeds shown relate to those made after 30 November 2016.
Half-yearly report for the six months
We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2017 which comprises the Condensed Income Statement, Condensed Balance Sheet, Condensed Statement of Changes in Equity, Condensed Statement of Cash Flows and the related explanatory notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the Company in accordance with the terms of our engagement to assist the Company in meeting the requirements of the Disclosure Guidance and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA"). Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have reached.
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA.
As disclosed in note 1, the annual financial statements of the Company are prepared in accordance with UK Accounting Standards and applicable law (UK Generally Accepted Accounting Practice), including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland. The condensed set of financial statements included in this halfyearly financial report has been prepared in accordance with FRS 104 Interim Financial Reporting.
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2017 is not prepared, in all material respects, in accordance with FRS 104 Interim Financial Reporting and the DTR of the UK FCA.
Chartered Accountants Saltire Court 20 Castle Terrace Edinburgh EH1 2EG 24 May 2017
We confirm that to the best of our knowledge:
On behalf of the Board,
Chairman
24 May 2017
Baronsmead Second Venture Trust plc Half-yearly report for the six months ended 31 March 2017
For the six months to 31 March 2017
| Six months to 31 March 2017 |
Six months to 30 June 2016 |
Nine months to 30 September 2016 |
||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Notes | Revenue £'000 |
Capital £'000 |
Total £'000 |
Revenue £'000 |
Capital £'000 |
Total £'000 |
Revenue £'000 |
Capital £'000 |
Total £'000 |
|
| Unrealised gains on movements in fair value of investments |
7 | – | 6,569 | 6,569 | – | 855 | 855 | – | 5,920 | 5,920 |
| Realised gains on disposal of investments |
7 | – | 83 | 83 | – | 2,130 | 2,130 | – | 2,216 | 2,216 |
| Income | 1,239 | – | 1,239 | 702 | – | 702 | 1,221 | – | 1,221 | |
| Investment management fee | (526) | (1,578) | (2,104) | (398) | (1,194) | (1,592) | (616) | (1,847) | (2,463) | |
| Other expenses | (604) | – | (604) | (650) | – | (650) | (810) | – | (810) | |
| Profit/(loss) on ordinary activities before taxation |
109 | 5,074 | 5,183 | (346) | 1,791 | 1,445 | (205) | 6,289 | 6,084 | |
| Taxation on ordinary activities | – | – | – | – | – | – | – | – | – | |
| Profit/(loss) for the period, being total comprehensive income for the period |
109 | 5,074 | 5,183 | (346) | 1,791 | 1,445 | (205) | 6,289 | 6,084 | |
| Return per ordinary share: | ||||||||||
| Basic and Diluted | 2 | 0.06p | 2.75p | 2.81p | (0.29p) | 1.50p | 1.21p | (0.16p) | 4.83p | 4.67p |
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 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 in November 2014 and updated in January 2017 by the Association of Investment Companies ("AIC SORP").
For the six months to 31 March 2017
| 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 2016 | 16,196 | 81,466 | 24,357 | 18,394 | 495 | 140,908 | |
| Profit/(loss) on ordinary activities after taxation |
– | – | 6,621 | (1,547) | 109 | 5,183 | |
| Shares issued following the acquisition of Baronsmead VCT5 plc |
4 | 4,708 | 38,245 | – | – | – | 42,953 |
| Buyback of shares to be held in treasury | 4 | – | – | – | (342) | – | (342) |
| Dividends paid | 6 | – | – | – | (5,887) | (100) | (5,987) |
| At 31 March 2017 | 20,904 | 119,711 | 30,978 | 10,618 | 504 | 182,715 |
| Non-distributable reserves | Distributable reserves | ||||||
|---|---|---|---|---|---|---|---|
| For the six months to 30 June 2016 | Notes | Called-up share capital £'000 |
Share premium £'000 |
Revaluation reserve £'000 |
Capital reserve £'000 |
Revenue reserve £'000 |
Total £'000 |
| At 1 January 2016 | 8,463 | 8,815 | 15,460 | 45,758 | 700 | 79,196 | |
| Profit/(loss) on ordinary activities after taxation |
– | – | 3,832 | (2,041) | (346) | 1,445 | |
| Shares issued following the acquisition of Baronsmead VCT4 plc |
6,800 | 63,884 | – | – | – | 70,684 | |
| Net proceeds of share issue, share buybacks & sale of shares from treasury |
933 | 8,767 | – | (322) | – | 9,378 | |
| Dividends paid | 6 | – | – | – | (10,553) | – | (10,553) |
| At 30 June 2016 | 16,196 | 81,466 | 19,292 | 32,842 | 354 | 150,150 |
| Non-distributable reserves | Distributable reserves | |||||
|---|---|---|---|---|---|---|
| For the nine months to 30 September 2016 Notes |
Called-up share capital £'000 |
Share premium £'000 |
Revaluation reserve £'000 |
Capital reserve £'000 |
Revenue reserve £'000 |
Total £'000 |
| At 1 January 2016 | 8,463 | 8,815 | 15,460 | 45,758 | 700 | 79,196 |
| Profit/(loss) on ordinary activities after taxation |
– | – | 8,897 | (2,608) | (205) | 6,084 |
| Shares issued following the acquisition of Baronsmead VCT 4 plc |
6,800 | 63,884 | – | – | – | 70,684 |
| Net proceeds of share issue, share buybacks & sale of shares from treasury |
933 | 8,767 | – | 939 | – | 10,639 |
| Dividends paid 6 |
– | – | – | (25,695) | – | (25,695) |
| At 30 September 2016 | 16,196 | 81,466 | 24,357 | 18,394 | 495 | 140,908 |
As at 31 March 2017
| Notes | As at 31 March 2017 £'000 |
As at 30 June 2016 £'000 |
As at 30 September 2016 £'000 |
|---|---|---|---|
| Fixed assets | |||
| Unquoted investments 7 |
60,304 | 47,538 | 49,286 |
| Traded on AIM 7 |
86,485 | 54,650 | 58,093 |
| Collective investment vehicles 7 |
34,548 | 8,210 | 9,200 |
| Listed interest bearing securities | – | 15,987 | – |
| Investments 7 |
181,337 | 126,385 | 116,579 |
| Current assets | |||
| Debtors | 195 | 370 | 1,464 |
| Cash at bank and on deposit | 2,711 | 24,700 | 24,110 |
| 2,906 | 25,070 | 25,574 | |
| Creditors (amounts falling due within one year) | (1,528) | (1,305) | (1,245) |
| Net current assets | 1,378 | 23,765 | 24,329 |
| Net assets | 182,715 | 150,150 | 140,908 |
| Capital and reserves | |||
| Called-up share capital | 20,904 | 16,196 | 16,196 |
| Share premium | 119,711 | 81,466 | 81,466 |
| Capital reserve | 10,618 | 32,842 | 18,394 |
| Revaluation reserve 7 |
30,978 | 19,292 | 24,357 |
| Revenue reserve | 504 | 354 | 495 |
| Equity shareholders' funds | 182,715 | 150,150 | 140,908 |
| As at 31 March 2017 |
As at 30 June 2016 |
As at 30 September 2016 |
|
|---|---|---|---|
| Net asset value per share | 91.56p | 99.16p | 92.17p |
| Number of ordinary shares in circulation | 199,553,707 | 151,420,796 | 152,870,796 |
| Treasury net asset value per share | 91.39p | 99.03p | 91.89p |
| Number of ordinary shares held in treasury | 9,484,214 | 10,539,214 | 9,089,214 |
| Number of listed ordinary shares in issue | 209,037,921 | 161,960,010 | 161,960,010 |
For the six months to 31 March 2017
| Six months to 31 March 2017 £'000 |
Six months to 30 June 2016 £'000 |
Nine months to 30 September 2016 £'000 |
|
|---|---|---|---|
| Net cash outflow from operating activities | (1,370) | (760) | (1,156) |
| Net cash (outflow)/inflow from investing activities | (18,968) | (4,217) | 10,740 |
| Equity dividends paid | (5,987) | (10,553) | (25,695) |
| Net cash outflow before financing activities | (26,325) | (15,530) | (16,111) |
| Net cash inflow from financing activities | 4,926 | 28,926 | 28,917 |
| (Decrease)/increase in cash | (21,399) | 13,396 | 12,806 |
| Reconciliation of net cash flow to movement in net cash | |||
| (Decrease)/increase in cash | (21,399) | 13,396 | 12,806 |
| Opening cash position | 24,110 | 11,304 | 11,304 |
| Closing cash at bank and on deposit | 2,711 | 24,700 | 24,110 |
| Reconciliation of profit on ordinary activities before taxation to net cash outflow from operating activities |
|||
| Profit on ordinary activities before taxation | 5,183 | 1,445 | 6,084 |
| Gains on investments | (6,652) | (2,985) | (8,136) |
| Changes in working capital and other non-cash items | 99 | 780 | 896 |
| Net cash outflow from operating activities | (1,370) | (760) | (1,156) |
On 30 November 2016 the Company acquired all of the assets and liabilities of BVCT5 plc for the issue of 47,077,911 consideration shares, on a relative net asset basis.
During the nine month period from 1 January 2016 to 30 September 2016, the Company paid a first interim dividend on 3 June 2016 of 7.00p per share (7.00p capital, nil revenue) and a second interim dividend on 30 September 2016 of 10.00p per share (10.00p capital, nil revenue).
The methods of fair value measurement are classified into a hierarchy based on reliability of the information used to determine the valuation.
| Level 1 | Level 2 | Level 3 | ||
|---|---|---|---|---|
| Collective | ||||
| Traded | investment | |||
| on AIM | vehicles | Unquoted | Total | |
| £'000 | £'000 | £'000 | £'000 | |
| Opening book cost | 47,957 | 3,525 | 40,740 | 92,222 |
| Opening unrealised appreciation | 10,136 | 5,675 | 8,546 | 24,357 |
| Opening valuation | 58,093 | 9,200 | 49,286 | 116,579 |
| Movements in the period: | ||||
| Purchases at cost | 1,799 | 17,000 | 275 | 19,074 |
| Holdings acquired following the acquisition of | ||||
| Baronsmead VCT5 plc | 23,251 | 6,810 | 9,077 | 39,138 |
| Sales – proceeds | (33) | – | (73) | (106) |
| Sales – realised gains on sales | 22 | – | 61 | 83 |
| Unrealised losses realised during the period | (51) | – | (1) | (52) |
| Increase in unrealised appreciation | 3,404 | 1,538 | 1,679 | 6,621 |
| Closing valuation | 86,485 | 34,548 | 60,304 | 181,337 |
| Closing book cost | 72,945 | 27,335 | 50,079 | 150,359 |
| Closing unrealised appreciation | 13,540 | 7,213 | 10,225 | 30,978 |
| Closing valuation | 86,485 | 34,548 | 60,304 | 181,337 |
| Equity shares | 86,485 | – | 15,735 | 102,220 |
| Loan notes | – | – | 44,569 | 44,569 |
| Collective investment vehicles | – | 34,548 | – | 34,548 |
| Closing valuation | 86,485 | 34,548 | 60,304 | 181,337 |
There has been no significant change in the risk analysis as disclosed in the Company's Annual Report and Accounts to 30 September 2016.
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, 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 nine month period ended 30 September 2016. The Company's principal risks and uncertainties have not changed materially since the date of that report.
Livingbridge VC LLP ('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 nine month period ended 30 September 2016. During the period the Company has incurred management fees of £2,104,000 (30 June 2016 – £1,592,000; 30 September 2016 – £2,463,000) and secretarial and accounting fees of £80,000 (30 June 2016 – £74,000; 30 September 2016 – £110,000) payable to the Manager.
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 liquidity of the Company and its ability to meet obligations as they fall due for a period of at least twelve months from the date that these financial statements were approved. As at 31 March 2017 the Company held cash and readily realisable securities totalling £19,711,000 including £17,000,000 held in JPMorgan Sterling Liquidity Fund. Cash flow projections have been reviewed and show that the Company has sufficient funds to meet both its contracted expenditure and its discretionary cash outflows in the form of the share buyback programme and dividend policy. The Company has no external loan finance in place and therefore is not exposed to any gearing covenants.
| 31 March | 30 September | % of Equity held by |
||||||
|---|---|---|---|---|---|---|---|---|
| Original | Accounting | 2017 | 2016 | Baronsmead | % of Equity | |||
| Company | Sector | Book cost† £'000 |
Book cost† £'000 |
Valuation £'000 |
Valuation+ £'000 |
% of net assets |
Second Venture Trust plc |
held by all funds# |
| Unquoted | ||||||||
| Create Health Ltd | Healthcare & Education | 2,330 | 4,243 | 5,644 | 5,867 | 3.1 | 14.0 | 29.0 |
| Happy Days Consultancy Ltd | Healthcare & Education | 4,180 | 4,482 | 5,045 | 4,895 | 2.7 | 31.5 | 65.0 |
| Crew Clothing Holdings Ltd Pho Holdings Ltd |
Consumer Markets Consumer Markets |
2,904 2,422 |
3,695 3,435 |
4,898 4,776 |
5,023 4,707 |
2.7 2.6 |
13.4 13.6 |
28.1 28.0 |
| Eque2 Ltd | TMT* | 1,872 | 2,728 | 4,164 | 3,602 | 2.3 | 18.6 | 38.5 |
| Carousel Logistics Ltd | Business Services | 2,336 | 2,967 | 4,012 | 3,742 | 2.2 | 14.7 | 40.0 |
| Armstrong Craven Ltd | Business Services | 1,645 | 2,504 | 3,855 | 3,573 | 2.1 | 18.9 | 46.0 |
| Key Travel Ltd | Business Services | 2,333 | 2,975 | 3,804 | 3,566 | 2.1 | 11.5 | 48.0 |
| CableCom II Networking Holdings Ltd | TMT* | 2,500 | 2,731 | 3,728 | 3,187 | 2.0 | 4.0 | 9.2 |
| Kirona Ltd | TMT* | 2,332 | 2,632 | 3,417 | 3,269 | 1.9 | 9.2 | 37.5 |
| Upper Street Events Ltd | Consumer Markets | 2,330 | 2,635 | 2,896 | 2,788 | 1.6 | 19.6 | 70.1 |
| Ten10 Group Ltd | Business Services | 2,331 | 2,626 | 2,672 | 2,690 | 1.5 | 11.4 | 30.6 |
| Niche Finance Group Ltd | Consumer Markets | 2,335 | 2,402 | 2,564 | 2,985 | 1.4 | 7.7 | 38.0 |
| Kalyke Investments Ltd | Business Services | 2,337 | 2,337 | 2,337 | 2,337 | 1.3 | 23.5 | 48.6 |
| Yeo Bridge Ltd | Business Services | 2,337 | 2,337 | 2,337 | 2,337 | 1.3 | 23.5 | 48.6 |
| CR7 Services Ltd | TMT* | 2,306 | 2,304 | 2,306 | 2,306 | 1.3 | 4.5 | 24.0 |
| IP Solutions Ltd | TMT* | 2,333 | 1,878 | 1,574 | 1,540 | 0.8 | 10.8 | 75.0 |
| Custom Materials Ltd | Consumer Markets | 275 | 275 | 275 | – | 0.1 | 3.0 | 5.5 |
| Xention Pharma Ltd | Healthcare & Education | 893 | 893 | 0 | 0 | 0.0 | 1.7 | 2.9 |
| Total unquoted | 42,331 | 50,079 | 60,304 | 33.0 | ||||
| AIM | ||||||||
| Netcall plc | TMT* | 2,616 | 5,983 | 8,949 | 7,840 | 4.9 | 10.6 | 17.7 |
| IDOX plc | TMT* | 1,028 | 2,972 | 7,748 | 7,555 | 4.2 | 2.7 | 4.3 |
| Dods (Group) plc | TMT* | 3,268 | 4,253 | 5,345 | 5,551 | 2.9 | 12.1 | 20.1 |
| Ideagen plc | TMT* | 1,650 | 2,467 | 4,781 | 3,249 | 2.6 | 3.1 | 5.6 |
| Inspired Energy plc | Business Services | 861 | 2,682 | 4,311 | 3,764 | 2.4 | 5.6 | 9.4 |
| Cerillion plc | TMT* | 2,200 | 2,432 | 3,821 | 3,647 | 2.1 | 9.8 | 17.8 |
| TLA Worldwide plc | Business Services | 2,136 | 3,429 | 3,713 | 4,350 | 2.0 | 7.4 | 12.5 |
| Bioventix plc | Healthcare & Education | 555 | 1,688 | 3,702 | 2,274 | 2.0 | 4.1 | 7.5 |
| Tasty plc | Consumer Markets | 2,033 | 6,085 | 3,654 | 7,558 | 2.0 | 8.4 | 12.9 |
| Plastics Capital plc | Business Services | 2,539 | 2,673 | 3,131 | 2,851 | 1.7 | 7.1 | 11.6 |
| Anpario plc | Healthcare & Education | 662 | 2,239 | 2,924 | 2,349 | 1.6 | 4.2 | 6.1 |
| Fulcrum Utility Services Ltd | Business Services | 438 | 1,650 | 2,122 | 1,331 | 1.2 | 2.2 | 2.4 |
| Electric Word plc | TMT* | 2,335 | 2,445 | 1,947 | 1,770 | 1.1 | 17.3 | 27.6 |
| Sanderson Group plc | TMT* | 1,324 | 1,562 | 1,937 | 1,682 | 1.1 | 4.6 | 8.8 |
| Wey Education plc | Healthcare & Education | 523 | 516 | 1,568 | 560 | 0.9 | 15.0 | 27.3 |
| EG Solutions plc | TMT* | 1,985 | 1,407 | 1,552 | 1,139 | 0.9 | 10.7 | 19.1 |
| Vianet Group plc | Business Services | 2,092 | 1,724 | 1,526 | 1,542 | 0.8 | 5.9 | 9.6 |
| Escher Group Holdings plc | TMT* | 1,842 | 1,735 | 1,463 | 1,788 | 0.8 | 5.8 | 9.7 |
| Everyman Media Group plc | Consumer Markets | 956 | 1,010 | 1,441 | 1,257 | 0.8 | 1.9 | 3.5 |
| FreeAgent Holdings plc | TMT* | 963 | 946 | 1,375 | – | 0.8 | 2.8 | 5.1 |
| CentralNic Group plc | TMT* | 1,122 | 1,354 | 1,338 | 1,238 | 0.7 | 3.0 | 5.5 |
| CloudCall Group plc | TMT* | 1,008 | 878 | 1,313 | 71 | 0.7 | 6.9 | 12.5 |
| Gama Aviation plc | Business Services | 1,004 | 1,171 | 1,243 | 814 | 0.7 | 1.4 | 2.4 |
| Driver Group plc | Business Services | 1,529 | 1,747 | 1,232 | 1,378 | 0.7 | 5.5 | 9.6 |
| Property Franchise Group plc (formerly MartinCo plc) |
Consumer Markets | 838 | 1,032 | 1,216 | 1,299 | 0.7 | 3.3 | 6.0 |
| Venn Life Sciences Holdings plc | Healthcare & Education | 1,496 | 1,488 | 1,169 | 1,727 | 0.6 | 11.9 | 21.7 |
| Company | Sector | Original Book cost† £'000 |
Accounting Book cost† £'000 |
31 March 2017 Valuation £'000 |
30 September 2016 Valuation+ £'000 |
% of net assets |
% of Equity held by Baronsmead Second Venture Trust plc |
% of Equity held by all funds# |
|---|---|---|---|---|---|---|---|---|
| AIM (continued) | ||||||||
| SysGroup plc | TMT* | 1,579 | 1,578 | 1,165 | 1,469 | 0.6 | 11.0 | 19.9 |
| Eden Research plc | Business Services | 1,100 | 1,105 | 1,127 | 1,208 | 0.6 | 5.8 | 10.6 |
| Paragon Entertainment Ltd | Consumer Markets | 1,045 | 642 | 1,118 | 503 | 0.6 | 11.9 | 19.1 |
| LoopUp Group plc | TMT* | 616 | 640 | 924 | 739 | 0.5 | 1.5 | 2.7 |
| Brady plc | TMT* | 653 | 702 | 829 | 741 | 0.5 | 1.3 | 2.0 |
| Belvoir Lettings plc | Consumer Markets | 919 | 826 | 751 | 1,040 | 0.4 | 2.2 | 4.0 |
| Crawshaw Group plc | Consumer Markets | 835 | 1,310 | 719 | 1,140 | 0.4 | 4.4 | 5.7 |
| Castleton Technology plc | TMT* | 247 | 499 | 597 | 606 | 0.3 | 1.2 | 2.2 |
| Begbies Traynor Group plc | Business Services | 545 | 513 | 592 | 558 | 0.3 | 1.1 | 2.1 |
| Plant Impact plc | Business Services | 462 | 510 | 557 | 554 | 0.3 | 1.4 | 2.5 |
| Science In Sport plc | Consumer Markets | 352 | 330 | 524 | 417 | 0.3 | 1.3 | 2.4 |
| STM Group plc | Business Services | 755 | 677 | 505 | 692 | 0.3 | 2.4 | 3.6 |
| InterQuest Group plc | Business Services | 620 | 726 | 394 | 439 | 0.2 | 3.0 | 6.0 |
| Scholium Group plc | Consumer Markets | 1,100 | 682 | 385 | 396 | 0.2 | 8.1 | 14.7 |
| Synectics plc | Business Services | 481 | 373 | 373 | 373 | 0.2 | 1.0 | 2.1 |
| Collagen Solutions plc | Healthcare & Education | 412 | 412 | 371 | – | 0.2 | 2.5 | 4.6 |
| Totally plc | Healthcare & Education | 86 | 197 | 282 | 307 | 0.2 | 1.0 | 1.7 |
| Adept4 plc | TMT* | 535 | 359 | 179 | 276 | 0.1 | 1.4 | 2.6 |
| MXC Capital Ltd | Business Services | 276 | 308 | 176 | 319 | 0.1 | 0.3 | 0.6 |
| Gresham House plc | TMT* | 137 | 145 | 154 | 149 | 0.1 | 0.4 | 0.7 |
| Mi-Pay Group plc | Business Services | 800 | 474 | 90 | 154 | 0.0 | 1.5 | 3.1 |
| Ubisense Group plc | TMT* | 262 | 128 | 66 | 84 | 0.0 | 0.3 | 0.4 |
| One Media iP Group plc | TMT* | 276 | 180 | 54 | 81 | 0.0 | 3.8 | 6.9 |
| APC Technology Group plc | Business Services | 2,638 | 946 | 22 | 25 | 0.0 | 0.3 | 0.4 |
| Zoo Digital Group plc | TMT* | 817 | 586 | 10 | 8 | 0.0 | 0.3 | 0.6 |
| Marwyn Management Partners plc | Business Services | 1,950 | 529 | 0 | 0 | 0.0 | 0.1 | 0.1 |
| Total AIM | 58,501 | 72,945 | 86,485 | 47.3 | ||||
| Collective investment vehicles | ||||||||
| CF Livingbridge UK Micro Cap Fund | 6,189 | 10,335 | 17,548 | 16,070 | 9.6 | |||
| JPMorgan Sterling Liquidity Fund | 17,000 | 17,000 | 17,000 | – | 9.3 | |||
| Total collective investment vehicles | 23,189 | 27,335 | 34,548 | 18.9 | ||||
| Total investments | 124,021 | 150,359 | 181,337 | 99.2 | ||||
| Net current assets | 1,378 | 0.8 | ||||||
| Net assets | 182,715 | 100.0 |
† The original book cost column provides the pro-forma combined cost of investments made by BVCT3, BVCT4 and BVCT5 prior to the acquisition and re-naming of BVCT3 as BSVT.
BSVT acquired the investments of BVCT4 at fair value on 11 March 2016 (total cost - £51,334,000) and the investments of BVCT5 at fair value on 30 November 2016 (total cost – £39,138,000). The accounting book cost column for the combined BSVT reflects the original cost of BVCT3's assets plus the fair value cost at which BVCT4's and BVCT5's assets were purchased.
The accounting cost column ties into the investment note on page 15 of these accounts however the original cost of the investment has been included to make it clearer for shareholders to review the portfolio.
* Technology, Media & Telecommunications ("TMT").
Half-yearly report for the six months ended 31 March 2017
The Registrar for Baronsmead Second Venture Trust plc is Computershare Investor Services PLC ("Computershare"). The Registrar will deal with all of your queries with regard to your shareholder account, such as:
You can contact Computershare with your queries in several ways:
| Telephone: | 0800 923 1534 | • This is an automated self-service system • It is available 24 hours a day, 7 days a week • You should have your Shareholder Reference Number ("SRN") to hand, which is available on your share certificate and dividend tax voucher and which you should always keep confidential for security reasons • Press '0' if you wish to speak to someone |
|---|---|---|
| • The Contact Centre in Bristol is available on UK business days between 8.30am – 5.00pm Monday to Friday |
||
| On-line: | Investor Centre www.investorcentre.co.uk |
• Computershare's secure website, Investor Centre, allows you to manage your own shareholding online • You will need to register to use this service on the Investor Centre web site • You should have your SRN to hand, which is available on your share certificate and dividend tax voucher and which you should always keep confidential for security reasons |
| Email: | [email protected] | |
| Post: | Computershare Investor Services PLC The Pavilions Bridgwater Road Bristol BS99 6ZZ |
Many companies are aware that their shareholders have received unsolicited phone calls or correspondence concerning investment matters. These are typically from overseas based "brokers" who target UK shareholders offering to sell them what often turn out to be worthless or high risk shares in US or UK investments. They can be very persistent and extremely persuasive. Shareholders are therefore advised to be very wary of any unsolicited advice, offers to buy shares at a discount or offers for free company reports.
Please note that it is very unlikely that either the Company or the Company's Registrar, Computershare, would make unsolicited telephone calls to shareholders and that any such calls would relate only to official documentation already circulated to shareholders and never in respect of investment "advice".
If you are in any doubt about the veracity of an unsolicited phone call, please call either the Company's Investment Manager or the Registrar on the numbers provided above and on the inside the back cover of this report.
The Company's shares are listed on the London Stock Exchange. The mid-price of the Company's shares is given daily in the Financial Times in the Investment Companies section of the London Share Service. Share price information can also be obtained from the link on the Company's website and many financial websites.
August 2017 – Quarterly factsheet to 30 June 2017 November 2017 – Announcement of final results for the period to 30 September 2017 January 2018 – Annual General Meeting
The information provided in this report has been produced in order for shareholders to be informed of the activities of the Company during the period it covers. Livingbridge VC LLP does not give investment advice and the naming of companies in this report is not a recommendation to deal in them.
Baronsmead Second Venture Trust plc is managed by Livingbridge VC LLP which is Authorised and regulated by the FCA. Past performance is not necessarily a guide to future performance. Stock market and currency movements may cause the value of investments and the income from them to fall as well as rise and investors may not get back the amount they originally invested. Where investments are made in unquoted securities and smaller companies, their potential volatility may increase the risk to the value of, and the income from, the investment.
The existing shares of the Company are listed on the London Stock Exchange and can be bought and sold using a stockbroker in the same way as shares of any other listed company.
The market makers in the shares of Baronsmead Second Venture Trust plc are:
| Panmure Gordon & Co. | 020 7886 2500 (the Company's broker) |
|---|---|
| Winterflood | 020 3400 0251 |
Qualifying investors* who invest in the existing shares of the Company can benefit from:
The UK tax treatment of VCTs is on a first in first out basis and therefore tax advice should be obtained before shareholders dispose of their shares and also if they deferred a capital gain in respect of new shares acquired prior to 6 April 2004.
* UK income tax payers, aged 18 or over, who acquire no more than £200,000 worth of VCT shares in a tax year.
Anthony Townsend (Chairman)† John Davies Malcolm Groat* Ian Orrock
Secretary Livingbridge VC LLP
Registered Office 100 Wood Street London EC2V 7AN
Investment Manager Livingbridge VC LLP 100 Wood Street London EC2V 7AN 020 7506 5717
Registered Number 04115341
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
KPMG LLP Saltire Court 20 Castle Terrace Edinburgh EH1 2EG
Solicitors
Dickson Minto W.S. Broadgate Tower 20 Primrose Street London EC2A 2EW
PricewaterhouseCoopers LLP 1 Embankment Place London WC2N 6RH
www.baronsmeadvcts.co.uk
* Chairman of the Audit Committee.
† Chairman of Management Engagement and Remuneration Committee, Chairman of the Nomination Committee.
Investment Manager T 020 7506 5600 www.livingbridge.com
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