REG - Baronsmead Second VT - Annual Financial Report
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RNS Number : 5635M Baronsmead Second Venture Trust PLC 23 December 2025
Baronsmead Second Venture Trust plc
Annual Report and Audited Financial Statements
for the year ended 30 September 2025
The Directors of Baronsmead Second Venture Trust plc are pleased to announce
the Annual Financial Report for the year ended 30 September 2025. The Annual
Report and Financial Statements can be obtained from the following
website: www.baronsmeadvcts.co.uk (http://www.baronsmeadvcts.co.uk/)
Financial Highlights
· Net Asset Value ("NAV") total return (as at 30 September 2025) of
342.3p to shareholders for every 100.0p invested at launch (January 2001).
· NAV per share increased 1.2 per cent to 55.8p, before the deduction
of dividends, for the 12 months to 30 September 2025.
· Annual tax free dividend yield of 7.3 per cent based on 4.00p
dividends paid (including proposed final dividend of 2.25p) and opening NAV of
55.2p.
· £10.3mn net investments (12 months to 30 September 2025) made into
six new and fourteen follow-on investments in 19 companies.
· Realisation proceeds of £13.0mn and gain of £2.1mn, for the 12
months to 30 September 2025.
· Total net assets under management of £221.2mn as at 30 September
2025.
Investment policy
Baronsmead Second Venture Trust plc's ("the Company") investment policy is to
invest primarily in a diverse portfolio of UK growth businesses, whether
unquoted or traded on AIM, which are substantially based in the UK, although
many of these investees may have some trade overseas.
Investments are made selectively across a range of sectors in companies that
have the potential to grow and enhance their value and which will diversify
the portfolio.
The Company will make investments in accordance with the prevailing VCT
legislation which places restrictions on the type and age of investee
companies as well as the maximum amount of investment that such investee
companies may receive.
Investment securities
The Company invests in a range of securities including, but not limited to,
ordinary and preference shares, loan stocks, convertible securities, and
permitted non-qualifying investments as well as cash. Unquoted investments are
usually structured as a combination of ordinary shares and loan stocks or
preference shares, while AIM-traded investments are primarily held in ordinary
shares. No single investment may represent more than 15 per cent at the time
of investment (by VCT value) of the Company's total investments.
Liquidity
Pending investment in VCT qualifying investments, the Company's cash and
liquid funds are held in permitted non-qualifying investments.
Investment style
Investments are selected in the expectation that the application of private
equity disciplines, including active management of the investments, will
enhance value and enable profits to be realised on the sale of investments.
Co‑investment
The Company typically invests alongside Baronsmead Venture Trust plc in
unquoted and quoted companies sourced by the Manager. Following the Manager's
acquisition of the Gresham House VCTs in September 2021, the Company now also
co-invests alongside the Gresham House VCTs in new unquoted VCT qualifying
investments. All new qualifying AIM deal flow will continue to be exclusively
allocated between the Company and Baronsmead Venture Trust plc.
As detailed in the Management retention section of the Strategic Report on
page 30 of the full Annual Report and Accounts, the Manager's staff and
portfolio consultants are entitled to invest in unquoted investments alongside
the Company. This arrangement is in line with current practice of private
equity houses and its objective is to attract, recruit, retain and incentivise
the Manager's team and is made on terms which align the interests of
shareholders and the Manager.
Borrowing powers
Should it be required, the Company's policy is to use borrowing for short term
liquidity purposes only up to a maximum of 25 per cent of the Company's gross
assets, as permitted by the Company's Articles of Association.
Investment objective
The Company is a tax efficient listed company which aims to achieve long-term
positive investment returns for private investors, including tax-free
dividends.
Dividend policy
The Board will decide the annual dividends each year and the level of the
dividends will depend on investment performance, the level of realised returns
and available liquidity. The dividend policy guidelines below are not binding
and the Board retains the ability to pay higher or lower dividends relevant to
prevailing circumstances and actual realisations. However, the Board confirms
the following two guidelines that shape its dividend policy:
· The Board will, wherever possible, seek to pay two dividends to
shareholders in each calendar year, typically an interim in September and a
final dividend following the AGM in February/March; and
· The Board will use, as a guide, when setting the dividends for a
financial year, a sum representing 7 per cent of the opening Net Asset Value
of that financial year.
Key elements of the business model
Access to an attractive, diverse portfolio
The Company 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 Company invests alongside other VCTs managed or advised by Gresham House
enabling the pooling of capital to create a larger, more meaningful
shareholding in the target company. This collective investment not only
strengthens the financial support available to the business but also enhances
the Manager's ability to influence strategic direction through greater board
representation and voting power. It also typically enables more constructive
engagement with management, improved governance oversight, and a clearer
alignment of interests, ultimately supporting stronger long-term outcomes for
both investors and the company.
The Manager's approach to investing
Gresham House Asset Management Ltd ("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.
CHAIR'S STATEMENT
During the 12 months to 30 September 2025, the Company's Net Asset Value per
share increased by 0.65p per share (an increase of 1.2 per cent), from 55.16p
to 55.81p. This is before accounting for the interim dividend of 1.75p per
share paid on 8 September 2025. This is the second successive year of headline
Net Asset Value growth.
The increase in the Company's Net Asset Value is primarily attributable to the
positive performance of 7.1% in its unquoted investment portfolio. This offset
the performance of -0.5% from the Company's AIM listed portfolio. We fully
recognise that overall performance is not where we would wish it to be and
your Board continues to review and challenge the Investment Manager with a
view to learning lessons and improving future performance. The Board is also
attuned to shareholder concerns on fees, particularly performance fees, across
the broad VCT sector. In the case of performance fees, no such fees have been
paid by the Company in this period and were such fees to become payable in
future periods, any performance fee is capped at 5 per cent of Net Asset
Value.
Results
The portfolio's performance during the period reflected the challenges faced
by smaller UK companies, given the fragility of the UK economy, wider
geopolitical concerns and the shifting sands of global trade tariffs. Larger
UK companies fared better and the FTSE All Share rose by 16% over the period,
as investors had greater faith in the earnings resilience of more established
companies. The Company's Net Asset Value per share decreased by 3.9p per share
in the six month period to 31 March 2025 before rebounding by 4.6p per share
in the subsequent period to 30 September 2025.
The table below shows the movement in Net Asset Value over the year.
Pence per ordinary share
NAV as at 1 October 2024 (after final dividend) 55.16
Valuation increase (1.2 per cent) 0.65
NAV as at 30 September 2025 before dividends 55.81
Less:
Interim dividend paid on 8 September 2025 (1.75)
Proposed final dividend of 2.25p payable, after shareholder approval, on 24 (2.25)
March 2026
Illustrative NAV as at 30 September 2025 after proposed dividend 51.81
The final dividend is payable on 24 March 2026, subject to shareholder
approval.
Portfolio Review
At 30 September 2025, the Company's AIM listed and unquoted investment
portfolios were valued at £140.9 million and comprised a diverse portfolio of
42 direct investments in AIM-listed companies and 39 direct investments in
unquoted companies.
The Company's investments in three Gresham House Equity Funds were valued at
£58.9 million at 30 September.
During the summer, the Company invested £5.0 million in Strategic Equity
Capital plc, an Investment Trust focusing on UK smaller companies, also
managed by Gresham House. More information is available in the Manager's
review on pages 11 to 14 of the full Annual Report and Accounts.
These four investments provide further diversity through indirect investments
in an additional 80 companies.
Despite difficult trading conditions, performance from the Company's unquoted
investments was 7.1 per cent and included the realisation of Panthera
Biopartners, a company that the VCT first backed in 2020 and exited with
proceeds of £10.3 million at a 3.1x cost money multiple. We also highlight
that there were two newer holdings, made within the past three years, that
were written down to zero value over the past 12 months, as business
development and growth did not meet expectations see page 17 of the full
Annual Report and Accounts.
Disappointingly, the Company's portfolio of AIM-listed and other listed
investments returned -0.5 per cent during the year. This compared unfavourably
to the FTSE AIM All Share Index which returned 5.8 per cent over the same
period. This underperformance was mainly due to the performance of the largest
asset in the portfolio, Cerillion plc and was despite a significant recovery
in the value of this part of the portfolio in the second half of the period,
with notable gains in The Property Franchise Group plc and Netcall plc. This
is covered in more detail in the Manager's review on pages 11 to 14 of the
full Annual Report and Accounts.
Investments and Divestments
Your Board is once again pleased to report that the Manager continues to see
attractive opportunities for investment. During the year, the Company deployed
a total of £10.2 million in 19 companies in both new and follow-on
investments. Further details of these investments are included in the
Manager's review on pages 11 to 14 of the full Annual Report and Accounts. As
we have communicated to shareholders previously, the requirement to make
investments in earlier stage companies may result in the need for multiple
funding rounds and greater volatility of returns over time. Your Board
continues to challenge the Investment Manager on the sectoral mix of new
investments, as well as ensuring a balance of very early stage and growth
stage companies. We expect that the more mature, established portfolio of
existing investments in both quoted and unquoted companies should assist in
sustaining returns and dividends for shareholders as newer investments develop
and grow.
As mentioned above, in the unquoted portfolio, the Company divested from
Panthera Biopartners, whilst in the AIM portfolio, the Company successfully
exited Inspired plc, receiving proceeds of £2.2 million and a 2.6x money
multiple on cost.
Dividends
The Board is pleased to declare a final dividend of 2.25p per share for the
year to 30 September 2025. This will be payable on 24 March 2026, subject to
shareholder approval. An interim dividend of 1.75p per share was paid in
September and means that the total dividends for the year are 4.00p. Your
Board is pleased to have paid or declared dividends representing a yield 7.3
per cent yield based on the opening Net Asset Value of 55.16p, in line with
its dividend policy objective.
Following a review of dividend payment practices, the Board is considering
phasing out the payment of dividends by cheque. Should this occur, a phased
transition will take place and shareholders who receive their dividends by
cheque will receive communications from the Company's Registrar, City
Partnership (UK) Ltd, on the process for transitioning to bank payments. The
Board strongly encourages shareholders to provide City Partnership with bank
account information so that future dividends can be received together with any
outstanding dividend monies due. This will also ensure that all future
dividends are paid automatically into your bank account.
Principal Risks and Uncertainties
The Company faces a number of risks and uncertainties including macro-economic
and geopolitical uncertainties. There are widespread concerns about the
outlook for the UK economy and we note that global political uncertainties and
armed conflicts can influence UK government policies, UK corporate spending
and investment plans and consumer confidence. These factors provide a
significant source of risk for our existing investment portfolio as well as
for the number and quality of future investment opportunities. The Company
seeks to mitigate these risks by investing in a diverse portfolio of VCT
qualifying companies which operate in different sectors and which have
different stages of maturity. Further detail on the Risks and Uncertainties
faced by the Company are set out on pages 23 to 24 of the full Annual Report
and Accounts.
FCA regulations - Private Markets Valuation Practices review
The Company's portfolio valuation methodology has continued to be applied
consistently and in line with IPEV guidelines. The Board and Gresham House
noted the findings of the FCA's Private Markets Valuation Practices review,
issued in March 2025. Following this, Gresham House undertook a review of the
valuation practices applied to the Company's portfolio of investments, the
results of which were presented to the Board for review. The Board was assured
by the results of the internal review noting that, overall, Gresham House
demonstrated a robust valuation process, underpinned by professional judgement
and appropriate external assurance. Gresham House also took the opportunity to
implement some minor improvements to align more closely with the FCA's
recommendations. The Board has full confidence in the valuation process and
recognises the importance of its own governance role with respect to
valuations.
Autumn Budget 2025
In November 2025, the Chancellor announced a number of changes affecting VCTs
in her Autumn Budget.
On the positive side, the legislation will increase the investment and company
size limits that will allow VCTs to provide follow-on funding to portfolio
companies as they grow beyond the start-up phase. This should allow our
maturing portfolio companies to scale up more effectively. Your Board welcomes
these changes.
On the negative side, it is disappointing that the legislation will decrease
the amount of upfront tax relief available to investors on the issuance of new
shares from 30% to 20%, with effect from 6 April 2026. However, with the
proposed 2 per cent increase in the tax on dividends, we note that the value
of tax-free dividends to VCT shareholders is enhanced. Over the medium to
longer term this will lessen the impact of the reduction in upfront income tax
relief.
Both changes will be legislated in the Finance Bill 2025-26 and the Board is
aware that the AIC and VCTA have set out their initial thoughts and have begun
discussions with their members in advance of the lobbying process. We wait for
the outcome of that process.
Fundraising & Share price discount management
The Company has established various policies aimed at providing shareholders
with long term investment returns, as well as financial planning
opportunities. These include the Company's dividend policy as noted above, the
share price discount management and associated share buy- back policies, as
well as fundraisings.
Fundraising
The Company successfully raised £15 million during the year. We would like to
extend thanks to our existing shareholders for their continued support and we
warmly welcome our new shareholders.
Following this, on 4 September 2025, the Company announced its intention to
fundraise an additional £15 million in new funds in the 2025/26 tax year with
an additional £10 million over allotment facility in a joint offer for
subscription alongside our sister VCT, Baronsmead Venture Trust plc. The first
allotment was on 20 November 2025 and raised £4.1 million, with further
allotments due in January, February and April 2026.
Share price discount and buy back policies
The Board intends to maintain its policy of seeking to maintain a share price
discount to Net Asset Value of 5 per cent and to buy back shares at that level
from time to time with the objective of maintaining liquidity in the market
for its existing shares. To that end, it will also sell shares out of Treasury
in certain circumstances. The day-to-day management of these policies is
undertaken by the Manager on behalf of the Board and is subject to the
prevailing market circumstances and on the basis that the Company has adequate
resources to make new and follow-on investments and pay dividends to
shareholders.
The Board has considered the share buyback process and sought to simplify it
for Shareholders by facilitating an online process with Redmayne Bentley LLP,
an FCA authorised stockbroker. A dedicated online form to initiate a sale of
shares back to the Company can be found on the Company's website
(www.baronsmeadvcts.co.uk) under " Want to sell back your shares?". The use of
the service is entirely optional. Investors may instead choose to sell their
shares through their existing stockbroker or any other FCA authorised firm,
including execution-only platforms. Please note that the Board is not making a
recommendation on which route is most appropriate for individual shareholders.
Further information is provided under Secondary Market in the Shares of
Baronsmead Second Venture Trust plc on page 106 of the full Annual Report and
Accounts and more details regarding the number of shares bought in and out of
Treasury during the year can be found in the Directors' report on page 39 of
the full Annual Report and Accounts.
Annual General Meeting ("AGM")
The Company intends to hold the next AGM on 19 March 2026. Shareholders are
invited to attend the Shareholder Event starting with the Manager's
presentation at 11.30am This will be followed by lunch. The formal business of
the AGM will start at 1.30pm. This will include presentations from me, members
of the Manager's team, case studies as well as a Q&A session.
This year's AGM will again provide shareholders with opportunities to engage
with the Board and the Manager and I would encourage as many shareholders as
possible to attend. Please see the inside front cover for more details and how
to register to attend. Registration details will also be included in the
Notice of AGM and on the Baronsmead Second Venture Trust website.
Outlook
The risks to the global economy continue to be exacerbated by geopolitical
instability and there are worrying implications for individual economies and
for world trade. UK consumer confidence remains subdued, businesses have
become more cautious and neither is expected to improve quickly, given the
UK's fiscal and political challenges.
The unquoted portfolio companies, which are predominantly young and early-
stage in nature, may feel the impacts of any further economic disruption more
than their more mature counterparts. We systematically monitor and review the
Investment Manager's dashboard summarizing the growth and progress of unquoted
holdings. The Manager's experienced portfolio directors are proactively
guiding and advising our management teams to ensure that action is undertaken
as necessary and opportunities are capitalised on when they arise. The Board
is hopeful that the portfolio's performance will continue to improve in time
and will withstand these external influences although it is cognisant of the
likelihood of longer investment hold periods and the potential increase in
failure rates.
Past experience of investing throughout the cycle, provided that the Manager
can find attractive companies, suggests that this volatile period could also
provide an opportunity for the Company to make high quality investments whilst
building strategic stakes in existing portfolio businesses with significant
potential. The Manager continues to identify pockets of innovation and
technological development such as fintech, AI, digital health and quantum
computing technology. It is anticipated that significant opportunities exist
in these sectors and this should lead to higher returns to investors.
Following a quieter exit environment in recent years, there are positive signs
of increased acquisitions activity in unquoted companies and for smaller
listed companies, with a number of further potential exits being negotiated by
the Company's Manager. The Board welcomes the increase in exit activity yet
remains conscious that the evergreen nature of VCTs requires patient strategic
choices to be made by the Manager to ensure that long-term shareholder value
is maximised.
Your Board is pleased to see that the Manager has added senior experienced and
skilled professionals to their investment team. We believe this is vital to
help ensure that your Company's portfolio can navigate the uncertain economic
landscape.
The Board believes that the Company's 'hybrid" investment strategy of
investing in both unquoted and AIM listed VCT qualifying companies will
continue to be a strength and will help deliver greater consistency of returns
through the economic cycle. We will continue to review and challenge the
Manager to improve shareholder returns.
Sarah Fromson
Chair
22 December 2025
MANAGER'S REVIEW
The evolving macroeconomic landscape has continued to present challenges for
the types of businesses eligible for VCT investment. The imposition of US
trade tariffs along with the increase in Employers' National Insurance
introduced by the UK Government during the year and the later than expected UK
budget all placed additional cost pressures on portfolio companies,
particularly in the second half. Despite these headwinds, it is encouraging
that the portfolio, which is well diversified, with exposure to over 160
quoted and unquoted companies, has delivered a total return of 1.2 per cent in
Net Asset Value over the year.
Portfolio Review
Overview
The net assets of £221 million were invested as follows:
Asset class NAV % of Number of investees companies % return in the year**
(£mn) NAV*
Unquoted 57 25 39 7
AIM-traded companies 84 38 42 0
Collective Investment Vehicles*** 64 29 80 5
Liquid assets(♯) 16 8 N/A 4
Total 221 100 161 1
* By value as at 30 September 2025.
** Includes investee companies with holdings by more than one fund.
*** Excludes OEICs and investee companies with holdings by more than one fund.
# Represents cash, OEICs and net current assets. % return in the period
relates only to the cash liquidity funds.
The tables on pages 15 to 16 of the full Annual Report and Accounts show the
breakdown of new investments and realisations over the course of the year and
below is a commentary on some of the key highlights in both the unquoted and
quoted portfolios.
Investment activity - Unquoted and Quoted
The Company's investment strategy is primarily focused on companies operating
in parts of the economy that we believe are benefiting from long-term
structural growth trends and in sectors where we have deep expertise and
network. The amount of capital invested in each business is matched to the
scale, maturity and underlying risk profile of the company seeking investment.
During the year, there were 20 investments into 19 companies totalling £10.3
million. There were 6 new additions to the portfolio and 14 follow-on
investments made.
Six new unquoted investments were completed during the year totalling £5.0
million.
· Mobility Mojo is a disability access assessment platform
· Gentianes Solutions Ltd (trading as Much Better Adventures) is an
online travel operator specialising in creating unique 'adventure' group trips
· Penfold Savings is a pension platform providing the infrastructure and
back-end administration for customers to manage and consolidate their pensions
· Nu Quantum is a developer of quantum networking hardware that is used
to scale quantum computing systems by interconnecting multiple quantum
processors
· Spinners Group is a multi venue competitive socialising company,
offering customers activities such as darts, bowling and clay shooting
alongside food and drink
· Modo25 Limited (trading as AskBosco) is a digital advertising
agency and AI-powered software platform
There were no new quoted investments completed during the year.
The Company made fourteen additional investments totalling £5.2 million into
thirteen existing portfolio companies, 10 unquoted and 3 quoted, across the
year. This is consistent with the investment strategy of continuing to back
our high potential assets with further capital to support future growth. We
anticipate the level of follow-on investment will continue to grow as the
earlier stage portfolio continues to mature.
Investment diversification at 30 September 2025 by value
Sector*
Technology 66%
Healthcare & education 19%
Consumer markets 8%
Business services 7%
Total assets
AIM 38%
Collective Investment Vehicles 29%
Unquoted 25%
Cash liquidity funds 8%
Length of time investments held*
Pre-VCT rule change** 47%
Between 1 and 3 years 26%
Less than 1 year 13%
Between 3 and 5 years 10%
Between 5 years and VCT rule change 4%
* Direct investments only, not held by the Collective Investment Vehicles.
** Investments made prior to the VCT rule change that took effect from 18
November 2015.
Unquoted Portfolio
Performance
The unquoted portfolio increased in value by 7.1 per cent during the year
demonstrating resilience and achieving steady growth in valuations. These
results were achieved against a backdrop of continued global uncertainty with
market volatility heightened by the imposition of US trade tariffs and an
upcoming budget in the UK. Gresham House's experienced non-executive directors
and portfolio consultants continue to support the portfolio companies during
these turbulent times.
Panthera Biopartners and CitySwift were the two investments that made the
biggest positive contributions in the year. Panthera is a provider of
recruitment services for clinical trials and was divested in full during the
year following an M&A process, receiving £10.3 million and a money
multiple on cost of 3.1x. CitySwift is a SaaS platform for bus operators and
local authorities. The company secured significant new contracts during the
year, including one with Transport for London (TfL), and continued to
demonstrate consistent growth in earnings and cash flow.
The largest detractors from performance were TravelLocal and Orri. TravelLocal
struggled with challenges from macroeconomic pressures and emerging AI-driven
disruption within the travel sector. Orri underwent a period of operational
and structural change, focusing on stabilisation and cost control in an
attempt to build a path toward sustainable recovery.
As Investment Manager we remain highly engaged with the management teams
within the portfolio, sharing insight and best practice to help them both
manage risk and spot opportunities in a quickly changing environment. We have
continued to invest in our portfolio and in-house talent teams, which
alongside our extensive network of earlier stage, high growth company experts,
ensure we are well positioned to help the companies we invest in to navigate
the challenges they face whilst also continuing to develop and scale.
Divestments
Other than Panthera Biopartners, there were no other unquoted realisations
during the year. Our investments in Cisiv and Silkfred were written off at the
end of the year. The value of these investments had decreased in previous
years so the incremental impact to Net Asset Value per share during the period
was immaterial. In addition, our investments in Azarc and Mable Therapy were
also written off at the year end. A portion of the value of these investments
had also decreased in previous years. Consistent with the inherent risks of
growth capital investing, the business models of these companies were not
sufficiently robust for the current economic environment.
Quoted Portfolio (AIM‑traded investments)
Performance
Disappointingly, the quoted portfolio decreased 0.5 per cent during the year,
reflecting the ongoing elevated levels of geopolitical and macroeconomic
uncertainty in the markets but specifically reflected the impact of a
de-rating of the largest AIM investment Cerillion. For reference the AIM
market in the UK increased 5.8 per cent over the same period.
The largest detractors from performance were Cerillion and Bioventix.
Cerillion, the VCTs largest investment (9.6 per cent of Net Asset Value),
suffered from share price weakness as a result of the CEO, Louis Hall,
tendering a portion of his personal shareholding at a significant discount to
the prevailing share price during the year. Mr Hall continues to hold a
considerable shareholding (20.12 per cent) and the placing was significantly
oversubscribed with strong institutional support. The fundamental performance
of the business remains strong with substantial contract win momentum
delivered during the year and the Manager remains confident in the long-term
outlook. Bioventix suffered from share price weakness during the year driven
by disappointing earnings as a result of their core business facing challenges
in downstream markets, particularly in China.
The largest positive contributors to performance were Netcall and Property
Franchise Group. Netcall continued to execute successfully on its transition
to a cloud-based business model, with cloud services revenue and annual
contract value both rising strongly. Property Franchise Group, a property
management, sales, real estate investment and other related services company
also performed positively during the year posting record first half results in
2025.
Overall, the AIM portfolio remains in good financial health with the portfolio
delivering positive returns excluding the impact of Cerillion. We continue to
closely monitor our AIM portfolio with a rolling programme of reviews of top
AIM holdings and continue to be positive on the long-term investment prospects
of the majority of these companies. Many of the larger quoted investments have
been long-term holdings. These companies are typically profitable, cash
generative businesses with low levels of financial gearing and continue to
have attractive long-term growth prospects.
Divestments
There were two full realisations of note during the year, both corporate
actions, in Inspired and Science in Sport. Inspired accepted an all-cash
takeover offer from HGGC LLC. The Company received proceeds of £2.2 million
representing a 2.6x money multiple on cost. This represented a good outcome
for Baronsmead shareholders and demonstrated the effectiveness of the
Manager's proactive engaged investment strategy which through its combined
large shareholding, strong non-executive board and retained corporate finance
advisers were able to defend against an unwanted hostile takeover approach
attracting an alternative buyer at a much enhanced price. Science in Sport was
taken over by Einstein Bidco, with the Company receiving £0.2 million
representing a 0.58x money multiple on cost.
Our investment in Totally plc, a health care services provider, was written
off during the year following its delisting. The majority of the value of this
investment had decreased in previous years. Our investment in Crossword
Cybersecurity, a provider of cybersecurity solutions, has been substantially
written down during the period. The investment consisted of equity shares and
a convertible loan note. The equity shares were written off during the year
when the company entered into administration in November 2024. The convertible
loan investment has prudently been fully provided for although there remains
potential for some value recovery in due course through the administration
process.
Collective investment vehicles
The Company's investments in the WS Gresham House UK Micro Cap Fund ("Micro
Cap"), WS Gresham House UK Multi Cap Income Fund ("Multi Cap") and WS Gresham
House UK Smaller Companies Fund ("Small Cap") remain a core component of the
Company's portfolio construction. These investments provide shareholders with
additional diversification through exposure to an additional 80 underlying
companies, as well as access to the potential returns available from a larger
and more established group of companies that fall within the Manager's core
area of expertise.
Over the year, Small Cap and Micro Cap delivered positive returns of 4.9 per
cent and 9.5 per cent respectively, compared to the IA UK Smaller Companies
sector which returned 2.5 per cent. Multi Cap was flat for the year, compared
to the IA UK Equity Income sector which returned 10.7 per cent. The long-term
absolute and relative returns from each fund remain strong although Multi Cap
has lagged its sector in recent years largely due to its small cap positioning
during a period when larger cap UK companies have outperformed their smaller
peers materially.
During the final quarter of the year, the Company invested in Strategic Equity
Capital plc ("SEC"), a UK smaller companies focused Investment Trust managed
by Gresham House. SEC is actively managed and maintains a highly-concentrated
portfolio of 15-25 high-quality, dynamic UK smaller companies, each operating
in a niche market offering structural growth opportunities. The Company
invested £5 million at an average 7 per cent discount to the prevailing Net
Asset Value, after all potential conflicts had been assessed and cleared by
the Manager's Conflicts Committee and reviewed by the Board. The company's
share price was down 5 per cent since investment, and the discount widened to
13.3 per cent, as a result of the announcement of a tender offer for up to 100
per cent of its issued share capital. Its Net Asset Value Total Return for the
quarter was up 6.6 per cent significantly outperforming the FTSE Small Cap
Index (ex Investment Trusts) which decreased 0.1 per cent. This share price
discount has since recovered to 6.6 per cent in early December following the
successful conclusion of the tender offer process post period end.
Liquid assets (cash and near cash)
The Company had cash and liquidity OEICs of approximately £16 million at the
year-end. This asset class is conservatively managed to take minimal or no
capital risk. The average 7 day yield on the liquidity OEICs was c3.9 per cent
at the end of the year.
Budget
The Government's decision to increase VCT investment limits provides the VCT
with greater capacity to support portfolio companies at later stages of their
development. This enables us to follow high-performing businesses further on
their growth journey while maintaining appropriate portfolio balance. Although
the reduction in upfront income tax relief to 20% from April 2026 may
influence investor behaviour in future fundraising cycles, it does not affect
the fundamentals of our investment strategy. We remain focused on identifying
and backing scalable, high-growth companies where additional capital can
accelerate value creation and deliver attractive long-term returns for
shareholders.
Outlook
Macroeconomic uncertainty will continue to impact all sectors and businesses
to varying degrees. The UK economy remains sluggish with little improvement
evidenced during the latter half of the year. However, Gresham House continues
to believe this will present attractive opportunities for your Company which,
by its evergreen nature, has the advantage of being able to take a longer-term
view of both new and portfolio follow-on investments. Pockets of innovation
exist and technological developments such as fintech, AI, digital health and
quantum computing technology are sectors which Gresham House believe will
present growth opportunities for company equity value and investor returns.
The Company's portfolio contains investments in these areas and Gresham House
will continue to pursue additional opportunities supporting high quality
management teams who have a deep appreciation of their industries.
The knowledge and experience of our dedicated investment team will be
increasingly important for the foreseeable future as they support their
portfolio management teams in times of uncertain markets. In this respect,
Gresham House is well placed by having one of the largest and most experienced
teams in the industry. Despite this knowledge pool, the Manager is acutely
aware of the evolving risk profile of the pool of potential high quality VCT
investments which are increasingly commanding higher entry prices. Experience
has shown that successful growth capital investments can have longer hold
periods, whilst failures can materialise sooner impacting performance in the
medium-term.
Nevertheless, the portfolio as a whole remains well funded and is exhibiting
resilience. The varied portfolio, as a result of the hybrid nature of the
investment strategy, across a wide range of sectors, positions the Company to
take advantage of the long-term investment horizon of VCTs and affords Gresham
House the ability to choose the optimal time to exit an investment to maximise
shareholder value.
Gresham House Asset Management Ltd
Investment Manager
22 December 2025
Investments in the year
Book
Cost
Company Location Sector Activity £'000
New
Unquoted investments
Nu Quantum Ltd Cambridge Technology Developing the components needed to interconnect quantum processors, enabling 1,564
the creation of distributed, scalable quantum computing systems
Gentianes Solutions Ltd (trading as Much Better Bristol Consumer markets Adventure travel marketplace 1,025
Adventures)
Spinners Group Ltd Reading Consumer markets Offers customers playful twists on classic games including bowling, crazy 804
golf, and darts
Modo25 Ltd (trading as AskBosco) Leeds Business services Digital marketing services 804
Mobility Mojo (UK) Ltd Northamptonshire Technology Provider of software to evaluate the accessibility of building environments 447
Penfold Technology Ltd London Technology Pension platform that enables customers to manage and consolidate their 399
pensions
Total new investments 5,043
Follow-on
Unquoted investments
Patchworks Integration Ltd London Technology Leading integration platform for fast growing retail and ecommerce businesses 1,559
Orri Ltd London Healthcare & education Provider of intensive day care treatments for eating disorders 568
SecureCloud+ Ltd Berkshire Technology Defence and public sector IT systems 530
Airfinity Ltd London Healthcare & education Provides real time life science intelligence as a subscription service 416
Scileads Ltd Belfast Technology A data-intelligence platform that enables companies operating within life 407
science sector to identify, track and convert potential customers
Branchspace Ltd London Technology Specialist digital retailing consultancy and software provider to the aviation 203
and travel
industry
Revlifter Ltd London Technology AI platform using advanced behavioural analytics to deliver tailored 182
promotions to users
Gentianes Solutions Ltd Bristol Consumer markets Adventure travel marketplace 167
(trading as Much Better
Adventures)
Counting Ltd London Business services Banking and accounting software for small businesses 132
Inlights.IO Ltd Manchester Consumer markets A B2B personalisation technology business 106
(formerly Yappy Ltd)
Focal Point Positioning Ltd Cambridgeshire Technology Research and development technology business focusing on global navigation and 91
satellite systems
Total unquoted follow-on investments 4,361
Follow-on
AIM-traded investments
IXICO plc London Healthcare & education Provides technology enabled services to the biopharmaceutical industry 578
worldwide
SEEEN plc# London Technology A video technology business 168
Oberon Investments Group plc London Business services Wealth advisory service for individuals and businesses 164
Total AIM-traded follow-on investments 910
Total follow-on investments 5,271
Total investments in the year* 10,314
# Investments into unquoted convertible loan note
* Includes unquoted and AIM investments only
Realisations in the year
First Original Proceeds‡ Overall
investment book cost# £'000 multiple
date £'000 return (x)
Company
Unquoted realisations
Panthera Biopartners Ltd Full trade sale Sep-20 3,338 10,260 3.1
MXC Capital Ltd Tender offer May-15 64 30 0.5
Cisiv Ltd Written off Oct-18 789 - -
Azarc.Io Inc Written off Dec-23 652 - -
Mable Therapy Ltd Written off Jul-23 619 - -
Silkfred Ltd Written off Aug-17 966 - -
Total unquoted realisations 6,428 10,290
AIM-traded realisations
Inspired plc Tender offer Nov-11 861 2,217 2.6
Science in Sport plc Tender offer Nov-15 352 203 0.6
SEEEN plc Market sale Sep-19 798 192 0.2
Cerillion plc Market sale Nov-15 2 54 19.6
Crossword Cybersecurity plc* Written off Jul-21 2,322 - -
Totally plc Written off Sep-15 86 - -
Total AIM-traded realisations 4,421 2,666
Total realisations in the year** 10,849 12,956
# Residual book cost at realisation date.
‡ Proceeds at time of realisation including interest.
* Only equity written off. Convertible loan note still held
** Includes unquoted and AIM investments only
Final Dividend
Subject to shareholder approval at the AGM, a final dividend of 2.25p per
share will be paid on 24 March 2026 to shareholders on the register at 27
February 2026. The ex-dividend date will be 26 February 2026, and the last
date for registering DRIP instructions will be 3 March 2026.
Annual General Meeting
The AGM will be held on 19 March 2026 at Saddlers' Hall EC2V 6BR. Shareholders
are invited to attend the Baronsmead Second Venture Trust plc the Shareholder
Event starting with the Manager's presentation at 11.30am. This will be
followed by lunch. Shareholders are invited to attend an introductory
presentation by the Company Chair, Ms Sarah Fromson, followed by a Q&A
session from 1.30pm. The formal business of the Company's AGM will commence at
2.00pm.
The 2026 Notice of Annual General Meeting can be found on the Company's
website and will be posted to shareholders shortly.
Further Information
The Annual Report and Accounts for the year ended 30 September 2025 and the
2026 Notice of Annual General Meeting are both be available on
www.baronsmeadvcts.co.uk (http://www.baronsmeadvcts.co.uk) .
The Annual Report will be submitted shortly in full unedited text to the
Financial Conduct Authority's National Storage Mechanism and will be available
for inspection at data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) in accordance with
DTR 6.3.5(1A) of the Financial Conduct Authority's Disclosure Guidance and
Transparency Rules.
LEI: 2138008D3WUMF6TW8C28
END
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