REG - Baronsmead Venture - Annual Financial Report
24/12/2024 07:00
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RNS Number : 2012R Baronsmead Venture Trust PLC 24 December 2024
Baronsmead Venture Trust plc
Annual Report and Audited Financial Statements
for the year ended 30 September 2024
The Directors of Baronsmead Venture Trust plc are pleased to announce the
Annual Financial Report for the year ended 30 September 2024. 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") per share increased 6.9 per cent to 56.6p,
before the deduction of dividends, for the financial year ended 30 September
2024.
· NAV total return of 421.5p to shareholders for every 100.0p
invested at launch (April 1998).
· Annual tax free dividend yield of 7.1 per cent based on 3.75p
dividends paid (including proposed final dividend of 2.0p) and opening NAV of
52.9p.
· £13.0million of investments made into seven new and twelve
follow-on opportunities during the year.
Investment policy
Baronsmead 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, inter alia, 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 (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 Second Venture Trust plc in
unquoted and quoted companies sourced by the Manager. Following the Manager's
acquisition of the Mobeus VCTs in September 2021, the Company now also
co-invests alongside the Mobeus VCTs in new unquoted VCT qualifying
investments. All new qualifying AIM dealflow will continue to be exclusively
allocated between the Company and Baronsmead Second Venture Trust plc.
As detailed in the Management retention section of the Strategic Report in 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 NAV of that
financial year.
About Baronsmead Venture Trust Plc
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 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 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 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 which can be sold or
potentially floated in the medium term.
STRATEGIC REPORT
CHAIR'S STATEMENT
I am pleased to report that over the 12 months to 30 September 2024 the Net
Asset Value per share increased by 3.65p per share (an increase of 6.9 per
cent), from 52.94p to 56.59p before taking account of the payment of the
interim dividend of 1.75p per share paid on 9 September 2024. This follows
several years of disappointing results and occurred during a fairly mixed and
uncertain economic and political environment.
The increase in the Company's NAV is attributable to the positive performances
of our AIM and other listed investments. The value of the Company's unquoted
portfolio continued to exhibit weakness due to a combination of both difficult
trading conditions and lengthening of sales cycles. Overall, however, the
Company's 'hybrid' investment strategy of investing in both AIM-listed and
unquoted VCT qualifying companies has contributed significantly to this year's
investment performance. Your Board believes this strategy can provide greater
consistency of investment returns over the medium to long term.
Results
Pence per ordinary share
NAV as at 1 October 2023 (after final dividend) 52.94
Valuation increase (6.9 per cent) 3.65
NAV as at 30 September 2024 before dividends 56.59
Less:
Interim dividend paid on 9 September 2024 (1.75)
Proposed final dividend of 2.0p payable, after shareholder approval, on 17 (2.00)
March 2025
Illustrative NAV as at 30 September 2024 after proposed dividend 52.84
*The final dividend is payable on 17 March 2025, subject to shareholder
approval
Portfolio Review
At 30 September 2024, the Company's investment portfolio was valued at £117.2
million and comprised a diverse portfolio of 41 investments in unquoted
companies and 44 direct investments in AIM-listed companies. The Company's
investments in three WS Gresham House Equity Funds were valued at £68.5
million at 30 September. These investments provide further diversity through
indirect investments in a further 76 companies.
The Company's portfolio of AIM-listed and other listed investments increased
by 16.5 per cent during the year. This compared favourably to the FTSE AIM All
Share Index which increased by 2.0 per cent over the same period. Significant
contributors to this performance were Cerillion, which increased by 47.7 per
cent during the year, and Property Franchise Group, which increased by 54.5
per cent.
The value of the Company's unquoted investments however decreased by 8.6 per
cent during the year. This is clearly very disappointing and stems from
continued difficult trading conditions and lower valuations where the
valuations are based on the valuation of comparable listed companies and
affected by higher discount rates. The largest detractors from performance
were eConsult in the healthcare sector and RevLifter in the technology sector.
These are covered in more detail in the Manager's Review in 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 £13.0 million in 19 companies in both new and follow-on
investments. Further details of these investments are included in the
Manager's review in 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 greater volatility of returns over
time. However, the more mature, established portfolio of existing investments
should assist in sustaining returns and dividends for shareholders as the new
portfolio develops and grows.
Commensurate with a challenging valuation environment, divestments from the
unquoted portfolio were somewhat muted with only one minor full realisation
and a small amount received in deferred consideration arising from a previous
realisation (proceeds from these sources totalling approximately £0.1
million).
In contrast, in the AIM portfolio, the Manager has continued its approach of
profitable partial realisations of Cerillion. Over the course of the Company's
financial year, this resulted in the receipt of proceeds of £6.7mn at an
aggregate of 21.1x original invested cost. Additionally, its worth noting that
following the takeovers of Gresham House and Gama Aviation, the Company
received £0.4 million for a gross money multiple of 3.9x cost and £0.4
million for a gross money multiple of 0.6x cost respectively.
Dividends
The Board is pleased to declare a final dividend of 2.0p per share for the
year to 30 September 2024, payable on 17 March 2025, subject to shareholder
approval. The final dividend is payable to shareholders on the register as at
14 February 2025. An interim dividend of 1.75p per share was paid in September
and means that the total dividends for the year are 3.75p. Thus, once again,
the Board is pleased to have paid or declared dividends representing a yield
of 7.1 per cent based on the opening NAV of 52.9p, which is in line with its
dividend policy objective.
Principle Risks and Uncertainties
The Company faces a number of risks and uncertainties including macro-economic
and geopolitical uncertainties. The outlook for the UK economy in particular
as well as factors influencing the global economy including political
uncertainties and armed conflicts can influence UK government policies,
corporate spending and investment plans and consumer confidence. These factors
provide a significant source of risk for our existing investment portfolio as
well as the number and quality of future investment opportunities for future.
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 in the full Annual Report and Accounts.
VCT Regulations - Retirement Date of the UK Government's Venture Capital
Schemes
During the summer we were pleased to see the European Commission approve the
extension of the VCT scheme until 5 April 2035. This was formalised by UK
legislation on 3 September 2024. The regulations bring into effect the
extension of the Enterprise Investment Scheme (EIS) and the Venture Capital
Trust (VCT) Scheme sunset clause to 2035.
The Board welcomes this news and would like to thank the Manager, the Venture
Capital Trust Association ("VCTA"), the Association of Investment Companies
("AIC") and other parties involved for their help in getting the new
legislation enacted. We were particularly pleased with the commitment to
maintaining the Government's Venture Capital Schemes on the part of both the
previous and current governing parties.
Autumn Budget 2024
On 30 October 2024, the Chancellor of the Exchequer presented her Autumn
Budget to Parliament. Whilst there were no direct changes to VCT legislation,
there were certain changes to inheritance and the capital gains tax regimes.
It is possible that there may be increased demand from investors for other tax
efficient forms of investing such as VCTs. However, the much heralded change
to the inheritance tax treatment of AIM listed shares had the potential to
severely impact the demand for these investments from retail investors. The
reduction of the relief from 100 to 50 per cent proved to be somewhat of a
relief to the AIM market as a whole.
Succession planning
During the year, Susannah Nicklin, the Senior Independent Director and Chair
of the Nomination Committee retired from the Board. Susannah served as a
director of the Company from February 2018 until June 2024 and I would like to
thank Susannah for her dedication and hard work and wish her all the best in
her future endeavours.
The Board has commenced the process of recruiting an additional Director to
replace Susannah and we expect to finalise this process in early 2025.
In the meantime, the Board has consisted of 3 non-executive directors.
Following Susannah's retirement from the Board, Michael Probin became the
Company's Senior Independent Director and I became the Chair of the Nomination
Committee.
Shareholder friendly policies
The Company has established various policies aimed at providing shareholders
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 regular
new fundraisings.
Fundraising
On 1 October 2024 the Company announced its intention to fundraise new funds
in the 2024/25 tax year. It is the Board's current intention to launch its
offer for subscription to raise £15 million (before costs) with an additional
£10 million over allotment facility during January 2025 in a joint offer for
subscription alongside our sister VCT, Baronsmead Second Venture Trust plc.
The full terms and conditions as they pertain to these offers will be
published in the prospectus and we will ensure shareholders are notified
accordingly.
Share price discount and buy back policies
The Board intends to continue with the policy of seeking to maintain a share
price discount to NAV 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 are 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. More details regarding the number of shares bought in and out of
Treasury during the year can be found in the Director's report in the full
Annual Report and Accounts.
Annual General Meeting ("AGM")
The Company intends to hold the next AGM on 12 March 2025. Shareholders are
invited to attend the Shareholder Event starting at 10.30am. This will include
presentations from myself, members of the Manager's team, case studies and
presentations from a number of portfolio companies as well as a Q&A
session. This will be followed by lunch. The formal business of the AGM will
start at 1.15pm.
We anticipate that this year's AGM will provide shareholders with greater
opportunities to engage with the Board and the Manager and I would encourage
as many shareholders as possible to attend. Please see the inside 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 Venture Trust website. In
a slight change to recent AGM's which have been 'live-streamed' at
considerable cost but with very few people logging in to the event, the event
will be recorded and made available on the Company's website for those unable
to attend in person.
Outlook
As we look beyond the turn of the year, the geopolitical and economic
uncertainties which have prevailed for the past few years see no signs of
abating. The cautious optimism of just a few months ago would appear to have
been replaced by the prospects of trade disputes and a subdued UK economic
recovery.
The portfolio remains highly diversified and the hybrid nature of our
investment portfolio helps to mitigate those uncertainties. Through its team
of portfolio managers and highly experienced portfolio consultants, the
Manager is working with our investee companies to help them focus on
investment fundamentals, conserve cash where necessary and grow value.
The Board continues to believe it is a good time to be investing in earlier
stage, innovative and high growth potential businesses. The Manager is
actively seeking to complete new investments, believing that this is an
attractive time to invest in the economic cycle.
We remain confident that the Manager is suitably positioned to provide the
necessary levels of support to the portfolio companies and remains focussed on
retaining, recovering and helping to grow value in existing and future
investee companies. The Board also believes that the Company's 'hybrid"
investment strategy will continue to be a strength and help deliver greater
consistency of returns through the economic cycle.
Fiona Miller Smith
Chair
23 December 2024
MANAGER'S REVIEW
Despite high levels of uncertainty and volatility, equity markets delivered
modest growth during the year to 30 September 2024. Inflation and interest
rates appear to have peaked, but concerns regarding geo-political tensions in
Europe and the Middle East persist. Against this backdrop, it is encouraging
that the portfolio, which is well diversified, with exposure to over 160
quoted and unquoted companies, has delivered an increase in net asset value of
6.9 per cent over the year.
PORTFOLIO REVIEW
Overview
The net assets of £212 million were invested as follows:
Asset class NAV % of Number of investees companies % return in the year**
(£mn) NAV*
Unquoted 50 23 41 (9)
AIM-traded companies 67 32 44 17
WS Gresham House Equity Funds*** 68 32 76 18
Liquid assets(♯) 27 13 N/A 4
Totals 212 100 161 7
* By value as at 30 September 2024.
** Return includes interest received on unquoted realisations during the year.
*** Excludes investee companies with holdings by more than one fund.
# Represents cash, OEICs and net current assets. % return in the period
relates only to the OEICs.
The tables in 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, £13.0 million was invested into 19 companies including 7 new
additions to the portfolio and 12 follow-on investments.
Five new unquoted investments were completed during the year.
· Ozone API is a software developer providing banks and financial
institutions with low-cost, compliant APIs
· CitySwift is a software business that works with bus operators to
analyse data from their networks
· Azarc.io specialises in business process automation, notably
automating custom declaration forms
· SciLeads is a data-intelligence platform that enables companies
operating within Life Science verticals to identify, track and convert
potential customers
· OnSecurity Technology is a B2B cybersecurity services business
which has built a technology platform to automate the scoping, scheduling, and
reporting of human-based penetration tests
Two new AIM quoted investments were made during the year:
· IntelliAM is a provider of a machine learning platform enabling
manufacturing organisations to leverage their data and maximise the value and
efficiency of their assets
· Earnz is a consolidator in the blue collar energy services sector
created by an experienced Executive Chairman which the Manager has
successfully backed in previous ventures
The Company made additional investments totalling £4.6 million into twelve
existing portfolio companies, 3 quoted and 9 unquoted, 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 2024 by value
Sector*
Technology 63%
Healthcare & education 21%
Business services 9%
Consumer markets 7%
Total assets
WS Gresham House Equity Funds 32%
AIM 32%
Unquoted 24%
Cash liquidity funds 12%
Length of time investments held*
Greater than 5 years 56%
Between 3 and 5 years 24%
Between 1 and 3 years 13%
Less than 1 year 7%
* Direct investments only, not held by the WS Gresham House Equity Funds.
Quoted portfolio (AIM-traded investments)
Performance
The quoted portfolio delivered positive absolute performance of 16.5 per cent
during the year, despite the ongoing elevated levels of geopolitical and
macroeconomic uncertainty in the markets. For reference, the AIM market in the
UK increased 2.0 per cent over the same period. The AIM portfolio remains in
good financial health and is exposed to structural growth areas providing some
insulation from the uncertain economic conditions.
The software sector provided the largest positive contributor to performance
with Cerillion, a provider of billing and charging software to the telecoms
industry, continuing to deliver strong revenue and profit growth. Property
Franchise Group, a franchised estate agency business focussed primarily on
lettings, also performed positively during the year following its takeover of
Belvoir Lettings.
The largest detractors from performance were Crossword Cybersecurity, a cyber
consultancy and software provider, which was subscale and exhibited a
challenging cash runway; and Inspired, an energy procurement and optimisation
consultancy, which announced the potential for certain large customer projects
to be delayed impacting current year revenue and profits.
We continue to closely monitor our AIM portfolio with a rolling programme of
independent reviews of top AIM holdings and broadly continue to be positive on
the long-term investment prospects 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 during the year, both corporate actions, in
Gresham House and Gama Aviation whose proceeds of £0.4 million each
represented gross multiples of 3.9x and 0.6x cost respectively. Our investment
in DeepVerge, an environmental and life sciences group, was written off during
the year although the NAV impact of this was limited during the year as the
value of this investment had largely decreased in previous years.
The opportunity to crystallise further profits was taken for Cerillion; over
the course of the year proceeds of £6.7 million were realised at a 21.1x cost
multiple.
In addition to this, liquidation proceeds of £0.1 million were received for
InterQuest, which was written off in September 2023.
Unquoted portfolio
Performance
The unquoted portfolio decreased in value by 8.6 per cent during the year. The
macroeconomic environment remained challenging for our portfolio companies
with many experiencing difficult trading conditions and lengthening of product
and services sales cycles, most notably consumer related businesses.
This was a disappointing performance which reflects the immaturity of the
unquoted portfolio. Earlier stage investment delivered lower levels of growth
than had been forecast resulting in shortened cash runways. With this
increased risk profile it is appropriate to have reduced the holding value of
a number of the companies within our portfolio. Gresham House's experienced
Non-Executive Directors and consultants continue to support the portfolio
companies during these turbulent times with the expectation that a number of
these companies will recover value as they trade out of difficult conditions
and / or raise further capital.
Panthera Biopartners and Ozone API were the two investments that made the
biggest positive contribution in the year. Panthera, a provider of recruitment
services for clinical trials, delivered impressive sales growth and
profitability during the year as a result of new contract wins. Ozone API, a
software developer providing banks and financial institutions with low-cost,
compliant APIs, was a new investment in the year. The company grew in line
with expectations and the valuation benefitted from the preference structure
of the investment.
The largest detractors from performance were in the healthcare and technology
sectors. eConsult, an online consultation provider used by GP practices and
hospitals, experienced increased competition during the year and an ongoing
challenge of funding for its hospital product, leading to a much reduced cash
runway. This led to the decision to seek a new owner for the business and
eConsult was acquired by Huma Therapeutics Limited in a share for share
transaction in September 2024. Huma is a well funded digital healthcare
business which specialises in continuous patient monitoring. RevLifter, an AI
platform using advanced behavioural analytics to deliver tailored promotions
to users, suffered from its largest customer, a large US retailer, more than
halving its spending.
As 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
There was one full realisation in the unquoted portfolio during the year with
proceeds of £0.04 million received from the realisation of FundingXchange,
for a gross multiple of 0.1x cost. In addition to this, earn out proceeds were
received on Evotix of £0.1 million with a gross money multiple of 0.8x cost.
Our investment in Armstrong Craven, a provider of executive search and
business intelligence services, was written off during the year although the
value of this investment had largely decreased in previous years.
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 76 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 returns of 28.1 per cent and
9.8 per cent respectively, compared to the IA UK Smaller Companies sector
which returned 16.1 per cent. Multi Cap delivered a return of 22.9 per cent,
compared to the IA UK Equity Income sector which returned 15.0 per cent.
Micro Cap and Multi Cap continue to be both highly rated by independent
ratings agencies. Micro Cap's cumulative performance is currently second
quartile within the IA UK Smaller Companies sector over the past 10 years.
Multi Cap's cumulative performance has remained the top quartile within the IA
UK Equity Income sector since launch in June 2017 and is the best performer
over five years. Small Cap has also achieved top quartile cumulative
performance since launch in 2019 and is the third best performing fund over
the past five years within the IA UK Smaller Companies sector.
Liquid assets (cash and near cash)
The Company held cash and liquidity OEICs of approximately £27.3 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 4.9 per cent
at the end of the year.
Third party independent valuations
During the year, the Company engaged the services of Lincoln International and
Kroll to conduct independent third party valuations as a means of managing the
Board's risk in respect of a systematic error regarding the valuation of one
or more of the material VCT portfolio assets. The responsibility for the
preparation of draft valuations lies with the Manager, and this does not
constitute outsourcing of any part of the valuation, and the Board is
responsible for the approval of valuations. The Manager uses these independent
valuations in conjunction with their own valuations to provide independent
assurance and risk mitigation to the Board and the Board continues to support
this. Four unquoted investments were selected, focussing on the higher valued
assets in the portfolio, which also covered different characteristics such as
value based on both revenue and EBITDA multiples and those with a range of
both equity and loan instruments. In July 2024, the Board assessed the use of
the third party valuations and concluded that the process had provided comfort
on the Manager's controls and the quality of the Manager's processes compared
to the market. Furthermore, the Board agreed to reassess the use of third
party independent valuations on a regular basis.
Outlook
Geo-political flux is likely to persist throughout 2025, although the UK and
US election results will hopefully allow more clarity on the future economic
and political landscape. That being said, the impact of the UK Government's
first budget has caused an element of short term market turbulence, potential
inflationary pressures and pausing of interest rate reductions.
This environment should present attractive opportunities with the advantage of
being able to take a longer-term view of both new and portfolio follow-on
investments. The early stage cohort of investments are taking on the
challenges presented and are expected to accelerate their funding plans,
however this should also produce some compelling follow-on investment
opportunities.
Gresham House's seasoned investment managers are a vital source of knowledge
and experience available to support the Company's portfolio of management
teams. In this respect, Gresham House is well placed by having one of the
largest and most experienced portfolio teams in the industry.
Looking into 2025, the Manager remains cautiously optimistic that the
combination of a somewhat improving economic backdrop, greater political
stability and a more attractive valuation environment will produce attractive
investment opportunities when viewed with a long- term perspective.
Gresham House Asset Management Ltd
Manager
23 December 2024
Investments in the year*
Book
Cost
Company Location Sector Activity £'000
Unquoted investments
New
Ozone Financial Technology Ltd London Technology Open banking infrastructure provider 1,867
OnSecurity Technology Ltd Bristol Technology A B2B cybersecurity services 1,210
business which has built a
technology platform to automate the scoping, scheduling, and reporting of
human-based
penetration tests
Huddl Mobility Ltd (trading as Ireland Technology SaaS product for bus opreators and local authorities to aggregate, cleanse 949
and access insight from data
CitySwift
from across their bus networks
SciLeads Ltd London Technology A data-intelligence platform that enables companies operating within Life 942
Science verticals to identify, track
and convert potential customers
Azarc.Io inc London Technology Automating customs declarations 659
Follow-on
Patchworks Integration Ltd London Technology Leading integration platform for 840
fast-growing retail and ecommerce businesses
Airfinity Ltd London Healthcare & education Provides real time life science 600
intelligence as a subscription service
Metrion BiosciencesLtd Cambridgeshire Healthcare & education Ion channel drug discovery and 486
safety assessment service provider
Counting Ltd London Business services Banking and accounting software for small businesses 470
Orri Ltd London Healthcare & education Provider of intensive day care 340
treatments for eating disorders
Focal Point Positioning Ltd Cambridgeshire Technology A research and development 226
focused technology business
focusing on global navigation and satellite systems
Yappy Ltd Manchester Consumer markets Supplier of customisable pet products 222
Rockfish Group Ltd Devon Consumer markets Seafood restaurant chain 175
Dayrize B.V. Amsterdam Technology A rapid product-level sustainability 160
impact assessment software tool for retailers and Consumer Packaged
Goods ("CPG") companies
Total unquoted investments 9,146
Book
Cost
Company Location Sector Activity £'000
AIM-traded investments
New
IntelliAM AI plc South Yorkshire Technology Provider of a machine learning 2,118
platform enabling manufacturing organisations to leverage their data and
maximise the value and
efficiency of their assets.
Earnz plc Gloucestershire Business services Specialist energy and heat 702
decarbonisation platform
Follow-on
Eden Research plc Oxfordshire Business services Developer of biological fungicides 732
and bio equivalents
PCI-PAL plc London Technology Secure payment service provider 196
Oberon Investments Group plc London Business services Wealth advisory service for 105
individuals and businesses
Total AIM-traded investments 3,853
Total investments in the year# 12,999
# includes unquoted and AIM investments only.
Realisations in the year
First Original Overall IRR
multiple
investment book cost(#) Proceeds(‡)
Company date £'000 £'000 return (x) (%)
Unquoted realisations
Funding Xchange Ltd Full trade sale Nov 19 705 44 0.1 -
Armstrong Craven Ltd Written off Jun 13 543 - 1.1* 1.6
Total unquoted realisations 1,248 44
AIM-traded realisations
Cerillion plc Market sale Nov 15 317 6,685 21.1 43.4
Gama Aviation plc Tender offer Nov 10 776 440 0.6 -
Gresham House plc Takeover Nov 14 112 433 3.9 15.9
Deepverge plc Written off Jun 21 1,410 - - -
Total AIM-traded realisations 2,615 7,558
Total realisations in the year** 3,863 7,602
During the year, liquidation proceeds of £114k were received from InterQuest
Group plc, which was written off in September 2023; and earn out proceeds of
£62k were received from Evotix Ltd, which was realised in May 2023; and
liquidation proceeds of £4k were received from Crawshaw Group plc, was was
written off in October 2018.
# 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.
** Includes unquoted and AIM investments only.
Final Dividend
Subject to shareholder approval at the AGM, a final dividend of 2.0p per share
will be paid on 17 March 2025 to shareholders on the register at 14 February
2025. The ex-dividend date will be 13 February 2025, and the last date for
registering DRIP instructions will be 24 February 2025.
Annual General Meeting
The AGM will be held on 12 March 2025 at Saddlers' Hall EC2V 6BR. Shareholders
are invited to attend the Shareholder Event starting at 10.30am. This will
include presentations from the Company Chair, members of the Manager's team,
case studies and presentations from a number of portfolio companies as well as
a Q&A session. This will be followed by lunch. The formal business of the
AGM will start at 1.15pm. The 2025 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 2024 and the
2025 Notice of Annual General Meeting will both be available today 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: 213800VQ1PQHOJXDDQ88
END
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