REG - Braveheart Inv Group - Final Results for the year ended 31 March 2023
03/07/2023 07:00
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RNS Number : 6473E Braveheart Investment Group plc 03 July 2023
Prior to publication, the information contained within this announcement was
deemed by the Company to constitute inside information as stipulated under the
UK Market Abuse Regulation. With the publication of this announcement, this
information is now considered to be in the public domain.
3 July 2023
Braveheart Investment Group plc
("Braveheart", the "Company" or the "Group")
Final Results for the year ended 31 March 2023
Braveheart Investment Group plc (AIM: BRH) announces its audited annual
results for the financial year ended 31 March 2023, highlights of which are
set out below:
· Earnings per share of 2.68 pence per share (2022: 4.02 pence per
share)
· Strong technical and product development progress at Kirkstall,
Paraytec and Phasefocus
· These strategic investments are now well positioned for growth in
product, service and licence revenues
For further information:
Braveheart Investment Group plc Tel: 01738 587555
Trevor Brown, Chief Executive Officer
Viv Hallam, Executive Director
Allenby Capital Limited (Nominated Adviser and Joint Broker) Tel: 020 3328 5656
James Reeve / George Payne
Peterhouse Capital Limited (Joint Broker) Tel: 020 7469 0936
Duncan Vasey / Lucy Williams
Chief Executive Officer's Report
I am pleased to report to shareholders for the year ended 31 March 2023.
I became CEO of Braveheart in August 2015. An investor buying the shares at
the then market price and selling them at the end of the 2023 financial year
would have enjoyed a total return (compound annual growth rate "CAGR") of
*28.59% pa. By comparison, over the same period for the AIM All-Share index**,
the CAGR was less than 2% pa (in the USA the CAGR of the S&P500 was 13%
and Berkshire Hathaway 14%). In the belief of the Directors, a total compound
return of 29% per annum places Braveheart amongst the best performing UK
listed investments during this period.
Our strategy is to invest shareholder funds in businesses that we believe
possess specific characteristics capable of generating exceptional returns on
disposal. The timing and price of such disposals is impossible to forecast,
and the Board acknowledges that patience may be required of shareholders while
waiting for events to unfold. Although convention requires your directors to
offer guidance about the future, the reality is that your directors have no
more idea about timing of realisations than anyone else. Where the directors
do have control is in positioning the portfolio to maximise exposure to
potentially positive events.
Strategic Investments Overview
Paraytec Limited (Braveheart owns 100% per cent of the company)
Paraytec develops high performance specialist detectors for the analytical and
life sciences instrumentation markets. In addition, it has been undertaking a
programme with the University of Sheffield to develop rapid tests ("CX300")
for identifying pathogens, including viruses.
CX300 development programme and clinical study
As reported on 31 May 2023, the collection of patient specimens for the
COVID-19 clinical study at Sheffield Teaching Hospitals NHS Foundation Trust
was successfully completed. The data set has since been 'locked' and passed to
the independent clinical statisticians. Paraytec is awaiting the findings of
the statistical analysis and initial reporting of results, which had been
agreed for end June, but due to delays at the clinical statistician service
provider, are now expected in July 2023.
Paraytec's programme to apply the CX300 technology to a test for the rapid
diagnosis of bacteraemia causing sepsis is underway. An important element of
this work has been to meet some of the UK's leading clinicians who design and
implement the NHS treatment standards for the diagnosis and treatment of
sepsis.
These meetings have concluded that the first target for Paraytec will be an
instrument for the rapid detection of bacteria in a blood sample and if
bacteria are present, to report whether these bacteria are classed as
Gram-positive or Gram-negative. Differentiation between these two classes of
bacteria is novel and invaluable to clinicians for a number of reasons:
firstly, it will greatly help clinicians identify the likely source of the
infection; secondly, different antibiotics are used to treat Gram-positive or
Gram-negative bacteria, allowing clinicians to immediately target the best
antibiotic treatment; thirdly, this will reduce the use of broad spectrum
antibiotics to treat patients, as this can cause the bacteria present to
rapidly increase their antibiotic resistance, making it even more difficult to
treat the patient.
Paraytec's novel CX300 technology can be a major tool in the sepsis threat to
global health and, as previously reported, proof-of-concept is expected to be
completed by the end of this year. Antibiotic Stewardship is a challenge to
global health. It demands the responsible and strategic use of antibiotics to
optimise patient outcomes, minimize the development of antibiotic resistance
and preserve the effectiveness of these valuable drugs for future generations.
Other applications
The CX300 instrument is now CE marked for laboratory use and marketed for
sale, details of which are on Paraytec's website, www.paraytec.com/cx-300/
(http://www.paraytec.com/cx-300/) . Instruments are being produced and
initially sales will be direct to customer by Paraytec's team. As volumes
grow, the Company will seek volume manufacturing partners and distributors. In
parallel with the CX300 instrument sales, there is potential for a substantial
consumable market, which Paraytec intends to develop and exploit.
Together with Professor Carl Smythe and his team at Sheffield University,
Paraytec has commenced a programme to test and develop a series of user
applications for the CX300. The first in this series concerns the analysis of
protein aggregation and a Technical Note "Therapeutic Antibody Aggregation
Analysis using CX-300 and ParaySelect(TM)" is now available on the Paraytec
website (www.paraytec.com (http://www.paraytec.com) ). This shows users how
the CX300 can quantify aggregation in the monoclonal antibody Herceptin™
within 60 seconds, using a remarkably small sample of 30 microlitres. Paraytec
has instruments ready to demonstrate this procedure and is setting up a
contract service to analyse samples on behalf of researchers.
Herceptin™ is an important biopharmaceutical used to treat early and
advanced Her2+ cancers, including breast, stomach and oesophageal cancer,
either alone or as an antibody-drug conjugate. Aggregation is to be avoided
because it results in loss of function, decreased solubility, and, most
importantly, enhances unwanted immunogenicity. Aggregate information is highly
valuable to medical protein producers, who need to know if the material is
denatured or aggregated before they use it in drug production. The CX300 can
greatly increase aggregate detection over current methods, which would assist
the research, development and production of better-quality drugs and
diagnostics, whilst saving time and cost.
Phasefocus Holdings Limited (Braveheart owns 44.19% of the company)
Phasefocus' patented imaging and analysis technology uses a novel
computational method for high fidelity Quantitative Phase Imaging ("QPI") and
advanced microscopy, known in the scientific literature as "ptychography". The
technology is useful for a wide range of applications including live cell
imaging, engineering metrology and electron microscopy. The company's
principal offering, Livecyte®, combines its QPI technology with integrated,
proprietary, analysis software for live cell analysis. What sets this system
apart from its counterparts is its unique ability to continuously track
thousands of individual cells and sustain cell health and viability over
prolonged durations. This fundamental feature facilitates longitudinal studies
involving live cells, thereby permitting a more thorough exploration of
dynamic cellular processes. The system enables users to automatically
characterize growth, morphology, and motility of large populations of cells in
a 96-well plate assay format.
We believe that the Livecyte® imaging and analysis system
https://www.phasefocus.com/livecyte (https://www.phasefocus.com/livecyte) is
truly market leading. Its easy-to-use image processing and cell tracking
algorithms allow cell biologists to identify and track individual cells in
real time. Researchers can now monitor the effect of drugs on cell behaviour
over many days, identifying cell division events and subsequent daughter
cells.
Many drug treatments used in cancer therapy aim to: (1) disrupt the cell cycle
to stop the tumour growing; or (2) reduce the probability of cells causing
secondary cancers through metastasis. Livecyte® has been demonstrated to
provide novel measurements crucial to assessing the performance of both
therapy targets; cell growth, proliferation and division events are useful for
understanding (1) and cell motion and migration characteristics are valuable
for (2).
Stem cells are extremely sensitive to DNA damage, which makes them very
challenging to image with most high-content cell analysis systems which use
high-power laser sources and fluorescent labelling. Livecyte®, with its QPI
technology, produces high contrast images without the need for fluorescent
labels or a high-powered illumination source, making it more suited to stem
cell research. Cells analysed with Livecyte® are also left viable for
subsequent downstream use, e.g. for further cell growth or additional
analysis.
Unlike comparative QPI systems, Livecyte® removes the need for expensive
consumables, reduces set up times, improves image quality, expands the field
of view and greatly reduces time to results through real-time data analysis.
Two new Livecyte® applications have been developed by Phasefocus in response
to customer requests and are scheduled for launch before the end of 2023.
These will be marketed as proprietary assays, to meet the needs of cell
biologists testing drug performance in immuno-oncology and neuroscience
applications.
Livecyte® systems are already being used in research laboratories across the
globe, with over 40 scientific research papers featuring Livecyte® data
published to date. There is substantial further potential; the global live
cell imaging market is estimated to be $2.7 billion in 2023 and expected to
grow at CAGR of 10.2% over the period to 2028.
https://www.marketsandmarkets.com/Market-Reports/live-cell-imaging-market-163914483.html#:~:text=The%20global%20live%20cell%20imaging,trend%20analysis%20of%20the%20market
(https://www.marketsandmarkets.com/Market-Reports/live-cell-imaging-market-163914483.html#:~:text=The%20global%20live%20cell%20imaging,trend%20analysis%20of%20the%20market)
.
Kirkstall Limited (Braveheart owns 86.11% of the company)
Kirkstall operates in the market known as 'organ-on-a-chip', where it has
developed Quasi Vivo®, a system of chambers for cell and tissue culture in
laboratories. Its patented technology is used by researchers in the growing
New Approach Methodologies ("NAMs"), which enable human-relevant drug safety
decisions to be made without the need for animal testing.
Kirkstall is committed to delivering alternatives to animal testing into the
hands and mind-sets of researchers worldwide. With Quasi Vivo and its
associated test assays, the Directors believe that Kirkstall has the potential
to change the research landscape. Quasi Vivo® systems enable precise control
of flow and pressure, to provide a significantly more human relevant research
environment (https://kirkstall.com/why-quasi-vivo/) than competitor systems,
which enables the use of human cells/tissue slices in 2D or 3D constructs
(scaffolds, gels or spheroids) in long term toxicology, mechanistic and
metabolic studies.
Kirkstall's new QV1200 product was launched in February 2023 and has already
attracted strong interest from academic and commercial customers. The QV1200
combines all of the most useful features of the previous Kirkstall products:
it is easy to set up; allows single and multi-organ experiments; has an
air-liquid interface (e.g. for use on lung experiments) and a liquid-liquid
interface (e.g. for use on blood brain barrier experiments); has a standard
microplate compatible with lab equipment and uses the standard wells for cell
experiments. In addition, the QV1200 has an increased throughput, allows for
cell imaging and uses improved biocompatible materials. The QV1200 culture
chambers are single use, allowing Kirkstall to benefit from repeat sales from
each customer.
Together with the launch of QV1200, Kirkstall has taken the exciting step of
establishing its own contract research organisation (CRO) service to customers
from its laboratory in Sheffield. Kirkstall will use the power of its NAMs
technology to provide early stage, clinically transferrable data across a
range of applications, providing customers with greater confidence in the
success of their projects, at a fraction of the time and cost
www.kirkstall.com/contact-us/ (http://www.kirkstall.com/contact-us/) .
Kirkstall's research team is developing toxicity test assays for liver, lung
and gut cells and will offer these to others, both through its CRO service and
by providing assay kit products for other laboratories to use. In parallel
work, researchers at Oxford University are developing blood-brain barrier
assays for Kirkstall. The aim is to provide data to prove that QV1200 system
replicates the human physiology more effectively than other flow systems.
Kirkstall's products and services sit in the Cell Biology Research and CRO
markets, both of which are growing rapidly. The global cell culture market
size was USD 21.95 billion in 2021 and is expected to surpass USD 52.65
billion by 2030 with a CAGR of 10.21% during the forecast period 2022 to 2030.
The CRO market is projected to reach USD 188.5 billion by 2030 from USD 73.4
billion in 2022, at a CAGR of 12.5 %. Kirkstall's products support the Early
Phase
Development market which represents approximately 20% of this market and is
forecast to grow faster during this period due to the increasing investment in
the development of life-saving drugs.
https://www.fortunebusinessinsights.com/industry-reports/contract-research-organization-cro-services-market-100864
(https://www.fortunebusinessinsights.com/industry-reports/contract-research-organization-cro-services-market-100864)
https://www.precedenceresearch.com/cell-culture-market
(https://www.precedenceresearch.com/cell-culture-market)
Listed Investments
At 31 March 2023, Braveheart held investments in the following AIM listed
companies:
· Aukett Swanke Group plc (Braveheart owns 12.96% of the company): a
professional services group that principally provides architectural and
interior design services in the primary international market sectors of
offices, residential, education, industrial, hospitality and mixed use or
'hybrid' developments.
· Autins Group plc (Braveheart owns 15.98% of the company): an
industry-leading designer, manufacturer and supplier of acoustic and thermal
insulation solutions for the automotive industry and other sectors.
· Image Scan Group plc (Braveheart owns 7.05% of the company): a
specialist supplier of X-ray screening systems to the security and industrial
inspection markets.
· Velocity Composites plc (Braveheart owns 1.26% of the company): a UK
based company and leading supplier of composite material kits to aerospace and
other high-performance manufacturers.
Your Board believes these technology-driven companies each has a significant
opportunity to build sales and deliver profit. As always, Braveheart is an
active investor, regularly communicating with their boards and seeking to
introduce opportunities that help deliver shareholder returns.
The Company also has a number of portfolio investments that are smaller scale
legacy investments. We will continue to manage these investments and seek
exits where appropriate.
Portfolio investments
The Company also has a number of portfolio investments that are smaller scale
legacy investments which we continue to manage and seek exits where
appropriate.
Prior-Year Restatement
Your Board has reviewed its accounting policy and concluded that as Braveheart
is an investment company and in accordance with IFRS 10, Kirkstall and
Paraytec are not required to be consolidated and thus these financial
statements, including the prior year have been restated to remove these
previously consolidated entities.
Investment Strategy
When Braveheart became a company listed on AIM, the Admission Document
approved by shareholders on 27 March 2007 set out the Investment Strategy
which was appropriate to the business and the market at that time. Over the
years, Braveheart has moved away from FCA regulated legacy fund management
activities and has for some years focused on making and managing direct
investments made from its own balance sheet resources. Your Board of directors
now considers that a New Investment Strategy is needed to reflect the business
opportunities and market conditions that the Company now faces and recommends
that this amendment to the Admission Document be approved by shareholders at
the forthcoming AGM.
Outlook
Shareholder funds are now deployed maximally to enhance the attractiveness of
our investments to potential acquirers. Intensive work continues to further
develop the attractiveness and value of our 'cutting edge' science businesses.
With the bait in the water, masterful inactivity is probably the most
appropriate stance for your directors to take for now, as we wait for
approaches.
Trevor Brown
Chief Executive Officer
30 June 2023
* Braveheart share price on 24/08/2015 was 7.5p and on 31/03/23 was 7.5p.
Total dividend paid during the above period was 43.25p, which equates to a
CAGR of 28.59%.
** https://www.londonstockexchange.com/indices/ftse-aim-all-share
(https://www.londonstockexchange.com/indices/ftse-aim-all-share)
FINANCIAL REVIEW
During the year, we continued the comprehensive review of our cost base and continued to reduce the central costs.
Income Statement
Fee-based revenue was generated by Braveheart Investment Group Plc. The
principal revenue from the Group's operations comprises investment management
fees, with total revenue during the year being £51,000 (2022: £64,000).
Finance income was £Nil (2022: £Nil), this being interest on outstanding
loan notes within the directly held portfolio.
As at 31 March 2023, the total number of directly held investments in the
portfolio of Strategic Investments and the Portfolio Investments was 21
companies (2022: 18). The fair value of the directly held portfolio was
£9,458,000 (2022: £4,937,000). During the year the group made investments of
£1,828,000 into six companies: Autins Group Plc, Aukett Swanke Plc, Image
Scan Holdings Plc, KDS Architecture Limited, Kirkstall Limited and Phasefocus
Holdings Limited.
Total income for the year ended 31 March 2023, including realised gains and
unrealised revaluation gains and losses, was £2,958,000 (2022: £2,691,000).
The average number of employees remained at four during the period under
review. Employee benefits expense was £556,000 (2022: £534,000). Other
operating and finance costs increased to £283,000 (2022: £226,000).
The total profit after tax decreased to £1,585,000 (2022: £1,883,000),
equivalent to a basic profit per share of 2.68 pence (2022: 4.02 pence).
Financial Position
The Group's net assets of £10,520,000 (2022: £7,486,000).
At the year end, the Group had cash balances of £935,000 (2022: £1,853,000).
There were no material borrowings.
A summary analysis of the Group's performance is as follows:
2023 2022
£'000 £'000
Investment management revenue and sales 51 64
Finance income 21 -
Income before portfolio movements 72 64
Profit on disposal of investments 171 60
Change in fair value of investments, gain on disposal of investments and 2,958 2,691
movement in contingent liability
Total income of continuing activities 3,201 2,815
Employee benefits expense (including share- based payments) (556) (534)
Other operating and finance costs (286) (228)
Total costs on continuing activities (842) (762)
Profit before tax - continuing 2,359 2,053
Tax (774) (170)
Total profit and total comprehensive profit for the year 1,585 1,883
Opening cash balance 1,853 2,134
Investment in portfolio companies (1,529) (1,467)
Proceeds from sale of equity investments 428 246
Amount paid to BBB (6) (171)
Warrants and share options exercised - 7
Funds raised - net of share issue costs 930 2,416
Other activities (741) (1,312)
Closing cash balance 935 1,853
Net assets 10,520 7,487
Key Performance Indicators (KPIs)
The KPIs we use to monitor business performance have been changed in order to better reflect the emphasis that the Board has placed upon the development of the Strategic Investments as the best way to increase shareholder value over the short and medium term. Given the nature of our business, these KPI's remain as, primarily, financial measures. They are:
2023 2022
Cash ('£000) 935 1,853
Share price (pence) 6.75 17.75
Income ('£000) 51 64
Value of investments 9,458 4,937
Principal Risks and Uncertainties
Through its operations the Group is exposed to a number of risks. The Group's
risk management objectives and policies are described in the Corporate
Governance Statement. Braveheart is ensuring that all necessary steps have
been taken to maintain the integrity of the Company's assets and the health
and well-being of our employees.
Section 172 Statement
Section 172 (1) of the Companies Act obliges the Directors to promote the
success of the Company for the benefit of the Company's members as a whole.
This section specifies that the Directors must act in good faith when
promoting the success of the Company and in doing so, have regard (amongst
other things) to:
a. the likely consequences of any decision in the long term,
b. the interests of the Company's employees,
c. the need to foster the Company's business relationship with suppliers,
customers and others,
d. the impact of the Company's operations on the community and environment,
e. the desirability of the Company maintaining a reputation for high standards
of business conduct, and
f. the need to act fairly between members of the Company.
The Board of Directors is collectively responsible for formulating the
Company's strategy, which is to provide advisory services to SMEs and invest
in businesses where prospects appear to be exceptional and deliver growth to
its shareholders.
The Board places equal importance on all shareholders and strives for
transparent and effective external communications, within the regulatory
confines of an AIM-listed company. The primary communication tool for
regulatory matters and matters of material substance is through the Regulatory
News Service, ("RNS"). The Company's
website is also updated regularly and provides further details on the business
as well as links to helpful content such as our latest investor presentations.
Our employees are one of the primary assets of our business and will be
critical to the future success of the Company. First and foremost, the
Directors strive to ensure a safe working environment for all its staff and
contractors, and we are proud of our safety achievements in 2022/23. We also
seek to reward employees with remuneration packages which align the interests
of the Company and its shareholders with those of employees. Employees are
also provided with challenging work and external training opportunities to
ensure their continual development.
The Directors believe they have acted in the way they consider most likely to
promote the success of the Company for the benefit of its members as a whole,
as required by Section 172 (1) of the Companies Act 2006.
On behalf of the Board
Trevor E Brown
Chief Executive Officer
30 June 2023
Consolidated Statement of comprehensive INCOME for the year ended 31 March
2023
Restated
2023 2022
Notes £ £
Revenue from contracts with customers 3 50,902 64,257
Change in fair value of investments 5 2,957,665 2,690,598
Profit on disposal of investments 5 170,576 60,414
Total income 3,179,143 2,815,269
Employee benefits expense (556,146) (534,240)
Other operating costs (283,356) (225,780)
Total operating costs (839,502) (760,020)
Finance costs (2,154) (1,721)
Finance income 21,003 88
Total costs (820,653) (761,653)
Profit before tax 2,358,490 2,053,616
Tax (773,652) (170,398)
Profit from continuing operations 1,584,838 1,883,218
Total profit and total comprehensive loss for the year 1,584,838 1,883,218
Profit attributable to:
Equity holders of the parent 1,584,838 1,883,218
1,584,838 1,883,218
Earnings per share Pence Pence
- basic 4 2.68 4.02
- diluted 4 2.68 3.38
The accompanying accounting policies and notes form part of these financial
statements.
consolidated statement of financial position as at 31 March 2023
Restated Restated
2023 2022 2021
Notes £ £ £
ASSETS
Non-current assets
Property, plant and equipment 418 796 421
Investments at fair value through profit or loss 5 9,458,324 4,937,155 834,922
Debtors due in over one year 1,155,200 813,200 317,200
10,613,942 5,751,151 1,152,543
Current assets
Trade and other receivables 64,510 211,782 188,921
Cash and cash equivalents 7 934,861 1,852,742 2,133,746
999,371 2,064,524 2,322,667
Total assets 11,613,313 7,815,675 3,475,210
LIABILITIES
Current liabilities
Trade and other payables (149,656) (158,761) (473,173)
(149,656) (158,761) (473,173)
Non-current liabilities
Deferred taxation (944,050) (170,398) -
Total liabilities (1,093,706) (329,159) (473,173)
Net assets 10,519,607 7,486,516 3,002,037
EQUITY
Called up share capital 4 1,274,469 1,044,807 766,148
Share premium reserve 4 5,370,711 4,371,343 2,226,671
Share based payment reserve 471,203 309,835 137,200
Retained earnings 3,403,224 1,760,531 (127,982)
Equity attributable to owners of the Parent 10,519,607 7,486,516 3,002,037
Total equity 10,519,607 7,486,516 3,002,037
The accompanying accounting policies and notes form part of these financial
statements.
Consolidated Statement of CAsh flows for the year ended 31 March 2023
Restated
2023 2022
£ £
Operating activities
Profit before tax 2,358,490 2,053,616
Adjustments to reconcile profit before tax to net cash flows from operating
activities
Share based payment 219,223 177,930
Increase in the fair value movements of investments (2,957,665) (2,690,598)
Profit on disposal of equity investments (170,576) (60,414)
Investment movement owed to BBB 6,801 41,265
Depreciation and amortisation 378 271
Interest income (21,003) (138)
Increase in trade and other receivables (194,728) (518,861)
Decrease in trade and other payables (9,106) (314,412)
Cash flow from operating activities (768,186) (1,311,341)
Investing activities
Proceeds from sale of investments 428,066 245,871
Amount paid to BBB - (170,887)
Purchase of investments (1,529,127) (1,467,469)
Purchase of tangibles - (646)
Interest received 21,003 138
Net cash flow from investing activities (1,080,058) (1,392,993)
Financing activities
Warrants and share options exercised - 7,480
Funds raised, net of share issue costs 930,363 2,415,850
Net cash flow from financing activities 930,363 2,423,330
Net decrease in cash and cash equivalents (917,881) (281,004)
Cash and cash equivalents at the beginning of the year 1,852,742 2,133,746
Cash and cash equivalents at the end of the year 934,861 1,852,742
During the year, there were two share for share exchanges involving Aukett
Swanke plc that resulted in additional non cash investment of £298,668 and an
equal uplift in share capital and share premium.
The accompanying accounting policies and notes form part of these financial
statements.
Consolidated Statement of ChAnges in Equity for the year ended 31 March 2023
Called up Share Capital Share Premium Reserve Share based payment Reserve Retained Earnings/ (Deficit) Total Total Equity
Non-controlling interest
GROUP £ £ £ £ £ £ £
At 1 April 2021 766,148 2,226,671 137,200 (559,897) 2,570,122 (6,025) 2,564,097
Prior year adjustment - - - 431,915 431,915 6,025 437,940
At 1 April 2021 restated 766,148 2,226,671 137,200 (127,982) 3,002,037 - 3,002,037
Profit and total comprehensive profit for the year - - - 1,883,218 1,883,218 1,883,218
Allotment of shares 278,659 2,228,822 - - 2,507,481 2,507,481
Cost of shares issued - (84,150) - - (84,150) (84,150)
Share based payments - - 177,930 - 177,930 177,930
Transfer to retained earnings - - (5,295) 5,295 - -
Transactions with owners, recognised directly in equity 278,659 2,144,672 172,635 1,888,513 4,484,479 4,484,479
At 1 April 2022 restated 1,044,807 4,371,343 309,835 1,760,531 7,486,516 7,486,516
Profit and total comprehensive profit for the year - - - 1,584,838 1,584,838 1,584,838
Allotment of shares 229,662 1,034,118 - - 1,263,780 1,263,780
Cost of shares issued - (34,750) - - (34,750) (34,750)
Share based payments - - 219,223 - 219,223 219,223
Transfer to retained earnings - - (57,855) 57,855 - -
Transactions with owners, recognised directly in equity 229,662 999,368 161,368 1,642,693 3,033,091 3,033,091
At 31 March 2023 1,274,469 5,370,711 471,203 3,403,224 10,519,607 10,519,607
Share capital is the number of shares issued in the company at their nominal
value. The share premium account represents the gross proceeds from issue of
shares, less their nominal value.
Notes to the financial statements for the year ended 31 March 2023
1 Corporate information
The Group and Company financial statements of Braveheart Investment Group plc
(the Company) for the year ended 31 March 2023 were authorised for issue by
the Board of Directors on 30 June 2023 and the statements of financial
position were signed on the Board's behalf by Trevor Brown.
Braveheart Investment Group plc is a public company incorporated in the United
Kingdom under the Companies Act 2006 limited by shares. The address of the
registered office is detailed at the back of this report. The nature of the
Group's operations and its principal activities are set out in the Strategic
Report and Directors' Report. The Company is registered in Scotland. The
Company's ordinary shares are traded on the AIM market of the London Stock
Exchange.
2 Accounting policies
(a) Basis of preparation
The Group and Company financial statements have been prepared in accordance
with UK-adopted international accounting standards in accordance with the
requirements of the Companies Act 2006 and in accordance with the requirements
of the AIM rules. The principal accounting policies adopted by the Group and
by the Company are set out in the following notes.
The consolidated financial statements have been prepared on a historical cost
basis, except where otherwise indicated. The financial statements are
presented in sterling and all values are rounded to the nearest pound (£),
which is also the functional currency of the company and its subsidiaries,
except where otherwise indicated.
The Group's business activities (together with the factors likely to affect
its future development, performance and position) and its financial position
is set out in the Chief Executive Officer's Report. The Group's risk
management objectives and policies are described in the Corporate Governance
Statement. Further information regarding the Group's financial risk management
objectives and policies, including those in relation to credit risk, liquidity
risk and market risk, is provided in note 21 to the financial statements. The
Group's capital management objectives are stated on page 47, note (n).
3 Revenue from contracts with customers
Revenue is attributable to the principal activities of the Group. In 2023 and
2022, all revenue arose within the United Kingdom.
Restated
Group Group
2023 2022
£ £
Investment management 15,000 21,167
Monitoring fees 3,600 -
Consultancy 32,302 43,090
50,902 64,257
Of the revenue stated above, £32,302 (2022: £43,090) related to The Lachesis
Seed Fund Limited Partnership.
The group derives revenue from the transfer of goods and services over time
and at a point in time in the following major product lines:
Investment management Monitoring fee Consultancy Total
2023
Timing of revenue recognition
At a point in time 15,000 3,600 - 18,600
Over time - - 32,302 32,302
15,000 3,600 32,302 50,902
2022 Restated
Timing of revenue recognition
At a point in time 21,167 - - 21,167
Over time - - 43,090 43,090
21,167 - 43,090 64,257
4 Earnings per share
Basic earnings per share has been calculated by dividing the profit
attributable to equity holders of the parent by the weighted average number of
ordinary shares in issue during the year.
The calculations of profit per share are based on the following profit and
numbers of shares in issue:
Restated
2023 2022
£ £
Profit for the year 1,584,838 1,883,218
Weighted average number of ordinary shares in issue: No. No.
For basic profit per ordinary share 59,104,950 46,870,999
Potentially dilutive ordinary shares - 1,633,195
For diluted earnings per ordinary share 59,104,950 48,504,194
Dilutive earnings per share adjusts for share options granted where the
exercise price is less than the average price of the ordinary shares during
the period. At the current year end there were Nil (2022: 1,633,195)
potentially dilutive ordinary shares.
The diluted loss per Ordinary Share is calculated by adjusting the weighted
average number of Ordinary shares outstanding to consider the impact of
options, warrants and other dilutive securities.
5 Investments at fair value through profit or loss
Level 1 Level 2 Level 3
Equity investments in quoted companies Equity investments in unquoted companies Debt investments in unquoted companies Equity investments in unquoted companies Debt investments in unquoted companies Total
GROUP £ £ £ £ £ £
At 1 April 2021 Restated - - - 834,922 - 834,922
Additions at Cost 1,420,534 - - 46,935 - 1,467,469
Disposals - - - (48,274) - (48,274)
Amount owed to creditors - - - (7,560) - (7,560)
Change in Fair Value (286,680) - - 2,977,278 - 2,690,598
At 1 April 2022 Restated 1,133,854 - - 3,803,301 - 4,937,155
Additions at Cost 1,177,139 - - 650,656 - 1,827,795
Disposals (257,490) - - - - (257,490)
Amount owed to creditors - - - (6,801) - (6,801)
Change in Fair Value (41,626) - - 2,999,291 - 2,957,665
At 31 March 2023 2,011,877 - - 7,446,447 - 9,458,324
Included in the balance above are investments that would be owed to the
British Business Bank through the Revenue Share Agreement. At the year end, an
amount of £24,242 would be due to the British Business Bank on disposal. This
liability is shown in the accounts within other creditors.
5 Investments at fair value through profit or loss (continued)
Level 1 Level 2 Level 3
Equity investments in quoted companies Equity investments in unquoted companies Debt investments in unquoted companies Equity investments in unquoted companies Debt investments in unquoted companies Total
COMPANY £ £ £ £ £ £
At 1 April 2021 Restated - - - 731,366 - 731,366
Additions at Cost 1,420,534 - - 46,935 - 1,467,469
Disposal - - - (126) - (126)
Change in Fair Value (286,680) - - 2,980,518 - 2,693,838
At 1 April 2022 Restated 1,133,854 - - 3,758,693 - 4,892,547
Additions at Cost 1,177,139 - - 650,717 - 1,827,856
Disposal (257,490) - - - - (257,490)
Change in Fair Value (41,626) - - 3,002,195 - 2,960,569
At 31 March 2023 2,011,877 - - 7,411,605 - 9,423,482
As at 31 March 2023, the group total value of investments in companies was
£9,458,324 (2022: £4,937,155). The group total change in fair value during
the year was a profit of £2,957,665 (2022: profit £2,690,598).
Investments, which is made up of equity investments, are designated on initial
recognition as financial assets at fair value through profit or loss. This
measurement basis is consistent with the fact that the Group's performance in
respect of its portfolio investments is evaluated on a fair value basis in
accordance with an established investment strategy. When investments are
recognised initially, they are measured at fair value.
After initial recognition the fair value of listed investments is determined
by reference to bid prices at the close of business on the reporting date.
Unlisted equity investments are measured at fair value by the directors in
compliance with the principles of the International Private Equity and Venture
Capital Guidelines, updated and effective December 2015, as recommended by the
European Venture Capital Association. The fair value of unlisted equity
investments is determined using the most appropriate of the valuation
methodologies set out in the guidelines. These include using recent arm's
length market transactions; reference to the current market value of another
instrument, which is substantially the same; earnings or profit multiples;
indicative offers; discounted cash flow analysis and pricing models.
The Group classifies its investments using a fair value hierarchy.
Classification within the hierarchy has been determined on the basis of the
lowest level input that is significant to the fair value measurement of the
relevant investment as follows:
· Level 1 - valued using quoted prices in active markets for
identical assets;
· Level 2 - valued by reference to valuation techniques using
observable inputs other than quoted prices included within Level 1; and
· Level 3 - valued by reference to valuation techniques using
inputs that are not based on observable market data.
The fair values of quoted investments are based on bid prices in an active
market at the reporting date. All unquoted investments have been classified as
Level 3 within the fair value hierarchy, their respective valuations having
been calculated using a number of valuation techniques and assumptions,
notwithstanding that the basis of the valuation methodology preferred by the
Group is 'price of most recent investment'. To reflect the potential impact
of alternative assumptions and a lack of liquidity in these holdings, a
discount has been applied to all Level 3 valuations. When using the DCF
valuation method, reasonably possible alternative assumptions could have a
material effect on the fair valuation of investments.
The methodologies used in the year for level 3 investments are broken down as
follows:
Methodology Description Inputs Adjustments % of portfolio valued on this basis
Fund Raising Used for unquoted investments where there has been a funding round, generally The price of the most recent investment A liquidity discount is applied, typically 15%. Where last funding round is 2.4%
within the last twelve months greater than twelve months then further discounts ranging between 0% and 100%
are applied.
Debt/Loan notes Loan investments The fair value of debt investment is deemed to be cost less any impairment Impairment provision if deemed necessary 0.7%
provision
Discounted cash flow and revenue multiples Used for companies with long-term cash flows and having comparable Long term cash flows are discounted at a rate considered appropriate for the A liquidity discount is applied, typically 20% 96.9%
transactions/ companies in the listed segment business, typically 25%. Revenue multiples are typically 5 to 10 times of
forward looking revenue.
Group Group
Change in fair value in the year: 2023 2022
£ £
Fair value gains 4,722,538 2,982,077
Fair value losses (1,764,873) (291,479)
2,957,665 2,690,598
The gain in the year came from the uplift of the valuations in Phasefocus
Holdings, Paraytec and Kirkstall
Details of investments where the nominal value of the holding in the
undertaking is 20% or more of any class of share are as follows:
Caledonia Portfolio Realisations Limited ('CPR') holds a 20% aggregate
shareholding in Verbalis Limited ('Verbalis'), a design and production of
automated language translation systems company. Neither CPR nor the Company is
represented on the Board or within management of Verbalis and in the opinion
of the directors, this shareholding does not entitle the Company to exert a
significant or dominant influence over Verbalis. The carrying value of
Verbalis is £nil (2022: £nil).
The Company holds a 100% aggregate holding in Paraytec Limited, which develops
high performance specialist detectors for the analytical and life sciences
instrumentation market. The valuation of Paraytec has been reviewed following
new patent filing of intellectual property, launch of its new product and
associated business plans. The Company is represented on the board. The
carrying value of Paraytec £3,038,625 (2022: £220,622).
The Company holds a 86% aggregate holding in Kirkstall Limited, a
biotechnology company which developed a system of interconnected chambers for
cell and tissue culture in laboratories. The valuation of Kirkstall has been
reviewed following development of new intellectual property, patent
application and launch of its new product and associated business plans. The
Company is represented on the Board. The carrying value of Kirkstall is
£1,678,844 (2022: £Nil).
The Company holds a 42% aggregate holding on PhaseFocus Holdings Limited, has
developed a series of patented computational imaging techniques that have a
wide range of applications including live cell imaging, engineering metrology
and electron microscopy. The Company is represented on the Board and in the
opinion of the directors, neither this shareholding nor the representative
entitles the Company to exert a significant or dominant influence over
PhaseFocus. The valuation method has changed following consultation with
Phasefocus representatives and their advisers. The carrying value of Phase
Focus is £2,502,512 (2022: £3,418,573).
The Company holds a 38% aggregate holding on Sentinel Medical Limited, this
company is developing a point of care diagnostic device for bladder cancer
detection and monitoring. The Company is represented on the Board and in the
opinion of the directors, this shareholding nor the representative entitles
the Company to exert a significant or dominant influence over Sentinel. The
carrying value of Sentinel is £33 (2022: £33).
The Company holds a 38.65% aggregate holding in KDS Architecture Limited, a
company which provides architectural services. The Company is not represented
on the Board or within management of KDS Architecture and in the opinion of
the directors, this shareholding does not entitle the Company to exert a
significant or dominant influence over KDS Architecture. The carrying value of
KDS Architecture is £76,074 (2022: £nil).
The registered addresses for these entities are as follows:
Verbalis Limited Frostineb
Cottage, Fala, Pathhead, Midlothian, Scotland, EH37 5TB
Paraytec Limited York House,
Outgang Lane, Osbaldwick, York, England, YO19 5UP
Kirkstall Limited York
House, Outgang Lane, Osbaldwick, York, England, YO19 5UP
Gyrometric Systems Limited Dockholme Lock Cottage, 380 Bennett
Street, Long Eaton, Nottingham, England, NG10 4JF
Phasefocus Holdings Limited 125 Wood Street, London, England,
EC2V 7AW
Sentinel Medical Limited York House, Outgang Lane,
Osbaldwick, York, England, YO19 5UP
KDS Architecture Limited 42 Lytton Road, Barnet,
England, EN5 5BY
6 Investment in subsidiaries
The Company has the following interests in subsidiary undertakings:
Name Country of Incorporation Nature of Business % Interest
Caledonia Portfolio Realisations Limited (i) Scotland Investment management 100%
Braveheart Academic Seed Funding GP Limited (i) England Investment management 100%
Ridings Holdings Limited (i) England Investment management 100%
The Ridings Early Growth Investment Company Limited (ii) England Investment management 100%
Paraytec Limited (iii) England Development of high performance specialist detectors 100%
Kirkstall Limited (iii) England Biotechnology 86%
Combrook Holdings England Investment management 60%
(i) Direct subsidiary of Braveheart Investment Group plc
(ii) Indirect subsidiary of Braveheart Investment Group plc
(iii) Not consolidated
Group entities act as General Partner to, and have an interest in, the
following limited partnerships:
Name Place of % Interest
Business
Lachesis Seed Fund England 0%
The registered addresses for the subsidiary undertakings are as follows:
Caledonia Portfolio Realisations Limited
1 George Square, Glasgow, Scotland, G2 1AL
Braveheart Academic Seed Funding GP Limited
One Fleet Place, London, EC4M 7WS
Ridings Holdings Limited
One Fleet Place, London, EC4M 7WS
The Ridings Early Growth Investment Company Limited
One Fleet Place, London, EC4M 7WS
Paraytec Limited York
House, Outgang Lane, Osbaldwick, York, North Yorkshire, YO19 5UP
Kirkstall Limited York
House, Outgang Lane, Osbaldwick, York, North Yorkshire, YO19 5UP
Combrook Holdings Limited Old Linen Court, 83-85
Shambles Street, Barnsley,South Yorkshire, England, S70 2SB
7 Cash and cash equivalents
Restated Restated
Group Group Company Company
2023 2022 2023 2022
£ £ £ £
Cash at bank and on hand 934,861 1,852,742 684,532 1,602,140
Cash balances are held with HSBC Bank plc and earn interest at floating rates
based on daily bank deposit rates.
8 Prior year adjustment
The accounts have been restated in order to take Kirkstall Limited and
Paraytec Limited out of the group accounts. IFRS 10 provides mandates that an
investment entity shall not consolidate its subsidiaries or apply IFRS 3 when
it obtains control of another entity, excluding any subsidiary that is itself
an investment entity and whose main purpose and activities are providing
services that relate to the investment entity's investment activities. As
such, the consolidation of Kirkstall Ltd and Paraytec Ltd in the prior year's
financial statements is deemed to be not in accordance with IFRS 10 and as
such requires correction and the prior-year figures should be restated to
reflect this change. The effects are stated below.
Changes to the Consolidated Statement of Financial Position
As previously Adjustment at Adjustment at Restated
reported 1 April 2021 31 March 2022 31 March 2022
£ £ £ £
Non current assets
Property, plant and equipment 1,776 (1,745) 765 796
Intangible assets 26,103 (28,152) 2,049 -
Goodwill 205,775 (205,775) - -
Investments at fair value through profit or loss 4,716,080 221,075 - 4,937,155
Debtors due in over one year - 371,200 442,000 813,200
8 Prior year adjustment (Continued)
As previously Adjustment at Adjustment at Restated
Reported 31 March 2022 1 April 2021 31 March 2022 31 March 2022
£ £ £ £
Current assets
Inventory 90,113 (98,441) 8,328 -
Trade and other receivables 123,412 (69,292) 157,662 211,782
Cash and cash equivalents 1,893,931 (9,120) (32,069) 1,852,742
Current liabilities
Trade and other payables (272,432) 117,906 (4,235) (158,761)
Deferred income (7,025) 41,843 (34,818) -
Equity
Retained earnings 899,202 431,915 429,414 1,760,531
Total equity 6,607,335 437,940 441,241 7,486,516
Changes to the consolidated income statement
As previously Restated
Reported 31 March 2022 Adjustment 31 March 2022
£ £ £
Total income 185,814 (121,557) 64,257
Total costs (1,390,801) 629,148 (761,653)
Tax (104,048) (66,350) (170,398)
Profit for the year 1,441,977 441,241 1,883,218
Changes to the consolidated cash flow
As previously Restated
Reported 31 March 2022 Adjustment 31 March 2022
£ £ £
Cash flow from operating activities (1,269,438) (41,903) (1,311,341)
Net cash flow from investing activities (1,402,827) 9,834 (1,392,993)
Net cash flow from financing activities 2,423,330 - 2,423,330
Net decrease in cash and cash equivalents (248,935) (32,069) (281,004)
Cash and cash equivalents at the beginning of the year 2,142,866 (9,120) 2,133,746
Cash and cash equivalents at the end of the year 1,893,931 (41,189) 1,852,742
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