REG - Braveheart Inv Group - Final Results
16/06/2022 07:00
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RNS Number : 0671P Braveheart Investment Group plc 16 June 2022
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.
16 June 2022
Braveheart Investment Group plc
("Braveheart", the "Company" or the "Group")
Final Results for the year ended 31 March 2022 & Notice of AGM
Braveheart Investment Group plc (AIM: BRH) announces its audited annual
results for the financial year ended 31 March 2022, highlights of which are
set out below:
· Earnings per share of 3.10 pence per share (2021: 36.30 pence per
share)
· Funds raised of £2.5 million before expenses during the year
· Additional investment into Phase Focus Limited
· Continued progress at Paraytec Limited
For further information:
Braveheart Investment Group plc Tel: 01738 587555
Trevor Brown, Chief Executive Officer
Allenby Capital Limited (Nominated Adviser and Joint Broker) Tel: 020 3328 5656
David Worlidge / James Reeve / George Payne
Peterhouse Capital Limited (Joint Broker) Tel: 020 7469 0936
Heena Karani / Lucy Williams
Chief Executive Officer's Report
I am pleased to report to shareholders for the year ended 31 March 2022.
Overview
Group strategy continues to be application of the Board's expertise and
financial resources to those existing and newly acquired businesses which the
Board consider have the greatest potential for outperformance. Details of
these investments together with operational updates about each of these
companies follow below.
Portfolio and Strategic Investments
As in previous years we have continued to divide our investments into two
categories, namely our Strategic Investments and Portfolio Investments. Each
of the Strategic Investments, of which there were five at the end of the year
under review, is summarised below in this annual report. The Portfolio
Investments are direct investments into third party companies that were made
by Braveheart from 2002 until the summer of 2015 (the 'Portfolio
Investments'). There are investments into a total of 13 different companies
within the Portfolio Investments as at 31 March 2022. Sentinel Medical
Limited is held in the accounts at £33, the original cost of Braveheart's
shareholding holding. This investment has been moved out of Strategic
Investments and into Portfolio Investments, until the business reaches a point
where it is determined to have significant value. Therefore, at the end of the
period under review there were investments into a total of 18 companies. We
will continue to manage the Portfolio Investments with a view to seeking exits
wherever possible.
Strategic Investments Overview
Paraytec Limited (Braveheart owns 100% per cent of the company)
Paraytec Limited ("Paraytec") develops high performance specialist detectors
for the analytical and life sciences instrumentation markets. In addition, the
company has undertaken a programme with the University of Sheffield to
develop a rapid test for identifying cancer and pathogens, including viruses.
As reported within our RNS on 15 November 2021, Paraytec has continued to
refine the platform technology that underpins its proposed fast, sensitive
COVID-19 test. The platform technology (product reference "CX300") comprises a
low-cost instrument that utilises intense fluorescent light to detect small
specific pathogens or cells in a biological sample.
Although the market for COVID-19 tests has dramatically changed in recent
months, the Company believes there will continue to be a significant long-term
global market for point-of-care COVID-19 testing. In addition, it is clear
that Paraytec's technology platform has the potential for many other
applications, and these are primarily the focus of interest in ongoing
discussions with potential licensees and acquirers.
Paraytec has recently received ethical and HRA approval to proceed with a
clinical study at the Sheffield Teaching Hospitals NHS Foundation Trust. This
study will collect specimens from COVID-19 positive participants for up to ten
days and monitor the ability of the Paraytec test to follow the course of
infection by comparison with the culture of SARS-CoV-2 virus from the
specimens. The test performance will also be compared with PCR (polymerase
chain reaction) and lateral flow tests. If successful, the Directors believe
these results will be a powerful demonstration of the accuracy and uniqueness
of the Paraytec test.
Professor Carl Smythe's team has established a CAT 3 laboratory at
the University of Sheffield to support the development of the CX300
technology platform. This will allow the research team to study a wide range
of pathogens that cause infectious diseases, including COVID-19. Potential
acquirers have focused their interest on a range of applications for the
CX300, so the Paraytec team will now concentrate on developing multiple tests,
including those previously commenced in bladder cancer and bacteraemia that
causes sepsis.
Phasefocus Holdings Limited (Braveheart owns 42.67 per cent of the company)
Phasefocus Holdings Limited ("Phasefocus"), a spin-out from the University of
Sheffield, has developed a series of patented computational imaging and
analysis techniques that have a wide range of applications including live cell
imaging, engineering metrology and electron microscopy. The company's novel
method for high fidelity quantitative imaging and microscopy is known in the
scientific literature as "ptychography".
Phasefocus's flagship product, Livecyte(TM), allows researchers and
biotechnology companies to characterise the dynamic behaviour of live cells in
ways previously not possible. Livecyte integrates Phasefocus's patented
label-free Quantitative Phase Imaging technology with state-of-the-art
automatic cell tracking algorithms. This enables users to automatically
characterize growth, morphology and motility of large populations of cells in
a 96-well plate assay format.
Since moving to a distribution sales model in 2019, partnerships with a wide
range of distributors have resulted in a marked increase in awareness of the
company's products in the marketplace. The reach of distributors, such as
Cytena (part of the BICO group, formerly CELLINK Inc.) and SinsiTech in China,
has helped Phasefocus enter new territories and has led to a rapid growth in
revenues.
In the company's financial year ended 31 December 2021, revenue increased by
more than 125% over the prior year. The company's head count also increased by
more than 10% in 2021. To enable the company to keep up with production
demand, in March 2022 Phasefocus opened an expanded production facility in
Nottingham Science Park, Nottingham, UK. The new facility has more than four
times the floor space of the previous production facility, with room to expand
further as demand grows in future years.
Kirkstall Limited (Braveheart owns 80% of the company)
Kirkstall Limited ("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 'organ-on-a-chip' market, where academia and
drug development companies need to maintain living cells in a nutrient flow.
With most of Europe's university research laboratories operating fully again
following relaxation of restrictions on non-COVID related research, Kirkstall
has seen a steady upturn in sales enquiries and orders for its Quasi Vivo®
products. The versatility and uniqueness of these products has been able to
attract attention into wider application areas including inhalation toxicity,
parasitic infections, nanotechnology, biosystem ecologies.
There has also been increased interest in its products from non-European
countries including USA, China, India and Singapore in the field of non-animal
micro-physiological in vitro models.
In the last year, the company identified three new peer reviewed publications
from research teams utilising Kirkstall's Quasi Vivo® system. Kirkstall is a
strong supporter of such research, as publications like these are an excellent
marketing tool.
The first study involved the evaluation of drug absorption via
gastrointestinal tract tissue and was conducted at Sheffield Hallam University
in collaboration with the Croda Group. The research is the result of
Kirkstall's partnership with Animal Free Research UK that started two years
ago to support human-relevant science and the principle of the replacement of
animals in research. https://doi.org/10.3390/pharmaceutics14020364
(https://doi.org/10.3390/pharmaceutics14020364)
The second study was conducted by the research group of Berthold Huppertz at
the Medical University of Graz, Austria. The study involved ex vivo human
placental tissue and concluded that Kirkstall's Quasi Vivo® system is the
most native-like in vitro system that can be used to simulate blood flow from
the mother to placenta and back, and thus can enable novel and more
physiological study designs. https://doi.org/10.3390/ijms22147464
(https://doi.org/10.3390/ijms22147464)
The third study was conducted by the group of Louise Carson, School of
Mechanical and Aerospace Engineering, Queens University Belfast. The group
utilised the Quasi Vivo® system to develop an in vitro model to evaluate long
term biocompatibility of bone substitute biopolymer constructs.
10.1016/j.actbio.2021.07.049 (https://doi.org/10.1016/j.actbio.2021.07.049)
Since September 2021, Kirkstall's Quasi Vivo® system has been on public
display at the Francis Crick Institute, London at their 'Outwitting Cancer'
exhibition.
www.crick.ac.uk/whats-on/exhibitions/outwitting-cancer/outwitting-cancer-exhibition
(http://www.crick.ac.uk/whats-on/exhibitions/outwitting-cancer/outwitting-cancer-exhibition)
A new Quasi Vivo®™ platform with advanced fluid flow is in late stage
development at Kirkstall. The system is a complete redesign, incorporating new
features which the directors of Kirkstall believe are highly desired by both
pharmaceutical and academic users. Prototypes are currently undergoing user
testing by Kirkstall's partners in the CyGenTig European consortium, in which
new techniques are under development for the production of engineered tissues
by optogenetics, aiming to build replacement human organs by controlling
individual cell growth using coloured laser light.
Autins Group plc (Braveheart owns 8.7% of the company)
During the period, Braveheart invested in Autins Group plc ("Autins") (AIM:
AUTG) through market purchases of shares. Autins specialises in solving
acoustic and thermal problems in the automotive industry and other specialist
applications. In particular, the company's leading product Neptune, a
non-woven microfibre web, is produced by a mixture of engineered polyester
fibre and melt-blown polypropylene. This material outperforms traditional
automotive insulation and is gaining traction in office and flooring acoustics
applications.
The Board considers that this investment fits well in its portfolio of
advanced technology businesses and seeks to identify opportunities
with Autins that will benefit both companies.
Velocity Composites plc (Braveheart owns 4.13% of the company)
In September 2021, Braveheart acquired 4.13% of Velocity Composites plc
("Velocity") (AIM: VEL) through the purchase of shares. Velocity is a leading
supplier of advanced composite material kits to the Aerospace sector. Velocity
Composites' clients include multi-national manufacturers of composite parts
and assemblies, who in turn deliver to the world's leading civil and military
aircraft manufacturers. The Airbus A320, A330, A350, A380, Eurofighter
Typhoon, F35 Joint Strike Fighter, Boeing 737, Boeing 787 and V22 Osprey are
all constructed using parts manufactured from Velocity's kits.
The Board considers that this investment fits well in its portfolio of
advanced technology businesses.
Outlook
We have entered our new financial year acutely aware of the geo-political and
macro-economic challenges the world is facing. However, we are hopeful that
this turbulence will also present interesting new investment opportunities and
we will be positioned to respond as events unfold.
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 £43,000 (2021: £60,000).
Revenue derived from strategic subsidiary undertakings has decreased by
£64,000 from £205,000 in 2021 to £141,000 in 2022. Finance income was £Nil
(2021: £Nil), this being interest on outstanding loan notes within the
directly held portfolio.
As at 31 March 2022, the total number of directly held investments in the
portfolio of Strategic Investments and the Portfolio Investments was 18
companies (2021: 19), of which two have been consolidated into Braveheart's
accounts. The fair value of the directly held portfolio, excluding the two
companies now consolidated into the Company's accounts, was £4,716,080 (2021:
£613,847). During the year the group made investments of £1,467,000 into
three portfolio companies, Autins Group Plc, Velocity Composites Plc and Phase
Focus Holdings Limited. This excludes investments made into investments that
are controlled by the Group. Two investments (being Kirkstall and Paraytec)
that are considered as Strategic Investments by the Board are now deemed to be
'controlled' by the Company and as a result of this, those companies have been
consolidated into Braveheart's accounts (but remain categorised by management
as Strategic Investments). At the year end, the value of these two investments
was £220,622 (2021: £220,622), although the value in the consolidation in
terms of goodwill stands at £205,775 (2021: £205,775, two companies).
Therefore, the fair value of the directly held portfolio (Strategic
Investments and Portfolio Investments and including the two investments that
have now been consolidated into the Company's accounts) was £4,921,855 (2021:
£819,622).
Total income for the year ended 31 March 2022, including realised gains and
unrealised revaluation gains and losses, was £2,937,000 (2021: £16,562,000).
The average number of employees remained at 7 during the period under review.
The number of employees working within the Group, excluding employees of
Kirkstall and Paraytec, was 4 during the year under review (2021: 3). Employee
benefits expense was £636,000 (2021: £1,341,000). Other operating and
finance costs decreased to £753,000 (2021: £954,000).
The total profit after tax decreased to £1,442,000 (2021: £13,907,000),
equivalent to a basic profit per share of 3.10 pence (2021: 36.30 pence).
Financial Position
The Group's net assets of £6,607,000 (2021: £2,564,000), include goodwill of
£206,000 (2021: £206,000).
The carrying value of goodwill was reviewed during the year. The income method
was not deemed appropriate for the companies under review due to the
difficulty of projecting the future income of these companies, so market value
approach was considered more appropriate.
At the year end the Group had cash balances of £1,894,000 (2021: £2,143,000
(including discontinued operations)). There were no material borrowings.
A summary analysis of the Group's performance is as follows:
2022 2021
£'000 £'000
Investment management revenue and sales 186 269
Finance income - -
Income before portfolio movements 186 269
Profit on disposal of investments 60 7,690
Profit on sale of subsidiary - 8,931
Change in fair value of investments, gain on disposal of investments and 2,691 (329)
movement in contingent liability
Total income of continuing activities 2,937 16,561
Employee benefits expense (including share- based payments) (636) (1,341)
Impairment of goodwill - (63)
Other operating and finance costs (755) (955)
Total costs on continuing activities (1,391) (2,359)
Profit before tax - continuing 1,546 14,202
Loss on discontinued operations - (69)
Tax (104) (226)
Total profit and total comprehensive profit for the year 1,442 13,907
Opening cash balance 2,143 685
Investment in portfolio companies (1,467) (250)
Proceeds from sale of equity investments 246 17,346
Amount paid to BBB (171) -
Dividends paid - (15,859)
Warrants and share options exercised 7 867
Funds raised - net of share issue costs 2,416 641
Other activities (1,280) (1,287)
Closing cash balance 1,894 2,143
Net assets 6,607 2,564
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:
2022 2021
Cash ('£000) 1,894 2,143
Share price (pence) 17.75 70.50
Income ('£000) 186 269
Value of investments 4,716 614
On behalf of the Board
Trevor E Brown
Chief Executive Officer
15 June 2022
Consolidated Statement of comprehensive INCOME for the year ended 31 March
2022
2022 2021
Notes £ £
Revenue from contracts with customers 2 185,814 268,725
Change in fair value of investments 2,690,598 (329,083)
Profit on disposal of investments 4 60,414 7,690,287
Profit on sale of subsidiary 4 - 8,931,434
Total income 2,936,826 16,561,363
Employee benefits expense (636,141) (1,340,954)
Impairment of goodwill 7 - (62,543)
Other operating costs (752,449) (953,791)
Total operating costs (1,388,590) (2,357,288)
Finance costs (2,349) (1,745)
Finance income 138 150
Total costs (1,390,801) (2,358,883)
Profit before tax 1,546,025 14,202,480
Tax (104,048) (226,367)
Profit from continuing operations 1,441,977 13,976,113
Loss from discontinued operations, net of tax - (69,350)
Total profit and total comprehensive loss for the year 1,441,977 13,906,763
Profit attributable to:
Equity holders of the parent 1,453,804 13,936,436
Non-controlling interest (11,827) (29,673)
1,441,977 13,906,763
Earnings per share Pence Pence
- basic 5 3.10 36.30
- diluted 5 2.82 35.25
consolidated statement of financial position as at 31 March 2022
2022 2021
Notes £ £
ASSETS
Non-current assets
Property, plant and equipment 1,776 2,166
Intangible assets 26,103 28,152
Goodwill 205,775 205,775
Investments at fair value through profit or loss 4,716,080 613,847
4,949,734 849,940
Current assets
Inventory 90,113 98,441
Trade and other receivables 123,412 105,772
Cash and cash equivalents 8 1,893,931 2,142,866
2,107,456 2,347,079
Total assets 7,057,190 3,197,019
LIABILITIES
Current liabilities
Trade and other payables (272,432) (591,079)
Deferred income (7,025) (41,843)
(279,457) (632,922)
Non-current liabilities
Deferred taxation (170,398) -
Total liabilities (449,855) (632,922)
Net assets 6,607,335 2,564,097
EQUITY
Called up share capital 1,044,807 766,148
Share premium reserve 4,371,343 2,226,671
Share based payment reserve 309,835 137,200
Retained earnings 899,202 (559,897)
Equity attributable to owners of the Parent 6,625,187 2,570,122
Non-controlling interest (17,852) (6,025)
Total equity 6,607,335 2,564,097
Consolidated Statement of CAsh flows for the year ended 31 March 2022
2022 2021
£ £
Operating activities
Profit for the year 1,441,977 13,906,763
Adjustments to reconcile profit before tax to net cash flows from operating
activities
Share based payment 177,930 400,148
(Increase) / Decrease in the fair value movements of investments (2,690,598) 329,083
Profit on disposal of subsidiary - (8,931,434)
Profit on disposal of equity investments (60,414) (7,690,287)
Fees taken from investment proceeds - 78,419
Bonus in lieu of cash - 300,000
Non-controlling interest on disposal - (92,673)
Investment movement owed to BBB 41,265 (15,528)
Depreciation and amortisation 12,919 11,755
Impairment of goodwill - 62,543
Interest income (138) (150)
Taxation 170,398 (4,136)
Decrease in inventory 8,328 39,253
Increase in trade and other receivables (17,640) (8,400)
(Decrease) / Increase in trade and other payables (353,465) 330,225
Cash flow from operating activities (1,269,438) (1,284,419)
Investing activities
Proceeds from sale of investments 245,871 17,346,338
Amount paid to BBB (170,887) -
Purchase of investments (1,467,469) (250,000)
Purchase of intangibles (9,834) (5,549)
Purchase of tangibles (646) (1,124)
Interest received 138 150
Net cash flow from investing activities (1,402,827) 17,093,951
Financing activities
Dividends paid - (15,859,160)
Warrants and share options exercised 7,480 866,980
Funds raised, net of share issue costs 2,415,850 640,623
Net cash flow from financing activities 2,423,330 (14,351,557)
Net (decrease) / increase in cash and cash equivalents (248,935) 1,457,975
Cash and cash equivalents at the beginning of the year 2,142,866 684,891
Cash and cash equivalents at the end of the year 1,893,931 2,142,866
Consolidated Statement of ChAnges in Equity for the year ended 31 March 2022
Called up Share Capital Share Premium Reserve Share based payment Reserve Retained Earnings/ (Deficit) Total Non-controlling interest Total Equity
£ £ £ £ £ £ £
At 1 April 2020 561,555 91,657 - 1,043,955 1,697,167 79,572 1,776,739
Profit and total comprehensive profit for the year - - - 13,936,436 13,936,436 (29,673) 13,906,763
Allotment of shares 204,593 2,135,014 - - 2,339,607 - 2,339,607
Dividend paid - - - (15,859,160) (15,859,160) - (15,859,160)
Non-controlling interest on disposal - - - 55,924 55,924 (55,924) -
Share based payments - - 400,148 - 400,148 - 400,148
Transfer to retained earnings - - (262,948) 262,948 - - -
Transactions with owners, recognised directly in equity 204,593 2,135,014 137,200 (1,603,852) 872,955 (85,597) 787,358
At 1 April 2021 766,148 2,226,671 137,200 (559,897) 2,570,122 (6,025) 2,564,097
Profit and total comprehensive profit for the year - - - 1,453,804 1,453,804 (11,827) 1,441,977
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 1,459,099 4,055,065 (11,827) 4,043,238
At 31 March 2022 1,044,807 4,371,343 309,835 899,202 6,625,187 (17,852) 6,607,335
Notes to the financial statements for the year ended 31 March 2022
1 Corporate information
The Group and Company financial statements of Braveheart Investment Group plc
(the Company) for the year ended 31 March 2022 were authorised for issue by
the Board of Directors on 15 June 2022 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.
While the financial information included in this announcement has been
prepared in accordance with International Financial Reporting Standards
(IFRSs), this announcement does not itself contain sufficient information to
comply with IFRSs. The Group has also published full financial statements that
comply with IFRSs available on its website and to be circulated shortly.
The financial information set out in the announcement does not constitute the
company's statutory accounts for the years ended 31 March 2022 or 2021. The
financial information for the year ended 31 March 2021 is derived from the
statutory accounts for that year, which were prepared under IFRSs, on which
the auditors gave a qualified report, and which have been delivered to the
Registrar of Companies.
The financial information for the year ended 31 March 2022 is derived from the
statutory accounts for that year, which were prepared under IFRSs, on which
the auditors have given an unqualified report that did not contain a statement
under section 498(2) or 498(3) of the Companies Act 2006, and which will be
delivered to the Registrar of Companies.
2 Accounting policies
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 (£)
except where otherwise indicated.
3 Revenue from contracts with customers
Revenue is attributable to the principal activities of the Group. In 2022 and
2021, all revenue arose within the United Kingdom.
2022 2021
£ £
Investment management 1,500 3,600
Consultancy 43,090 59,634
Sale of goods 33,537 54,333
Grant income 74,984 111,181
Royalties 32,703 39,977
185,814 268,725
Of the revenue stated above, £43,090 (2021: £59,634) 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 Consultancy Sale of goods Grant income Royalties Total
2022
Timing of revenue recognition
At a point in time 1,500 - 33,537 74,984 - 110,021
Over time - 43,090 - - 32,703 75,793
1,500 43,090 33,537 74,984 32,703 185,814
2021
Timing of revenue recognition
At a point in time 3,600 - 54,333 111,181 - 169,114
Over time - 59,634 - - 39,977 99,611
3,600 59,634 54,333 111,181 39,977 268,725
4 Profit on sale of investment and subsidiary
During the previous year, the company disposed of its shareholding in Pharm 2
Farm Limited in exchange for 310,354,815 shares in Remote Monitored Systems
Plc. The sale was completed on 5 November 2020, and the group made a profit of
£8,931,434 on the initial investment of £225,000.
The group also sold 519,992,405 shares in Remote Monitored Systems Plc for
£17,424,757. The shares were acquired during the previous year through a
share for share exchange, cash investment and the sale of Pharm 2 Farm
Limited. The consideration of these various transactions was £9,734,470,
resulting in a profit on disposal of £7,690,287.
5 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:
2022 2021
£ £
Profit for the year 1,441,977 13,906,763
Weighted average number of ordinary shares in issue: No. No.
For basic profit per ordinary share 46,870,999 38,307,451
Potentially dilutive ordinary shares 4,596,000 1,140,000
For diluted earnings per ordinary share 51,466,999 39,447,451
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 4,596,000 (2021: 1,140,000)
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.
6 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
£ £ £ £ £ £
At 1 April 2020 - - - 724,402 - 724,402
Additions at Cost 9,734,470 - - 203,000 - 9,937,470
Disposals (9,734,470) - - - - (9,734,470)
Amount owed to creditors - - - 15,528 - 15,528
Change in Fair Value - - - (329,083) - (329,083)
At 1 April 2021 - - - 613,847 - 613,847
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 31 March 2022 1,133,854 - - 3,582,226 - 4,716,080
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 £31,043 would be due to the British Business Bank on disposal. This
liability is shown in the accounts within other creditors.
As at 31 March 2022, the group total value of investments in companies was
£4,716,080 (2021: £613,847). The group total change in fair value during the
year was a profit of £2,690,598 (2021: loss £329,083).
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 of 15% 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 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 26%
within the last twelve months greater than twelve months then further discounts ranging between 0% and 100%
are applied.
Earnings Used for investments which we can determine a set of listed companies with Earnings multiples are applied to the earnings of the company to determine the A liquidity discount is applied, typically 15% 0%
similar characteristics enterprise value
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%
provision
Indicative offers Used where an investment is in a sales process, a price has been agreed but Contracted proceeds or best estimate of expected proceeds A discount between 5% - 10% is applied to reflect any uncertain adjustments to 74%
the transaction has not yet settled expected proceeds
Discounted cash flow Used for companies with long-term cash flows Long term cash flows are discounted at a rate considered appropriate for the A liquidity discount is applied, typically 15% 0%
business, typically 9% - 12.5%
Group Group
Change in fair value in the year: 2022 2021
£ £
Fair value gains 2,982,077 11,895
Fair value losses (291,479) (340,978)
2,690,598 (329,083)
The gain in the year came from the uplift of the valuation in Phase Focus.
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 (2021: £nil).
The Company holds a 6.43% aggregate holding on Gyrometric Systems Limited,
this company has developed a patent protected system of hardware and software
to accurately monitor the vibrations in rotating shafts. During the year
Braveheart announced that it and Remote Monitored Systems plc ("RMS") had
entered into a share purchase agreement with the founders of Gyrometric
Systems Limited to return of control of Gyrometric to the founders of the
company, David Orton, Dr Paul Orton and Dr Janet Poliakoff. Under the terms of
the reorganisation, Braveheart's 19.5% interest in Gyrometric was reduced to
6.43% and Braveheart wrote off a loan of £39,200. The carrying value of
Gyrometric is £1 (2021: £1).
The Company holds a 42% aggregate holding on Phase Focus 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, this shareholding nor the representative entitles
the Company to exert a significant or dominant influence over Phase Focus. The
carrying value of Phase Focus is £3,418,573 (2021: £389,913).
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 (2021: £33).
The registered addresses for these entities are as follows:
Verbalis Limited Frostineb
Cottage, Fala, Pathhead, Midlothian, EH37 5TB
Gyrometric Systems Limited Dockholme Lock Cottage, 380 Bennett
Street, Long Eaton, Nottingham, NG10 4JF
Phase Focus Holdings Limited 125 Wood
Street, London, United Kingdom, EC2V 7AW
Sentinel Medical Limited York House, Outgang Lane,
Osbaldwick, York, England, YO19 5UP
7 Goodwill
Paraytec Kirkstall Pharm 2 Farm Total
£ £ £ £
Cost - At 31 March 2020 571,137 944,409 131,359 1,646,905
Disposals - - (131,359) (131,359)
Cost - At 31 March 2021 571,137 944,409 - 1,515,546
Disposals - -
Cost - At 31 March 2022 571,137 944,409 - 1,515,546
Impairment - At 31 March 2020 (365,362) (881,866) - (1,247,228)
Impairment (62,543)- - (62,543)
Impairment - 31 March 2021 (365,362) (944,409) - (1,309,771)
Impairment - - - -
Impairment - 31 March 2022 (365,362) (944,409) - (1,309,771)
Net Book Value - At 1 April 2022 205,775 - - 205,775
Net Book Value - At 1 April 2021 205,775 - - 205,775
The income approach was not deemed a reliable method for valuing the goodwill
of Paraytec and Kirkstall. Therefore, the market value method was used in
order to ascertain the value of goodwill at the year end.
8 Cash and cash equivalents
2022 2021
£ £
Cash at bank and on hand 1,893,931 2,142,866
Cash balances are held with HSBC Bank plc and Bank of Scotland plc and earn
interest at floating rates based on daily bank deposit rates.
9 Posting of audited results for the year ended 31 March 2022 and Notice of AGM
The Company is pleased to announce that it expects to post its audited report and accounts for the year ended 31 March 2022 to shareholders shortly. It is also posting notice of its annual general meeting ("Notice of AGM"), to be held on 13 July 2022 at 10.30 am. Copies of the final report and accounts and the Notice of AGM will also be available to view on the Company's website shortly, at http://www.braveheartgroup.co.uk/.
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