18th Jun 2007 07:01
Braveheart Investment Group plc18 June 2007 18 June 2007 Braveheart Investment Group plc ("Braveheart" or the "Group") Preliminary Results Braveheart (AIM: BRH), the technology commercialisation and investmentmanagement company, which was admitted to AIM on 30 March 2007, announces maidenpreliminary results for the year to 31 March 2007. Highlights: • Successful admission to AIM following a £5.7 million placing net of costs • 14 investments totalling £4 million made in the year made by the Group and on behalf of clients • 2 exits/listings achieved • Eleksen Group plc floated on AIM in May 2006 with initial market capitalisation of £20 million • Vibration Technology Ltd sold to Sercel SA for £32 million in September 2006 • Total revenue increased 9.5% to £587,399 • Non recurring costs relating to IPO of £123,544 contributed to a loss for the year, after adjustment for taxation of £156,896 in line with expectations • Strathclyde Innovation Fund, a £12 million unique partnership with Strathclyde University, announced Post Year End / Flotation Events • Further exit achieved through the June 2007 £32 million Capital Pub Company IPO • First acquisition and investments completed as a quoted company: • Further investments in Edinburgh Robotics Ltd and Spiral Gateway Ltd • WL Ventures Ltd acquired enlarging the portfolio to 32 companies • £25 million partnership fund with Edinburgh University, the largest such deal in Scotland to date, announced today. Commenting, Geoffrey Thomson, Chief Executive, said: "The past year has been transformational for our company. The recent IPO has provided us withthe resources to implement our strategic plans of contributing capital todedicated university funds, increasing investment from our own balance sheet andmaking acquisitions where there is demonstrable value to be added. Lookingahead, we are exploring a number of opportunities and are confident we are wellplaced to achieve growth and profitability in the future. "Today, we have also announced the creation of our second dedicated universityfund, a £25 million partnership with the University of Edinburgh, which is thelargest such agreement signed to date in Scotland. The University of Edinburghis ranked fifth in the UK and first in Scotland for research income. This newfund will enable us to extend our ability to make proprietary investments,whilst supporting some of Scotland's most exciting and innovative technology." For further information, please contact: Braveheart Investment Group:Geoffrey Thomson, Chief Executive Tel: 01738 587555 Tavistock Communications: Tel: 020 7920 3150Richard Sunderland, Simon Hudson, Rachel Drysdalerdrysdale@tavistock.co.uk Chairman's Statement The year to 31 March 2007 has been one of transformation for the Group and I amdelighted to provide my first report for Braveheart as a quoted company. On 30March our shares were admitted to the AIM market of the London Stock Exchange,following a placing which extended our investor base and provided additionalcapital that will allow us implement our growth plans. Braveheart differs from other technology commercialisation companies in that wehave dual income streams. The first is from our growing investment managementbusiness and the second is from capital realisations arising out of balancesheet investments. I believe this combination will lead to superior shareholderreturns. Ongoing Operations Braveheart has made good progress during the year under review, notwithstandingthe inevitable distractions and the amount of management time allocated to ourpostponed but successful IPO. We have taken a number of steps to increase our access to high qualityinvestment opportunities by strengthening our relationships with universities inScotland and, immediately after the close of the year, completing our firstacquisition. Balance sheet investment rose by £725,155 compared with £259,318 inthe previous year. Results The results are in line with expectations and follow the loss reported in ourAIM Admission Document for the nine months to 31 December 2006. They do notreflect a complete picture of the underlying performance of the business in thatthey include non recurring costs of £123,544, relating to our IPO activities,which we are required to write-off against revenue. They also reflect the effectof a temporary diversion in management time away from the day-to-day running ofthe business to focus on the IPO and the investment in our infrastructure whichwill enable us to operate on a bigger landscape and take on the fiduciaryresponsibilities associated with a public company. For the year under review, total revenue increased 9.5% to £587,399. The lossfor the year, after adjustment for taxation, was £156,896 compared with a profitof £126,260 in the previous year. The Board is confident that with the IPO complete, the Group is in a goodposition to achieve growth and profitability in the future. IPO Following the postponement of the Company's IPO in June 2006, due to adversemarket conditions, we successfully joined AIM in March of this year, raising£5.7 million net of costs. This has provided us with the resources to implement our strategic plans by wayof contributing capital to dedicated university funds, increasing the scale ofinvestment from our own balance sheet and completing acquisitions where it canbe demonstrated that we can add value. We also now have the facility to returnto market when further capital is required. Strategic Initiatives In February, we announced the formation of the Strathclyde Innovation Fund("SIF"), a £12 million fund which is a partnership between the Company, theUniversity of Strathclyde, and others. It is expected to secure a valuablepipeline of investment opportunities going forward. We already have a strongrecord of working with the University. The first closing of SIF is scheduled forautumn 2007. Today we have announced the formation of a partnership with the University ofEdinburgh to create a £25 million fund dedicated to commercialising intellectualproperty emanating from the University. Many shareholders will know that we havealready invested in two University of Edinburgh spin-outs that have subsequentlybecome quoted companies. We are delighted to be strengthening our ties withScotland's largest university. In early April, following the close of our financial year, an agreement wasconcluded with West Lothian Council for the acquisition of WL Ventures, nowrenamed Caledonia Portfolio Realisations Ltd ("CPR"). CPR owns a portfolio ofsome ten technology investments. We will consider providing follow-on funding,where there are opportunities to create value. As with all our investments, wewill also use our network of high net worth entrepreneurs to support theseportfolio companies as they grow. The consideration for the purchase comprisedan upfront cash payment together with a share of profits upon the realisation ofeach investment. Earlier investment in embryonic businesses is providing a stream ofopportunities for mainstream investment, as intellectual property is convertedinto proven technology, and further investment is needed to demonstrate thatsuch technology is commercial. Acquisitions such as CPR will increase the scale and diversity of our portfolioand further opportunities to acquire similar portfolios are being sought. Board, Management and Staff There were no changes within the Board during the year but management wasstrengthened further. The executive team now consists of two directors and sevenmembers of staff. A share incentive scheme was approved during the year, withparticipation open to all executive staff and members of the Board. This is, inpart, performance related. The members of our staff represent our greatest asset. They operate as a closelyknit team and I wish to acknowledge their hard work, dedication and skill. Our Clients and Investors Many of the Company's investment clients, who are successful entrepreneurs intheir own right, provide their services as non-executive directors and chairmenof our portfolio companies. These services are critical to the success of thoseventures and to Braveheart in terms of increasing shareholder value. We seek tomaximise the effectiveness of their contribution through regular progressreviews and by way of seminars that examine the options for resolving typicalproblems and encourage peer networking. I would like to thank them all for theirimportant contribution. I would also like to take this opportunity to extend a warm welcome to our newinstitutional shareholders and those clients who are now shareholders for thefirst time. In particular, I welcome Kenmore Property Group, as a cornerstoneinvestor, and extend my appreciation to the Bank of Scotland, whose ongoingsupport has been invaluable. Dividends No dividend has been paid or is being proposed. It is the Board's intention thatin future, subject to the availability of distributable reserves, regulardividends should be paid out of management profits and special dividends shouldbe paid where there are meaningful capital profits realised from the disposal ofinvestments held in the balance sheet. Prospects The Board is confident that as a consequence of the strategic initiatives thathave and are being taken, the Company is increasingly well positioned withregard to investment opportunities in intellectual property based businesses.Its growing investment portfolio provides a pool from which it can identify themost likely winners that can be supported, with both capital and management,through to profitable realisation. Garry S WatsonChairman18 June 2007 Group Income Statement Year ended Year ended 31 March 31 March 2007 2006 (unaudited) £ £ Revenue 538,686 519,458Realised profit on the disposal of investments 78,152 5,060Unrealised profit/(loss) on the revaluation of investments (82,372) 10,105 Finance revenue 48,713 17,009 ------------------------Total income 583,179 551,632 Staff costs (472,400) (265,269)Other operating costs (274,430) (150,802) ------------------------Total costs (746,830) (416,071) Profit/(loss) before taxation (163,651) 135,561 Tax (charge)/credit 6,755 (14,301) ------------------------Profit/(loss) for the period (156,896) 121,260 ======================== Earnings/(loss) per share Pence Pence- basic (0.016) 0.020- diluted (0.016) 0.015 Group Balance Sheet Unaudited As at As at 31 March 31 March 2007 2006 £ £ ASSETS Non-current assets Property, plant and equipment 26,217 29,072 Investments at fair value through profit or loss 896,156 311,431 Deferred tax asset 5,056 25,838 Current assets Trade and other receivables 61,602 165,258 Current tax asset 24,577 - Cash and cash equivalents 6,481,751 746,461 -------------------------Total assets 7,495,359 1,278,060 ========================= LIABILITIESCurrent liabilities Trade and other payables (242,370) (88,981) Current tax liability - (24,888) Deferred income (38,770) (35,808) -------------------------Total liabilities (281,140) (149,677) -------------------------NET ASSETS 7,214,219 1,128,383 ========================= EQUITYCalled up share capital 268,078 127,692 Share premium account 7,001,588 896,593 Retained earnings (55,447) 104,098 -------------------------Total equity 7,214,219 1,128,383 ========================= UnauditedGroup Cash Flow Statement Year ended Year ended 31 March 31 March 2007 2006Operating activities £ £Profit/(loss) before tax (163,651) 135,561Adjustments to reconcile profit before taxto net cash flows from operating activitiesDepreciation of property, plant and equipment 7,662 7,535Share-based payments expense - 17,185(Increase)/decrease on the revaluation of investments 82,372 (10,105)Loss on disposal of property, plant and equipment 1,344 163Interest income (48,713) (17,009)Increase in investments (667,097) (256,068)Decrease/(increase) in trade and other receivables 103,656 (51,738)Increase in trade and other payables 156,549 60,337Tax paid (24,577) - -------------------------Net cash flows from operating activities (552,455) (114,139) -------------------------Investing activitiesPurchase cost of property, plant and equipment (6,151) (9,982)Interest received 48,713 17,009 -------------------------Net cash flows used in investing activities 42,562 7,027 ------------------------- Financing activitiesProceeds from issue of shares 6,968,350 739,290Transaction costs of issue of shares (722,969) (39,508)Repayment of capital element of hire purchase contract (198) (1,086) -------------------------Net cash flows used in financing activities 6,245,183 698,696 ========================= Net increase in cash and cash equivalent 5,735,290 591,584Cash and cash equivalent as at 1 April 746,461 154,877 -------------------------Cash and cash equivalent as at 31 March 6,481,751 746,461 ========================= Statement of Changes in Equity for the year ended 31 March 2006 Group Share Capital Share Premium Retained Total Earnings £ £ £ £ Balance at 1 April 114,914 209,589 (44,746) 279,757Issue of new share capital 12,778 726,512 - 739,290Expenses paid in connection with share issue - (39,508) - (39,508)Profit for the year - - 121,260 121,260Share-based payments - - 17,185 17,185Share-based payments - deferred tax - - 10,399 10,399 ----------------------------------------------------Balance as at 31 March 127,692 896,593 104,098 1,128,383 ==================================================== Statement of Changes in Equity for the year ended 31 March 2007 (unaudited) Group Share Capital Share Premium Retained Earnings Total £ £ £ £ Balance at 1 April 127,692 896,593 104,098 1,128,383Exercise of options 60,566 522,153 - 582,719Issue of new share capital 79,820 6,305,811 - 6,385,631Expenses paid in connection with share issue - (722,969) - (722,969)(Loss) for the year - - (156,896) (156,896)Share-based payments - current tax - - 7,750 7,750Share-based payments - deferred tax - - (10,399) (10,399) --------------------------------------------------------------Balance as at 31 March 268,078 7,001,588 (55,447) 7,214,219 ============================================================== NOTES 1 Basis of preparation The Group's financial statements have been prepared in accordance withInternational Financial Reporting Standards (IFRS) as adopted by the EuropeanUnion and as applied in accordance with the provisions of the Companies Act1985. The principal accounting policies adopted by the Group and by the Companyare set out in the following notes. The Company has taken advantage of the provision of s230 of the Companies Act1985 not to publish its own Income Statement. The financial statements are presented in sterling and all values are rounded tothe nearest pound (£) except when otherwise indicated. 2 Revenue Revenue is attributable to the principal activities of the Group. All revenuearose within the United Kingdom and the Channel Islands. Group Group 2007 2006 £ £ Deal fees 460,448 434,371Client subscriptions 78,238 71,187Facilitation fee - 13,900 --------------------- 538,686 519,458 ===================== 3 Profit/(loss) for the year Profit/(loss) for the year has been arrived at after charging: Group Group 2007 2006 £ £ Depreciation of property,plant and equipment 7,662 7,535Lease payments recognised as an operating lease (office rent) 45,000 38,898Loss on the disposal of plant, property and equipment 1,344 163Auditors remuneration: 28,250 6,000 - audit - audit of the parent company 3,000 3,000 - taxation compliance 6,540 2,500 - corporate finance services 32,770 - - other services - 5,043 ================== 4 Taxation on profit on ordinary activities 2007 2006 £ £ UK corporation tax (17,138) 24,888Deferred tax 10,383 (10,587) -------------------Tax charge/(credit) in the income statement (6,755) 14,301 =================== Tax relating to items charged orcredited to equity Deferred tax: share-based payments 10,399 (10,399)Current tax: share-based payments (7,750) - -------------------Tax charge/(credit) in equity 2,649 (10,399) =================== Reconciliation of total tax chargeProfit before tax (163,651) 135,561 -------------------Tax on profit on ordinary activities at the rate of 19% (31,094) 25,757Expenses not deductible for tax purposes 12,645 1,149Tax relief on share-based payments - (10,689)Unprovided deferred tax 13,493 2,066Reduction in unutilised tax losses - (5,141)Prior year adjustment (311) -Other (1,488) 1,159 -------------------Total tax reported in the income statement (6,755) 14,301 =================== Deferred taxThe deferred tax included in thebalance sheet is as follows: 2007 2006 £ £ Deferred tax liabilityAccelerated capital allowances 1,747 3,160Revaluation of investments - 2,157 -------------------Total deferred tax liability 1,747 5,317 -------------------Deferred tax assetShort term timing differences (6,803) (6,803)Share-based payments - (24,352) -------------------Total deferred tax asset (6,803) (31,155) -------------------Total deferred tax as reported in the balance sheet (5,056) (25,838) =================== 5 Earnings/(loss) per share Basic earnings/(loss) per share have been calculated by dividing the earningsattributable to Shareholders by the weighted average number of ordinary sharesin issue during the period. Diluted earnings/(loss) per share adjusts for share options granted where theexercise price is less than the average price of the ordinary shares during theperiod. The calculations of earnings/(loss) per share are based on the following profit/(loss) and numbers of shares in issue: 2007 2006 £ £ Profit/(loss) for the year (156,896) 121,260 --------------------- Weighted average number ofordinary shares in issue:For basic earnings per ordinary share 9,412,875 6,011,900 Dilutive effect of exercisable options - 1,827,935 --------------------- 9,412,875 7,839,835 ===================== The weighted average number of ordinary shares in issue in 2006 has beenadjusted to reflect the subdivision (ordinary shares of 10p each were subdivided into 2p ordinary shares) that occurred on 16 May 2006. 6 Investments at fair value through profit or loss Unlisted AIM Listed Total £ £ £ Valuation at 1 April 2006 306,525 4,906 311,431Revaluation of assets (15,314) 3,955 (11,359) ---------------------------------Cost at 1 April 2006 291,211 8,861 300,072Additions at cost 519,722 205,433 725,155Transfers (70,141) 70,141 -Disposals - Proceeds - (136,210) (136,210)- Gain on disposal - 78,152 78,152 ---------------------------------Cost at 31 March 2007 740,792 226,377 967,169Unrealised gain/(loss) on therevaluation of assets (20,481) (50,532) (71,013) ---------------------------------Valuation at 31 March 2007 720,311 175,845 896,156 ================================= 7 Investment in subsidiary The Company holds an investment in its subsidiary company Braveheart VenturesLtd, totalling £224,190 and consisting of 100% of the issued 10p ordinary sharecapital and 100% of the issued redeemable preference shares. Braveheart VenturesLtd is a company registered in Scotland. 8 Share Capital Authorised 2007 2006 £ £ 2,000,000 ordinary shares of 10p each - 200,000 33,645,000 ordinary shares of 2p each 672,900 - Allotted, called up and fully paid 1,276,919 ordinary shares of 10p each - 127,692 13,403,895 ordinary shares of 2p each 268,078 - ===================== 9. General These are the first annual accounts prepared under International Financial Reporting Standards (IFRS). The effect of the Group's conversion from UK GAAP to IFRS has already been communicated to shareholders in the Group's Placing and Admission to AIM document in March 2007. These are not the company's full statutory accounts. The last statutory accounts filed were for the year ended 31 March 2006 with an unqualified audit opinion; The accounts are unaudited pending audit clearance on the statutory accounts. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Braveheart Investments