Braveheart Inv Regulatory News (BRH)

2 November 2015

Braveheart Investment Group plc

('Braveheart', the 'Company' or the 'Group')

Half-Yearly Report and Disposal of interest in Investee Company

Braveheart Investment Group plc today announces its interim results for the six months ending 30 September 2015.

Key Points:

· Revenue of £610,000 in the period (six months ended 30 September 2014: £922,000);

· Loss net of revaluation of portfolio of £258,000 in the period (six months ended 30 September 2014: profit of £6,000);

· Loss, post revaluation of portfolio, of £1,039,000 (2014: £88,000);

· Good progress made on exit potential of the portfolio; and

· Continuation of reorganisation and restructuring head office.

Post period end:

· Sale of one portfolio company, Bloxx Limited, returning cash of around £164,000 to investment clients and £678,000 less contingent consideration of £262,000 to our balance sheet.

Further information:

Braveheart Investment Group plc

Trevor Brown, CEO Tel: +44 1738 587555

Sanlam Securities UK Limited (Nominated Advisor and Broker to Braveheart)

Lindsay Mair / James Thomas Tel: +44 20 7628 2200

Chairman and Chief Executive Officer's Statement

We are pleased to report to shareholders for the six months ended 30 September 2015.

Strategy

Since last reporting to shareholders in August 2015, we have continued to look critically at all our operating costs and have identified further areas where costs can be reduced. We are now approaching the end of this review and expect that the key result of this work will be that we can look forward to beginning the new financial year with costs and income at levels which should result in modestly profitable trading from our continuing fund management businesses.

Portfolio

Braveheart's directly held portfolio (the "Portfolio") currently represents the major proportion of shareholder funds and where there was both positive and negative news.

The negative news is that, as part of our comprehensive appraisal of operations, we have undertaken a review of the value of the constituent investments in the Portfolio and have decided it is appropriate to reduce their combined value to £1.76m. (31 March 2015 £2.48m), though this may prove to have been conservative in retrospect. We intend to step-up our efforts to pro-actively work with the managements of our portfolio companies to add value wherever possible and accelerate exits where appropriate.

More positively, on 30 October 2015, a subsidiary of Braveheart, Caledonia Portfolio Realisations Ltd (CPR), along with other investors in Bloxx Ltd which includes a number of Braveheart clients, sold its investment in Bloxx Ltd to Akamai Technologies Incorporated for an aggregate consideration of £678,000 in cash (net of costs), of which £143,000 is to be retained by the purchaser for two years. An aggregate contingent consideration of £262,000 will be settled by Braveheart in due course. In addition, the Company's investor clients will receive £164,000.

Bloxx Ltd is a web and internet filtering software business. At 31 March 2014 the abbreviated accounts of Bloxx Ltd showed net assets of £2.34m. Braveheart acquired Bloxx Ltd in April 2007 as part of the West Lothian Portfolio for which it paid £50,000, and it has since invested a further £50,000 in Bloxx Ltd. The investment in Bloxx Ltd was valued in CPR's accounts at £690,000 with a contingent consideration of £262,000. The disposal is at a premium to the amount invested by Braveheart. The proceeds will significantly increase the Company's cash reserves and will be used for general working capital.

We are working energetically to maximise the returns from the remaining investments in the Portfolio with the intention of recycling cash from any realisations into projects to enhance shareholder value.

Strathtay Ventures

We are not able to report any exits on behalf of our private clients from our portfolio companies in the first half of the year, although since the period end, as noted above, an exit was achieved from one company (Bloxx Limited) which has generated a satisfactory return to both our private client shareholders and also Braveheart plc shareholders.

In our last report we noted that we were looking at long term disposal options for the Lachesis Fund. This process continues and we remain hopeful that a satisfactory conclusion will be achieved in coming months.

Viking Fund Managers

Viking is the fund manager for the Finance Yorkshire Equity Fund www.finance-yorkshire.com (FYEF). Having completed FYEF's investment phase of £40m (into a portfolio of 46 companies) Viking is investing a further £5m of extension capital while continuing to successfully manage the FYEF portfolio. Viking is also preparing to explore opportunities to acquire further fund management mandates in 2016.

WhiteRock Capital Partners

WhiteRock Capital Partners (WCP) www.whiterockcp.co.uk is the manager of the £50m Northern Ireland Growth Loan Fund (GLF). Braveheart as equal partner with NEL Fund Managers and Clarendon Fund Managers owns one third of WCP. All GLF investments are made by way of loans, typically unsecured but with an element of profit share. Finance for the £50m Growth Loan Fund - which provides loans to established Northern Ireland SMEs seeking to access growth finance - has been provided by Invest Northern Ireland and private investor, Northern Ireland Local Government Officers' Superannuation Committee (NILGOSC). We look forward to working with our partners in WCP to further develop our business in Ireland as opportunities arise.

Financial Review

Revenue was £610,000 in the six months ended 30 September 2015 (2014: £922,000) with the reduction being mainly due to the Viking equity contract shifting from investment phase into exit phase.

The Group's direct investment portfolio comprises minority stakes in unquoted investments. There were no realisations in the six months ended 30 September 2015 and, following a further review of the valuations of this portfolio, we recorded an unrealised loss on the revaluation of these investments of £724,000 (2014: loss of £197,000) which resulted in the value of the Portfolio now being £1.76m (31 March 2015: £2.48m).

Operating costs were £868,000 (2014: £928,000).

Loss before revaluation of portfolio was £258,000 in the period (six months ended 30 September 2014: loss of £6,000).

The Group recorded a loss before taxation of £1.04m or a loss of 3.84 pence per share (2014: loss of £88,000; loss of 0.35 pence per share).

Cash balances at 30 September 2015 were £260,000 (2014: £ 376,000).

The Group continues to have a corporate banking relationship with HSBC Bank plc, from whom £500,000 facilities are available but not drawn. At 30 September 2015 net assets were £2.36m (2014: £4.06m).

Outlook

The cost base of the Group has now been significantly reduced and we expect that the last elements of this program will be completed by the end of the current financial year so that the fund management businesses can return a modest profit over the course of the new financial year. Our attention will continue to focus upon developing a new strategy for the Group and working hard with our partners to achieve improvements in shareholder value. I very much look forward to be able to report positive news to our shareholders in the months ahead

Jeremy H Delmar-Morgan, Chairman

Trevor E Brown, Chief Executive Officer

Condensed consolidated statement of comprehensive income FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2015

Condensed consolidated statement of FIANCIAL POSITION FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2015

Condensed consolidated statement of cash flows FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2015

Condensed consolidated statement of changes in equity FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2015

NOTES TO THE INTERIM FINANCIAL STATEMENTS

1 Basis of preparation

The financial information presented in this half-yearly report constitutes the condensed consolidated financial statements (the interim financial statements) of Braveheart Investment Group plc (Braveheart or the Company), a company incorporated in the United Kingdom and registered in Scotland, and its subsidiaries (together, the Group) for the six months ended 30 September 2015. The interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting and should be read in conjunction with the Annual Report and Accounts for the year ended 31 March 2015 which have been prepared in accordance with International Financial Reporting Standards as adopted for use in the EU. The financial information in this half-yearly report, which was approved by the Board and authorised for issue on 2 November 2015 is unaudited.

The interim financial statements do not constitute statutory accounts for the purpose of sections 434 and 435 of the Companies Act 2006. The comparative financial information presented herein for the year ended 31 March 2015 has been extracted from the Group's Annual Report and Accounts for the year ended 31 March 2015 which have been delivered to the Registrar of Companies. The Group's independent auditors' report on those accounts was unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their report and did not contain a statement under section 498(2) or 498(3) of the Companies Act 2006.

The preparation of the half-yearly report requires management to make judgements, estimates and assumptions that affect the policies and the reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. In preparing this half-yearly report, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the audited consolidated financial statements for the year ended 31 March 2015.

The interim financial statements have been prepared using the same accounting policies as those applied by the Group in its audited consolidated financial statements for the year ended 31 March 2015 and which will form the basis of the 2016 Annual Report. The interim financial statements have been prepared on the same basis as the financial statements for year ended 31 March 2015 which is on the assumption that the company is a going concern.

2 Earnings per share

The basic earnings per share has been calculated by dividing the loss for the period attributable to equity holders of the parent by the weighted average number of ordinary shares in issue during the period.

The calculation of earnings per share is based on the following (loss)/profit and number of shares in issue:

3 Goodwill

The Group assessed the recoverable amount of the above goodwill with each of Viking and Neon's cash generating units and determined that Viking's goodwill was impaired. The recoverable amount was assessed by reference to the cash generating unit's value in use based on internally prepared and approved 3 year cash flow projections and growth based projections for a further two years assuming a 2.5% growth rate and 12.5% discount factor.

4 Investments at fair value through profit or loss

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 used most commonly by the Group is 'price of most recent investment'. The use of reasonably possible alternative assumptions has no material effect on the fair valuation of the related investments. The impact on the fair value of investments if the discount rate and provision shift by 1% is £11,508 (2014: £15,946).

5 Contingent consideration

During the half year, £57,000 was debited (half year to September 2014: credited £115,000) to the statement of comprehensive income in respect of the increase in the sum due on future exit values of the Caledonia Portfolio Realisations (CPR) portfolio as a result of an increase in the fair value of the related portfolio assets. The contingent consideration will be eliminated once the sale of Bloxx Limited is recorded in the accounts.

6 Share capital

The Company has one class of ordinary shares. All shares carry equal voting rights, equal rights to income and distribution of assets on liquidation or otherwise, and no right to fixed income. 

7 Post balance sheet events

We completed the sale of our investment in Bloxx Limited.

A copy of this report is available on request from the Company's registered office: 2 Dundee Road, Perth, PH2 7DW. A copy has also been posted on the Company's website: www.braveheartinvestmentgroup.co.uk