Braveheart Inv Regulatory News (BRH)

29 December 2011

Braveheart Investment Group plc

('Braveheart' or the 'Group')

Half-Yearly Report

Braveheart Investment Group plc today announces its interim results for the six months ended 30 September 2011.

KEY POINTS

·; Fee based revenue increased 89% to £621,000 in the period

·; Realised last remaining quoted investment for £92,000, resulting in a gain of 42%

·; Placed 4,132,574 shares raising £950,000 (before expenses) and facilitated the strategically required exit of two major institutional investors

·; Closing net assets of £4.72m

·; 6 portfolio companies received financing of £11.73m in aggregate

·; Envestors led £4.52m financings for client companies

·; Participation in new £50m English Business Angel Co Investment Fund announced

·; Viking Fund Managers appointed to develop a network of angel investors operating across the North East of England

·; Envestors named 'Private Investor Network of the Year', following two previous wins by Group companies.

POST PERIOD END

·; 4 portfolio companies received financing of £3.13m in aggregate

·; Envestors led £2.76m financings for client companies

Chairman and Chief Executive's Statement

Overview

It is just over a year since we completed the acquisition of Envestors and we are very pleased with the contribution they have made to the Group. Since their acquisition in October 2010, Envestors have led financings for their client companies of £9.76m, and have been the driving force behind our growth in fee income.

Since the beginning of the financial year we have been actively pursuing our strategy of increasing fee income, and have been intensively involved in discussions to acquire additional investment management businesses. While these discussions have not yet resulted in a tangible transaction, we continue to explore various opportunities and will update shareholders as appropriate.

Additionally, we have a maturing portfolio of directly held investments. While we are now investing smaller sums directly from our own balance sheet, we continue to support our portfolio companies and work towards achieving realisations from the portfolio. We disposed of our last remaining listed investment in the period under review and anticipate that further realisations will enhance shareholder value in the short to medium term.

Financial review

Fee based revenue in the six months ended 30 September 2011 increased 89% to £621,000 (2010: £329,000), reflecting the contribution from the Envestors acquisition made in October 2010.

We disposed of our last remaining quoted investment, The Capital Pub Company PLC for £92,000, resulting in a realised gain of £39,000 (2010: £168,000).

The Group's remaining portfolio comprises minority stakes in unquoted investments. The periodic fair valuations of these investments are susceptible to fluctuations, some of which can be material. As a direct result of the recent prevailing economic environment and reduced availability of finance for SMEs, we have seen lower peer group multiples and refinancings on terms adversely affecting the current value of the Group's holdings. While these valuations are not necessarily indicative of long term value, we recorded an unrealised loss of £297,000 (2010: £324,000) on the revaluation of these investments.

By contrast, £17,000 was credited (2010: £2,000 charged) to the statement of comprehensive income in respect of a reduction in the sum due on future exit values of the Caledonia Portfolio Realisations portfolio as a result of a reduction in the fair value of the related portfolio assets.

In addition, £162,000 (2010: £nil) was credited in respect of a reduction in the fair value of the currently estimated contingent consideration due on the acquisition of Envestors, primarily as a result of a reduction in the Company's share price.

Finally, finance income of £8,000 (2010: £9,000) was received.

Total income, including all unrealised movements on the portfolio valuation and contingent consideration, was £550,000 (2010: £180,000).

Operating costs were £1.39m (2010: £761,000) reflecting the Envestors cost base for the first time, ongoing costs relating to corporate activity as described above, and certain one-time costs incurred in relation to the placing and other financing activity earlier in the period (as described below).

Accordingly, the loss before taxation was £842,000 (2010: £581,000) or 4.91 (2010: 4.15) pence per share.

In June 2011, the Company raised £950,000 (before expenses) by way of a placing of 4,132,574 ordinary shares, and as a result cash balances at 30 September 2011 were £841,000 (2010: £1.34m). During the period the Group also completed the migration of its corporate banking relationship to HSBC Bank plc, from whom facilities are now available but undrawn. At 30 September 2011 net assets were £4.72m (2010: £5.13m), as compared to £4.52m at 31 March 2011.

Board and personnel

There were no changes to the board of directors, nor to the management board in the period. However, for some time Colin Grant has intimated that he wished to step down as Chief Financial Officer (CFO) and Company Secretary once a successor had been identified. As of 9 January 2012 this role will therefore be assumed by Aileen Brown who joins the Company with a strong track record of CFO experience in listed companies and corporate finance expertise. The Board welcomes Aileen and looks forward to working with her. Colin will remain associated with the Company on a project by project basis and the Board thanks him for his professionalism and hard work over the last three years.

Strategy

The Board intends to continue to pursue its strategy of building the investment management and corporate finance areas of the business to profitability. This will involve cross-selling of investment and corporate services and organic growth with existing operations including refining the Envestors offering and rolling-out the Envestors brand in the UK and selected locations overseas. Additional acquisition opportunities will be considered where they add demonstrable scale and profitability. Alongside these activities, the Group will seek to maximise the realisation values of its directly held portfolio by securing realisations when appropriate.

Outlook

The current macro-economic outlook continues to be bleak and is likely to remain so for some time. However, we anticipate that we will continue to expand our investment management business and with a valuable maturing portfolio of investments we continue to be optimistic about the future.

Garry S Watson Geoffrey C B Thomson

Chairman Chief Executive Officer

Independent review report to Braveheart Investment Group plc

Introduction

We have been engaged by the Company to review the financial information in the half-yearly report for the six months ended 30 September 2011 which comprises the condensed consolidated statement of comprehensive income, condensed consolidated statement of financial position, condensed consolidated statement of cash flows, condensed consolidated statement of changes in equity and the related notes.

We have read the other information contained in the half-yearly report which comprises only Highlights and the Chairman and Chief Executive's Statement, and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with guidance contained in ISRE (UK and Ireland) 2410, 'Review of Interim Financial Information performed by the Independent Auditor of the Entity'. Our review work has been undertaken so that we might state to the Company those matters we are required to state to them in a review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusion we have formed.

Directors' responsibilities

The half-yearly report is the responsibility of, and has been approved by, the directors. The AIM rules of the London Stock Exchange require that the accounting policies and presentation applied to the financial information in the half-yearly report are consistent with those which will be adopted in the annual accounts having regard to the accounting standards applicable for such accounts.

As stated in the Basis of Preparation, the annual financial statements of the Group are prepared in accordance with IFRS as adopted by the European Union. The financial information in the half-yearly financial report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the financial information in the half-yearly report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the financial information in the half-yearly report for the six months ended 30 September 2011 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union.

GRANT THORNTON UK LLPRegistered Auditor

Chartered Accountants

Edinburgh

28 December 2011

Condensed consolidated statement of comprehensive income

for the six months ended 30 September 2011

Condensed consolidated statement of financial positionas at 30 September 2011

Condensed consolidated statement of cash flowsfor the six months ended 30 September 2011

Condensed consolidated statement of changes in equityfor the six months ended 30 September 2011

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 2011. 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 2011 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 28 December 2011, is unaudited but has been subject to a review by the Group's independent auditors.

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 2011 has been extracted from the Group's Annual Report and Accounts for the year ended 31 March 2011 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 2011.

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 2011 and which will form the basis of the 2012 Annual Report.

2 Loss per share

Basic loss 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.

There were no potentially dilutive ordinary shares in the Group at the period end and therefore the diluted loss per share is equal to the basic loss per share.

The calculation of loss per share is based on the following loss and number of shares in issue:

3 Goodwill

The acquisition of Viking Fund Managers (VFM) has been accounted for under IFRS 3. At initial recognition, contingent consideration settled, or to be settled, in shares was fair valued by reference to the Company's share price at the acquisition date. The movement in goodwill in the periods since acquisition was primarily due to movements in the fair value of contingent consideration resulting from movements in the Company's share price. All consideration in respect of the acquisition of VFM has now been paid and accordingly goodwill will remain constant unless impaired.

The acquisition of Envestors has been accounted for under IFRS 3 Revised. At initial recognition, consideration settled, or to be settled, in shares was fair valued by reference to the Company's share price at the acquisition date. Under IFRS 3 Revised, future changes to the fair value of contingent consideration are applied to the statement of comprehensive income, and accordingly goodwill will remain constant unless impaired.

4 Intangible assets

5 Investments at fair value through profit or loss

6 Contingent consideration

During the half year, £17,000 was credited to the statement of comprehensive income in respect of a reduction in the sum due on future exit values of the Caledonia Portfolio Realisations (CPR) portfolio as a result of a reduction in the fair value of the related portfolio assets.

In addition, and in accordance with IFRS3 Revised: Business Combinations whereby changes in the fair value of contingent consideration are applied to the statement of comprehensive income, £162,000 was credited in respect of a reduction in the fair value of the currently estimated consideration due on the acquisition of Envestors primarily as a result of a reduction in the Company's share price.

Accordingly, at 30 September 2011, short term contingent consideration of £579,000 comprised £452,000 being the sum due on future exit values of the CPR portfolio and £127,000 being the fair value of the currently estimated consideration due within twelve months in respect of the acquisition of Envestors, while long term contingent consideration of £286,000 represents the balance of the fair value of the currently estimated consideration due in respect of the acquisition of Envestors.

7 Share capital

On 24 June 2011, the Company raised £950,000 (before expenses of £48,000) via the placing of 4,132,574 ordinary shares of 2 pence each at an issue price of 23.0 pence per share.

On 25 July 2011, the Company issued 399,034 ordinary shares of 2 pence each at a fair value issue price of 31.0 pence each in satisfaction of the final tranche of consideration due in respect of the acquisition of VFM.

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.

BRAVEHEART INVESTMENT GROUP PLC

COMPANY INFORMATION

Directors, Secretary, Registered Office and Advisers

Directors Garry S Watson OBE CA, Chairman

Geoffrey C B Thomson, Chief Executive Officer

Carolyn Smith BA Hons ACIS, Chief Investment Officer

Colin C Grant BCom CA, Chief Financial Officer

Edward B Cunningham CBE, Non-executive Director

J Kenneth Brown BA CA, Non-executive Director

Jeremy H Delmar-Morgan MA MSI, Non-executive Director

Secretary Colin C Grant BCom CA

Company

registration

number SC247376

Registered

office The Cherrybank Centre

Cherrybank Gardens

Perth

PH2 0PF

Telephone +44 (0)1738 587555

Website www.braveheartinvestmentgroup.co.uk

Advisers Registrar Solicitors

Capita Registrars Limited Maclay Murray & Spens LLP

The Registry Quartermile One

34 Beckenham Road 15 Lauriston Place

Beckenham Edinburgh

Kent EH3 9EP

BR3 4TU

Principal Bankers Auditors

HSBC Bank plc Grant Thornton UK LLP

76 Hanover Street 1/4 Atholl Crescent

Edinburgh Edinburgh

EH2 1HQ EH3 8LQ

Nominated Adviser and

Broker

Seymour Pierce Limited

20 Old Bailey

London

EC4M 7EN

Shareholder communications

A copy of this report will be sent to shareholders and is available on request from the Company's registered office: The Cherrybank Centre, Cherrybank Gardens, Perth, PH2 0PF. A copy has also been posted on the Company's website: www.braveheartinvestmentgroup.co.uk

Disclaimer

This half-yearly report contains certain forward-looking statements which reflect the knowledge of, and information available to, the directors at the date of preparation of this half-yearly report. By their nature, these statements involve risk and uncertainty because they relate to events and depend on circumstances that may or may not occur in the future and there are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements.