Baronsmead Vt Regulatory News (BVT)

Baronsmead Venture Trust plc

Half-Yearly report for the six months ended

31 March 2017

The Directors announce the unaudited half-yearly financial report for the six months to 31 March 2017.

Copies of the half-yearly report can be obtained from the following website: www.baronsmeadvcts.co.uk.

Our Investment Objective

Baronsmead Venture Trust is a tax efficient listed company which aims to achieve long-term investment returns for private investors, including tax free dividends.

Investment Policy

· To invest primarily in a diverse portfolio of UK growth businesses, whether unquoted or traded on AIM.

· Investments are made selectively across a range of sectors in companies that have the potential to grow and enhance their value.

Dividend Policy

The Board of Baronsmead Venture Trust aims to sustain a minimum annual dividend level at an average of 6.5p per ordinary share, mindful of the need to maintain net asset value. The ability to meet these twin objectives depends significantly on the level and timing of profitable realisations and cannot be guaranteed. There will be variations in the amount of dividends paid year on year.

Shareholder choice

The Board wishes to provide shareholders with a number of choices that enable them to utilise their investment in Baronsmead Venture Trust in ways that best suit their personal investment and tax planning requirements and in a way that treats all shareholders equally.

· Fund raising | From time to time the Company seeks to raise additional funds by issuing new shares at a premium to the latest published net asset value to account for issue costs. This enables shareholders seeking additional investments to do so with taxation relief.

· Dividend Reinvestment Plan | The Company offers a Dividend Reinvestment Plan which enables shareholders to purchase additional shares through the market in lieu of cash dividends. Approximately 638,000 shares were bought in this way during the six months to 31 March 2017.

· Buy back of shares | From time to time the Company buys its own shares through the market in accordance with its share price discount policy. Subject to certain conditions, the Company seeks to maintain a mid market share price discount of approximately 5 per cent. to net asset value.

· Secondary market | The Company's shares are listed on the London Stock Exchange and can be bought or sold by shareholders using a stockbroker or authorised share dealing service in the same way as shares of any other listed company. Approximately 2,980,000 shares were bought by investors in the Company's existing shares in the six months to 31 March 2017.

Financial Headlines

· + 4.8% - Net asset value ("NAV") per share increased 4.8 per cent. to 91.23p in the six months to 31 March 2017, before deduction of dividends.

· 380.6p - NAV total return to shareholders for every 100.0p invested at launch.

· 3.0p - Dividends totalled 3.0p in the six month period ended 31 March 2017.

Cash returned to shareholders by date of investment 

The table below shows the cash returned to shareholders that invested in Baronsmead Venture Trust plc (formerly known as Baronsmead VCT 2 plc) dependent on their subscription cost, including the income tax available to be reclaimed on the subscription.

* Share dividend calculated using conversion ratio of 0.9657, which is the rate the C shares were converted into ordinary shares.

Chairman's Statement 

I am pleased to report a 4.8 per cent. (4.1p) increase in NAV per share for the six months to 31 March 2017 before dividend payments. An interim dividend of 3.0p per share was paid on 31 March 2017 in lieu of the dividend that would have otherwise been paid in June 2017 following the publication of these results.

Results

During the six months to 31 March 2017, the Company's NAV per share increased 4.8 per cent. from 87.1p to 91.2p before dividends.

The increase in NAV of 4.8 per cent. was the result of steady progress across our investment portfolio. Over the six months to 31 March 2017, our unquoted investments delivered an increase in their valuations of 3.0 per cent. Despite the continued volatility of the quoted markets, the value of our AIM-traded investments increased by 8.1 per cent. and our investment in CF Livingbridge UK Micro Cap Fund ("Micro Cap Fund", previously Wood Street Microcap Investment Fund) increased by 9.2 per cent.

Portfolio Review

At 31 March 2017, the Company's investment portfolio was valued at £118m and comprised investments in 73 unquoted and AIM-traded companies. In addition, the Company's investment in the Micro Cap Fund provides investment exposure to a further £20m in 44 AIM-traded and fully listed companies.

Investment and Divestments

The Company's investments and divestments during the period are set out in the tables below.

The new VCT rules introduced in November 2015 have required the Investment Manager to adapt its investment strategy to focus on the provision of development capital to younger companies to enable them to grow their businesses organically rather than through acquisition. This transition has taken time to achieve as the Manager has had to consider how best to deploy funds in generally, earlier stage companies whilst maintaining its investment quality standards and this has resulted in fewer new investments than in prior years. The Board has been supportive of a cautious approach during this transition as a hasty or imprudent deployment of funds could have proved expensive in terms of a loss of capital and a reduction in the long-term return to shareholders.

I am now pleased to report that either side of the period end the Company made two new unquoted investments as well as three investments in AIM-traded companies for a total investment of £1.9m during the period under review and £2.7m subsequently. The Board is also encouraged to note that the pipeline of potential new investments is improving and anticipates the investment of further funds over the course of the Summer.

Dividends

An interim dividend of 3.0p per share was paid on 31 March 2017 in lieu of the dividend that would otherwise have been paid in June 2017, following the publication of the Company's results for the six months to 31 March 2017. The Board aims to sustain a minimum annual dividend level at an average of 6.5p per ordinary share and therefore in the ordinary course of events, would expect to declare a further final dividend for the financial year to 30 September 2017 which would be paid following shareholder approval at the Company's next AGM. The timing and level of future dividends depends significantly on the level and timing of profitable realisations and rate of investment. Inevitably, as these cannot be guaranteed, there will be variations in the amounts and dates that dividends are paid.

Fundraising

The Board will be considering whether to raise new funds in the 2017/18 tax year which will be determined by the Company's cashflow and its anticipated requirements to fund new investments over the next two years. The Board appreciates that shareholders would like as much notice as possible of its fundraising intentions so that they can plan their financial affairs accordingly. Ordinarily, the Board would seek to raise funds during January and February, having informed shareholders of its fundraising intentions in November when its annual results are published. However, if it becomes appropriate to raise new funds earlier, the Board will ensure that shareholders are informed as soon as possible.

VCT Legislation and Policy Review

Legislative changes to VCTs included in the March 2017 Budget were limited to technical changes to the rules concerning the restructuring of investments. In addition, the Government's venture capital schemes (SEIS, EIS and VCTs) will be included in the recently announced Patient Capital Review which aims "to ensure that high growth businesses can access the long-term capital that they need to fund productivity enhancing investment". This will provide the VCT industry with the opportunity to demonstrate that the existing tax reliefs encourage investment and entrepreneurship and are effective, well targeted and provide excellent value for money for UK taxpayers. The Manager and Board will be fully engaged throughout this process, with a view to informing you of the conclusions of the Review and any policy recommendations that might be brought forward.

Outlook

Despite signs of a slowdown in the wider economy, as the impact of a much-weakened sterling finally begins to work its way through to the consumer, there are no signs yet of a deterioration in performance in the Company's portfolio.

The outlook for the rest of 2017 remains uncertain, with the potential for macro and geopolitical events to impact sentiment and create market volatility. However, the Manager continues to focus on areas of sectoral growth and companies that have the potential to grow profits even without a tailwind from the wider economy.

This is reflected in the valuation of the Company's investments in the NAV at 30 April 2017 which has grown by a further 1.6p per share, to 89.8p per share. Whilst changes in market sentiment may impact the valuation of investments in the short term and the general election may result in a slowdown of business transactions over the coming weeks, the diversity and quality of the Company's portfolio should continue to deliver consistent returns for shareholders over the medium to long term.

Peter Lawrence

Chairman

24 May 2017

Investment Diversification at 31 March 2017

Investments in the period

* Technology, Media & Telecommunications ("TMT").

Realisations in the period

Independent Review Report to Baronsmead Venture Trust plc

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2017 which comprises the Condensed Income Statement, Condensed Balance Sheet, Condensed Statement of Changes in Equity, Condensed Statement of Cash Flows and the related explanatory notes. We have read the other information contained in the half-yearly financial report 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 the terms of our engagement to assist the Company in meeting the requirements of the Disclosure Guidance and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA"). Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this 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 conclusions we have reached.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA.

As disclosed in note 1, the annual financial statements of the Company are prepared in accordance with UK Accounting Standards and applicable law (UK Generally Accepted Accounting Practice), including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with FRS 104 Interim Financial Reporting.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial 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 condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2017 is not prepared, in all material respects, in accordance with FRS 104 Interim Financial Reporting and the DTR of the UK FCA.

John Waterson

for and on behalf of KPMG LLP

Chartered Accountants

Saltire Court

20 Castle Terrace

Edinburgh EH1 2EG

24 May 2017

Responsibility Statement of the Directors in respect of the Half-Yearly Financial Report

We confirm that to the best of our knowledge:

● the condensed set of financial statements has been prepared in accordance with FRS 104 Interim Financial Reporting

● the interim management report includes a fair review of the information required by:

a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

On behalf of the Board,

Peter Lawrence

Chairman

24 May 2017

Condensed Income Statement

For the six months to 31 March 2017

All items in the above statement derive from continuing operations.

There are no recognised gains and losses other than those disclosed in the Income Statement.

The revenue column of the Income Statement includes all income and expenses. The capital column accounts for the realised and unrealised profit or loss on investments and the proportion of the management fee charged to capital.

The total column of this statement is the Statement of Total Comprehensive Income of the Company prepared in accordance with the Financial Reporting Standard ("FRS"). The supplementary revenue return and capital return columns are prepared in accordance with the Statement of Recommended Practice issued in November 2014 and updated in January 2017 by the Association of Investment Companies ("AIC SORP").

Condensed Statement of Changes in Equity

For the six months to 31 March 2017

Condensed Balance Sheet

As at 31 March 2017

Condensed Statement of Cash Flows

For the six months to 31 March 2017

Notes

1. The condensed financial statements for the six months to 31 March 2017 comprise the statements set out above together with the related notes below. The Company applies FRS 102 and the AIC's Statement of Recommended Practice issued in November 2014 and updated in January 2017 ('the SORP') for its annual financial statements. The condensed financial statements for the six months to 31 March 2017 have therefore been prepared in accordance with FRS 104 'Interim Financial Reporting' and the principles of the SORP. The accounts have been prepared on the same basis as the accounting policies set out in the Company's Annual Report and Financial Statements for the year ended 30 September 2016.

2. Return per share is based on a weighted average of 173,351,635 ordinary shares in issue (31 March 2016 - 108,808,998 ordinary shares; 30 September 2016 - 139,821,872 ordinary shares).

3. Earnings for the first six months to 31 March 2017 should not be taken as a guide to the results of the full financial year to 30 September 2017.

4. During the six months to 31 March 2017 the Company sold 1,250,000 shares out of treasury. At 31 March 2017, the Company held 10,003,819 ordinary shares in treasury. Shares may be sold out of treasury below Net Asset Value as long as the discount at issue is narrower than the average discount at which the shares were bought into treasury.

5. Excluding treasury shares, there were 174,120,866 ordinary shares in issue at 31 March 2017 (31 March 2016 - 170,380,866 ordinary shares; 30 September 2016 - 172,870,866 ordinary shares).

6. The interim dividend of 3.00p per share (2.80p capital, 0.20p revenue) was paid on 31 March 2017 to shareholders on the register on 10 March 2017. The ex-dividend date was 9 March 2017.

During the year to 30 September 2016, the Company paid a first interim dividend on 18 December 2015 of 3.50p per share (3.50p capital, nil revenue), a second interim dividend on 3 June 2016 of 6.50p per share (6.45p capital, 0.05p revenue) and a third interim dividend on 30 September 2016 of 8.50p per share (8.39p capital, 0.11p revenue).

7. All investments are initially recognised and subsequently measured at fair value. Changes in fair value are recognised in the Income Statement.

The methods of fair value measurement are classified into a hierarchy based on reliability of the information used to determine the valuation.

• Level 1 - Fair value is measured based on quoted prices in an active market.

• Level 2 - Fair value is measured based on directly observable current market prices or indirectly being derived from market prices.

• Level 3 - Fair value is measured using a valuation technique that is not based on data from an observable market.

There has been no significant change in the risk analysis as disclosed in the Company's Annual Report and Accounts to 30 September 2016.

8. The financial information contained in this half-yearly financial report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The information for the year to 30 September 2016 has been extracted from the latest published audited financial statements. The audited financial statements for the year to 30 September 2016, which were unqualified, have been filed with the Registrar of Companies. No statutory accounts in respect of any period after 30 September 2016 have been reported on by the Company's auditors or delivered to the Registrar of Companies.

9. The Company has one reportable segment being investing in primarily a portfolio of UK growth businesses, whether unquoted or traded on AIM.

10. Copies of the half-yearly financial report have been made available to shareholders and are available from the Registered Office of the Company at 100 Wood Street, London EC2V 7AN.

Principal Risks and Uncertainties

The Company's assets consist of equity and fixed interest investments, shares in collective investment schemes, cash and liquid resources. Its principal risks are therefore market risk, credit risk and liquidity risk. Other risks faced by the Company include loss of approval as a Venture Capital Trust, legislative, investment performance, economic, political and other external factors, regulatory and compliance and operational risks. These risks, and the way in which they are managed, are described in more detail in the Principal Risks & Uncertainties table within the Strategic Report section in the Company's Report and Accounts for the year to

30 September 2016. The Company's principal risks and uncertainties have not changed materially since the date of that report.

Related Parties

Livingbridge VC LLP ('the Manager') manages the investments of the Company. The Manager also provides or procures the provision of secretarial, administrative and custodian services to the Company. Under the management agreement, the Manager receives a fee of 2.0 per cent. per annum of the net assets of the Company. This is described in more detail under the heading 'The Investment Management Agreement' within the Strategic Report in the Company's Annual Report and Accounts for the year to 30 September 2016. During the period the Company has incurred management fees of £1,480,000 (31 March 2016 - £1,108,000; 30 September 2016 - £2,599,000) and secretarial fees of £72,000 (31 March 2016 - £75,000; 30 September 2016 - £147,000) payable to the Manager. A performance fee of £260,000 (31 March 2016 - £107,000; 30 September 2016 - £nil) has been accrued at 31 March 2017. This is described in more detail under the heading 'Performance fees' within the Strategic Report in the Company's Annual Report and Accounts for the year to 30 September 2016.

Going Concern

After making enquiries, and bearing in mind the nature of the Company's business and assets, the Directors consider that the Company has adequate resources to continue in operational existence for the foreseeable future. In arriving at this conclusion the Directors have considered the liquidity of the Company and its ability to meet obligations as they fall due for a period of at least twelve months from the date that these financial statements were approved. As at 31 March 2017 the Company held cash and readily realisable securities totalling £16,329,000 including £12,000,000 in JPMorgan Sterling Liquidity Fund. Cash flow projections have been reviewed and show that the Company has sufficient funds to meet both its contracted expenditure and its discretionary cash outflows in the form of the share buyback programme and dividend policy. The Company has no external loan finance in place and therefore is not exposed to any gearing covenants. 

Corporate Information

National Storage Mechanism

A copy of the Half-Yearly Report will be submitted shortly to the National Storage Mechanism ("NSM") and will be available for inspection at the NSM, which is situated at: www.morningstar.co.uk/uk/NSM.

END

Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on this announcement (or any other website) is incorporated into, or forms part of, this announcement.