Braveheart Investment Group plc Annual Report and Accounts 2016
KEY POINTS | Strategic Report | 01
Highlights• Operatingcostsreducedbyapproximately£570,000overafullyear;• Cashatbankof£1.3masat31March2016;• Operatinglossof£370,000;• SuccessfuldisposalofinterestinWhiteRockCapitalPartners;• PurchaseofremaininginterestinRidingsHoldingsLtd;• Vikingawardedacontractextensiontoinvestafurther£5.1mtotopupthe£40mFinanceYorkshireEquityFund,andafurther£3.8mmadeavailableinJanuary2016;
• Completionofreorganisationandrestructuringefforts,withremainingexceptionalchargesnowaccountedfor;and
• BoardnowfocusedonGroup’sfuturewithanemphasisonensuringpositiveearningsareachievedinthecurrentyear.
Strategic Report Governance Accounts and notes
01Keypoints02 ChiefExecutiveOfficer’sreport
06Directors’report09Boardofdirectors10Corporategovernance
statement13Directors’remunerationreport16Independentauditors’report
17Consolidatedstatement ofcomprehensiveincome
18Consolidatedstatement offinancialposition
19 Companystatement offinancialposition
20Consolidatedstatement ofcashflows
21Companystatement ofcashflows
22 Consolidatedandcompanystatementofchangesinequity
23Notestothefinancialstatements
49Noticeofannual generalmeeting
52Companyinformation
DisclaimerThisAnnualReportcontainscertainforward-lookingstatements,whichreflecttheknowledgeof,andinformationavailableto,thedirectorsatthedateofpreparationofthisAnnualReport.Bytheirnature,thesestatementsinvolveriskanduncertaintybecausetheyrelatetoeventsanddependoncircumstancesthatmayormaynotoccurinthefutureandthereareanumberoffactorsthatcouldcauseactualresultsordevelopmentstodiffermateriallyfromthoseexpressedorimpliedbytheseforward-lookingstatements.
Braveheart Investment Group plc Annual Report and Accounts 2016
02 |CHIEF EXECUTIVE OFFICER’S REPORT | Strategic Report
I am pleased to report to shareholders for the 12 months ended 31 March 2016.
OverviewThroughoutthecourseoftheyear,wecontinuedtoreviewalloperationswiththeobjectiveofidentifyingwhichactivitieswecanbestconcentrateourresourcesupon,tothemostproductiveeffectforourshareholders.Asaresultofthatreviewandrelatedactionstakenbyyourboard,wehavesucceededinreducingoperatingcostsoftheGroupbyapproximately£570,000perannum.
ThetargetthattheboardhassetitselfforthecurrentyearistoensurethattheoperatingcostsoftheGroupwillbelessthanoperatingincome,allowingustobudgetforasurplusforthefullyear.
Akeypartoftheoperationalreviewwehaveundertakenhasbeentotakethedifficultdecisiontoscaleback,sellorclosethosepartsoftheGroupthatthereviewhasidentifiedasunlikelytobecomeprofitableinthenearfutureand/orhavingarequirement forsignificantcapitalexpenditure.
Tothisendwehavetakenthefollowingactions:
1.Soldour33%participationinWhiteRocktothemanagementteamforthesumof£100,000(asannouncedon8January2016)2.ExitedfromtheinvestmentpartnerparticipationwithSEEDRS3.ClosedourStrathtayprivateclientbusiness
BraveheartGroupcontinuestoownandmanageasmallprivateequityportfolioonitsownaccount.Attheendoftheperiodunderreviewthenumberofdirectlyheldinvestmentstotalled18(2015:18).
Wearepleasedtohavebeenabletoannounce,duringtheyearunderreview,thesuccessfulexitforbothourowndirectlyheldinvestmentandforthemanyclientsthatwehavehistoricallyadvised,oftheinvestmentsinBloxxLtdandBioptaLtd.
AnimportantpartofthefocusonachievingtheseexitshasbeentoundertakeadetailedreviewoftheexitopportunitiesforeachinvestmentandthelikelyvaluethatsuchanexitwouldgenerateforBraveheart.Thisreviewhasledustoconcludethatsomeofthevaluationsofthedirectlyheldportfolioneededtobeadjusted,withtheaggregateadjustmentforthewholeportfoliobeingareductioninvalueof£1,026,000(excludingBloxxLtdandBioptaLtd)to£468,000(2015:£2,478,000).Thereductioninvaluationhasbeentakenthroughtheprofitandlossaccountbutis,ofcourse,anon-cashadjustmentandsohasnotimpactedthecashheldonourbalancesheet.
Asattheendofthefinancialyearthecashheldonourbalancesheetstoodat£1,263,000(2015:£503,000).ThesignificantincreaseinthecashpositionofBraveheartisduetoacombinationofthesaleofparticipationsandinvestmentsduringtheyearunderreview,togetherwiththedeterminationofyourboardtoreducetheoperationalcostsoftheGroup.
ThemostimportantoperationalactivityoftheGroupisourfundmanagementbusiness,VikingFundManagers(‘Viking’).Vikinghadanothersuccessfulyear,workingthroughouttheYorkshireandHumberregion.ItmanagestheFinanceYorkshireEquityFund(‘FYEF’)whichinvestsbothdebtandequityinstrumentsindevelopmentcapitalsituationsandunitsizesrangefrom£50,000to£2million.
During2015,Vikingwasawardedacontractextensiontoinvestafurther£5.1milliontotopupthe£40millionFYEF,withafurther£3.8millionbeingmadeavailableinJanuarythisyear.Intheperiod,theVikingteaminvested£16.4million,bringingthetotalinvestedat31March2016to£46.3million(2015:£29.9million)intoatotalof53SMEs(2015:44).Vikinganticipatesinvestingtheremaining£2.64millionduringthefirstquarterof2016/17sothatfundwillbefullyinvestedby30June2016.
Thereafter,VikingiscontractedtocontinueintotheportfoliomanagementphaseuntilDecember2019.Throughoutlastyeartheteamwereresponsibleforsecuringseveralexitsforthefund.Theportfoliocontinuestolookpromisingasitmovesintogrowthandrealisationphase,withseveralinvestmentshavingsignificantpotentialvaluetobereturned.
Anew,£400millionNorthernPowerhouseInvestmentFund(‘NPIF’)isbeingplannedbytheBritishBusinessBankasasuccessortotheJEREMIEfundsinTeeside,YorkshireandHumberandtheNorthWest,withanticipatedlaunchdatesinautumn2016.VikinglooksforwardtobiddingtowinaplaceontheframeworkforfundmanagementservicesanditsexperiencedteamiskeentowinamandateforrunninganNPIFfundwithasimilarremitanddurationtoFYEF.
InDecember2015,VikingboughtouttheremainingshareholdersofRidingsHoldingsLimited(‘RHL’),whichhasaportfolioofremaininginvestmentsfrompreviousfundstoberealised.
Braveheart Investment Group plc Annual Report and Accounts 2016
CHIEF EXECUTIVE OFFICER’S REPORT | Strategic Report | 03
Financial Review Duringtheyearwecontinuedthecomprehensivereviewofourcostbase,andimplementedarestructuringofheadofficeoperations.Thisexercisehascontinuedpostyear-endandweexpecttofurtherreduceourannualcentralcostsduringthecourseofthefinancialyearending31March2017.
Income StatementFee-basedrevenueisgeneratedbybothStrathtayVenturesLtd(‘SVL’)andVikingFundManagersLtd(‘VFM’).TheprincipalrevenuefromtheGroup’soperationsprincipallycomprisesinvestmentmanagementfees,withtotalrevenueduringtheyearbeing£1,133,000(2015:£1,864,000).
Financeincomewas£7,000(2015:£13,000),thisbeinginterestonoutstandingloannoteswithinthedirectlyheldportfolio.
Asat31March2015,thefairvalueoftheGroup’sdirectlyheldportfolioof18companieswas£2,478,000.DuringtheyeartheGroupmadeinvestmentsof£16,500intotwoexistingportfoliocompaniesand£45,000topurchasetheremainingshareholdinginRidingsHoldingsLtd.Aspreviouslynoted,investmentsinBloxxandBioptawererealisedshowingareturnof£1,074,000.Asat31March2016thefairvalueoftheinvestmentportfoliooftheremaining18companieswas£468,000,resultinginanaggregateunrealisedrevaluationlossof£1,026,000(2015:unrealisedrevaluationlossof£1,080,000).
TheGroup’sdirectlyheldportfoliosareheldeitherbytheCompany,StrathclydeInnovationFundLP,CaledoniaPortfolioRealisationsLtd(‘CPR’)orRidingsHoldingsLtd.Thereisanincreaseincontingentconsiderationof£57,000(2015:decreaseincontingentconsiderationof£136,000)payableonfutureexitvaluesofCPRportfoliocompanieswhichhasnowbeenagreedandpartlypaid.
Totalincomefortheyearended31March2016,includingrealisedgainsandunrealisedrevaluationgainsandlosses,was£196,000,adecreasefrom£1,143,000in2015.
Theaveragenumberofemployeesdecreasedby5duringtheperiodunderreview.Employeebenefitsexpensewas£1,001,000(2015:£1,394,000),includingredundancyandlossofofficecostsof£178,000.Otheroperatingandfinancecostswerebroadlythesameat£516,000(2015:£518,000).Agoodwillimpairmentlossof£372,000(2015:£nil)wasrecordedagainstVikingFundManagers.
Excludingunrealisedportfoliomovementsandcontingentconsideration,thelossbeforetaxwas£610,000(2015:profitof£177,000).Thetotallossaftertaxandamountsattributabletonon-controllinginterestsincreasedto£1,693,000(2015:lossof£768,000),equivalenttoalosspershareof6.23pence(2015:losspershareof2.78pence).
Braveheart Investment Group plc Annual Report and Accounts 2016
04 | CHIEF EXECUTIVE OFFICER’S REPORT | Strategic Report
Financial PositionNetassetsat31March2016were£1,705,000(2015:£3,388,000),equivalentto6.30pencepershare(2015:12.52pence)thedecreasereflectingtradingresults.
TheGroup’snetassetsincludegoodwillof£380,000(2015:£752,000).ThecarryingvalueofgoodwillwasreviewedduringtheyearandinlightofcurrentprojectionsoffutureperformancetheDirectorshaveimpairedgoodwillby£372,000.
AttheyearendtheGrouphadcashbalancesof£1,263,000(2015:£503,000).Therewerenomaterialborrowings.
AsummaryanalysisoftheGroup’sperformanceisasfollows:
2016 2015
£’000 £’000
Investmentmanagementrevenue 1,133 1,864
Financeincome 7 13
Incomebeforeportfoliomovements 1,140 1,877
Changeinfairvalueofinvestmentsandmovementincontingentconsideration (944) (734)
Totalincome 196 1,143
Employeebenefitsexpense(includingsharebasedpayments) (1,001) (1,394)
Goodwillimpairment (372) -
Otheroperatingandfinancecosts (516) (517)
Totalcosts (1,889) (1,911)
Lossbeforetax (1,693) (768)
Totallossandtotalcomprehensivelossfortheyear (1,693) (768)
Openingcashbalance 503 159
Increaseinportfolioinvestments (17) (60)
ProceedsfromsaleofequityinvestmentsandLLP 1,163 414
Otheractivities (382) (140)
Netcashacquiredonacquisition (4) -
Newshareissue - 130
Closingcashbalance 1,263 503
Netassets 1,705 3,388
Netassetspershare 6.30 pence 12.52pence
Braveheart Investment Group plc Annual Report and Accounts 2016
CHIEF EXECUTIVE OFFICER’S REPORT | Strategic Report | 05
Outlook and StrategyWewillcontinuetotightlycontroltheoperationalcostbaseoftheGroup,whilstatthesametimetryingtoincreasetheactivitiesandrevenuesofVFM.WealsohopetoidentifynewprivateequityinvestmentswithgoodgrowthpotentialwhereourinvestmentwillproducegoodreturnsforBraveheartshareholders.
OurexpectationisthatthecompletionoftherestructuringandoperationalreviewwillresultinanimprovedoutlookfortheGroupbecomingprofitableoverthefullyear.Ilookforwardtoupdatingshareholdersonprogressastheyearunfolds.
Key Performance Indicators (KPIs)TheKPIsweusetomonitorbusinessperformance,whichgiventhenatureofourbusinessareprimarilyfinancialmeasures,are:
2016 2015
Netassets(‘£000) 1,705 3,388
Cashbalance(£’000) 1,263 503
Lossaftertaxattributabletoequityholders(£’000) (1,685) (739)
InvestmentsmadebyGroup(£’000) 61 60
InvestmentsmadebyGroup(numberofcompanies) 2 2
RealisedgainonsaleofGroupinvestments(£’000) 139 211
NetunrealisedmovementonrevaluationofGroupinvestments(£’000) (1,026) (1,080)
Fundsundermanagement(£m) 77 125
Principal Risks and Uncertainties
ThroughitsoperationstheGroupisexposedtoanumberofrisks.TheGroup’sriskmanagementobjectivesandpoliciesaredescribedintheCorporateGovernanceStatementonpage10.
OurcurrentChairman,JeremyDelmar-Morgan,hasconcludedthatitisnowanappropriatetimeforhimtoretirefromtheBoardoftheCompany,withhisleavingtakingeffectonthe31stJuly2016.JeremyhasbeenChairmanofBraveheartsince2008andhassteeredtheGroupthroughsomedifficulttimesasweadjustedandre-focusedtheoperationsoftheGroup.IwouldliketotakethisopportunitytothankhimfortheconsiderableeffortthathehasputintoBraveheartoverthelast8yearsandwishhimwellinhisretirement.
Trevor E Brown ChiefExecutiveOfficer 22June2016
Braveheart Investment Group plc Annual Report and Accounts 2016
06 | DIRECTORS’ REPORT | Governance
Thedirectorspresenttheirreporttogetherwiththeauditedfinancialstatementsfortheyearended31March2016.
Principal ActivitiesTheGroupprovidesdebt/equityandadvisoryservicestoSMEsandservicestheinvestmentrequirementsofbusinessangels, highnetworthindividuals,familyofficesandpublicsectororganisations.
Results and DividendsThefinancialstatementsoftheGroupandtheCompanyfortheyearto31March2016aresetoutonpages17to48. TheGroup’sconsolidatedlossfortheyearwas£1,693,000(2015:loss£768,000). Thedirectorsdonotrecommendpaymentofadividendfortheyear(2015:£nil).
Corporate Governance StatementInformationregardingthecorporategovernancestatementcanbefoundintheCorporateGovernancestatementonpages10to12.
Directors and their InterestsThenamesofthedirectorswhoheldofficeduringthefinancialyeararelistedonpage52. Biographicaldetailsofthedirectorswhoheldofficeattheendofthefinancialyearareshownonpage9. Nodirectorhadamaterialinterestinanycontract,otherthantheircontractforservices,duringorattheendofthefinancialyearthatwassignificanttotheGroup’sbusiness.
Directors’ Interests in SharesThedirectorsat31March2016andtheirinterestsinthesharecapitalintheCompanyareasfollows:
At 31 March 2016 At31March2015
Directors Ordinary shares
Options over ordinary shares
Ordinaryshares
Optionsoverordinaryshares
JHDelmar-Morgan 50,000 - 50,000 -
TEBrown 7,805,934 - 7,290,233 -
JDFreeman (appointed 21 August 2015) - - - -
ATGBurton(appointed 24 September 2015) 659,460 178,379 - -
MABowles(resigned 2 March 2016) n/a n/a - -
GCBThomson(resigned 21 August 2015) n/a n/a 2,350,890 529,637
CSmith(resigned 6 May 2015) n/a n/a 247,204 357,049
ABrown(resigned 20 April 2015) n/a n/a 15,524 136,165
Nonotificationofanyotherchangeintheaboveinterestshasbeenreceivedintheperiodfrom31March2016tothedateofthisreport.
Share CapitalDetailsofthestructureoftheCompany’ssharecapitalandtherightsattachingtothesharesaresetoutinnote20tothefinancialstatements.
At31March2016theCompanyhad27,055,491allotted,calledupandfullypaidordinarysharesof2penceeach.
TheCompanyhasoneclassofordinaryshares.Allsharescarryequalvotingrights,equalrightstoincomeanddistributionofassetsonliquidationorotherwise,andnorighttofixedincome.
Therearenospecificrestrictionsonthesizeofaholdingoronthetransferofshares,whicharebothgovernedbythegeneralprovisionsoftheCompany’sArticlesofAssociation(theArticles)andprevailinglegislation.
PowertopurchasetheCompany’sownsharesisprovidedintheCompany’sArticlessubjecttostatutoryprovisions.ThedirectorshavenoexistingauthoritytopurchasetheCompany’sownshares.
Financial InstrumentsTheGroup’sfinancialinstrumentscompriseinvestmentsdesignatedatfairvaluethroughprofitorloss,cashandvariousitemssuchastradeandotherreceivables,andtradepayables,allofwhicharisedirectlyfromitsnormaloperations.ThemainpurposesofthesefinancialinstrumentsaretoprovidereturnsfrominvestmentandfinancefortheGroup’soperations.
FurtherinformationregardingtheGroup’sfinancialriskmanagementobjectivesandpolicies,includingthoseinrelationtocreditrisk,liquidityriskandmarketrisk,isprovidedinnote25tothefinancialstatements.
Braveheart Investment Group plc Annual Report and Accounts 2016
DIRECTORS’ REPORT | Governance | 07
Articles of AssociationTheCompany’sArticlesmaybeamendedbyaspecialresolutionoftheshareholders.
Appointment and Replacement of DirectorsTheCompanymaybyordinaryresolutionappointapersonwhoiswillingtoacttobeadirector,eithertofillavacancyorasanadditiontotheexistingdirectorsandmayalsodeterminetherotationinwhichanyadditionaldirectorsaretoretire.AnypersonsoappointedbythedirectorsshallholdofficeonlyuntiltheconclusionofbusinessatthenextAnnualGeneralMeetingandshallbeeligibleforreappointmentbyordinaryresolutionatthatmeeting.TheCompanymayalsobyordinaryresolutionremoveadirectorfromoffice.
AteachAnnualGeneralMeetingoftheCompany,directorseligibletoretireshallretirefromofficebyrotation.NodirectorshallcontinuetoholdofficeasadirectorafterthethirdAnnualGeneralMeetingfollowinghiselectionorre-election,withoutsubmittingthemselvesforre-electionatthesaidthirdAnnualGeneralMeeting.
Significant ShareholdingsAsat31March2016,thefollowingbeneficialownerseachheld3%ormoreoftheCompany’sissuedsharecapital:
Name Number Percentage
VidacosNomineesLimited1 4,201,840 15.53
HargreaveHaleNomineesLimited2 3,978,176 14.70
LynchwoodNomineesLimited2 3,493,855 12.91
GCBThomson 2,350,890 8.69
DCThomsonLimited 2,258,490 8.35
ChaseNomineesLimited3 1,105,440 4.09
WavePowerTechnologiesLimited 972,385 3.591BeneficialownerbeingANorris2BeneficialownerbeingTEBrown.TEBrownownsafurther68,202sharespersonallyandafurther265,701throughFreeAssociationBooksLtd,acompanyofwhichheisadirector
3BeneficialownerbeingWRehman
Directors’ Indemnity and liability Insurance
Duringtheyear,theCompanyhasmaintainedliabilityinsuranceinrespectofitsDirectors.SubjecttotheprovisionsoftheCompaniesAct2006,theArticlesprovidethattotheextentthattheproceedsofanyliabilityinsuranceareinsufficienttomeetanyliabilityinfull,everyDirectorisentitledtobeindemnifiedoutofthefundsoftheCompanyagainstanyliabilitiesincurredintheexecutionordischargeofhisorherpowersorduties.AcopyoftheindemnityisavailableforinspectionasrequiredbytheCompaniesAct2006.
Disclosure in Strategic Report
AspermittedbyParagraph1AofSchedule7totheLargeandMedium-sizedCompaniesandGroup’s(AccountsandReports)Regulations2008certainmatterswhicharerequiredtobedisclosedinthedirectors’reporthavebeenomittedastheyareincludedinthestrategicreportonpages2to5.Thesemattersrelatetobusinessreviewandoutlookandstrategy.
Braveheart Investment Group plc Annual Report and Accounts 2016
08 | DIRECTORS’ REPORT | Governance
Directors’ Responsibilities
ThedirectorsareresponsibleforpreparingtheAnnualReportandthefinancialstatementsinaccordancewithapplicablelawandregulations.
Companylawrequiresthedirectorstopreparefinancialstatementsforeachfinancialyear.UnderthatlawthedirectorshaveelectedtopreparethefinancialstatementsinaccordancewithInternationalFinancialReportingStandards(IFRS)asadoptedbytheEuropeanUnionandapplicablelaw.Undercompanylawthedirectorsmustnotapprovethefinancialstatementsunlesstheyaresatisfiedthattheygiveatrueandfairviewofthestateofaffairsandprofitorlossofthecompanyandgroupforthatperiod.Inpreparingthosefinancialstatements,thedirectorsarerequiredto:
• selectsuitableaccountingpoliciesandthenapplythemconsistently;• makejudgementsandestimatesthatarereasonableandprudent;• statewhetherapplicableIFRS,asadoptedbytheEuropeanUnion,havebeenfollowed,subjecttoanymaterialdeparturesdisclosedandexplainedinthefinancialstatements;
• provideadditionaldisclosureswhencompliancewithspecificrequirementsinIFRSisinsufficienttoenableuserstounderstandtheimpactofparticulartransactions,othereventsandconditionsontheentity’sfinancialpositionandfinancialperformance;and
• preparethefinancialstatementsonagoingconcernbasisunlessitisinappropriatetopresumethatthecompanywillcontinue inbusiness.
Thedirectorsareresponsibleforkeepingadequateaccountingrecordswhicharesufficienttoshowandexplainthecompany’stransactionsanddisclosewithreasonableaccuracyatanytimethefinancialpositionoftheGroupandoftheCompanyandenablethemtoensurethatthefinancialstatementscomplywiththeCompaniesAct2006.TheyarealsoresponsibleforsafeguardingtheassetsoftheCompanyandhencefortakingreasonablestepsforthepreventionanddetectionoffraudandotherirregularities.
FinancialstatementsarepublishedontheGroup’swebsiteinaccordancewithlegislationintheUnitedKingdomgoverningthepreparationanddisseminationoffinancialstatements,whichmayvaryfromlegislationinotherjurisdictions.ThemaintenanceandintegrityoftheGroup’swebsiteistheresponsibilityoftheDirectors.
Political and Charitable Donations
ItistheBoard’spolicynottomakeanypoliticaldonationsnorcharitabledonationswhichexceed£200.TheGroupdidnotmakeanysuchdonationsintheyear(2015:£nil).
Disclosure of Information to Auditors
Thedirectorsconfirmthat:
• sofaraseachdirectorisaware,thereisnorelevantauditinformationofwhichthecompany’sauditorisunaware;and• thedirectorshavetakenallthestepsthattheyoughttohavetakenasdirectorsinordertomakethemselvesawareofanyrelevantauditinformationandtoestablishthattheauditorsareawareofthatinformation.
Auditor
DuringtheyearGrantThorntonUKLLPresignedasauditorandMazarsLLPwereappointedtofillthecasualvacancy.Inaccordancewithsection489oftheCompaniesAct2006,aresolutionproposingthereappointmentofMazarsLLPwillbeputtotheshareholdersattheforthcomingAnnualGeneralMeeting.
OnbehalfoftheBoard
Jeremy H Delmar-Morgan Director 22June2016
Braveheart Investment Group plc Annual Report and Accounts 2016
BOARD OF DIRECTORS | Governance| 09
Jeremy H Delmar-Morgan MA MSIChairman JeremyisaDirectoroftheLondonSymphonyOrchestraEndowmentTrustandDaylightInnovationInvestmentSupportCorporationLtd.PreviouslyJeremywasapartnerinHoblyn,Dix&MauriceandaDirectorofVickersDaCostabeforejoiningTeather&Greenwoodin1979wherehewentontobecomeChairman.HesubsequentlyjoinedHichens,Harrison&CoasChairmanin2004,andwaspreviouslyChairmanofAllenbyCapitalandTheBrendoncareFoundation.JeremyjoinedtheBoardin2008.
Trevor E BrownChief Executive Officer (from 21 August 2015, previously a Non-executive Director)Trevoriscurrentlyadirectorof:PeterhouseCapitalLimited,FlyingBrandsplc,Non-executiveDirectorofFeedbackplc,andwaspreviouslyNon-executiveDirectorofAdvancedOncotherapyplc.TrevorjoinedtheBoardofBraveheartasaNon-executiveDirectorwitheffectfrom1April2014andbecametheChiefExecutiveOfficeron21August2015.
Andrew T G Burton BSc Executive Director (appointed on 24 September 2015)AndrewisManagingDirectorofVikingFundManagersLtd.Andrewhasbeeninvolvedinearlystagetechnologyinvestingsince1986.BeforesettingupVikingFundManagersLtdin2002herantheYorkshireAssociationofBusinessAngels(whichhenowchairs)andpreviouslyworkedforUniVenturesInternationalatLeedsMetropolitanUniversitywherehewasresponsibleforhighgrowthprogrammesandincubators.
Jonathan D Freeman BA Hons MBANon-executive Director (appointed 21 August 2015)Jonathanisanexperiencedcorporatefinancierandcompanydirector.Hehasextensiveexperienceofquotedcompanies,financialservicesandofFCAregulatedentities.JonathanisseniorindependentNon-executiveDirectorofFuturaMedicalplcandalsochairstheirAuditCommitteeandRemunerationCommittee.HeisalsotheChairmanofPhotonStarLEDGroupplc.JonathanjoinedtheBoardasanExecutiveDirectorwitheffectfrom21August2015andbecameaNon-executiveDirectoron3March2016.
Braveheart Investment Group plc Annual Report and Accounts 2016
10 | CORPORATE GOVERNANCE STATEMENT | Governance
Thedirectorsrecognisetheimportanceofsoundcorporategovernance.AsacompanywhosesharesaretradedonAIM,theCompanyisnotobligedtocomplywiththecorporategovernanceregimeassetoutintheUKCorporateGovernanceCode.WedonotcomplywiththeUKCorporateGovernanceCode,however,wehavereportedonourCorporateGovernancearrangementsbydrawinguponbestpracticeavailable,includingthoseaspectsoftheUKCorporateGovernanceCodeweconsidertoberelevanttothecompanyandbestpractice.ItintendstocomplywiththeQuotedCompaniesAlliance’sCorporateGovernanceGuidelinesforSmallerQuotedCompaniesinsofarasitisreasonablypracticableforapubliccompanyofitssizeandnature.ThedirectorshaveadoptedacodeofconductfordealingsbydirectorsandemployeeswhichcomplieswiththeAIMRulesandarecommittedtomaintainingthehigheststandardsofcorporategovernance.
The Board of Directors
Asat31March2016theBoardcomprisedthenon-executiveChairman,JeremyDelmar-Morgan,theCEOTrevorBrown,oneexecutivedirector,AndrewBurtonandonenon-executivedirector,JonathanFreeman.Duringtheyearunderreviewthefollowingdirectorsresignedfromtheboard:AileenBrown(resigned20April2015),CarolynSmith(resigned6May2015),GeoffreyThomson(resigned21August2015)andMartinBowles(resigned2March2016).Biographicaldetailsofthecurrentdirectorsaresetoutonpage9.Executiveandnon-executivedirectorsaresubjecttore-electionatintervalsofnomorethanthreeyears.ThelettersofappointmentofalldirectorsareavailableforinspectionattheCompany’sregisteredofficeduringnormalbusinesshours.
TheBoardmeetsatleasteighttimesperannum.IthasestablishedanAuditandComplianceCommitteeandaRemunerationCommittee,particularsofwhichappearhereafter.TheboardconcludedduringtheyearunderreviewthatappointmentstotheboardshouldbemadebytheboardasawholeandsohasdisbandedtheNominationsCommittee.
Non-executive Directors
TheBoardhasadoptedguidelinesfortheappointmentofnon-executivedirectorswhichhavebeeninplaceandwhichhavebeenobservedthroughouttheyear.TheseprovidefortheorderlyandconstructivesuccessionandrotationoftheChairmanandnon-executivedirectorsinsofarasbothChairmanandnon-executivedirectorswillbeappointedforaninitialtermofthreeyearsandmay,attheBoard’sdiscretionbelievingittobeinthebestinterestsoftheCompany,beappointedforsubsequentterms.TheChairmanmayserveasanon-executivedirectorbeforecommencingafirsttermasChairman.
InaccordancewiththeCompaniesAct2006,thedirectorscomplywith:adutytoactwithintheirpowers;adutytopromotethesuccessoftheCompany;adutytoexerciseindependentjudgement;adutytoexercisereasonablecare,skillanddiligence;adutytoavoidconflictsofinterest;adutynottoacceptbenefitsfromthirdpartiesandadutytodeclareanyinterestinaproposedtransactionorarrangement.
Delegation of Responsibilities by the Board of Directors
UltimateauthorityforallaspectsoftheGroup’sactivitiesrestswiththeBoard,therespectiveresponsibilitiesoftheChairmanandChiefExecutiveOfficerarisingasaconsequenceofdelegationbytheBoard.TheBoardhasadoptedtwostatements;thefirstsetsoutmatterswhicharereservedtotheBoardandthesecondestablishesthedivisionofresponsibilitiesbetweentheChairmanandtheChiefExecutiveOfficer.TheChairmanisresponsiblefortheeffectivenessoftheBoardandforensuringcommunicationwithshareholders,whilemanagementoftheGroup’sbusinesshasbeendelegatedbytheBoardtotheChiefExecutiveOfficer.
Audit and Compliance Committee
FortheperiodunderreviewtheAuditandComplianceCommitteecomprisedJonathanFreeman(Chairman),MartinBowles(untilhisresignationon2March2016)andAndrewBurton.ThiscommitteehasprimaryresponsibilityformonitoringthequalityofinternalcontrolsandensuringthatthefinancialperformanceoftheGroupisproperlymeasuredandreported.ItreceivesreportsfromtheexecutivemanagementandauditorsrelatingtotheinterimandannualaccountsandtheaccountingandinternalcontrolsystemsinusethroughouttheGroup.TheAuditandComplianceCommitteemeetsnotlessthantwiceineachfinancialyearandhasunrestrictedaccesstotheGroup’sauditors.
Braveheart Investment Group plc Annual Report and Accounts 2016
CORPORATE GOVERNANCE STATEMENT | Governance| 11
InadditiontheAuditandComplianceCommitteeareresponsibletotheBoardforensuringthatproceduresareinplace,andarebeingeffectivelyimplementedtoidentify,evaluateandmanagethesignificantrisksfacedbytheGroup.Ariskassessmentmatrixsetsoutthoserisks,andidentifiestheirownershipandthecontrolsthatareinplace.Thismatrixisupdatedaschangesariseinthenatureofrisksorthecontrolsthatareimplementedtomitigatethem.TheAuditandComplianceCommitteereviewstheriskmatrixandtheeffectivenessofscenariotestingonaregularbasis.Thefollowingprincipalrisks,andcontrolstomitigatethem,havebeenidentified:
Activity Risk Impact Control(s)
Management Recruitmentandretentionofkeystaff
Reductioninoperatingcapability
StimulatingandsafeworkingenvironmentBalancingsalarywithlongertermincentiveplans
Regulatory adherence Breachofrules Censureorwithdrawalofauthorisation Strongcomplianceregime
StrategicDamagetoreputationInadequatedisasterrecoveryprocedures
InabilitytosecurenewcapitalorclientsLossofkeyoperationalandfinancialdata
EffectivecommunicationswithshareholdersRobustcomplianceSecureoff-sitestorageofdata
Financial Liquidity,marketand creditriskInappropriatecontrolsandaccountingpolicies
InabilitytocontinueasgoingconcernReductioninassetvaluesIncorrectreportingofassets
RobustcapitalmanagementpoliciesandproceduresAppropriateauthorityandinvestmentlevelsassetbyTreasuryandInvestmentPoliciesAuditandRiskManagementCommittee
Furtherdetailsofthefinancialrisks,includingquantitativeconsiderationsoftheirpotentialimpacts,aresetoutinnote25tothefinancialstatements.
Thedirectorshaveestablishedprocedures,asrepresentedbythisstatement,forthepurposeofprovidingasystemofinternalcontrol.AninternalauditfunctionisnotconsiderednecessaryorpracticalduetothesizeoftheGroupandtheclosedaytodaycontrolexercisedbytheexecutivedirectors.However,theBoardwillcontinuetomonitortheneedforaninternalauditfunction.
Remuneration Committee
FortheperiodunderreviewtheRemunerationCommitteecomprisedTrevorBrown,whochairedtheCommittee,andMartinBowles.TheRemunerationCommitteereviewstheperformanceoftheexecutivedirectorsandemployeesandmakesrecommendationstotheBoardonmattersrelatingtotheirremunerationandtermsofemployment.TheRemunerationCommitteealsoconsidersandapprovesthegrantingofshareoptionspursuanttotheshareoptionplan.
Attendance at Board and Committee Meetings
Thefollowingtablesummarisesthenumberofboardandcommitteemeetingsheldduringtheyearandtheattendancerecordofindividualdirectors:
Board
Audit and Risk Management
Remuneration
(now disbanded) Nominations
Attended
Eligible to attend
Attended
Eligible to attend
Attended
Eligible to attend
Attended
Eligible to attend
JHDelmar-Morgan 9 11 1 1
TEBrown 11 11 1 1 1 1
JDFreeman 7 7 2 2
ATGBurton 4 4 2 2
MABowles 10 11 1 1 1 1
GCBThomson 4 4
Braveheart Investment Group plc Annual Report and Accounts 2016
12 | CORPORATE GOVERNANCE STATEMENT | Governance
Share DealingsTheCompanyhasadopted,witheffectfromthedateonwhichitsshareswereadmittedtoAIM,acodefordirectors’andemployees’dealingsinsecuritieswhichisappropriateforacompanywhosesecuritiesaretradedonAIM,andisinaccordancewithrule21oftheAIMrules.
Investment Authorities InvestmentauthoritiesarereviewedinMarchofeachyearandmorefrequentlyasdeterminedbytheBoard.TheseauthoritiesrelatetothemaximumamountthattheexecutivedirectorsmayinvestfromtheGroup’sownresourcesinanyoneportfolioinvestment.Investmentsoutwiththeagreedparametersmaybemadewiththeagreementofanon-executivedirectororbytheBoard.
Going ConcernThedirectorshavingreviewedtheGroup’sandCompany’sbudgetsandplans,takingaccountofreasonablypossiblechangesintradingperformance,haveareasonableexpectationthattheGroupandtheCompanyhaveadequateresourcestocontinueinoperationalexistencefortheforeseeablefutureandthatitisthereforeappropriatetocontinuetoadoptthegoingconcernbasisinpreparingthefinancialstatements.
Communication with ShareholdersTheBoardiscommittedtomaintaininggoodcommunicationandhavingconstructivedialoguewithitsshareholders.TheCompanyhascloseongoingrelationshipswithitsprivateshareholders.InstitutionalshareholdersandanalystshavetheopportunitytodiscussissuesandprovidefeedbackatmeetingswiththeCompany.Inaddition,allshareholdersareencouragedtoattendtheCompany’sAnnualGeneralMeeting.
InvestorsalsohaveaccesstocurrentinformationontheCompanythoughitswebsite,www.braveheartgroup.co.uk,andviaTrevorBrown,CEOwhoisavailabletoanswerinvestorrelationsenquiries.
Braveheart Investment Group plc Annual Report and Accounts 2016
DIRECTORS’ REMUNERATION REPORT | Governance| 13
Thedirectorsrecognisetheimportanceofsoundcorporategovernance.AsaCompanywhosesharesaretradedonAIM,theCompanyisnotobligedtocomplywiththecorporategovernanceregimeassetoutintheUKCorporateGovernanceCodeandtheDirectorsRemunerationReportispreparedonavoluntarybasis.Thereforeonlyrelevantdisclosureshavebeenincluded.
Remuneration CommitteeDuringtheyearunderreview,theRemunerationCommitteewaschairedbyTrevorBrownandMartinBowleswasalsoamemberoftheCommittee.TheCommitteemetonceduringtheyear.
Remuneration PolicyTheRemunerationCommitteerecognisesandhasacceptedtheFCA’sRemunerationCode.TheCommitteeisresponsibleforimplementingandmaintainingaremunerationpolicywhichensuresthatExecutiveDirectors,otherGroupcompanydirectors,seniormanagementandotheremployeesareremuneratedinsuchamannerastoensurethat(i)theyarefairlyrewardedinamannerwhichsecuresandretainstheskilledandexperiencedindividualstheGrouprequirestoensureitscorporateobjectives,includinganincreaseinshareholdervalue;(ii)conflictsofinterestareminimisedandthattheinterestsofstaffarealignedwiththelongterminterestsoftheGroup;and(iii)remunerationisconsistentwithandpromotessoundandeffectiveriskmanagementanddoesnotencouragerisktakingthatexceedstheleveloftoleratedrisksetbytheBoardandisinlinewiththebusinessstrategy,objectives,valuesandlong-terminterestsoftheGroup.TheCommitteeiscommittedtoensuringcompliancewiththeFCA’sRemunerationCode.
Determination of Directors’ and Senior Management’s SalariesTheRemunerationCommitteebelievesthattheinterestsoftheExecutiveDirectors,otherGroupcompanydirectors,seniormanagementandstaffandthoseoftheshareholdersandotherstakeholdersarebestalignedbyaremunerationpolicythatprovidesabasesalarytogetherwithawardsundertheGroup’sShareOptionScheme(the“Scheme”).TheRemunerationCommitteereviewsanddeterminesannuallydirectors’andseniormanagement’ssalariesinrelationtothetasksandresponsibilitiesinvolvedandthelevelofcomparablesalariesinthemarketplace.Inparticular,theCommitteeseekstoensurethatsalariesarecompetitive.Initsfinaldeterminationofsalaries,theCommittee’sconclusionsaresetwithinwhatisaffordable.DuringtheyearcontributionscontinuedinrespectofpensionarrangementsforoneDirectorofViking.
Executive Director Service AgreementsEachoftheexecutivedirectorshasaserviceagreementwiththeCompany.Theseagreementscanbeterminatedbyeitherpartygivingtheotherwrittennoticeatanytime.Paymentsonterminationarerestrictedtothevalueofthesalaryforthenoticeperiod.
Non-executive DirectorsThefeespayabletotheChairmanandthenon-executivedirectorsarefirstreviewedbytheCommittee,takingintoaccountmarketrates,followingwhichitsubmitsrecommendationstotheBoardforapproval.TheChairmanandeachnon-executivedirectorhaveagreedaletterofappointmentwhichsetsouttheirduties,responsibilitiesandfees.
Directors’ Remuneration Thetotalamountofdirectors’remuneration(includingcompensationforlossofoffice)issetoutbelow:
Total 2016
£
Total 2015
£
Executive directors:
TEBrown(appointed CEO 21 August 2015) 17,223 -
JDFreeman (appointed 21 August 2015) 26,600 -
ATGBurton(appointed 24 September 2015) 77,250 -
GCBThomson(resigned 21 August 2015) 234,721 154,666
CSmith(resigned 6 May 2015) 84,413 117,333
ABrown(resigned 20 April 2015) 69,682 117,333
Non-executive directors:
JHDelmar-Morgan 23,175 30,833
TEBrown(until change of appointment to CEO 21 August 2015) 6,281 17,937
JDFreeman(appointed 3 March 2016) 1,500 -
MABowles(resigned 2 March 2016) 14,995 9,012
555,840 447,114
TheCompanycontributed£3,203(2015:£nil)tothedefinedcontributionpensionschemeofonedirector,anddidnotpayanybonusestodirectorsduringthecurrentorpreviousyear.TheCompanypaidprivatemedicalinsurancepremiumsof£1,585,£176and£143(2015:£1,183,£560and£560)inrespectofGeoffreyThomson,CarolynSmithandAileenBrown.
Braveheart Investment Group plc Annual Report and Accounts 2016
14 | DIRECTORS’ REMUNERATION REPORT | Governance
Share Option SchemeTheCompanyoperatestheBraveheartInvestmentGroupplcExecutiveShareOptionScheme2006(theScheme),whichcomprisesPartA,ashareoptionschemeapprovedbyHMRC(theApprovedScheme)andPartB,anunapprovedshareoptionscheme(theUnapprovedScheme).
Historically,theSchemewasopentoalldirectorsandemployeesoftheGroup,althoughnon-executivedirectorscouldonlyparticipateinPartB.TheSchemeisnowopenonlytoallexecutivedirectorsandemployees.
OptionsaregrantedbytheBoardtakingintoaccounttheneedtomotivate,retainandrecruithighcalibreemployeesandwithregardtothecontributionthatsuchemployeesareexpectedtomakeinachievingtheCompany’sobjectives.
OptionsgrantedundertheSchemearecategorisedasEmploymentOptions,PerformanceOptionsorOtherOptions.EmploymentOptionsmaybegrantedundereitherPartAorPartB.AllPerformanceOptionsandOtherOptionsaregrantedunderPartB.
EmploymentOptionsvestandbecomeexercisableonthethirdanniversaryofdateofgrant,andgenerallylapseontheearlierofcessationofemployment(or6monthsthereafterifoptionshavevestedatcessationdate)orthe10thanniversaryofdateofgrant.
PerformanceOptionshavetodatehadvestingconditionslinkedtothegrowthintheCompany’smarketcapitalisationfromthedateofgrant(PerformanceConditions).IfaPerformanceConditionisnotmet,therelatedPerformanceOptionlapsesattheendoftherelevantmeasurementperiod.
Otherwise,PerformanceOptionsvestonattainmentofthePerformanceConditionandbecomeexercisableonthe1stanniversaryofthedateofthePerformanceConditionbeingmet,andlapseonthe10thanniversaryofdateofgrant.
Optionsweregrantedandlapsedduringtheyearasfollows:
Share Options Theinterestsofthedirectorsinshareoptionswereasfollows:
Date of Grant
At 1 April
2015
No of Options granted in year
No of Options
exercised in year
No of Options
lapsed in year
At 31 March
2016Exercise
PriceDate first
exercisable Expiry date
Employment Options granted under Part A
GThomson25May20123September
2012
74,852
10,346
- -
- -
- -
74,852
10,346
£0.120
£0.160
25May20153September
2015
24May20222September
202285,198 - - - 85,198
CSmith25May20123September
2012
54,823
7,849
- -
- -
(54,823)
(7,849)
- -
£0.120
£0.160
25May20163September
2015
24May20222September
202262,672 - - (62,672)
ABrown25May20123September
2012
25,951
7,849
- -
- -
(25,591)
(7,849)
-
-
£0.120
£0.160
25May20163September
2015
24May20222September
2022
33,800 - - (33,800) -
ABurton
18June20095July2010
25May20123September
201219August
2014
24,12827,74220,761
7,135
11,977
---
-
-
---
-
-
---
-
-
24,12827,74220,761
7,135
11,977
£0.295£0.255£0.120
£0.160
£0.105
18June20125July2013
25May20163September
20155November
2015
17June20194July2020
24May20222September
202218August
202491,743 - - - 91,743
Employment Options granted under Part B
GThomson18June20095July2010
42,75349,155
- - -42,75349,155
£0.295£0.255
18June20125July2014
17June20194July2020
91,908 - - - 91,908
CSmith18June20095July2010
31,66936,411
- -(31,669)(36,411)
--
£0.295£0.255
18June20125July2014
17June20194July2020
68,080 - - (68,080) -
Braveheart Investment Group plc Annual Report and Accounts 2016
DIRECTORS’ REMUNERATION REPORT | Governance| 15
Date of Grant
At 1 April
2015
No of Options granted in year
No of Options
exercised in year
No of Options
lapsed in year
At 31 March
2016Exercise
PriceDate first
exercisable Expiry date
Performance Options granted under Part B
GThomson
5July201025May2012
19August2014
76,92362,500
108,108
--
-
--
-
--
-
76,92362,500
108,108
£0.255£0.120
£0.105
5October201125August2014
5November2016
4July202024May2022
19August2024
247,531 - - - 247,531
CSmith
5July201025May2012
19August2014
46,15437,500
64,865
--
-
--
-
(46,154)(37,500)
(64,865)
--
-
£0.255£0.120
£0.105
5October201125August2014
5November2016
4July202024May2022
19August2024
148,519 - - (148,519) -
ABrown25May2012
19August2014
37,500
64,865
-
-
-
-
(37,500)
(64,865)
-
-
£0.120
£0.105
25August20145November
2016
24May202219August
2024102,365 - - (102,365) -
ABurton
5July201025May2012
19August2014
26,92321,875
37,838
--
-
--
-
--
-
26,92321,875
37,838
£0.255£0.120
£0.105
5October201125August2014
5November2016
4July202024May2022
19August2024
86,636 - - - 86,636
Date of Grant
At 1 April
2015
No of Options granted in year
No of Options
exercised in year
No of Options
lapsed in year
At 31 March
2016Exercise
PriceDate first
exercisable Expiry date
Performance Options granted under Part BGThomson 5July2010 105,000 - - - 105,000 £0.255 5July2010 4July2020CSmith 5July2010 77,778 - - (77,778) - £0.255 5July2010 4July2020
ThePerformanceConditionsattachedtothePerformanceOptionsareasfollows:
Date of Grant Performance Condition Percentage of the Grant to which the Performance
Condition applies to
5July2010 TheCompany’smarketcapitalisationexceedsthebenchmarkpriceby25%for5consecutivebusinessdaysatanytimebeforethe5October2011.
100.00%
25May2012 TheCompany’smarketcapitalisationexceedsthebenchmarkpriceby25%for5consecutivebusinessdaysatanytimebeforethe25August2013.
100.00%
19August2014 TheCompany’smarketcapitalisationexceedsthebenchmarkpriceby25%for5consecutivebusinessdaysatanytimebeforethe5November2015.
100.00%
Thebenchmarkpriceistheoptionexercisepricemultipliedbythenumberofordinarysharesof2penceeachintheissuedsharecapitaloftheCompanyonthedateofgrantoftherelatedoption.
Thechargemadeinrespectofthefairvalueofoptionsgrantedtodirectorswas:
2016 £
2015 £
Expensearisingfromequity-settledshare-basedpaymentstransactions 3,924 5,047
Braveheart Investment Group plc Annual Report and Accounts 2016
16 INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF | Governance BRAVEHEART INVESTMENT GROUP PLC
WehaveauditedthefinancialstatementsofBraveheartInvestmentGroupplcfortheyearended31March2016whichcomprisetheConsolidatedStatementofComprehensiveIncome,theConsolidatedandCompanyStatementsofFinancialPosition,theConsolidatedandCompanyStatementsofCashFlows,theConsolidatedandCompanyStatementsofChangesinEquityandtherelatednotes.ThefinancialreportingframeworkthathasbeenappliedintheirpreparationisapplicablelawandInternationalFinancialReportingStandards(IFRSs)asadoptedbytheEuropeanUnionand,asregardstheparentcompanyfinancialstatements,asappliedinaccordancewiththeprovisionsoftheCompaniesAct2006.
Respective responsibilities of directors and auditors
AsexplainedmorefullyintheDirectors’ResponsibilitiesStatementonpage8,thedirectorsareresponsibleforthepreparationofthefinancialstatementsandforbeingsatisfiedthattheygiveatrueandfairview.
OurresponsibilityistoauditandexpressanopiniononthefinancialstatementsinaccordancewithapplicablelawandInternationalStandardsonAuditing(UKandIreland).ThosestandardsrequireustocomplywiththeAuditingPracticesBoard’sEthicalStandardsforAuditors.ThisreportismadesolelytotheCompany’smembers,asabody,inaccordancewithChapter3ofPart16oftheCompaniesAct2006.OurauditworkhasbeenundertakensothatwemightstatetotheCompany’smembersthosematterswearerequiredtostatetotheminanauditors’reportandfornootherpurpose.Tothefullestextentpermittedbylaw,wedonotacceptorassumeresponsibilitytoanyoneotherthantheCompanyandtheCompany’smembersasabody,forourauditwork,forthisreport,orfortheopinionswehaveformed.
Scope of the audit of the financial statements
AdescriptionofthescopeofanauditoffinancialstatementsisprovidedontheFinancialReportingCouncil’swebsiteatwww.frc.org.uk/auditscopeukprivate.
Opinion on financial statements
Inouropinion:
• thefinancialstatementsgiveatrueandfairviewofthestateoftheGroup’sandoftheparentCompany’saffairsasat31March2016andoftheGroup’slossfortheyearthenended;
• theGroupfinancialstatementshavebeenproperlypreparedinaccordancewithIFRSsasadoptedbytheEuropeanUnion;• theparentCompanyfinancialstatementshavebeenproperlypreparedinaccordancewithIFRSsasadoptedbytheEuropeanUnionandasappliedinaccordancewiththeprovisionsoftheCompaniesAct2006;and
• thefinancialstatementshavebeenpreparedinaccordancewiththerequirementsoftheCompaniesAct2006.
Opinion on other matter prescribed by the Companies Act 2006
InouropiniontheinformationgivenintheStrategicReportandDirectors’Reportforthefinancialyearforwhichthefinancialstatementsarepreparedisconsistentwiththefinancialstatements.
Matters on which we are required to report by exception
WehavenothingtoreportinrespectofthefollowingmatterswheretheCompaniesAct2006requiresustoreporttoyouif,inouropinion:
• adequateaccountingrecordshavenotbeenkeptbytheparentcompany,orreturnsadequateforouraudithavenotbeenreceivedfrombranchesnotvisitedbyus;or
• theparentcompanyfinancialstatementsarenotinagreementwiththeaccountingrecordsandreturns;or• certaindisclosuresofdirectors’remunerationspecifiedbylawarenotmade;or• wehavenotreceivedalltheinformationandexplanationswerequireforouraudit.
Richard Metcalfe (SeniorStatutoryAuditor) ForandonbehalfofMazarsLLP CharteredAccountantsandStatutoryAuditor 90StVincentStreet GLASGOW G25UB 22June2016
Braveheart Investment Group plc Annual Report and Accounts 2016
Notes 2016 £
2015 £
Revenue 3 1,132,739 1,863,662
Changeinfairvalueofinvestments 11 (1,025,718) (1,080,442)
Movementoncontingentconsideration 18 (57,362) 135,726
Gainondisposalofinvestments 7 138,561 211,174
Financeincome 4 7,393 13,639
Total income 195,613 1,143,759
Employeebenefitsexpense 5 (1,001,427) (1,393,712)
Impairmentofintangibleassets 14 (371,944) -
Otheroperatingcosts (501,849) (507,268)
Total operating costs (1,875,220) (1,900,980)
Financecosts 6 (13,799) (10,592)
Total costs (1,889,019) (1,911,572)
Loss before tax 7 (1,693,406) (767,813)
Tax 8 - -
Total loss and total comprehensive income for the year (1,693,406) (767,813)
Loss attributable to:
Equityholdersoftheparent (1,685,853) (739,081)
Non-controllinginterest (7,553) (28,732)
(1,693,406) (767,813)
Earningspershare Pence Pence
-basicanddiluted 10 (6.23) (2.78)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME fortheyearended31March2016 | 17
Theaccompanyingaccountingpoliciesandnotesformpartofthesefinancialstatements.
Braveheart Investment Group plc Annual Report and Accounts 2016
Notes 2016 £
2015 £
ASSETS
Non-current assets
Goodwill 14 380,000 751,944
Investmentsatfairvaluethroughprofitorloss 11 467,609 2,478,065
Investmentinlimitedliabilitypartnership 12 - 5,000
Otherreceivables 15 293,290 91,308
1,140,899 3,326,317
Current assets
Tradeandotherreceivables 15 211,760 247,739
Cashandcashequivalents 16 1,262,786 502,630
1,474,546 750,369
Total assets 2,615,445 4,076,686
LIABILITIES
Current liabilities
Tradeandotherpayables 17 (544,350) (422,019)
Contingentconsideration/liability 18 (216,711) (204,995)
Deferredincome 19 (47,090) (18,620)
(808,151) (645,634)
Non-current liabilities
Borrowings 23 (43,392) (43,392)
Otherpayables 17 (58,898) -
(102,290) (43,392)
Total liabilities (910,441) (689,026)
Net assets 1,705,004 3,387,660
EQUITY
Calledupsharecapital 20 541,109 541,109
Sharepremiumreserve 1,564,095 1,564,095
Mergerreserve 523,367 523,367
Retainedearnings (887,552) 787,551
Equity attributable to owners of the ParentNon-controllinginterest
1,741,019(36,015)
3,416,122(28,462)
Total equity 1,705,004 3,387,660
Registerednumber:SC247376ApprovedforissuebytheBoardofDirectors22June2016andsignedonitsbehalfby:
Jeremy H Delmar-MorganChairman
Theaccompanyingaccountingpoliciesandnotesformpartofthesefinancialstatements.
18 | CONSOLIDATED STATEMENT OF FINANCIAL POSITIONasat31March2016
Braveheart Investment Group plc Annual Report and Accounts 2016
Notes 2016 £
2015 £
ASSETS
Non-current assets
Investmentsatfairvaluethroughprofitorloss 11 230,543 1,779,545
Investmentinsubsidiaries 12 938,127 1,766,630
Investmentinlimitedliabilitypartnership 12 - 5,000
Otherreceivables 15 58,885 -
1,227,555 3,551,175
Current assets
Tradeandotherreceivables 15 210,785 466,168
Cashandcashequivalents 16 948,562 446,342
1,159,347 912,510
Total assets 2,386,902 4,463,685
LIABILITIES
Current liabilities
Tradeandotherpayables 17 (2,295,601) (1,804,265)
Contingentconsideration 18 - (204,995)
(2,295,601) (2,009,260)
Non-current liabilities
Otherpayables 17 (58,898) -
Total liabilities (2,354,499) (2,009,260)
Net assets 32,403 2,454,425
EQUITY
Calledupsharecapital 20 541,109 541,109
Sharepremiumreserve 1,564,095 1,564,095
Mergerreserve 523,367 523,367
Retaineddeficit (2,596,168) (174,146)
Equity attributable to owners of the Parent 32,403 2,454,425
Registerednumber:SC247376ApprovedforissuebytheBoardofDirectorson22June2016andsignedonitsbehalfby:
Jeremy H Delmar-MorganChairman
Theaccompanyingaccountingpoliciesandnotesformpartofthesefinancialstatements.
COMPANY STATEMENT OF FINANCIAL POSITION asat31March2016 | 19
Braveheart Investment Group plc Annual Report and Accounts 2016
20 | CONSOLIDATED STATEMENT OF CASH FLOWS fortheyearended31March2016
2016 £
2015 £
Operating activities
Lossbeforetax (1,693,406) (767,813)
Adjustments to reconcile loss before tax to net cash flows from operating activities
Share-basedpaymentsexpense 10,750 12,479
Decreaseinthefairvaluemovementsofinvestments 1,025,718 1,080,442
Gainondisposalofequityinvestments (54,644) (211,174)
GainondisposalofLLP (83,917) -
Impairmentlosses 371,944 -
Interestincome (7,393) (13,639)
(Increase)/decreaseintradeandotherreceivables (106,433) 172,345
Increase/(decrease)intradeandotherpayables 800 (451,469)
Cash flow from operating activities (536,581) (178,829)
Investing activities
Proceedsfromsaleofequityinvestments 1,074,218 414,652
ProceedsfromsaleofLLP 88,917 -
Purchaseofinvestments (16,500) (60,000)
Repaymentofloannotes 147,218 23,147
Acquisitionofsubsidiary,netofcashacquired (4,509) -
Interestreceived 7,393 13,639
Net cash flow from investing activities 1,296,737 391,438
Financing activities
Proceedsfromissueofnewshares - 130,587
Net cash flow from financing activities - 130,587
Netincreaseincashandcashequivalents 760,156 343,196
Cashandcashequivalentsatthebeginningoftheyear 502,630 159,434
Cash and cash equivalents at the end of the year 1,262,786 502,630
Theaccompanyingaccountingpoliciesandnotesformpartofthesefinancialstatements.
Braveheart Investment Group plc Annual Report and Accounts 2016
COMPANY STATEMENT OF CASH FLOWSfortheyearended31March2016 | 21
2016 £
2015 £
Operating activities
Lossbeforetax (2,432,772) (810,912)
Adjustments to reconcile loss before tax to net cash flows from operating activities
Decreaseinthefairvaluemovementsofinvestments 948,436 488,661
Loss/(gain)ondisposalofequityinvestments 73,819 (211,174)
GainondisposalofLLP (83,917) -
Decreaseinthefairvalueofsubsidiaries 839,253 -
Interestincome (7,382) (13,571)
Decreaseintradeandotherreceivables 196,498 209,469
Increaseintradeandotherpayables 345,239 166,503
Net cash flow from operating activities (120,826) (171,024)
Investing activities
Proceedsfromsaleofequityinvestment 396,029 414,652
Purchaseofinvestments (16,500) (60,000)
ProceedsfromsaleofLLP 88,917 -
Repaymentofloannotes 147,218 23,147
Interestreceived 7,382 13,571
Net cash flow from investing activities 623,046 391,370
Financing activities
Proceedsfromissueofnewshares - 130,587
Net cash flow from financing activities - 130,587
Netincreaseincashandcashequivalents 502,220 350,933
Cashandcashequivalentsatthebeginningoftheyear 446,342 95,409
Cash and cash equivalents at the end of the year 948,562 446,342
Theaccompanyingaccountingpoliciesandnotesformpartofthesefinancialstatements.
Braveheart Investment Group plc Annual Report and Accounts 2016
22 | CONSOLIDATED AND COMPANY STATEMENT OF CHANGES IN EQUITYfortheyearended31March2016
GROUPShare
Capital £
Share Premium
£
Merger Reserve
£
Retained Earnings
£Total
£
Non-controlling
interest £
Total Equity £
At 1 April 2014 517,409 1,457,208 523,367 1,514,153 4,012,137 270 4,012,407
Issueofnewsharecapital 23,700 106,887 - - 130,587 - 130,587
Share-basedpayments - - - 12,479 12,479 - 12,479
Transactionswithowners 23,700 106,887 - 12,479 143,066 - 143,066
Lossandtotalcomprehensiveincomefortheyear - - - (739,081) (739,081) (28,732) (767,813)
At 1 April 2015 541,109 1,564,095 523,367 787,551 3,416,122 (28,462) 3,387,660
Share-basedpayments - - - 10,750 10,750 - 10,750
Transactionswithowners - - - 10,750 10,750 - 10,750
Lossandtotalcomprehensiveincomefortheyear - - - (1,685,853) (1,685,853) (7,553) (1,693,406)
At 31 March 2016 541,109 1,564,095 523,367 (887,552) 1,741,019 (36,015) 1,705,004
COMPANY Share Capital
£
Share Premium
£
Merger Reserve
£
Retained Earnings
£Total
£
At 1 April 2014 517,409 1,457,208 523,367 624,287 3,122,271
Issueofnewsharecapital 23,700 106,887 - - 130,587
Share-basedpayments - - - 12,479 12,479
Transactionswithowners 23,700 106,887 - 12,479 143,066
Lossandtotalcomprehensiveincomefortheyear - - - (810,912) (810,912)
At 1 April 2015 541,109 1,564,095 523,367 (174,146) 2,454,425
Share-basedpayments - - - 10,750 10,750
Transactionswithowners - - - 10,750 10,750
Lossandtotalcomprehensiveincomefortheyear - - - (2,432,772) (2,432,772)
At 31 March 2016 541,109 1,564,095 523,367 (2,596,168) 32,403
Theaccompanyingaccountingpoliciesandnotesformpartofthesefinancialstatements.
Braveheart Investment Group plc Annual Report and Accounts 2016
NOTES TO THE FINANCIAL STATEMENTS fortheyearended31March2016 | 23
1 Corporate informationTheGroupandCompanyfinancialstatementsofBraveheartInvestmentGroupplc(theCompany)fortheyearended31March2016wereauthorisedforissuebytheBoardofDirectorson22June2016andthestatementsoffinancialpositionweresignedontheBoard’sbehalfbyJeremyDelmar-Morgan.
BraveheartInvestmentGroupplcisacompanyincorporatedintheUnitedKingdomundertheCompaniesAct2006.Theaddressoftheregisteredofficeisdetailedatthebackofthisreport.ThenatureoftheGroup’soperationsanditsprincipalactivitiesaresetoutintheStrategicReportandDirectors’Report.TheCompanyisregisteredinScotland.TheCompany’sordinarysharesaretradedontheAIMmarketoftheLondonStockExchange.
2 Accounting policies(a) Basis of preparationTheGroupandCompanyfinancialstatementshavebeenpreparedinaccordancewithInternationalFinancialReportingStandards(IFRS)asadoptedbytheEuropeanUnionastheyapplytofinancialstatementsfortheyearended31March2016andasappliedinaccordancewiththeprovisionsoftheCompaniesAct2006.TheprincipalaccountingpoliciesadoptedbytheGroupandbytheCompanyaresetoutinthefollowingnotes.
TheCompanyhastakenadvantageoftheprovisionofsection408oftheCompaniesAct2006nottopublishitsownStatementofComprehensiveIncome.TheamountoflossforthefinancialyeardealtwithinthefinancialstatementsoftheCompanyissetoutinnote9tothefinancialstatements.
Thefinancialstatementshavebeenpreparedonahistoricalcostbasis,exceptwhereotherwiseindicated.Thefinancialstatementsarepresentedinsterlingandallvaluesareroundedtothenearestpound(£)exceptwhereotherwiseindicated.
TheGroup’sbusinessactivities(togetherwiththefactorslikelytoaffectitsfuturedevelopment,performanceandposition)anditsfinancialpositionissetoutintheChiefExecutiveOfficer’sReport.TheGroup’sriskmanagementobjectivesandpoliciesaredescribedintheCorporateGovernanceStatement.FurtherinformationregardingtheGroup’sfinancialriskmanagementobjectivesandpolicies,includingthoseinrelationtocreditrisk,liquidityriskandmarketrisk,isprovidedinnote25tothefinancialstatements.TheGroup’scapitalmanagementobjectivesarestatedonpage29,note(o).
ThedirectorshavereviewedtheGroup’sandtheCompany’sbudgetsandplans,takingaccountofreasonablypossiblechangesintradingperformanceandthelevelofcurrentlyavailablebutundrawnbankfacilities,haveareasonableexpectationthattheGroupandtheCompanyhaveadequateresourcestocontinueinoperationalexistencefortheforeseeablefutureandthatitisthereforeappropriatetocontinuetoadoptthegoingconcernbasisinpreparingthefinancialstatements.
(b) Changes in accounting policy and disclosuresTherearenonewadditionalstandards,interpretationsandamendmentsthathadamaterialimpactontheGroup’sfinancialstatementsduringtheyear.
(c) New standards and interpretations not yet effectiveTheInternationalAccountingStandardsBoardhasissuedthefollowingstandardswithaneffectivedateafterthedateofthesefinancialstatements:
IFRS15wasissuedon28May2014andprovidesasingleglobalstandardonrevenuerecognitionwhichalignstheIFRSandUSGAAPguidance.Itreplacesexistingrevenuerecognitionguidance,includingIAS18revenue,IAS11ConstructionContractsandIFRIC13CustomerLoyaltyProgrammes.TheGrouphasassessedthepotentialimpactonitsconsolidatedfinancialstatementsresultingfromtheapplicationofIFRS15anddoesnotforeseeanymaterialeffectwhentheStandardisapplied.Whileearlyadoptionispermitted,IFRS15hasaneffectivedateof1January2018withtheyearending31March2019beingthefirstannualfinancialstatementstowhichthestandardapplies.
IFRS9willeventuallyreplaceIAS39initsentirety.Theprocesshasbeendividedintothreemaincomponents,beingclassificationandmeasurement;impairment;andhedgeaccounting.TheGroupprovisionallyassessesthepotentialeffecttobeimmaterialgiventhemajorityofitsfinancialassetsarecurrentlyheldatfairvaluethroughprofitorloss.Thecurrentproposedeffectivedateis1January2018.
Noneoftheothernewstandards,interpretationsandamendmentsnotyeteffectiveisexpectedtohaveamaterialeffectontheGroup’sfuturefinancialstatements.
(d) Basis of consolidation TheGroup’sfinancialstatementsconsolidatetheresultsofBraveheartInvestmentGroupplcanditssubsidiaries(togetherreferredtoasthe‘Group’)drawnupto31Marcheachyear.Thefinancialstatementsofthesubsidiariesusedinthepreparationoftheconsolidatedfinancialstatementsarepreparedforthesamereportingyearastheparentcompanyusingconsistentaccountingpolicies.Allintra-groupbalances,transactions,incomeandexpensesareeliminatedinfullonconsolidation.
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– SubsidiariesThesubsidiarieshavebeenconsolidatedfromthedateoftheiracquisition,beingthedateonwhichtheGroupobtainedcontrol,andwillcontinuetobeconsolidateduntilthedatethatsuchcontrolceases.AsperIFRS10anentityisclassedasunderthecontroloftheGroupwhenallthreeofthefollowingelementsarepresent:powerovertheentity,exposuretovariablereturnsfromtheentityandtheabilityoftheGrouptouseitspowertoaffectthosevariablereturns.Controlisreassessedwheneverfactsandcircumstancesindicatethattheremaybeachangeinanyoftheseelementsofcontrol.
Achangeintheownershipinterestofasubsidiary,withoutalossofcontrol,isaccountedforasanequitytransaction.
IftheGrouplosescontroloverasubsidiary,itderecognisestherelatedassets,liabilities,non-controllinginterestandanyothercomponentsofequitywhileanyresultantgainorlossisrecognisedinprofitorloss.Anyinvestmentretainedisrecognisedatfairvalue.
TheGroupismadeupofseveraldifferenttypesofsubsidiaries.TheGroupassessesthefunctionperformedbyeachtypeofsubsidiarytodetermineitstreatmentundertheIFRS10exceptionfromconsolidation.ThetypesofsubsidiariesandtheirtreatmentunderIFRS10areasfollows:
• Investmentmanagers–Consolidated
Theseentitiesprovideinvestmentrelatedservicesthroughtheprovisionofinvestmentmanagementoradvice.Theydonotholdanydirectinvestmentsinportfolioassets.Theseentitiesarenotinvestmententities.
• GeneralPartners(GPs)–Consolidated
GeneralPartnersprovideinvestmentmanagementservicesanddonotholdanydirectinvestmentsinportfolioassets.Theseentitiesarenotinvestmententities.
• Subsidiariesheldatfairvalue
InaccordancewithIFRS,asBraveheartInvestmentGroupisaninvestmententityStrathclydeInnovationFundLP(SIF)isnotconsolidatedandheldatfairvaluegiventhesubsidiarydoesnotprovideservicesthatrelatetoBraveheartInvestmentGroup’sinvestmentactivities.
WheretheGrouphasnostakeinaLP,theDirectorsconsiderthattheGroupdoesnothavethepowertogoverntheseoperationssoastoobtainbenefitsfromtheiractivitiesandaccordinglydonotmeetthedefinitionofasubsidiaryunderIFRS10ConsolidatedFinancialStatements.
Non-controllinginterestsrepresenttheportionofprofitorlossandnetassetsthatisnotheldbytheGroupandarepresentedseparatelyintheconsolidatedstatementofcomprehensiveincomeandwithinequityintheconsolidatedstatementoffinancialpositionseparatelyfromparentshareholders’equity.
(e) Use of estimates and assumptionsThepreparationofthefinancialstatementsinconformitywithIFRSrequiresmanagementtomakejudgements,estimatesandassumptionsthataffecttheapplicationofpoliciesandreportedamountsofassetsandliabilities,incomeandexpenses.Theestimatesandassociatedassumptionsarebasedonhistoricalexperienceandotherfactorsthatarebelievedtobereasonableunderthecircumstances,theresultsofwhichformthebasisofmakingthejudgementsaboutcarryingvaluesofassetsandliabilitiesthatarenotreadilyapparentfromothersources.Actualresultsmaydifferfromtheseestimates.Wheremanagement’sjudgementhasbeenapplied,thisisnotedintherelevantaccountingpolicy.
Thekeyassumptionsconcerningthefutureandotherkeysourcesofestimatinguncertaintyatthereportingdatethathaveasignificantriskofcausingamaterialadjustmenttothecarryingamountsofassetsandliabilitieswithinthenextfinancialyeararediscussedbelow:
– Fair value of unquoted investmentsUnquotedinvestmentshavebeenvaluedbythedirectorsincompliancewiththeprinciplesoftheInternationalPrivateEquityandVentureCapitalGuidelinesasendorsedbytheEuropeanVentureCapitalAssociation(EVCA).Theuseofsuchvaluationtechniquesrequiresthedirectorstomakecertainjudgementsincludingmakingassessmentsoffuturerevenueandearningsofportfoliocompanies,appropriatemultiplestoapply,andmarketabilityandotherriskdiscountsandprovisions,andhencetheyaresubjecttouncertainty.Thefairvalueofunquotedinvestmentsat31March2016was£302,055(2015:£2,478,065).FurtherinformationregardingtheGroups’fairvalueofunquotedinvestmentsisprovidedinnote11.
– Share-based paymentsTheGroupmeasuresthecostofequity-settledtransactionsbyreferencetothefairvalueoftheequityinstrumentsatthedateatwhichtheyweregranted.Judgementisrequiredindeterminingthemostappropriatevaluationmodelforagrantofequityinstrumentsdependingonthetermsandconditionsofthegrant.Managementarealsorequiredtousecertainassumptionsindeterminingthemostappropriateinputstothevaluationmodelincludingexpectedlifeoftheoption,volatility,riskfreerateanddividendyield.Theassumptionsandmodelsusedarefullydisclosedinnote21.
– Contingent considerationUnderIFRS3:Businesscombinationscontingentconsiderationisincludedinthecostofabusinesscombinationtotheextentthatitisdeemedprobableandcanbemeasuredreliably.Thisrequiresmanagementtoassesstheprobabilityandtoestimatethefinancialimpactofeventsonwhichconsiderationiscontingent.
– Intangible assetsIntangibleassetsthatareacquiredasaresultofabusinesscombinationareseparatelyrecognisedonacquisitionattheirfairvalue,andamortisedovertheirexpectedusefullife.Thisrequiresmanagementtomakeanassessmentofanasset’sseparability,revenuestreamandlife,andapplysuitablevaluationmethodologiesthereto.
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– Impairment of goodwill Goodwillissubjecttoanimpairmenttestonanannualbasisorearlierwhereanyeventorchangeincircumstanceisidentifiedthatindicatesthatthecarryingvaluemaynotberecoverable.Testingforimpairmentrequiresacomparisonofthecarryingvalueamountofgoodwillagainsttherecoverableamount,whichisthevalue-in-useofthecash-generatingunittowhichthegoodwillisallocated.Value-in–userequiresestimationoffuturecashflowsexpectedfromthecash-generatingunitaswellasanappropriategrowthfactoranddiscountratetocalculatethepresentvalueofthecashflows.
– Assessment of investment entitiesAnassessmentisrequiredtodeterminethedegreeofcontrolorinfluencetheGroupexercisesandtheformofanycontroltoensurethatthefinancialtreatmentisaccurate.
(f) Revenue recognition and segmental reportingTheGroupearnsfeeincomefromtheservicesitprovidestoitsclients.Revenueisrecognisedatthefairvalueoftheconsiderationreceivedorreceivable,excludingrebates.Feesearnedfortheprovisionofanongoingservicearerecognisedasthatserviceisprovided.Dealfeesandfacilitationfeesareearnedonindividualtransactionsandrelatedrevenueisrecognisedoncompletionoftheunderlyingtransaction.TheGroupreceivescompensationforitsroleasfundmanager;thesefundmanagementfeesincludefixedfeesandperformancefeesandarerecognisedastherelatedservicesareprovided.
Interestincomeisrecognisedusingtheeffectiveinterestmethod.Interestincomeisinterestearnedonbankdepositaccountsandloannotesandisincludedwithinthestatementofcomprehensiveincome.
Revenueisdeferredwhenitdoesnotmeettherevenuerecognitionpolicyandispresentedasdeferredincomeinthestatementoffinancialposition.
Thebusinessisregardedasonesegmentduetothenatureofservicesprovidedandthemethodsusedtoprovidetheseservices.TheChiefExecutive,whoisconsideredtobethechiefoperatingdecisionmaker,managestheGroupbasedonthecontextofinformationpresentedtohim.AlloperationsareconductedintheUnitedKingdom.
(g) Taxation Thetaxexpenserepresentsthesumofthetaxcurrentlypayable,anddeferredtax.Currenttaxisbasedontaxableprofitfortheyear.Taxableprofitdiffersfromnetprofitasreportedinthestatementofcomprehensiveincomebecauseitexcludesitemsofincomeorexpensesthataredeductibleinotheryearsanditfurtherexcludesitemsthatarenevertaxableordeductible.TheGroup’sliabilityforcurrenttaxiscalculatedusingtaxratesthathavebeenenactedorsubstantivelyenactedbythereportingdate.
Deferredtaxisthetaxexpectedtobepayableorrecoverableondifferencesbetweenthecarryingamountsofassetsandliabilitiesinthefinancialstatementsandthecorrespondingtaxbasesusedinthecomputationoftaxableprofits(‘temporarydifferences’)andisaccountedforusingtheliabilitymethod.
Adeferredtaxassetorliabilityshallberecognisedforalltaxabletemporarydifferences,excepttotheextentthatthedeferredtaxassetorliabilityarisesfrom(a)theinitialrecognitionofgoodwill,(b)theinitialrecognitionofanassetorliabilityinatransactionwhich(i)isnotabusinesscombinationand(ii)atthetimeofthetransaction,affectsneitheraccountingprofit/(loss)nortaxableprofit/(loss)or(c)relatestoaninvestmentinsubsidiary,excepttotheextentthat(i)theparentisabletocontroltimingofreversaland(ii)itisprobablethattemporarydifferenceswillnotreverseintheforeseeablefuture.Deferredtaxassetsarerecognisedtotheextentthatitisprobablethattaxableprofitswillbeavailableagainstwhichdeductibletemporarydifferencescanbeutilised.Deferredtaxiscalculatedatthetaxratesthatareexpectedtoapplyintheperiodwhentheliabilityissettledortheassetisrealisedusingtaxratesandlawsthathavebeenenactedorsubstantivelyenactedbythereportingdate.
(h) Intangible assets– GoodwillGoodwillrepresentstheexcessofthecostofanacquisitionoverthefairvalueofthenetidentifiableassetsoftheacquiredsubsidiaryatthedateofacquisition.Goodwillonacquisitionofsubsidiariesisincludedinintangibleassets.Goodwillistestedannuallyforimpairmentandcarriedatcostlessaccumulatedimpairmentlosses.
– Other intangible assetsIntangibleassetsthatareacquiredasaresultofabusinesscombinationareseparatelyrecognisedonacquisitionattheirfairvalue.Brandsarevaluedusingthe‘relieffromroyalty’methodanddatabasesarevaluedusingthe‘costtorecreate’method.Amortisationischargedona10%straight-linebasistothestatementofcomprehensiveincomeovertheirexpectedusefuleconomiclives,andisincludedwithinotheroperatingcosts.
(i) Impairment of intangible assets Goodwillissubjecttoanimpairmenttestonanannualbasisorearlierwhereanyeventorchangeincircumstanceisidentifiedthatindicatesthatthecarryingvaluemaynotberecoverable.Testingforimpairmentrequiresacomparisonofthecarryingvalueamountofgoodwillagainsttherecoverableamount,whichisthevalue-in-useofthecash-generatingunittowhichthegoodwillisallocated.Value-in-userequiresestimationoffuturecashflowsexpectedfromthecash-generatingunitaswellasanappropriategrowthfactoranddiscountratetocalculatethepresentvalueofthecashflows.
Assetsthataresubjecttoamortisationaretestedforimpairmentwhenevereventsorchangesincircumstancesindicatethatthecarryingamountmaynotberecoverable.Therecoverableamountisthehigherofanasset’sfairvaluelesscoststosellanditsvalueinuse.
Impairmentlossesarerecognisedimmediatelyinthestatementofcomprehensiveincome.
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(j) Financial assets
FinancialassetsarerecognisedwhentheGroupbecomespartytothecontractsthatgiverisetothemandareclassifiedatinitialrecognitionaseitherfinancialassetsatfairvaluethroughprofitorlossorloansandreceivables.FinancialassetsarederecognisedwhentherightstoreceivecashflowsfromtheassethaveexpiredortheGrouphastransferredsubstantiallyalltherisksandrewardsoftheasset.
– Investments at fair value through profit or loss Investments,whichincludeequityanddebtinvestments,aredesignatedoninitialrecognitionasfinancialassetsatfairvaluethroughprofitorloss.ThismeasurementbasisisconsistentwiththefactthattheGroup’sperformanceinrespectofitsportfolioinvestmentsisevaluatedonafairvaluebasisinaccordancewithanestablishedinvestmentstrategy.Wheninvestmentsarerecognisedinitially,theyaremeasuredatfairvalue.
Afterinitialrecognitionthefairvalueoflistedinvestmentsisdeterminedbyreferencetobidpricesatthecloseofbusinessonthereportingdate.
UnlistedequityinvestmentsaremeasuredatfairvaluebythedirectorsincompliancewiththeprinciplesoftheInternationalPrivateEquityandVentureCapitalGuidelines,updatedandeffectiveDecember2015,asrecommendedbytheEuropeanVentureCapitalAssociation.Thefairvalueofunlistedequityinvestmentsisdeterminedusingthemostappropriateofthevaluationmethodologiessetoutintheguidelines.Theseincludeusingrecentarm’slengthmarkettransactions;referencetothecurrentmarketvalueofanotherinstrument,whichissubstantiallythesame;earningsorprofitmultiples;indicativeoffers;discountedcashflowanalysisandpricingmodels.
WhereverpossibletheGroupusesvaluationtechniqueswhichmakemaximumuseofobservablemarketbasedinputsandaccordinglythebasisofthevaluationmethodologyusedmostcommonlybytheGroupis‘priceofmostrecentinvestment’.
WhereverpossibletheGroupusesvaluationtechniqueswhichmakemaximumuseofobservablemarketbasedinputsandaccordinglythebasisofthevaluationmethodologyusedmostcommonlybytheGroupis‘priceofmostrecentinvestment’.
Price of recent investmentTheGroupconsidersthatfairvalueestimates,whicharebasedentirelyonobservablemarketdata,willbeofgreaterreliabilitythanthosebasedonassumptionsand,accordingly,wheretherehasbeenanyrecentinvestmentbythirdparties,thepriceofthatinvestmentwillgenerallyprovideabasisofthevaluation.Thelengthofperiodforwhichitremainsappropriatetousethepriceofrecentinvestmentdependsonthespecificcircumstancesoftheinvestmentandthestabilityoftheexternalenvironment.GiventhenatureoftheGroup’sinvestmentsinearly-stagecompanies,wherethereareoftennocurrentandnoshort-termfutureearningsorpositivecashflows,itcanbedifficulttogaugetheprobabilityandfinancialimpactofthesuccessorfailureofdevelopmentorresearchactivitiesandtomakereliablecashflowforecasts.Consequently,themostappropriateapproachtodeterminefairvalueisamethodologythatisbasedonmarketdata,thatbeingthepriceofarecentinvestment.WheretheGroupconsidersthatthepriceofrecentinvestment,unadjusted,isnolongerrelevantandtherearelimitedornocomparablecompaniesortransactionsfromwhichtoinfervalue,theGroupcarriesoutanenhancedassessmentbasedonmilestoneanalysisand/orindustryandsectoranalysis.InapplyingthemilestoneanalysisapproachtoinvestmentsincompaniesinearlyordevelopmentstagestheGroupseekstodeterminewhetherthereisanindicationofchangeinfairvaluebasedonaconsiderationofperformanceagainstanymilestonesthatweresetatthetimeoftheoriginalinvestmentdecision,aswellastakingintoconsiderationthekeymarketdriversoftheinvesteecompanyandtheoveralleconomicenvironment.
WheretheGroupconsidersthatthereisanindicationthatthefairvaluehaschanged,anestimationismadeoftherequiredamountofanyadjustmentfromthelastpriceofrecentinvestment.Whereverpossible,thisadjustmentisbasedonobjectivedatafromtheinvesteecompanyandtheexperienceandjudgementoftheGroup.However,anyadjustmentis,byitsverynature,subjective.Whereadeteriorationinvaluehasoccurred,theGroupreducesthecarryingvalueoftheinvestmenttoreflecttheestimateddecrease.IfthereisevidenceofvaluecreationtheGroupmayconsiderincreasingthecarryingvalueoftheinvestment;however,intheabsenceofadditionalfinancingroundsorprofitgenerationitcanbedifficulttodeterminethevaluethatapurchasermayplaceonpositivedevelopmentsgiventhepotentialoutcomeandthecostsandriskstoachievingthatoutcomeandaccordinglycautionisapplied.FactorsthattheGroupconsidersinclude,interalia,technicalmeasuressuchasproductdevelopmentphasesandpatentapprovals,financialmeasuressuchascashburnrateandprofitabilityexpectations,andmarketandsalesmeasuressuchastestingphases,productlaunchesandmarketintroduction.
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Other valuation techniquesIfthereisnoreadilyascertainablevaluefromfollowingthe‘priceofrecentinvestment’methodology,orthereisobjectiveevidencethatadeteriorationinfairvaluehasoccurredsincearelevanttransaction,theGroupconsidersalternativemethodologiessuchasdiscountedcashflows(”DCF”)orprice-earningsmultiples.DCFinvolvesestimatingthefairvalueofabusinessbycalculatingthepresentvalueofexpectedfuturecashflows,basedonthemostrecentforecastsinrespectoftheunderlyingbusiness.Giventhedifficultyofproducingreliablecashflowforecastsforseed,start-upandearly-stagecompaniesasdescribedearlier,thismethodologyisgenerallyusedasaconfirmatoryindicatorofthelevelofanyadjustmentthatmayneedtobemadetothelastpriceofrecentinvestment.
Whenusingtheearningsmultiplemethodology,earningsbeforeinterestandtax(“EBIT”)aregenerallyused,adjustedtoamaintainablelevel.Asuitableearningsmultipleisderivedfromanequivalentbusinessorgroupofbusinesses,forwhichtheaverageprice-earningsmultiplefortherelevantsectorindexcangenerallybeconsideredasuitableproxy.Thismultipleisappliedtoearningstoderiveanenterprisevaluewhichisthendiscountedbyupto60%fornon-marketabilityandotherrisksinherenttobusinessesinearlystagesofoperation.
No reliable estimateWhereafairvaluecannotbeestimatedreliably,theinvestmentisreportedatthecarryingvalueatthepreviousreportingdateunlessthereisobjectiveevidencethattheinvestmenthassincebeenimpaired.
Debtinvestmentsaregenerallyunquoteddebtinstrumentswhichareconvertibletoequityatafuturepointintime.Suchinstrumentsareconsideredtobehybridinstrumentscontainingafixedratedebthostcontractwithanembeddedequityderivative.TheGroupdesignatestheentirehybridcontractatfairvaluethroughprofitorlossoninitialrecognitionandaccordingly,theembeddedderivativeisnotseparatedfromthehostcontractandaccountedforseparately.Giventheirshorttermnature,thefairvalueofdebtinvestmentsisdeemedtobecostlessanyimpairmentprovision.
Thegainsandlossesarisingfromchangesinfairvaluearereflectedintheprofitandlossintheperiodinwhichtheyarise.
– Loans and receivablesLoansandreceivablesarenon-derivativefinancialassetswithfixedordeterminablepaymentsthatarenotquotedinanactivemarket,andcomprisetradeandotherreceivables,otherfinancialassetsandcashandcashequivalents,allofwhichareinitiallyrecognisedatfairvalueandaresubsequentlymeasuredatamortisedcostusingtheeffectiveinterestratemethod.
Theyareincludedincurrentassets,exceptformaturitygreaterthan12monthsaftertheendofthereportingperiod,wherebytheseareclassifiedasnon-currentassets.
– Trade receivablesTradereceivablesareinitiallyrecognisedatfairvaluewhichisnormallytheinvoicevalueinshorttermreceivables.Thereafterthereceivablesarecarriedatamortisedcost.Provisionismadewherethereisobjectiveevidencethatabalancewillnotberecoveredinfullinaccordancewiththeinstrumentsoriginalterms.Animpairmentcalculationisbasedonacomparisonbetweenthecarryingamountandthenetpresentvalueofexpectedfuturecashflows,discountedbytheoriginaleffectiverate.
– Cash and cash equivalentsCashandcashequivalentsintheconsolidatedcashflowcomprisecashinhandandshorttermbankdeposits.
(k) Financial liabilitiesFinancialliabilities,beingtradeandotherpayables,areinitiallyrecognisedatfairvalueandaresubsequentlycarriedatamortisedcost.
(l) The Company’s investment in its subsidiaries and limited liability partnershipIntheCompany’saccounts,investmentinitssubsidiaryundertakingsandlimitedliabilitypartnershiparestatedatcostlessanyprovisionforimpairment.
(m) Contingent considerationContingentconsiderationisrecognisedatfairvalue.UnderIFRS3Revised,contingentconsiderationisfairvaluedatinitialrecognitionevenifitisnotprobable,withsubsequentchangesrecognisedinthestatementofcomprehensiveincome.
(n) Leases Leasepaymentsunderoperatingleases,whereasignificantproportionoftherisksandbenefitsremainwiththelessor,arerecognisedonastraightlinebasisoverthetermofthelease.
(o) Share capitalFinancialinstrumentsissuedbytheGrouparetreatedasequityiftheholdershaveonlyaresidualinterestintheGroup’sassetsafterdeductingallliabilities.TheGroupconsidersitscapitaltocompriseitssharecapital,sharepremium,mergerreserveandretainedearnings.
• Sharepremium—amountsubscribedforsharecapitalinexcessofnominalvalue,netofdirectlyattributableissuecosts;
• Mergerreserve—amountsubscribedforsharecapitalinexcessofnominalvalueinrelationtothequalifyingacquisitionofsubsidiaryundertakings;
• Retainedearnings—cumulativenetgainsandlossesrecognisedintheconsolidatedstatementofcomprehensiveincomenetofassociatedshare-basedpaymentscredits;
• Non-controllinginterest—shareofprofits/(losses)attributabletotheLimitedPartnersofStrathclydeInnovationFundLP.
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TheGroup’scapitalmanagementobjectivesare:
• toensuretheGroup’sabilitytocontinueasagoingconcern;• toensureasufficientcashbalanceismaintained;and• tomaximisereturnstoshareholders.
TheGroupcontinuouslymonitorsrollingcashflowforecaststoensuresufficientcashisavailableforanticipatedcashrequirements.TheGroupmayissuenewsharesorrealiseinvestmentstomeetsuchrequirements.TodatetheGrouphasnegligibleborrowingsanddoesnotpayadividend.InvestmentsmadebytheGrouparesubjecttodetailedselectioncriteriaandaremonitoredcarefullybytheBoard.Thegroupconsidersthatithasappropriatelymanageditscapitalrequirementsduringtheyear.
StrathtayVenturesLimited,aGroupinvestmentmanagementsubsidiaryandVikingFundManagersLtd,aGroupfundmanagementsubsidiary,aresubjecttoexternalcapitalrequirementsimposedbytheFinancialConductAuthorityandassuchmustensurethattheyhavesufficientcapitaltosatisfytheserequirements.TheGroupensuresitremainscompliantwiththeserequirementsasdescribedinthefinancialstatementsofeachcompany.
Therehasbeennochangeincapitalmanagementobjectives,policiesandproceduresfromthepreviousyear.
(p) Share-based paymentsThecostofequity-settledtransactionswithemployeesismeasuredbyreferencetothefairvalueoftheinstrumentsissuedatthedateatwhichtheyaregrantedandisrecognisedasanexpenseoverthevestingperiod,whichendsonthedateonwhichtherelevantemployeesbecomefullyentitledtotheaward.Fairvalueisdeterminedusinganappropriatepricingmodel.Invaluingequity-settledtransactions,noaccountistakenofanyvestingconditions,otherthanconditionslinkedtothepriceofthesharesoftheCompany(marketconditions).
Noexpenseisrecognisedforawardsthatdonotultimatelyvest,exceptforawardswherevestingisconditionaluponamarketcondition,whicharetreatedasvestingirrespectiveofwhetherornotthemarketconditionissatisfied,providedthatallotherperformanceconditionsaresatisfied.
Ateachreportingdatebeforevesting,thecumulativeexpenseiscalculated,representingtheextenttowhichthevestingperiodhasexpiredandmanagement’sbestestimateoftheachievementorotherwiseofnon-marketconditionsandofthenumberofequityinstrumentsthatwillultimatelyvestor,inthecaseofaninstrumentsubjecttoamarketcondition,betreatedasvestingasdescribedabove.Themovementincumulativeexpensesincethepreviousreportingdateisrecognisedinthestatementofcomprehensiveincome,withacorrespondingentryinequity.
Wherethetermsofanequity-settledawardaremodifiedoranewawardisdesignatedasreplacingacancelledorsettledaward,thecostbasedontheoriginalawardtermscontinuestoberecognisedovertheoriginalvestingperiod.Inaddition,anyexpenseisrecognisedovertheremainderofthenewvestingperiodfortheincrementalfairvalueofanymodification,basedonthedifferencebetweenthefairvalueoftheoriginalawardandthefairvalueofthemodifiedaward,bothasmeasuredonthedateofthemodification.Noreductionisrecognisedifthisdifferenceisnegative.
Whereanequity-settledawardiscancelled,itistreatedasifithadvestedonthedateofcancellation,andanycostnotyetrecognisedinthestatementofcomprehensiveincomefortheawardisexpensedimmediately.Anycompensationpaiduptothefairvalueoftheawardatthecancellationorsettlementdateisdeductedfromequity,withanyexcessoverfairvaluebeingtreatedasanexpenseinthestatementofcomprehensiveincome.
(q) PensionsschemeareheldseparatelyfromthoseoftheGroupinindependentlyadministeredfunds.TheGrouphasnofurtherobligationsoncethecontributionshavebeenpaid.Thecontributionsarerecognisedasemployeebenefitsexpenseswhentheyaredue.
(r) Business combinationsTheGroupusesthepurchasemethodofaccountingtoaccountforacquisitionofsubsidiaries.Thecostofanacquisitionismeasuredasthefairvalueoftheassetsgiven,equityinstrumentsissuedandliabilitiesincurredorassumedatthedateofexchange,plus,underIFRS3butnolongerunderIFRS3Revised,costsdirectlyattributabletotheacquisition.Identifiableassetsacquiredandliabilitiesandcontingentliabilitiesassumedinabusinesscombinationaremeasuredinitiallyattheirfairvalueattheacquisitiondate,irrespectiveoftheextentofanynon-controllinginterest.TheexcessofthecostofacquisitionoverthefairvalueoftheGroup’sshareoftheidentifiablenetassetsacquiredisrecordedasgoodwill.Ifthecostofacquisitionislessthanthefairvalueofthenetassetsofthesubsidiaryacquired,thedifferenceisrecogniseddirectlyinthestatementofcomprehensiveincome.
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3 Revenue
RevenueisattributabletotheprincipalactivitiesoftheGroup.In2016and2015,allrevenuearosewithintheUnitedKingdom.
GROUP 2016 £
2015 £
Investmentmanagement 1,078,851 1,780,658
Consultancy 53,888 83,004
1,132,739 1,863,662
Thebusinessisregardedasonesegmentduetothenatureofservicesprovidedandthemethodsusedtoprovidetheseservices.ThebusinessismanagedandfinancialperformanceisreportedtotheBoardonthisbasis.
4 Finance income
GROUP 2016 £
2015 £
Bankinterestreceivable 53 83
Interestonloannotes 7,340 13,556
7,393 13,639
5 Employee benefits expense
GROUP 2016 £
2015 £
Salaries 882,814 1,225,812
Socialsecuritycosts 91,460 135,716
Pensioncosts 16,403 19,705
Share-basedpayments 10,750 12,479
1,001,427 1,393,712
Theaveragenumberofpersons(includingdirectors)employedbytheGroupduringtheyearwas12(2015:17),allofwhomwereinvolvedinmanagementandadministrativeactivities.Duringthecurrentyear,theCompanyrechargedStrathtay£72,454(2015:£174,508)inrespectofemployeebenefitsexpense.Theremunerationofthedirectors(includinglossofoffice),issetoutbelowinaggregate:
2016 £
2015 £
Short-termemployeebenefits 397,631 447,114
Terminationbenefits 158,209 -
555,840 447,114
Employer’sNIC 38,966 37,421
Post-employmentbenefit 3,203 -
Share-basedpayments 3,924 5,047
601,933 489,582
FurtherinformationabouttheremunerationofindividualdirectorsisprovidedintheDirectors’RemunerationReportonpages13to15.
Braveheart Investment Group plc Annual Report and Accounts 2016
30 | NOTES TO THE FINANCIAL STATEMENTS fortheyearended31March2016
Theremunerationofthemanagementboarddetailedonpages13to15,whoareconsideredtobekeymanagementpersonneloftheGroup,issetoutbelowinaggregateinaccordancewithIAS24‘RelatedPartyDisclosures’:
2016 £
2015 £
Short-termemployeebenefits 458,383 615,770
Terminationbenefits 158,209 -
Post-employmentbenefit 3,203 -
Share-basedpayments 4,104 6,387
623,899 622,157
6 Finance costs
GROUP 2016 £
2015 £
Bankcharges 13,799 10,592
7 Loss before tax
GROUP Loss for the year has been arrived at after charging:
2016 £
2015 £
Impairmentofintangibles 371,944 -Leasepaymentsrecognisedasanoperatinglease(officerent) 21,831 28,408Gainondisposalofinvestments 138,561 211,174Auditor’sremuneration:Auditservices–Feespayablefortheauditoftheconsolidationandtheparentcompanyaccounts 21,000 25,000–Feespayablefortheauditofsubsidiaries,pursuanttolegislation 14,000 16,000Nonauditservices–Assuranceservicefees 4,500 5,000–Taxcompliancefees 5,750 6,500
Braveheart Investment Group plc Annual Report and Accounts 2016
NOTES TO THE FINANCIAL STATEMENTS fortheyearended31March2016 | 31
8 Tax on loss on ordinary activities NoliabilitytoUKcorporationtaxaroseonordinaryactivitiesfortheyearended31March2016orfortheyearended31March2015.
GROUP Reconciliation of total tax:
2016 £
2015 £
Lossbeforetax (1,693,406) (767,813)
Taxatthestatutoryrateof20%(2015:20%) (338,681) (153,563)
Disallowedexpenses (89,095) (23,247)
Unrealisedlossonthefairvaluemovementofinvestments 205,144 19,868
Lossescarriedforward 222,632 156,942
Total tax reported in the statement of comprehensive income - -
TheGrouphaspotentialunrecogniseddeferredtaxassetsinrespectof:
• excessmanagementexpensesof£2,716,113(2015:£2,533,078)arisingfromBraveheartInvestmentGroupplc;• excessmanagementexpensesof£800,772(2015:£923,987)arisingfromCaledoniaPortfolioRealisationsLtd;and• unutilisedtradinglossesof£1,901,931(2015:£1,777,101)inStrathtayVenturesLimited.
Nodeferredtaxassetshavebeenrecognisedinrespectoftheseamountsasitisuncertainthattherewillbesuitabletaxableprofitsfromwhichthefuturereversalofthedeferredtaxcouldbededucted.
9 Loss of the Parent Company
2016 £
2015 £
LossoftheParentCompanyonly (2,432,772) (810,912)
10 Loss per share
Basiclosspersharehasbeencalculatedbydividingthelossattributabletoequityholdersoftheparentbytheweightedaveragenumberofordinarysharesinissueduringtheyear.
Thecalculationsoflosspersharearebasedonthefollowinglossandnumbersofsharesinissue:
2016 £
2015 £
Lossfortheyear (1,685,853) (739,081)
Weightedaveragenumberofordinarysharesinissue: No. No.
Forbasiclossperordinaryshare 27,055,491 26,626,943
Potentiallydilutiveordinaryshares - -
Fordilutedlossperordinaryshare 27,055,491 26,626,943
Therewerenopotentiallydilutiveordinarysharesattheyearendastheaveragepriceoftheordinaryshareswaslessthantheaverageexercisepriceoftheshareoptions.
Braveheart Investment Group plc Annual Report and Accounts 2016
32 | NOTES TO THE FINANCIAL STATEMENTS fortheyearended31March2016
11 Investments at fair value through profit or loss
Level1 Level2 Level3
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£
GROUP
At 1 April 2014 - - - 3,601,500 123,632 3,725,132
AdditionsatCost - - - - 60,000 60,000
Repayments/Disposals - - - (203,478) (23,147) (226,625)
ChangeinFairValue - - - (1,080,442) - (1,080,442)
At 1 April 2015 - - - 2,317,580 160,485 2,478,065
AdditionsatCost - - - - 16,500 16,500
Acquired 165,554 - - - - 165,554
Repayments/Disposals - - - (1,014,807) (151,985) (1,166,792)
ChangeinFairValue - - - (1,000,718) (25,000) (1,025,718)
At 31 March 2016 165,554 - - 302,055 - 467,609
Level1 Level2 Level3
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£
COMPANY
At 1 April 2014 - - - 2,311,199 123,632 2,434,831
AdditionsatCost - - - - 60,000 60,000
Repayments/Disposals - - - (203,478) (23,147) (226,625)
ChangeinFairValue - - - (488,661) - (488,661)
At 1 April 2015 - - - 1,619,060 160,485 1,779,545
AdditionsatCost - - - - 16,500 16,500
Repayments/Disposals - - - (465,081) (151,985) (617,066)
ChangeinFairValue - - - (923,436) (25,000) (948,436)
At 31 March 2016 - - - 230,543 - 230,543
Asat31March2016,thegrouptotalvalueofequityinvestmentsincompanieswas£467,609(2015:£2,317,580).Ofthis,£71,511(2015:£698,520)relatestosubsidiariesheldatfairvalue.Thegrouptotalchangeinfairvalueduringtheyearwasalossof£1,025,718(2015:loss£1,080,442)ofwhich£77,283(2015:£591,783)relatestosubsidiariesheldatfairvalue.Duringtheyear,VikingFundManagersLtdacquired100%oftheissuedsharecapitalofRidingsHoldingsLtdwhichhasquotedinvestmentsof£165,554.
Investments,whichincludeequityanddebtinvestments,aredesignatedoninitialrecognitionasfinancialassetsatfairvaluethroughprofitorloss.ThismeasurementbasisisconsistentwiththefactthattheGroup’sperformanceinrespectofitsportfolioinvestmentsisevaluatedonafairvaluebasisinaccordancewithanestablishedinvestmentstrategy.Wheninvestmentsarerecognisedinitially,theyaremeasuredatfairvalue.
Braveheart Investment Group plc Annual Report and Accounts 2016
NOTES TO THE FINANCIAL STATEMENTS fortheyearended31March2016 | 33
Afterinitialrecognitionthefairvalueoflistedinvestmentsisdeterminedbyreferencetobidpricesatthecloseofbusinessonthereportingdate.UnlistedequityinvestmentsaremeasuredatfairvaluebythedirectorsincompliancewiththeprinciplesoftheInternationalPrivateEquityandVentureCapitalGuidelines,updatedandeffectiveDecember2015,asrecommendedbytheEuropeanVentureCapitalAssociation.Thefairvalueofunlistedequityinvestmentsisdeterminedusingthemostappropriateofthevaluationmethodologiessetoutintheguidelines.Theseincludeusingrecentarm’slengthmarkettransactions;referencetothecurrentmarketvalueofanotherinstrument,whichissubstantiallythesame;earningsorprofitmultiples;indicativeoffers;discountedcashflowanalysisandpricingmodels.
TheGroupclassifiesitsinvestmentsusingafairvaluehierarchy.Classificationwithinthehierarchyhasbeendeterminedonthebasisofthelowestlevelinputthatissignificanttothefairvaluemeasurementoftherelevantinvestmentasfollows:
• Level1-valuedusingquotedpricesinactivemarketsforidenticalassets;• Level2-valuedbyreferencetovaluationtechniquesusingobservableinputsotherthanquotedpricesincludedwithinLevel1;and
• Level3-valuedbyreferencetovaluationtechniquesusinginputsthatarenotbasedonobservablemarketdata.
Thefairvaluesofquotedinvestmentsarebasedonbidpricesinanactivemarketatthereportingdate.AllunquotedinvestmentshavebeenclassifiedasLevel3withinthefairvaluehierarchy,theirrespectivevaluationshavingbeencalculatedusinganumberofvaluationtechniquesandassumptions,notwithstandingthatthebasisofthevaluationmethodologyusedmostcommonlybytheGroupis‘priceofmostrecentinvestment’.Theuseofreasonablypossiblealternativeassumptionshasnomaterialeffectonthefairvaluationoftherelatedinvestments.Theeffectontheconsolidatedstatementofcomprehensiveincomefortheperiodisalsonotexpectedtobematerial.TherearenoidentifiedunobservableinputstowhichtheLevel3fairvalueswouldbemateriallysensitive.Theimpactonthefairvalueofinvestmentsifthediscountrateandprovisionshiftby1%is£3,269(2015:£12,435).
Methodology Description Inputs Adjustments%ofportfoliovaluedonthisbasis
FundRaising Usedforunquotedinvestmentswheretherehasbeenafundinground,generallywithinthelasttwelvemonths
Thepriceofthemostrecentinvestment
Typicallynodiscountisappliedunlesslastroundoffundingisgreaterthantwelvemonthsthendiscountsrangingbetween10%-100%areapplied
93%
Earnings Usedforinvestmentswhichwecandetermineasetoflistedcompanieswithsimilarcharacteristics
Earningsmultiplesareappliedtotheearningsofthecompanytodeterminetheenterprisevalue
Aliquiditydiscountisapplied,typically15%
7%
Debt/Loannotes
Loaninvestments Thefairvalueofdebtinvestmentisdeemedtobecostlessanyimpairmentprovision
Impairmentprovisionifdeemednecessary
0%
Indicativeoffers
Usedwhereaninvestmentisinasalesprocess,apricehasbeenagreedbutthetransactionhasnotyetsettled
Contractedproceedsorbestestimateofexpectedproceeds
Adiscountbetween5%-10%isappliedtoreflectanyuncertainadjustmentstoexpectedproceeds
0%
Discountedcashflow
Companieswithlong-termcashflows
Longtermcashflowsarediscountedataratewhichisbenchmarkedagainstmarketdata
Nofurtherdiscountisapplied
0%
Braveheart Investment Group plc Annual Report and Accounts 2016
34 | NOTES TO THE FINANCIAL STATEMENTS fortheyearended31March2016
Change in fair value in the year:
GROUP 2016 £
2015 £
Fairvaluegains 147,559 56,660
Fairvaluelosses (1,173,277) (1,137,102)
(1,025,718) (1,080,442) Detailsofinvestmentswherethenominalvalueoftheholdingintheundertakingis20%ormoreofanyclassofshareareasfollows:
Name of Company Holding % of class of shares held Nature of Business
VerbalisLtd(Verbalis) ‘A’Ordinaryshares 100% Designandproductionofautomatedlanguagetranslationsystems
Theaboveshareholding,whichisheldbyCaledoniaPortfolioRealisationsLtd(’CPR’),representsa20%aggregateshareholdinginVerbalis.NeitherCPRnortheCompanyisrepresentedontheBoardorwithinmanagementofVerbalisandintheopinionofthedirectors,thisshareholdingdoesnotentitletheCompanytoexertasignificantordominantinfluenceoverVerbalis.ThecarryingvalueofVerbalisis£nil(2015:£nil).
12 Investment in subsidiaries and limited liability partnership (i) Investment in subsidiaries
TheCompanyhasthefollowinginterestsinsubsidiaryundertakings:
NameCountry of Incorporation Nature of Business % Interest
StrathtayVenturesLtd(i) Scotland Investmentmanagement 100%
CaledoniaPortfolioRealisationsLtd(i) Scotland Investment 100%
CaledoniaLPLtd(i) Scotland Investmentmanagement 100%
StrathclydeInnovationFundGPLtd(i) Scotland Investmentmanagement 100%
CaledoniaSpecialistFinanceLtd(i) Scotland Dormant 100%
VikingFundManagersLtd(i) England Investmentmanagement&businessadvisoryservices
100%
BraveheartAcademicSeedFundingGPLtd(i) England Investmentmanagement 100%
BraveheartNomineesLtd(ii) Scotland Dormant 100%
FinanceYorkshireEquityGPLtd(ii) England GeneralPartner 100%
RidingsHoldingsLtd(ii) England Investmentmanagement 100%
TheRidingsEarlyGrowthInvestmentCompanyLtd(ii) England Investmentmanagement 100%
COMPANY
Cost £
At 1 April 2014 1,889,877
Increaseininvestmentvaluearisingfromshare-basedpayments 12,479
Decreaseininvestmentvalue:CPR (135,726)
At 1 April 2015 1,766,630
Increaseininvestmentvaluearisingfromshare-basedpayments 10,750
Decreaseininvestmentvalue:CPR (220,866)
Impairmentininvestmentvalue:SVL (131,399)
Impairmentininvestmentvalue:Viking (486,988)
At 31 March 2016 938,127
(i) Direct subsidiary of Braveheart Investment Group plc(ii) Indirect subsidiary of Braveheart Investment Group plc
Braveheart Investment Group plc Annual Report and Accounts 2016
NOTES TO THE FINANCIAL STATEMENTS fortheyearended31March2016 | 35
ThedecreaseintheinvestmentvalueofCPRisindirectrelationtothemovementofthefairvalueofinvestments.DuringtheyearthedirectorsdeterminedtowritedownthecarryingvalueoftheCompany’sinvestmentinbothSVLandViking.TheimpairmentreviewswereconductedinaccordancewithIAS36.TheinvestmentinSVLwasimpairedby£131,399(2015:£nil)toitsnetassetvalueandtheinvestmentinVikingwasfullyimpairedduetothefullimpairmentofgoodwill.Thenetassetvalueofsubsidiariesisconsideredtoequatetotheirfairvalue.TheseimpairmentprovisionsarechargedwithintheCompany’soperatingcosts.
GroupentitiesactasGeneralPartnerto,andhaveaninterestin,thefollowinglimitedpartnerships:
Name Place of Business % Interest
StrathclydeInnovationFund(SIF) Scotland 89.29%
LachesisSeedFund England 0%
FinanceYorkshireEquityFund England 0%
(ii) Investment in limited liability partnership On8January2016,theGroupsoldits33.3%interestinthetotalcapitalcommitmentsofWhiteRockCapitalPartnersLLPtoWhiteRockFinanceLtdfor£100,000.
13 Business Combination On31December2015VikingacquiredtheremainingbalanceoftheissuedsharecapitalofRidingsHoldingsLtd(RHL),havingpreviouslyhelda33%stake.RHLwaspreviouslyclassifiedasaninvestmentheldbyaventurecapitalist,andwasmeasuredatafairvalueof£nilasat31March2015inaccordancewithIAS39FinancialInstruments:RecognitionandMeasurement.Considerationof£45,000wassatisfiedentirelyincash.RHLowns100%oftheissuedsharecapitalofTheRidingsEarlyGrowthInvestmentCompanyLtd(REGIC).BothcompaniesarebasedintheUK.TheacquisitionformspartoftheGroup’sstrategytogrowitscapitalappreciationthroughrealisations.TheallocationoftheacquisitioncosttotheidentifiableassetsandliabilitiesofRHLattheacquisitiondateisasfollows:
Carrying Value £
Fair Value £
Investments 165,554 165,554
Tradeandotherreceivables 59,570 59,570
Cashandcashequivalents 40,491 40,491
Tradeandotherpayables (3,904) (3,904)
Contingentliability - (216,711)
NetAssets 261,711 45,000
Cashpaid - 45,000
In2009,RHLreceiveda£1mgrantfromYorkshireForwardtoprovidetransitionalloanfundingtobusinessesinYorkshireandtheHumberregion.Thefundisnowfullydeployedandisintherealisationphase.FollowingtheacquisitionofRHL,therehasbeenavariationoftheoriginalagreementwithBritishBusinessFinancialServicesLtd(BBFSL),whonowadministerthefund.BBFSLwillnowreceiveacashlumpsumplusanyfuturecashreceiptsarisingfromtradereceivablesplusaspecifiedpercentageofanyfuturerealisationproceeds.BasedonthisvariationthebookvaluesarisingontheacquisitionhavebeenadjustedtoreflectthecontingentliabilitythatisnowduetoBBFSL(seenote18).
RHLowns100%oftheissuedsharecapitalofTheRidingsEarlyGrowthInvestmentCompanyLtd(REGIC).In2002,REGICreceived£5mfromthethenDepartmentofTradeandIndustry’sEarlyGrowthFundintheformofarepayablegrant.Atthedateofacquisition,REGIChadnetliabilitiesof£7.0m.InJanuary2016,avariationtotheoriginalgrantagreementwasreachedwherebyanyshortfallintherepaymentoftheoriginalgrantplusinterestwillbeconsidereddischargedbythetransferofanyremainingassets.TheBoardhavedeemedthelikelihoodoffullrepaymentofthegrantplusinterestastobesoremotethattheyhavefairvaluedthenetassetsto£nil.
Thenetcashoutflowarisingfromthisbusinesscombinationis£4,509,whichcomprisesofthecashandcashequivalentsacquiredof£40,491lesscashconsiderationpaidof£45,000.Fortradeandotherreceivablesacquired,thereisnodifferencebetweenthecontractualamountreceivableandthebookvalue.Fromthedateofacquisition,RHLhascontributed£niltothenetlossoftheGroup.HadtheacquisitionofRHLtakenplaceatthestartoftheperiod,theconsolidatedincomefortheperiodwouldhavebeen£220,539andthelossfortheperiodwouldhavebeen£1,723,988.
14 Goodwill
Braveheart Investment Group plc Annual Report and Accounts 2016
36 | NOTES TO THE FINANCIAL STATEMENTS fortheyearended31March2016
Viking £
Neon £
Total £
At 1 April 2014 and 1 April 2015 371,944 380,000 751,944
Impairment (371,944) - (371,944)
At 31 March 2016 - 380,000 380,000
TheacquisitionofVikingFundManagersLtdhasbeenaccountedforunderIFRS3.Atinitialrecognition,contingentconsiderationsettled,ortobesettled,inshareswasfairvaluedbyreferencetotheCompany’ssharepriceattheacquisitiondate.TheacquisitionofNeonhasbeenaccountedforunderIFRS3Revised.
Attheendoftheyear,theGroupassessedtherecoverableamountoftheabovegoodwillassociatedwitheachoftheVikingandNeon’scash-generatingunits(bothbeingpartoftheGroup’sonlyoperatingsegment),anddeterminedthatgoodwillwasimpairedforVikingbutnotforNeon.TherecoverableamountofNeonwasassessedbyreferencetothecash-generatingunit’svalueinusebasedoninternallypreparedandapproved3yearcashflowprojectionsandgrowthbasedprojectionsforafurther2years(areasonablemeasurementperiodinthegroup’slineofbusiness)assumingthefollowinggrowthratesandapplyingthefollowingdiscountfactors:
TherecoverableamountofVikingwassimilarlyassessedandduetotheacquisitionofRHLandRegicduringtheyear,managementfeespreviouslypaidfromRHLandRegictoVikinghavenowceasedleavingtheonlyrevenuestreamasbeingLachesisfundmanagementfees.ThefutureleveloffeeincomegeneratedbyLachesiswasdeemedinsufficienttomeettherecoverableamountofgoodwillandhasthereforeresultedinafullimpairmentofVikinggoodwill.
Cashflowprojectionsaremainlybasedoncontractedrevenuesandassociatedcosts,whichcanthereforebepredictedwithreasonablecertaintyandthedirectorsdonotconsidertheretobesignificantassumptionsincludedwithinthesecashflows.
Cash-generating unit Viking Neon
2016 2015 2016 2015
Growthrate(averagep.a.) 2.5% 2.5% 2.5% 2.5%
Discountfactor(p.a.) 12.5% 12.5% 12.5% 12.5% Thesefactorsarebasedonpastexperienceandfutureexpectationswhichthedirectorsconsidertobeappropriate.Valueinuseestimatesarisingfromreasonablypossiblechangestothesefactorsdonotindicatefurtherimpairment.
15 Trade and other receivables
Group 2016
£
Group 2015
£
Company 2016
£
Company 2015
£
Tradereceivables 177,825 79,027 2,828 4,732
Prepaymentsandaccruedincome 33,935 168,712 33,935 117,464
Amountsduefromrelatedparties - - 174,022 343,972
211,760 247,739 210,785 466,168
Non-current:Otherreceiveables 293,290 91,308 58,885 -
505,050 339,047 269,670 466,168
Astradereceivablesaregenerallyofshort-termmaturity,thedirectorsconsiderthecarryingamountstoapproximatetheirfairvalue.Allreceivablesarenon-interestbearingandunsecured.
TheGroup’sotherreceivablesof£293,290relatestoaFinanceYorkshirefundperformancefeeof£91,308whichisexpectedtobepaidinfullduring2019,andexitproceedsfromBloxxLtdof£143,097andBioptaLtdof£58,885whichareexpectedtobepaidinfullduringNovember2017andDecember2018respectively.
Braveheart Investment Group plc Annual Report and Accounts 2016
NOTES TO THE FINANCIAL STATEMENTS fortheyearended31March2016 | 37
16 Cash and cash equivalents
Group 2016
£
Group 2015
£
Company 2016
£
Company 2015
£
Cashatbankandonhand 1,262,786 502,630 948,562 446,342
CashbalancesareheldwithHSBCBankplcandBankofScotlandplcandearninterestatfloatingratesbasedondailybankdepositrates.
17 Trade and other payables
Group 2016
£
Group 2015
£
Company 2016
£
Company 2015
£
Tradepayables 242,406 82,192 209,789 45,602
Amountsduetorelatedparties - - 1,970,638 1,582,963
Payrollliabilities 74,267 43,081 51,749 5,954
Accruals 227,677 296,746 63,425 169,746
Non-current:Otherpayables
544,350 422,019 2,295,601 1,804,265
58,898 - 58,898 -
603,248 422,019 2,354,499 1,804,265
Duetotheshort-termmaturityoftradepayables,thedirectorsconsiderthecarryingamountstoapproximatetheirfairvalue.Tradepayablesarenon-interestbearingandarenormallysettledon30-dayterms.Non-currentotherpayablesistheconsiderationduetoWLVenturesLtdbasedontheexitvalueofBloxxLtd.
18 Contingent consideration and contingent liabilityIn2015,theshorttermcontingentconsiderationof£204,995wasthesumdueonfutureexitvaluesoftheCPRportfolio.Movementinthecurrentyearisanincreaseof£57,362(2015:decreaseof£135,726).Duringtheyear,BloxxLtdexitedandthereforecontingentconsiderationhasmovedtobothcurrentandnon-currenttradeandotherpayables.Postyearend,thecurrentamounthasbeensettledandthenon-currentamountwillbepaidinNovember2017.Attheyearend,thecontingentconsiderationrelatingtothefutureexitsoftheCPRportfoliois£nil.ContingentconsiderationrelatingtoCPRisdirectlylinkedtomovementinitsportfolio,a1%increaseinthediscountratewoulddecreasethecontingentconsiderationby£nil(2015:£3,349).
Asattheyearend,theshorttermcontingentliabilityof£216,711isthesumdueonfutureexitvaluesoftheRHLportfolioandcashreceipts.ThecontingentliabilityrelatingtoRHLisdirectlylinkedtomovementinitsportfolio,a1%increaseinthediscountratewoulddecreasethecontingentliabilityby£1,655.
19 Deferred incomeGroupdeferredincomeattheyearendof£47,090(2015:£18,620)relatestomonitoringandarrangementfees.Feesearnedfortheprovisionofthisongoingservicearerecognisedasthatserviceisprovidedandrecognisedatthefairvalueoftheconsiderationreceivedorreceivable.
Braveheart Investment Group plc Annual Report and Accounts 2016
38 | NOTES TO THE FINANCIAL STATEMENTS fortheyearended31March2016
20 Share capital
2016£
2015£
Authorised
33,645,000ordinarysharesof2penceeach
(2015:33,645,000ordinarysharesof2penceeach) 672,900 672,900
Allotted,calledupandfullypaid
27,055,491ordinarysharesof2penceeach
(2015:27,055,491ordinarysharesof2penceeach) 541,109 541,109
TheCompanyhasoneclassofordinaryshares.Allsharescarryequalvotingrights,equalrightstoincomeanddistributionofassetsonliquidationorotherwise,andnorighttofixedincome.
21 Share-based payments TheGroupoperatestheBraveheartInvestmentGroupplcExecutiveShareOptionScheme2006(theScheme),whichcomprisesPartA,ashareoptionschemeapprovedbyHMRC(theApprovedScheme)andPartB,anunapprovedshareoptionscheme(theUnapprovedScheme).
Historically,theSchemewasopentoalldirectorsandemployeesoftheGroup,althoughnon-executivedirectorscouldonlyparticipateinPartB.TheSchemeisnowonlyopentoallexecutivedirectorsandemployees.
OptionsaregrantedbytheBoardtakingintoaccounttheneedtomotivate,retainandrecruithighcalibreemployeesandwithregardtothecontributionthatsuchemployeesareexpectedtomakeinachievingtheGroup’sobjectives.
OptionsgrantedundertheSchemearecategorisedaseitherEmploymentOptions,PerformanceOptionsorOtherOptions.EmploymentOptionsmaybegrantedundereitherPartAorPartB.AllPerformanceOptionsandOtherOptionsaregrantedunderPartB.
EmploymentOptionsvestandbecomeexercisableonthethirdanniversaryofdateofgrant,andgenerallylapseontheearlierofcessationofemployment(or6monthsthereafterifoptionshavevestedatcessationdate)orthe10thanniversaryofdateofgrant.
PerformanceOptionshavevestingconditionslinkedtothegrowthintheCompany’smarketcapitalisationfromthedateofgrant(PerformanceConditions).IfaPerformanceConditionisnotmet,therelatedPerformanceOptionlapsesattheendoftherelevantmeasurementperiod.Otherwise,PerformanceOptionsvestonattainmentofthePerformanceConditionandbecomeexercisableonthe1stanniversaryofthedateofthePerformanceConditionbeingmet,andlapseonthe10thanniversaryofdateofgrant.
OtherOptionsareimmediatelyexercisableandlapseonthe10thanniversaryofdateofgrant.
Duringthecurrentyear,nooptionsweregranted.304,240EmploymentOptionslapsed,356,009PerformanceOptionslapsedand103,704OtherOptionslapseddueeithertothecessationofemploymentorrelatedPerformanceConditionnothavingbeenmet.
Duringtheyearended31March2015,104,513EmploymentOptionsand589,189PerformanceOptionsweregranted.230,494EmploymentOptionslapsedand223,294PerformanceOptionslapsedduringtheyeareitherduetothecessationofemploymentorrelatedPerformanceConditionnothavingbeenmet.
Braveheart Investment Group plc Annual Report and Accounts 2016
NOTES TO THE FINANCIAL STATEMENTS fortheyearended31March2016 | 39
21 Share-based payments (continued)ThecurrentyearmovementinShareOptionsissummarisedbelow:
Date of Grant
At 1 April 2015
Weighted Average Exercise
Price
No of Options granted in year
No of Options
exercised in year
No of Options
lapsed in year
At 31 March
2016Exercise
Price
Weighted Average Exercise
PriceDate first
exercisable Expiry date
Employment Options granted under Part A
8December2008
16,185 - - (16,185) - £0.350 8December2011
7December2018
18June2009
83,829 - - (28,259) 55,570 £0.295 18June2012 17June2019
5July2010 100,304 - - (36,411) 63,893 £0.255 5July2014 4July2020
25May2012 239,434 - - (108,023) 131,411 £0.120 25May15 24May2022
3September2012
54,472 - - (25,477) 28,995 £0.160 3September2016
2September2022
25September2012
6,422 - - - 6,422 £0.157 25September2012
24September2022
19August2014
97,488 - - (21,805) 75,683 £0.105 5November2016
19August2024
598,134 £0.187 - - (236,160) 361,974 £0.171
Employment Options granted under Part B
18June2009
74,422 - - (31,669) 42,753 £0.295 18June2012 17June2019
5July2010 85,566 - - (36,411) 49,155 £0.255 5July2014 4July2020
159,988 £0.274 - - (68,080) 91,908 £0.274
Performance Options granted under Part B
5July2010 211,537 - - (65,384) 146,153 £0.255 5October2011
4July2020
25May2012 209,375 - - (90,625) 118,750 £0.120 25August2014
24May2022
19August2014
562,162 - - (200,000) 362,162 £0.105 5November2016
19August2024
983,074 £0.186 - - (356,009) 627,065 £0.143
Other Options granted under Part B
5July2010 225,093 £0.255 - - (103,704) 121,389 £0.255 £0.255 5July2010 4July2020
Braveheart Investment Group plc Annual Report and Accounts 2016
40 | NOTES TO THE FINANCIAL STATEMENTS fortheyearended31March2016
21 Share-based payments (continued)ThepreviousyearmovementinShareOptionsissummarisedbelow:
Date of Grant
At 1 April 2014
Weighted Average Exercise
Price
No of Options granted in year
No of Options
exercised in year
No of Options
lapsed in year
At 31 March
2015Exercise
Price
Weighted Average Exercise
PriceDate first
exercisable Expiry date
Employment Options granted under Part A
8December2008
16,185 - - - 16,185 £0.350 8December2011
7December2018
18June2009
94,752 - - (10,923) 83,829 £0.295 18June2012 17June2019
5July2010 124,058 - - (23,754) 100,304 £0.255 5July2014 4July2020
5October2010
69,231 - - (69,231) - £0.235 5October2014
4October2020
25May2012 324,553 - - (85,119) 239,434 £0.120 25May15 24May2022
3September2012
82,135 - - (27,663) 54,472 £0.160 3September2016
2September2022
25September2012
13,201 - - (6,779) 6,422 £0.157 25September2012
24September2022
19August2014
- 104,513 - (7,025) 97,488 £0.105 5November2016
19August2024
724,115 £0.187 104,513 - (230,494) 598,134 £0.175
Employment Options granted under Part B
18June2009
74,422 - - - 74,422 £0.295 18June 2012
17June 2019
5July2010 85,566 - - - 85,566 £0.255 5July2014 4July2020
159,988 £0.274 - - - 159,988 £0.274
Performance Options granted under Part B
5July2010 233,844 - - (22,307) 211,537 £0.255 5October2011
4July2020
5October2010
68,121 - - (68,121) - £0.235 5January2012
4October2020
25May2012 275,000 - - (65,625) 209,375 £0.120 25August2014
24May2022
25September2012
40,214 - - (40,214) - £0.157 25December2014
24September2022
19August2014
- 589,189 - (27,027) 562,162 £0.105 5November2016
19August2024
617,179 £0.186 589,189 - (223,294) 983,074 £0.140
Other Options granted under Part B
5July2010 225,093 £0.255 - - - 225,093 £0.255 £0.255 5July2010 4July2020
Braveheart Investment Group plc Annual Report and Accounts 2016
NOTES TO THE FINANCIAL STATEMENTS fortheyearended31March2016 | 41
21 Share-based payments (continued)1,202,336shareswereexercisableat31March2016(2015:1,006,311).Theweightedaverageexercisepriceofthetotalnumberofoptionsgrantedandnotexercisedat31March2016was£0.173(2015:£0.175)andtheweightedaveragecontractuallifeoftheoptionswas1,925days(2015:2,160days).
Thechargemadeinrespectofthefairvalueofoptionsgrantedwas:
2016 £
2015 £
Expensearisingfromequity-settledshare-basedpaymentstransactions 10,750 12,479
ThefairvalueofPerformanceandOtherOptionsareestimatedatthedateofgrantusingaTrinomialoptionpricingmodel.ThefairvalueofEmploymentOptionsisestimatedatthedateofgrantusingaBlack-Scholesoptionpricingmodel.
Thefollowingassumptionshavebeenusedincalculatingthefairvalueofshareoptions:
2016 2015
Employment Options
Performance Options
Employment Options
Performance Options
Valuationmethod Black-Scholes Trinomial Black-Scholes Trinomial
Riskfreeinterestrate 1.5% 1.5% 1.5% 1.5%
Expectedlife(averageyears) 3 2 3 2
Expectedvolatility 42% 42% 42% 42%
Dividendyield 0% 0% 0% 0%
Theexpectedlifeoftheoptionsistheexpectedaveragepointatwhichanoptionbecomesexercisable.TheexpectedvolatilityisbasedonhistoricalvolatilityofthesharepriceoftheCompanyandofquotedcomparablecompaniesoverthemostrecentperiodatthedateofgrantthatiscommensuratewiththeaverageexpectedlifeoftheoption.Theweightedaveragesharepriceusedineachcalculationwasequaltotheoptionexerciseprice.
22 Operating lease commitments TheCompany’scommercialleaseonitsofficepremisesatMerlinHouse,Perth,ceasedinJune2015.TheCompanyenteredintoanew5-yearlease(witha30monthbreakclause)onpremisesat2DundeeRoad,Perth.Renewalsareattheoptionoftheentitythatholdsthelease.Therearenorestrictionsplaceduponthelesseebyenteringintothislease.
Futureminimumrentalspayableunderoperatingleasesareasfollows:
2016 £
2015 £
Futureminimumpaymentsdue:
Notlaterthanoneyear 8,000 14,750
Intwotofiveyears 5,634 32,000
13,634 46,750
23 BorrowingsAt31March2016StrathclydeInnovationFundLPhadreceived£43,392(2015:£43,392)fromlimitedpartnersunrelatedtotheGrouptocoverpartnershipobligations.Suchsumsaretreatedaslongtermsloansfromlimitedpartners.
Braveheart Investment Group plc Annual Report and Accounts 2016
42 | NOTES TO THE FINANCIAL STATEMENTS fortheyearended31March2016
24 Related party disclosuresTradeandotherreceivables(note15)includethefollowingamountsduefromsubsidiaryundertakings:
2016 £
2015 £
StrathclydeInnovationFundLP 27,679 27,679
CaledoniaPortfolioRealisationsLtd 50 -
CaledoniaLPLtd 146,293 316,293
174,022 343,972
Tradeandotherpayables(note17)includethefollowingamountsduetosubsidiaryundertakings:
2016 £
2015 £
StrathtayVenturesLtd 196,622 294,030
VikingFundManagersLtd 1,212,430 1,262,430
StrathclydeInnovationFundLP 25,000 25,000
CaledoniaPortfolioRealisationsLtd 536,586 1,503
1,970,638 1,582,963
Allaboveamountsareunsecured,interestfreeandhavenofixeddateforrepayment.TransactionsbetweentheCompanyanditssubsidiariesareeliminatedonconsolidation.
Thedirectorshaveagreedthat,whileamountsduetoGroupcompaniesareincludedincreditorsduewithinoneyearastheyaretechnicallypayableondemand,paymentoftheseamountswillnotberequiredunlesstheCompanyisabletodoso.
Duringthecurrentyear,Braveheartrecharged£72,454(2015:£174,508)toStrathtayandVikingrecharged£71,318(2015:£93,918)toStrathtayinrespectofemployeebenefitsexpense.
AndrewBurtonisadirectorofVikingFundManagersLtd.Duringtheyear,Vikingwaschargedrenttotalling£900(2015:£nil)inrespectofbusinesspremisesownedpersonallybyMrandMrsBurton.Asat31March2015and2016,£nilwasduetoMrandMrsBurton.
TheCompanyrechargedcoststoWhiteRockof£4,371(2015:£6,471).Attheyear-end£2,828(2015:£3,688)wasoutstandingandincludedwithindebtors.
Duringtheyear,theCompanywaiveda£170,000inter-companyloantoCaledoniaLPastheDirectorsdeemedtheloanunlikelytoberepaidbasedonthecurrentvaluationsofinvestmentsheldbyCaledoniaLP.
Groupentitieshavealimitedpartnershipinterestin,andactasGeneralPartnertoStrathclydeInnovationFundLP.
Braveheart Investment Group plc Annual Report and Accounts 2016
NOTES TO THE FINANCIAL STATEMENTS fortheyearended31March2016 | 43
25 Financial risk management objectives and policies (Group and Company)GroupandCompany’sfinancialinstrumentscompriseinvestmentsdesignatedatfairvaluethroughprofitorloss,cashandvariousitemssuchastradeandotherreceivables,andtradeandotherpayables,allofwhicharisedirectlyfromitsnormaloperations.
ThecarryingvaluesofalloftheGroupandCompany’sfinancialinstrumentsapproximatetheirfairvaluesat31March2016and31March2015.TheAccountingPoliciesdescribedinnote2outlineshowthefinancialinstrumentsaremeasured.
Ananalysisofthestatementoffinancialposition,relevanttoananalysisofriskmanagement,isasfollows:
Financial instruments
Designated at fair value
though profit or loss
£
Loans and receivables
£
Non-financial assets &
financial assets outwith the
scope of IAS 39£
Total£
GROUP
2016
Investments 467,609 - - 467,609
Tradeandotherreceivables - 471,115 33,935 505,050
Cashandcashequivalents - 1,262,786 - 1,262,786
467,609 1,733,901 33,935 2,235,445
2015
Investments 2,478,065 - - 2,478,065
Tradeandotherreceivables - 79,027 260,020 339,047
Cashandcashequivalents - 502,630 - 502,630
2,478,065 581,657 260,020 3,319,742
COMPANY
2016
Investments 230,543 - (*)938,127 1,168,670
Tradeandotherreceivables - 235,735 33,935 269,670
Cashandcashequivalents - 948,562 - 948,562
230,543 1,184,297 972,062 2,386,902
2015
Investments 1,779,545 - (*)1,771,630 3,551,175
Tradeandotherreceivables - 348,704 117,464 466,168
Cashandcashequivalents - 446,342 - 446,342
1,779,545 795,046 1,889,094 4,463,685
(*)Investmentsinserviceentities
Braveheart Investment Group plc Annual Report and Accounts 2016
44 | NOTES TO THE FINANCIAL STATEMENTS fortheyearended31March2016
25 Financial risk management objectives and policies (continued)
Other financial liabilities at
amortised cost£
Financial liabilities at fair value
£Total
£
GROUP
2016
Tradeandotherpayables 603,248 - 603,248
Contingentliability - 216,711 216,711
Borrowings 43,392 - 43,392
646,640 216,711 863,351
2015
Tradeandotherpayables 378,938 - 378,938
Contingentconsideration - 204,995 204,995
Borrowings 43,392 - 43,392
422,330 204,995 627,325
COMPANY
2016
Tradeandotherpayables 2,354,499 - 2,354,499
2,354,499 - 2,354,499
2015
Tradeandotherpayables 1,798,311 - 1,798,311
Contingentconsideration - 204,995 204,995
1,798,311 204,995 2,003,306
OneoftheGroup’sprincipalobjectivesandpoliciesistoachieveincomeandcapitalgainsthroughinvestmentinequitysharesinaportfolioofUKcompanies,themajorityofwhichareunlisted.
ThroughitsnormaloperationstheGroupisexposedtoanumberoffinancialrisks,namelycreditrisk,liquidityriskandmarketrisk.TheBoardreviewsandagreespoliciesformanagingeachoftheserisksassummarisedbelow.
Braveheart Investment Group plc Annual Report and Accounts 2016
NOTES TO THE FINANCIAL STATEMENTS fortheyearended31March2016 | 45
25 Financial risk management objectives and policies (continued)
Credit risk
CreditriskarisesfromtheexposuretotheriskoflossifthecounterpartyfailstoperformitsfinancialobligationstotheGroup.TheGroup’sfinancialassetspredominantlycompriseinvestmentsdesignatedatfairvaluethroughprofitorloss,andcash.InaccordancewithitsInvestmentPolicytheGroupseekstomanagecreditriskrelatedtoitsinvestmentsthroughdetailedinvestmentselectioncriteriaanddiversificationandbyplacinglimitsonindividualinvestments.InaccordancewithitsTreasuryPolicy,theGroupseekstomitigatethisriskoncashbyplacingfundsonlywithbankswithhighcredit-ratingsassignedbyinternationalcredit-ratingagencies.
TheGrouphasnosignificantconcentrationofcreditriskwithinanyofitsotherfinancialassets.IncludedwithinsuchotherfinancialassetsarebalanceswhicharepastdueatthereportingdateforwhichtheGrouphasnotprovidedastherehasnotbeenasignificantchangeintheircreditqualityandwhichtheGroupbelievesarefullyrecoverable.TheageprofileoftheGroupandCompany’sotherfinancialassetsisasfollows:
Neither past due nor
impaired £
Less than 3 months
£
3 to 12 months
£
More than 1 year
£Total
£
GROUP
2016
Tradereceivables 121,044 1,916 54,796 69 177,825
Otherreceivables 325,263 - - - 325,263
446,307 1,916 54,796 69 503,088
2015
Tradereceivables 70,431 - 7,948 648 79,027
Otherreceivables 249,865 - - - 249,865
320,296 - 7,948 648 328,892
COMPANY
2016
Tradereceivables 2,827 - - - 2,827
Otherreceivables 90,858 - - - 90,858
Amountsduefromrelatedparties 174,022 - - - 174,022
267,707 - - - 267,707
2015
Tradereceivables 4,732 - - - 4,732
Otherreceivables 107,309 - - - 107,309
Amountsduefromrelatedparties 343,972 - - - 343,972
456,013 - - - 456,013
TheGroupconsidersitsexposuretocreditriskisnegligible.TheGroup’sbankbalanceof£1,262,786attheyear-endisheldinabankwithahighcreditratingandthetradereceivablesof£503,088arecloselymonitoredaspartofthecreditcontrolprocess.
Liquidity risk
LiquidityriskistheriskthattheGroupwillnotbeabletomeetitsfinancialobligationsastheyfalldue.
TheGroupseekstomanageitsliquidityriskbyholdingsufficientcashreservestomeetforeseeableneeds,andbyinvestingcashassetssafely.TheGroupcontinuouslymonitorsrollingcashflowforecaststoensuresufficientcashisavailableforanticipatedcashrequirementsand,inaccordancewithitsTreasuryPolicy,theGrouponlyinvestscashassetswithreputablecounterparties.
Braveheart Investment Group plc Annual Report and Accounts 2016
46 | NOTES TO THE FINANCIAL STATEMENTS fortheyearended31March2016
25 Financial risk management objectives and policies (continued)ThematurityprofileoftheGroupandCompany’sfinancialliabilitiesisasfollows:
On demand £
Less than 3 months
£
3 to 12 months
£
More than 1 year
£Total
£
GROUP
2016
Tradeandotherpayables 544,350 - - 58,898 603,248
Otherliabilities 47,090 - - 43,392 90,482
591,440 - - 102,290 693,730
2015
Tradeandotherpayables 422,019 - - - 422,019
Otherliabilities 18,620 - - 43,392 62,012
440,639 - - 43,392 484,031
COMPANY
2016
Tradeandotherpayables 324,963 - - 58,898 383,861
Amountsduetorelatedparties 1,970,638 - - - 1,970,638
2,295,601 - - 58,898 2,354,499
2015
Tradeandotherpayables 221,302 - - - 221,302
Amountsduetorelatedparties 1,582,963 - - - 1,582,963
1,804,265 - - - 1,804,265
Braveheart Investment Group plc Annual Report and Accounts 2016
NOTES TO THE FINANCIAL STATEMENTS fortheyearended31March2016 | 47
25 Financial risk management objectives and policies (continued)
Market RiskMarketriskistheriskthatchangesinmarketconditionssuchasequityprices,interestratesandforeignexchangerateswillhaveanadverseimpactontheGroup’sfinancialpositionorresults.
Equity price riskTheGroupisexposedtoequitypriceriskduetouncertaintiesaboutfuturevaluesofitsportfoliooflistedandunlistedequityinvestments.TheGroupmanagessuchequitypriceriskinasimilarwaytocreditriskthroughdetailedinvestmentselectioncriteriaanddiversificationandbyplacinglimitsonindividualinvestments.InvestmentsaremonitoredcarefullyandtheBoardreviewstheportfolioonaregularbasis.
Interest rate riskTheGroupfinancesitsoperationsthroughequityfundingasopposedtodebtandthereforeminimisesitsexposuretointerestraterisks.TheGroup’sfinancialinstrumentsarenon-interestbearing,withtheexceptionofloannoteswhichattractfixedrateinterest,andcashbalanceswhichattractvariableinterestratesdeterminedwithreferencetothebankinterestrate.
TheinterestrateprofileoftheGroup’sfinancialinstrumentsisasfollows:
GROUP Fixed Rate £
Variable Rate £
Interest free £
Total £
2016
Financial assets
Investments:equity - - 467,609 467,609
Cashandcashequivalents - 1,262,786 - 1,262,786
Otherfinancialassets - - 505,050 505,050
- 1,262,786 972,659 2,235,445
Financial liabilities
Contingentconsideration - - 216,711 216,711
Otherfinancialliabilities - - 693,730 693,730
- - 910,441 910,441
2015
Financial assets
Investments:equity - - 2,317,580 2,317,580
Investments:loannotes 160,485 - - 160,485
Cashandcashequivalents - 502,630 - 502,630
Otherfinancialassets - - 339,047 339,047
160,485 502,630 2,656,627 3,319,742
Financial liabilities
Contingentconsideration - - 204,995 204,995
Otherfinancialliabilities - - 484,031 484,031
- - 689,026 689,026
Braveheart Investment Group plc Annual Report and Accounts 2016
48 | NOTES TO THE FINANCIAL STATEMENTS fortheyearended31March2016
25 Financial risk management objectives and policies (continued)
TheinterestrateprofileoftheCompany’sfinancialinvestmentsisasfollows:
COMPANY Fixed Rate £
Variable Rate £
Interest free £
Total £
2016
Financial assets
Investments:equity - - 1,168,670 1,168,670
Cashandcashequivalents - 948,562 - 948,562
Otherfinancialassets - - 269,670 269,670
- 948,562 1,438,340 2,386,902
Financial liabilities
Otherfinancialliabilities - - 2,354,499 2,354,499
- - 2,354,499 2,354,499
2015
Financial assets
Investments:equity - - 3,551,175 3,551,175
Cashandcashequivalents - 446,342 - 446,342
Otherfinancialassets - - 466,168 466,168
- 446,342 4,012,343 4,463,685
Financial liabilities
Contingentconsideration - - 204,995 204,995
Otherfinancialliabilities - - 1,804,265 1,804,265
- - 2,009,260 2,009,260
Itisestimatedthatthemaximumeffectofaonepercentagepoint(100basispoints)fallininterestratestowhichtheGroupisexposedwouldbeanincreaseinlossbeforetaxforthetwelvemonthsto31March2016of£12,262(2015:£5,062).
Foreign currency riskTheGrouphasnomaterialexposuretoforeigncurrencyrisk.
26 Ultimate controlling partyThereisnoultimatecontrollingparty.
27 Multilateral guaranteesTheCompanyalongwithallotherUKregisteredundertakingsformingpartofBraveheartInvestmentGroupplchaveprovidedmultilateralguaranteesacrossthebankoverdraft.TheCompaniesobligationsunderthemultilateralguaranteesaresecuredbyFloatingchargesovertheCompanyassets.ThebankoverdraftfacilityexpiresinJuly2016andwillnotberenewed.
Braveheart Investment Group plc Annual Report and Accounts 2016
NOTICE OF ANNUAL GENERAL MEETING | 49
BRAVEHEART INVESTMENT GROUP PLC
(“The Company”)
NOTICE OF ANNUAL GENERAL MEETING
(registered in Scotland with company number SC247376)
NOTICEISHEREBYGIVENthatanAnnualGeneralMeetingoftheCompanywillbeheldatMazars’officeatTowerBridgeHouse, StKatherine’sWay,LondonE1W1DDon19July2016at11.00amtoconsiderthefollowingresolutions:
Ordinary Business Toconsiderand,ifthoughtfit,passthefollowingresolutionswhichwillbeproposedasOrdinaryResolutionsoftheCompany:
Resolution 1 THATtheauditedaccountsoftheCompanyforthefinancialyearended31March2016andthereportsofthedirectorsandauditorsthereonbereceived.
Resolution 2 THATMazarsLLPbere-appointedasauditorsofthecompanytoholdofficeuntiltheconclusionofthenextgeneralmeetingoftheCompanybeforewhichauditedaccountsarelaid.
Resolution 3 THATthedirectorsbeauthorisedtodeterminetheremunerationoftheauditors.
Resolution 4 THATthedirectorsbegenerallyandunconditionallyauthorisedforthepurposesofSection551oftheCompaniesAct2006(theCA2006)toallotorgrantrightstosubscribeforsharesintheCompanyuptoanaggregatenominalamountof£108,222providedthatthisauthorityshall,unlessreviewedvariedorrevokedbytheCompany,expireontheexpiryofthenextAnnualGeneralMeetingoftheCompanysavethattheCompanymay,beforesuchexpiry,makeoffersoragreementswhichwouldormightrequiresharestobeallottedandthedirectorsmayallotsharesintheCompanyinpursuanceofsuchofferoragreementnotwithstandingthattheauthorityconferredbythisresolutionhasexpired.
Thisresolutionrevokesandreplacesallunexercisedauthoritiespreviouslygrantedtothedirectorstoallotsharespursuanttosection551oftheCA2006butwithoutprejudicetoanyallotmentofsharesorgrantsofrightsalreadymade,offeredoragreedtobemadepursuanttosuchauthorities.
Resolution 5 THAT,subjecttothepassingresolution6above,thedirectors,pursuanttothegeneralauthorityconferredonthem,beempoweredpursuanttosection570oftheCA2006toallotforcashequitysecurities(asdefinedinsection560oftheCA2006)asifsection561oftheCA2006didnotapplytosuchallotmentprovidedthatthispowershallbelimitedtotheallotmentofequitysecuritieswhollyforcashuptoanaggregatenominalvalueof£108,222being20%oftheissuedsharecapitaloftheCompanyandshallexpireontheexpiryofthenextAnnualGeneralMeetingoftheCompany,savethattheCompanymay,beforesuchexpiry,makeoffersoragreementswhichwouldormightrequireequitysecuritiestobeallottedandthedirectorsmayallotequitysecuritiesinpursuanceofsuchofferoragreementnotwithstandingthattheauthorityconferredbythisresolutionhasexpired.
BYORDEROFTHEBOARD Jeremy H Delmar-Morgan Chairman 22June2016
Registeredoffice:2DundeeRoad PerthPH27DW
Braveheart Investment Group plc Annual Report and Accounts 2016
50 | NOTICE OF ANNUAL GENERAL MEETING
Explanations of the Resolutions proposed:
Explanation of Resolution 1:ThedirectorsarerequiredbylawtopresenttotheshareholdersoftheCompanyatageneralmeetingtheauditedaccountsoftheCompanyforthefinancialyearended31March2016andthereportsofthedirectorsandauditorsthereon.Thereportofthedirectorsandtheauditedaccountshavebeenapprovedbythedirectorsandthereportoftheauditorshasbeenapprovedbytheauditors.AcopyofeachofthesedocumentsmaybefoundintheannualreportoftheCompany.
Explanation of Resolution 2:TheauditorsareresponsibleforexaminingtheannualaccountsoftheCompanyandforminganopinionastowhetherornottheygiveatrueandfairviewofitsresultsandthefinancialposition.ItisarequirementoflawthattheCompanyappointauditorsateachmeetingatwhichaccountsarepresentedtoshareholders,suchappointmenttocontinueuntilthenextauditedaccountsoftheCompany.
Explanation of Resolution 3:TheresolutiongivesthedirectorsoftheCompanytheauthoritytodeterminetheremunerationpaidtotheauditorsforthenextfinancialyear.TheamountoftheremunerationforthenextfinancialyearwillbedisclosedinthenextauditedaccountsoftheCompany.
Explanation of Resolution 4: ItisbeingproposedtoreplacetheexistingauthorityofthedirectorsoftheCompanytoallotsharesintheCompany(orrightsinrespectthereof)inconnectionwithsection551oftheCA2006.Thedirectorsareseekingauthoritytoissueupto2,705,549shareshavinganaggregatenominalvalueof£108,222,representing20%oftheissuedsharecapitaloftheCompany,suchauthoritytoexpireontheexpiryofthenextAnnualGeneralMeetingoftheCompany.
Thelimitationstothedirectors’authoritydonotextendto:
• Theallotmentofshares,orthegrantofarighttosubscribefor,orconvertanysecurityinto,sharesintheCompanypursuanttoanemployee’ssharescheme(asdefinedbysection1166ofCA2006);or
• Theallotmentofsharespursuanttoarighttosubscribefor,orconvertsecuritiesinto,sharesintheCompanypreviouslygrantedinaccordancewithdirectorsauthority.
Explanation of Resolution 5:Thisresolution,willbeproposedasaspecialresolution,supplementsthedirectors’generalauthoritytoallotsharesasconferredonthempursuanttoResolution6.Section561oftheCA2006requiresaCompanyproposingtoallotequitysecuritiestoofferthemfirsttoexistingshareholdersinproportiontotheirexistingshareholdings.Ifpassed,thisrequirementwillnotapplytoallotmentofsharesforcashuptoanominalvalueof£108,222being20%oftheissuedsharecapitaloftheCompany.Thisauthorityenablesthedirectorstoraiseadditionalequitycapitalthroughanissueofsharesforcash.ThisauthoritywillexpireafteroneyearoratthedateofthenextAnnualGeneralMeeting,whicheverisearlier.
Receipt of copies of Annual Report & AccountsTheCompaniesAct2006prescribesthemethodsbywhichacompanyispermittedtocommunicatewithitsshareholders.TheCompany’sArticlesofAssociationincludeprovisionsallowingtheCompanytouseitswebsitetopublishcertainstatutorycommunicationsanddocuments.Accordingly,documentsincludingnoticesofAnnualGeneralMeetingsandtheAnnualReport&Accounts,arepublishedontheCompanywebsiteatwww.braveheartgroup.co.uk.ReducingthenumberofcommunicationssentbypostnotonlyresultsincostsavingstotheCompany,butalsoreducestheimpactthattheunnecessaryprintinganddistributionofdocumentshasontheenvironment.InadditiontoincludingprovisionsintheCompany’sarticlesofassociationsanctioningthiswebsitepublication,companylawrequiresthatshareholdersareindividuallyaskedwhethertheywishtocontinuetoreceivedocumentsotherthanbywebsitepublication.TheCompanyregularlyreviewscommunicationsprovidedtoshareholdersandproposestoaskshareholderswhethertheywishtoreceivedocumentsbywebsitepublication.Pleasenotethat,ifyouconsenttoreceivedocumentsbywebsitepublication,youwillcontinuetobenotifiedeachtimethattheCompanyplacesadocumentonitswebsiteandthisnotificationwillbesenttoyoubypost.Ifyouwishtocontinuetoreceiveahardcopyofnoticesofgeneralmeetings,andotherdocuments,includingtheAnnualReport&Accounts,youwillneedtocompletetheaccompanyingformandreturnitasinstructed.
Braveheart Investment Group plc Annual Report and Accounts 2016
NOTES | 51
Notes:
1. AmemberentitledtoattendandvoteattheAnnualGeneralMeeting(theMeeting)isentitledtoappointoneormoreproxiestoexercisealloranyofhisrightstoattend,voteandspeakinsteadofhim.AproxyneednotbeamemberoftheCompany.Youmayappointmorethanoneproxyprovidedeachproxyisappointedtoexerciserightsattachedtodifferentshares.Youmaynotappointmorethanoneproxytoexercisetherightsattachedtoanyoneshare.
2. Tobevalid,aformofproxy(otherthananelectroniccommunicationappointingaproxy)togetherwiththepowerofattorneyorotherauthority(ifany)underwhichitissigned(oracopyofsuchauthoritycertifiednotarially)mustbelodgedattheofficeoftheCompany’sregistrars,CapitaAssetServices,PXS,34BeckenhamRoad,Beckenham,Kent,BR34TUby11.00amon15July2016,ornotlessthan48hoursbeforethetimeappointedforholdinganyadjournedmeeting.
3. PursuanttoRegulation41oftheUncertificatedSecuritiesRegulation2001,theCompanyhasspecifiedthatonlythoseshareholdersregisteredintheregisterofmembersoftheCompanyasatcloseofbusinesson15July2016or,intheeventthatthismeetingisadjourned,intheregisterofmembers48hoursbeforethetimeofanyadjournedmeeting,willbeentitledtovote,ortoappointoneormoreproxiestovoteontheirbehalf,atthismeetinginrespectofthenumberofsharesregisteredintheirnamesatthattime.Changestoentriesontheregisterofmembersafter6.00pmon15July2016or,intheeventthatthismeetingisadjourned,intheregisterofmembers48hoursbeforethetimeofanyadjournedmeeting,shallbedisregardedindeterminingtherightsofanypersontoattendorvoteatthemeeting.
4. Completionandreturnofaformofproxywillnotpreventamemberfromattendingthemeetingandvotinginpersonshouldtheywishtodoso.
5. CRESTmemberswhowishtoappointaproxyorproxiesbyutilisingtheCRESTelectronicproxyappointmentservicemaydosofortheMeetingandanyadjournment(s)thereofbyutilisingtheproceduresdescribedintheCRESTManual.CRESTpersonalmembersorotherCRESTsponsoredmembersandthoseCRESTmemberswhohaveappointedavotingserviceprovider(s),shouldrefertotheirCRESTsponsororvotingserviceprovider(s),whowillbeabletotaketheappropriateactionontheirbehalf.
6. InorderforaproxyappointmentmadebymeansofCRESTtobevalid,theappropriateCRESTmessage(a‘CRESTProxyInstruction’)mustbeproperlyauthenticatedinaccordancewithEuroclearUK&IrelandLimited’s(‘EUI’)specificationsandmustcontaintheinformationrequiredforsuchinstructions,asdescribedintheCRESTManual.Themessageregardlessofwhetheritrelatestotheappointmentofaproxyortoanamendmenttotheinstructiongiventoapreviouslyappointedproxymust,inordertobevalid,betransmittedsoastobereceivedbytheissuer’sagent(IDRA10)by11.00amon15July2016.Forthispurpose,thetimeofreceiptwillbetakentobethetime(asdeterminedbythetimestampappliedtothemessagebytheCRESTApplicationsHost)fromwhichtheissuer’sagentisabletoretrievethemessagebyenquirytoCRESTinthemannerprescribedbyCREST.
7. CRESTmembersand,whereapplicable,theirCRESTsponsorsorvotingserviceprovidersshouldnotethatEUIdoesnotmakeavailablespecialproceduresinCRESTforanyparticularmessages.NormalsystemtimingsandlimitationswillthereforeapplyinrelationtotheinputofCRESTProxyInstructions.ItisthereforetheresponsibilityoftheCRESTmemberconcernedtotake(or,iftheCRESTmemberisaCRESTpersonalmemberorsponsoredmemberorhasappointedavotingserviceprovider(s),toprocurethathisCRESTsponsororvotingserviceprovider(s)take(s))suchactionasshallbenecessarytoensurethatamessageistransmittedbymeansoftheCRESTsystembyanyparticulartime.Inthisconnection,CRESTmembersand,whereapplicable,theirCRESTsponsorsorvotingserviceprovidersarereferred,inparticular,tothosesectionsoftheCRESTManualconcerningpracticallimitationsoftheCRESTsystemandtimings.
8. TheCompanymaytreatasinvalidaCRESTProxyInstructioninthecircumstancessetoutinRegulation35(5)(a)oftheUncertificatedSecuritiesRegulations2001.
9. TheCompanymaytreatasinvalidaCRESTProxyInstructioninthecircumstancessetoutinRegulation35(5)(a)oftheUncertificatedSecuritiesRegulations2001excepted).
10. Inordertofacilitatevotingbycorporaterepresentativesatthemeeting,arrangementswillbeputinplaceatthemeetingsothat(i)ifacorporateshareholderhasappointedthechairmanofthemeetingasitscorporaterepresentativetovoteonapollinaccordancewiththedirectionsofalltheothercorporaterepresentativesforthatshareholderatthemeeting,thenonapollthosecorporaterepresentativeswillgivevotingdirectionstothechairmanandthechairmanwillvote(orwithholdavote)ascorporaterepresentativeinaccordancewiththosedirections;and(ii)ifmorethanonecorporaterepresentativeforthesamecorporateshareholderattendsthemeetingbutthecorporateshareholderhasnotappointedthechairmanofthemeetingasitscorporaterepresentative,adesignatedcorporaterepresentativewillbenominated,fromthosecorporaterepresentativeswhoattend,whowillvoteonapollandtheothercorporaterepresentativeswillgivevotingdirectionstothatdesignatedcorporaterepresentative.CorporateshareholdersarereferredtotheguidanceissuedbytheInstituteofCharteredSecretariesandAdministratorsonproxiesandcorporaterepresentatives(www.icsa.org.uk)forfurtherdetailsofthisprocedure.Theguidanceincludesasampleformofappointmentletterifthechairmanisbeingappointedasdescribedin(i)above.
Braveheart Investment Group plc Annual Report and Accounts 2016
52 | COMPANY INFORMATION
Directors JeremyHDelmar-MorganMAMSI, Chairman (a) (r)
TrevorEBrown,Chief Executive Officer (appointed interim CEO 21 August 2015) (r)
JonathanDFreemanBAHonsMBA,Non-executive Director (a) (appointed 21 August 2015)
AndrewTGBurtonBSc,Executive Director (a) (appointed 24 September 2015)
MartinABowles,Non-executive Director (resigned 2 March 2016) (a)
GeoffreyCBThomson, Chief Executive Officer (resigned 21 August 2015)
CarolynSmithBAHonsACIS, Chief Investment Officer (resigned 6 May 2015)
AileenBrownCA,Chief Financial Officer (resigned 20 April 2015)
(a) Member of Audit and Compliance Committee
(r) Member of Remuneration Committee
Secretary WatsonMorganAssociatesLimited (appointed 1 April 2016) KevinCBrown (resigned 31 March 2016)
Registration Number
SC247376
Registered Office
2DundeeRoadPerthPH27DWTelephone+44(0)1738587555
Website www.braveheartgroup.co.uk
Advisers RegistrarCapitaAssetServicesLimitedTheRegistry34BeckenhamRoadBeckenhamKentBR34TU
AuditorMazarsLLP90StVincentStreetGlasgow G25UB
Principal Bankers HSBCBankplc76HanoverStreetEdinburghEH21HQ
Solicitors MaclayMurray&SpensLLPQuartermileOne15LauristonPlaceEdinburghEH36EP
Nominated Adviser and BrokerAllenbyCapitalLimited3StHelen’sPlaceLondonEC3A6AB
Bankers BankofScotlandplcPentlandHouse8LochsideAvenueEdinburghEH129DJ