Baronsmead Second Venture Trust plc
Annual Report and Audited Financial
Statements for the year ended
30September 2024
Company number 04115341
Please join us for the
2025 Baronsmead
Shareholder event
& Annual General
Meetings (AGM)
Wednesday 12 March 2025
Saddlers’ Hall EC2V 6BR
10:30am
Welcome reception
11:00am
Shareholder presentation
12.30pm
Break for lunch and refreshments
1:15pm
Baronsmead Venture Trust AGM
1:30pm
Baronsmead Second Venture Trust AGM
Register to attend at www.greshamhouse.com/baronsmead-
vcts-agm-2025 / or scan the QR code below.
Please note the event will be in-person only
The Notice of AGM will be posted to shareholders separately, and
will include an explanation of the items to be considered. It will be
uploaded to the Company’s website in due course.
Contents
Investment policy and objective 2
About Baronsmead Second Venture Trust plc 3
01
Strategic report
Financial highlights 5
Performance summary 6
Chair’s statement 7
Manager’s review 10
Investments in the year 14
Realisations in the year 18
Ten largest investments 19
Principal risks and uncertainties 24
Environmental, Social & Governance (ESG) 26
Other matters 30
Directors’ duties 34
02
Directors’ report
Board of Directors 39
Directors’ report 41
Corporate governance 44
Audit & Risk Committee report 50
Nomination Committee report 53
Directors’ remuneration report 56
Statement of Directors’ responsibilities 61
Independent auditor’s report 62
03
Financial Statements
Income statement 71
Statement of changes in equity 72
Balance sheet 73
Statement of cash flows 74
Notes to the financial statements 75
04
Appendices
Cash and total returns to shareholders 93
Cash returned to shareholders by date of investment 94
Dividends paid since launch 95
Full investment portfolio 96
Glossary 99
05
Information
Shareholder information and contact details 103
Corporate information 106
Example investments
Ozone (unquoted)
Ozone API is the provider of a software platform enabling
banks to deliver APIs to comply with and generate
revenue opportunities from Open Banking and Open
Finance globally.
IntelliAM (quoted)
IntelliAM provides platform-based machine-learning
solutions to blue-chip clients in the FMCG sector,
increasing the operating and energy efficiency of their
manufacturing sites.
Panthera (unquoted)
Panthera is an independent site management organisation
providing patient recruitment services to clinical research
organisations, pharma and biotech companies.
Skillcast (quoted)
Skillcast provides a compliance e-learning platform and
subscription-based solutions to UK corporate clients
across professional services.
If you have sold or otherwise transferred all of your shares in Baronsmead Second Venture Trust plc, please forward this
document and the accompanying form of proxy as soon as possible to the purchaser or transferee, or to the stockbroker,
bank or other agent through whom the sale or transfer was, or is being, effected, for delivery to the purchaser or transferee.
Annual Report and Audited Financial Statements 2024 1
Co‑investment
The Company typically invests alongside Baronsmead
Venture Trust plc in unquoted and quoted companies
sourced by the Manager. Following the Manager’s
acquisition of the Mobeus VCTs in September 2022, the
Company now also co-invests alongside the Mobeus
VCTs in new unquoted VCT qualifying investments. Allnew
qualifying AIM dealflow will continue to be exclusively
allocated between the Company and Baronsmead
Venture Trust plc.
As detailed in the Management retention section of the
Strategic Report on page 32, the Manager’s staff and
portfolio consultants are entitled to invest in unquoted
investments alongside the Company. This arrangement is
in line with current practice of private equity houses and
its objective is to attract, recruit, retain and incentivise
the Manager’s team and is made on terms which align the
interests of shareholders and the Manager.
Borrowing powers
Should it be required, the Company’s policy is to use
borrowing for short term liquidity purposes only up to a
maximum of 25per cent of the Company’s gross assets,
aspermitted by the Company’s Articles of Association.
Investment objective
The Company is a tax efficient listed company which aims
to achieve long-term positive investment returns for private
investors, including tax-free dividends.
Dividend policy
The Board will decide the annual dividends each year
and the level of the dividends will depend on investment
performance, the level of realised returns and available
liquidity. The dividend policy guidelines below are not
binding and the Board retains the ability to pay higher
or lower dividends relevant to prevailing circumstances
and actual realisations. However, the Board confirms the
following two guidelines that shape its dividend policy:
The Board will, wherever possible, seek to pay two
dividends to shareholders in each calendar year, typically
an interim in September and a final dividend following the
AGM in February/March; and
The Board will use, as a guide, when setting the dividends
for a financial year, a sum representing 7 per cent of the
opening NAV of that financial year.
Investment policy
Baronsmead Second Venture Trust plc’s
(“theCompany”) investment policy is to invest
primarily in a diverse portfolio of UK growth
businesses, whether unquoted or traded on
AIM, which are substantially based in the UK,
although many of these investees may have
some trade overseas.
Investments are made selectively across a range of sectors
in companies that have the potential to grow and enhance
their value and which will diversify the portfolio.
The Company will make investments in accordance with
the prevailing VCT legislation which places restrictions
on the type and age of investee companies as well as
the maximum amount of investment that such investee
companies may receive.
Investment securities
The Company invests in a range of securities including,
butnot limited to, ordinary and preference shares, loan
stocks, convertible securities, and permitted non-qualifying
investments as well as cash. Unquoted investments are
usually structured as a combination of ordinary shares
and loan stocks or preference shares, while AIM-traded
investments are primarily held in ordinary shares. No single
investment may represent more than 15per cent (by VCT
value) of the Company’s total investments.
Liquidity
Pending investment in VCT qualifying investments, the
Company’s cash and liquid funds are held in permitted
non-qualifying investments.
Investment style
Investments are selected in the expectation that the
application of private equity disciplines, including active
management of the investments, will enhance value and
enable profits to be realised on the sale of investments.
Investment policy and objective
2 Annual Report and Audited Financial Statements 2024
About Baronsmead Second Venture Trust plc
Key elements of the business model
Access to an attractive, diverse portfolio
The Company gives shareholders access to a diverse
portfolio of growth businesses.
The Company will make investments in growth businesses,
whether unquoted or traded on AIM, which are substantially
based in the UK in accordance with the prevailing VCT
legislation. Investments are made selectively across a
range of sectors.
The Manager’s approach to investing
The Manager endeavours to select the best opportunities
and applies a distinctive selection criteria based on
Primarily investing in parts of the economy which are
experiencing long term structural growth
Businesses that demonstrate, or have the potential for,
market leadership in their niche
Management teams that can develop and deliver
profitable and sustainable growth
Companies with the potential to become an
attractive asset appealing to a range of buyers at the
appropriate time to sell
In order to ensure a strong pipeline of opportunities,
the Manager invests in building deep sector knowledge
and networks and undertakes significant proactive
marketing to interesting target companies in preferred
sectors. This approach generates a network of potentially
suitable businesses with which the Manager maintains a
relationship ahead of possible investment opportunities.
The Manager as an influential shareholder
The Manager is an engaged and supportive shareholder (on
behalf of the Company) in both unquoted and significant
quoted investments.
For unquoted investments, representatives of the Manager
often join the investee board.
The role of the Manager with investees is to ensure that
strategy is clear, the business plan can be implemented
and that the management resources are in place to deliver
profitable growth. The intention is to build on the business
model and grow the company into an attractive target able
to be either sold or potentially floated in the medium term.
A more detailed explanation of how the business model is applied
is provided in the Other Matters section of the Strategic Report on
pages 30 to 33.
3Annual Report and Audited Financial Statements 2024
01
Strategic
report
Financial highlights
01 Strategic report
337.7p
7.2%
+6.3%
£13.4mn
Net asset value total return
1
(as at 30September 2024)
Annual tax free dividend yield
1
(12 months to 30 September 2024)
Increase in net asset
value per share
1,2
(12 months to 30September 2024)
New investments
1,3
(12 months to 30 September 2024)
Net Asset Value (“NAV”) total return to
shareholders for every 100.0p invested at launch
(January 2001).
Sep 22
Sep 23
328.9p
Sep 24
337.7p
318.5p
Sep 22
Sep 23
£23.1mn
Sep 24
£13.4mn
£10.9mn
NAV per share increased 6.3 per cent. to 59.2p,
before the deduction of dividends, for the
financialyear ended 30 September 2024.
Annual tax free dividend yield based on 4.0p
dividends paid (including proposed final dividend
of 2.25p) and opening NAV of 55.6p
Investments made into seven new and twelve
follow-on opportunities during the year.
Sep 22
Sep 23
7.1%
Sep 24*
7.2%
7.2%
* includes proposed final dividend of 2.25p.
Unquoted: £9.3mn
Quoted: £4.1mn
Sep 22
Sep 23
62.1p
Sep 24*
55.2p
55.6p
NAV per share (p)
Dividends*
* includes proposed final dividend
of 2.25p.
4.0p
5Annual Report and Audited Financial Statements 2024
1. Alternative Performance Measures (“APM”)/Key Performance Indicators (“KPIs”) – please refer to glossary on page 99 for definitions.
2. Please refer to table on page 7 for breakdown of NAV per share movement.
3. Investments into unquoted and AIM investments only.
6 Annual Report and Audited Financial Statements 2024
01 Strategic report
Performance summary
Ten‑year performance record
Net asset value per share (pence) Share price (mid) (pence)
Net asset value total return per share (pence)*
Pence
202420222021202020192018201720162015 2023
0
50
100
200
250
300
350
400
450
150
* Net asset value total return (gross dividends reinvested) rebased to 100p at launch. Source: Gresham House Asset Management Ltd
Total net assets
0
50
100
150
200
250
2024202320222021202020192018201720162015
£mn
NAV total return
NAV total return reconciliation 2022 2023 2024
Opening NAV total return (p) 406.2 328.9 318.5
NAV movement (p) (28.9) (11. 3) (0.2)
Dividend (p) 8.3 8.2 6.6
Total return (p) (20.6) (3.1) 6.4
Change in NAV total return (p)* (77.3) (10.3) 19.2
Closing NAV total return (p) 328.9 318.5 337.7
AIC methodology: The NAV total return to the investor, including the original amount invested (rebased to 100) from launch,
assuming that dividends paid were reinvested at the NAV of the Company at the time the shares were quoted ex-dividend
* The change in NAV total return is the sum of the monthly total returns calculated on a compound basis.
Sarah Fromson
Chair
The economic environment over the
12months to 30 September 2024 was mixed.
The persistently high inflation and rising
interest rates that preceded the start of the
period subsided, with inflation falling to the
lowest level in three years and there was an
initial cut in interest rates, with expectations
of more to come. Against this backdrop, the
Company’s NAV per share increased 3.53p per
share (6.3per cent) before dividend payments
for the year ended 30 September 2024.
UK consumer confidence is also at its highest level in
three years. However this has not yet translated into
consumption, which remains subdued, as evidenced by
the recent household saving data. The Company aims
to achieve long-term positive investment returns for its
shareholders from a diverse portfolio of investments in UK
growth companies. Despite the difficult conditions leading
to a drop in the value of the unquoted portfolio over the
period, the Board continues to believe that, in aggregate,
the fundamentals of the large majority of portfolio
companies remain robust. The Company continues to be in
a position to support those investee companies where the
Manager believes there is a strong prospect of providing
good investment returns for shareholders over the medium
to longer term.
Results
Pence per
ordinary
share
NAV as at 1 October 2023
(after final dividend) 55.63
Valuation increase (6.3 per cent) 3.53
NAV as at 30 September 2024
before dividends 59.16
Less:
Interim dividend paid on 9 September 2024 (1.75)
Proposed final dividend of 2.25p payable,
after shareholder approval, on 17 March 2025 (2.25)
Illustrative NAV as at 30 September 2024
after proposed dividend 55.16
Portfolio Review
At 30 September 2024, the Company’s investment portfolio
was valued at £140.2 million and comprised 83 direct
investments, of which 41 are in unquoted companies and
42 are in quoted companies. The Company’s investments
in three WS Gresham House Equity Funds were valued at
£62.5 million at 30 September. These investments provide
investment exposure to an additional 77 AIM-traded and
fully listed companies, spreading investment risk across a
highly diversified portfolio of 160 companies.
The performance of the Company’s portfolio of AIM-listed
and other listed investments was 16.2 per cent during
the year. This compared favourably to the FTSE AIM All
Share Index which was 2.0 per cent over the same period.
Significant contributors to this performance were Cerillion,
up 47.7per cent during the year; and Property Franchise
Group, up 54.5per cent during the year.
The Company’s unquoted investments however were
down 9.0 per cent during the year. This is clearly very
disappointing and stems from continued difficult trading
conditions and lower valuations where the valuations are
based on the valuation of comparable listed companies and
affected by higher discount rates. The largest detractors
from performance were eConsult in the healthcare sector
and RevLifter in the technology sector. These are covered
in more detail in the Manager’s Review on pages 10 to 13.
7Annual Report and Audited Financial Statements 2024
01 Strategic report
Chair’s statement
VCT Regulations – Retirement Date
of the UK Government’s Venture
Capital Schemes
During the summer we were pleased to see the European
Commission approve the extension of the VCT scheme
until 5 April 2035. This was formalised by UK legislation
on 3 September 2024. The regulations bring into effect
the extension of the Enterprise Investment Scheme
(EIS) and the Venture Capital Trust (VCT) Scheme sunset
clause to 2035.
Autumn Budget 2024
AIM stocks suffered a material sell off in the run up to the
October 2024 UK budget on fears that IHT tax relief on
AIM shares might be removed. In the event the relief was
reduced but not removed entirely resulting in a relief rally
in certain popular AIM stocks. Overall the preservation of
the relief albeit at reduced rates signals a recognition by
the new government that support for the AIM market is
important as a component of its overall growth strategy.
Welook forward to more indications of government support
for the UK equity market going forward.
Consumer Duty
The FCA’s Consumer Duty came into force on 31 July
2023 and requires in-scope firms to act to deliver good
outcomes for retail customers across the distribution chain
in respect of four main areas: (i) products and services,
(ii) price and value, (iii) consumer understanding, and (iv)
consumer support. The Consumer Duty applies to the
regulated and ancillary activities of all FCA authorised firms
under the Financial Services and Markets Act 2000, the
Payment Services Regulations 2017 and the Electronic
Money Regulations 2011. VCTs are not FCA authorised
firms and, accordingly, the Company does not fall within
scope of the Consumer Duty. However, the Consumer Duty
does apply to the Manager, being an FCA authorised firm,
and the Board is cognisant of the Manager’s obligations
to comply with the Consumer Duty. Notwithstanding
that the Baronsmead VCTs are outside of direct scope of
the Consumer Duty, the Manager continues to apply the
principles of the Consumer Duty to the VCTs given the retail
nature of the target market. The Board receives regular
updates from the Manager on the delivery of its obligations
under the Consumer Duty.
Investments and Divestments
The Board is once again pleased to report that the
Company continues to see attractive opportunities and
make new investments. The Company invested a total
of £13.4 million in 19 companies over the year. Further
details of the new investments made are included in the
Manager’s review on pages 10 to 13. As we have said to
shareholders previously, the requirement since 2015 to
make investments in earlier stage companies is likely to
result in greater volatility of returns over time. However, the
more mature, established portfolio of existing investments
should assist in sustaining returns and dividends for
shareholders, as the newer holdings develop and grow.
The priority for portfolio companies is to operate in a
difficult macroeconomic environment with proactivity and
resilience. The Company has the resources to support
new and existing portfolio companies and the Manager
is focusing on the key challenges and opportunities
of each holding.
There was only one full realisation in the unquoted portfolio
during the year with proceeds of £0.1 million received from
the realisation of FundingXchange, for a gross multiple of
0.1x cost. However, in addition to this, deferred earn-out
consideration of £0.1 million from the sale of Evotix for a
gross money multiple of 0.8x cost. In the listed portfolio,
the Manager has also continued its approach of profitable
partial realisations of Cerillion during the year, resulting
in the receipt of proceeds of £8.2 million at an aggregate
of 21.1x original invested cost in this AIM-listed company.
Following the takeovers of Gresham House and Gama
Aviation, the Company received £0.5 million for a gross
money multiple of 3.9x cost and £0.6 million for a gross
money multiple of 0.6x cost respectively.
Dividends
The Board is pleased to declare a final dividend of 2.25p
per share for the year to 30 September 2024, payable
on 17March 2025. This is in addition to the 1.75p interim
dividend paid in September and means that the total
dividends for the year are 4.00p. This is a 7.2 per cent yield
based on the opening NAV of 55.6p and meets the target
policy of 7 per cent of the NAV at the start of the year.
8
Annual Report and Audited Financial Statements 2024
01 Strategic report - Chair’s statement
Outlook
With UK CPI now tracking the target inflation level and
UK investors having priced in their expectations of two
further interest rate cuts, we hope that the green shoots
of economic improvement in the second half of the
year will continue.
The portfolio remains highly diversified and the Board
continues to believe it is a good time to be investing
in earlier stage, innovative and high growth potential
businesses. The Manager is actively seeking to complete
new investments, believing that this is a propitious time
in the economic cycle ahead of the typical upswing that
follows the uncertain times of the past few years. We
remain confident that the Manager is suitably resourced
and positioned to provide the necessary levels of support
to the portfolio companies and remains focussed on
retaining, recovering and helping to grow value in existing
and future investee companies.
Sarah Fromson
Chair
23 December 2024
Succession planning
During the year, the Board began the process of
implementing its succession plan, with Adriana Stirling
joining the Board on 1 December 2024. Adriana qualified
as a chartered accountant with PricewaterhouseCoopers
LLP (“PwC”) and developed extensive organisational and
anti-financial crime technical expertise over her 17 years at
PwC, leading client engagements across financial and non-
financial service industries, spanning the public and private
sectors. In 2014, she became the Managing Director of a
private family office. She has overall responsibility for the
investment and operational aspects of the office, including
managing significant shareholder positions in several
unquoted companies. We are very much looking forward to
working with her.
Our current Audit & Risk Committee Chair, Malcolm Groat,
will be retiring with effect from 31 December 2024. Malcolm
has served as a director of Baronsmead Second Venture
Trust plc since 2016. I would like to thank Malcolm for his
dedication and hard work during this time and wish him
all the best in his future endeavours. Malcolm was also
the Senior Independent Director and, following Malcolm’s
retirement, Graham McDonald will assume this role.
Fundraising
On 1 October 2024 the Company announced its intention
to fundraise new funds in the 2024/25 tax year. It is the
Board’s current intention to launch its offer for subscription
to raise £15 million (before costs) with an additional
£10million over allotment facility during January 2025
in a joint offer for subscription alongside our sister
VCT, Baronsmead Venture Trust plc. The full terms and
conditions as they pertain to these offers will be published
in the prospectus and we will ensure shareholders are
notified accordingly.
Annual General Meeting (“AGM”)
The Company intends to hold the next AGM on 12 March
2025. Shareholders are invited to attend a presentation by
the Manager at 11am followed by a Q&A session. This will
be followed by some light refreshments at 12.30pm. The
formal business of the AGM will start at 1.30pm.
The event will give shareholders more opportunity to
engage with the Board and the Manager and I look forward
to meeting as many shareholders as possible. Please
see the inside cover for more details and how to register
to attend. Registration details will also be included in the
Notice of AGM and on the Baronsmead Second Venture
Trust website. The event will be held in person, with a
recording made available shortly afterwards for those
unable to attend in person.
9
Annual Report and Audited Financial Statements 2024
01 Strategic report - Chair’s statement
2024 has been a very unusual year with significant
macroeconomic and geopolitical factors having a
significant influence over markets. The UK equity market
delivered modest growth during the year with larger
cap companies outperforming smaller cap companies,
particularly those on AIM due to ongoing negative fund
flow dynamics and depressed risk appetite amongst
domestic investors. An increasing weight of money
chasing large cap US stocks, particularly in the technology
sector, supported by index funds and passive flows has
further exacerbated the relative underperformance of
the UK. Such levels of global equity market concentration
into one geography (the US) and certain sectors or
companies (large cap technology) have only been seen
infrequently throughout history and have typically reversed
aggressively in due course. A period of uncertainty
following the snap UK general election and the new Labour
government’s first budget, the longest such period for
almost 100years, contributed to volatile sentiment and
produced a further headwind for UK smaller companies,
reduced both listed share prices and funding availability
for unquoted growth companies. In particular the shares
of many AIM-listed companies were depressed by the
uncertainty running up to the budget due to concerns
over the future of tax reliefs although the outcome was
ultimately less bad than feared by many commentators.
Thereremainsanongoingdisparity between the
valuations of many UK smaller companies and equivalent
valuations for similar companies in private markets.
Thishas supported the ongoing elevated level of takeover
activity across the UK market as private equity investors
and strategic corporates seek to exploit this discount
to buy businesses. We expect this discount to close as
more investors return seeking to capture some of this
increasingly extreme value opportunity.
During the year our AIM portfolio and our WS Gresham House
Equity Fund investments significantly outperformed our
unquoted portfolio. This largely reflects the relative maturity
of the underlying portfolio companies with our quoted
holdings typically being larger, profitable, cash generative
businesses that have already established themselves and
delivering growth at a sensible moderate pace. In contrast
the nature of the relatively earlier stage unquoted portfolio is
such that more of these businesses are immature and more
exposed to elongating sales cycles that are typical during
periods of greater economic uncertainty. Also typically a
certain number of earlier stage venture investments will fail
and those that do tend to fail earlier than the time it takes for
the successful businesses to demonstrate meaningful and
sustained traction. As a result we expect to see value uplifts
come through from the unquoted portfolio in future years as
some of the businesses mature.
Portfolio review
Overview
The net assets of £227 million were invested as follows:
Asset class
NAV
(£mn)
% of
NAV*
Number of
investees
% return in
the year**
Unquoted 53 23 41 (9)
AIM-traded companies 87 38 42 16
WS Gresham House Equity Funds*** 62 28 77 18
Liquid assets
#
25 11 N/A 3
Totals 227 100 160 6
* By value as at 30 September 2024.
** Return includes interest received on unquoted realisations during the year.
***
Excludes investee companies with holdings by more than one fund.
#
Represents cash, OEICs and net current assets. % return in the period relates only to the cash liquidity funds.
Clive Austin
Managing Director,
VCT Portfolio
Ken Wotton
Managing Director,
Public Equity
Tania Hayes
Chief Operating
Officer,
Strategic Equity
Trevor Hope
Managing Director
& Chief Investment
Officer, VCTs
Ed Wass
Director
of VCT Portfolio
10 Annual Report and Audited Financial Statements 2024
01 Strategic report
Manager’s review
SciLeads is a data-intelligence platform that enables
companies operating within Life Science verticals to
identify, track and convert potential customers
OnSecurity Technology is a B2B cybersecurity services
business which has built a technology platform to
automate the scoping, scheduling, and reporting of
human-based penetration tests
Two new AIM quoted investments were made
during the year:
IntelliAM is a provider of a machine learning platform
enabling manufacturing organisations to leverage their
data and maximise the value and efficiency of their assets
Earnz is a consolidator in the blue collar energy
services sector created by an experienced Executive
Chairman which the Manager has successfully backed in
previous ventures
The Company made additional investments totalling
£5.1million into twelve existing portfolio companies,
3quoted and 9 unquoted, across the year. This is
consistent with the investment strategy of continuing
to back our high potential assets with further capital to
support future growth. We anticipate the level of follow
-on
investment will continue to grow as the earlier stage
portfolio continues to mature.
The timeline and table on pages 14 to 18 show the
breakdown of new investments and realisations over
the course of the year and below is a commentary on
some of the key highlights in both the unquoted and
quoted portfolios.
Investment activity –
unquoted and quoted
The Company’s investment strategy is primarily focused
on companies operating in parts of the economy that we
believe are benefiting from long-term structural growth
trends and in sectors where we have deep expertise and
network. The amount of capital invested in each business is
matched to the scale, maturity and underlying risk profile of
the company seeking investment.
During the year, £13.4 million was invested into 19
companies including 7 new additions to the portfolio and
12follow-on investments.
Five new unquoted investments were completed during
the year.
Below are descriptions of the new investments made;
Ozone API is a software developer providing banks and
financial institutions with low-cost, compliant APIs
CitySwift is a software business that works with bus
operators to analyse data from their networks
Azarc.io specialises in business process automation,
notably automating custom declaration forms
Investment diversification at 30 September 2024 by value
Sector* Total assets Length of time investments held*
Healthcare & education
Business services
Consumer markets
Technology
64%
7%
20%
9%
WS Gresham House Equity Funds
Unquoted
Cash liquidity funds
AIM
38%
28%
23%
11%
Between 5 years and VCT rule change
Between 3 and 5 years
Between 1 and 3 years
Less than 1 year
Pre-VCT rule change**
11%
6%
22%
12%
49%
* Direct investments only, not held by the WS Gresham House UK Equity Funds.
** Investments made prior to the VCT rule change that took effect from 18 November 2015.
11
01 Strategic report - Manager’s review
Annual Report and Audited Financial Statements 2024
Quoted Portfolio
(AIM‑traded investments)
Performance
The quoted portfolio delivered positive absolute
performance of 16.2 per cent during the year, despite the
ongoing elevated levels of geopolitical and macroeconomic
uncertainty in the markets. For reference the AIM market
in the UK increased 2.0 percent over the same period.
The AIM portfolio remains in good financial health and
is exposed to structural growth areas providing some
insulation from the deteriorating economic conditions.
The software sector provided the largest positive
contributor to performance with Cerillion, a provider of
billing and charging software to the telecoms industry
continuing to deliver strong revenue and profit growth.
Property Franchise Group, a franchised estate agency
business focussed primarily on lettings, also performed
positively during the year following its takeover of
Belvoir Lettings.
The largest detractors from performance were Crossword
Cybersecurity, a cyber consultancy and software
provider, which was subscale and exhibited a challenging
cash runway; and Inspired, an energy procurement and
optimisation consultancy, which announced the potential
for certain large customer projects to be delayed impacting
current year revenue and profits.
We continue to closely monitor our AIM portfolio with a
rolling programme of independent reviews of top AIM
holdings and broadly continue to be positive on the
long-term investment prospects of these companies.
Many of the larger quoted investments have been long-
term holdings. These companies are typically profitable,
cash generative businesses with low levels of financial
gearing and continue to have attractive long-term
growth prospects.
Divestments
There were two full realisations during the year, both
corporate actions, in Gresham House and Gama Aviation
whose proceeds of £0.1 million and £0.1 million represented
gross multiples of 3.9x and 0.6x cost respectively. Our
investment in DeepVerge, an environmental and life
sciences group, was written off during the year although
the NAV impact of this was limited during the year as the
value of this investment had decreased in previous years.
The opportunity to crystallise further profits was taken
for Cerillion; over the course of the year proceeds of
£8.2million were realised at 21.1x cost.
In addition to this, liquidation proceeds of £0.1 million
were received for InterQuest, which was written off in
September 2023.
Unquoted portfolio
Performance
The unquoted portfolio decreased in value by 9.0 per
cent during the year. The macroeconomic environment
remained challenging for our portfolio companies with
many experiencing difficult trading conditions and
lengthening of product and services sales cycles, most
notably consumer related businesses.
This was a disappointing performance which reflects
the immaturity of the unquoted portfolio. Earlier stage
investment delivered lower levels of growth than had been
forecast resulting in shortened cash runways. With this
increased risk profile it is appropriate to have reduced the
holding value of a number of the companies within our
portfolio. Gresham House’s experienced Non-Executive
Directors and consultants continue to support the
portfolio companies during these turbulent times with the
expectation that a number of these companies will recover
value as they trade out of difficult conditions and / or raise
further capital.
Panthera Biopartners and Ozone API were the two
investments that made the biggest positive contribution
in the year. Panthera, a provider of recruitment services
for clinical trials, delivered impressive sales growth and
profitability during the year as a result of new contract
wins. Ozone API, a software developer providing banks and
financial institutions with low-cost, compliant APIs, was
a new investment in the year. The company grew in line
with expectations and the valuation benefitted from the
preference structure of the investment.
The largest detractors from performance were in the
healthcare and technology sectors. eConsult, an online
consultation provider used by GP practices and hospitals,
experienced increased competition during the year and
an ongoing challenge of funding for its hospital product,
leading to a much reduced cash runway. This led to
the decision to seek a new owner for the business and
eConsult was acquired by Huma Therapeutics Ltd in a
share for share transaction in September 2024. Huma is a
well funded digital healthcare business which specialises
in continuous patient monitoring. RevLifter, an AI platform
using advanced behavioural analytics to deliver tailored
promotions to users, suffered from its largest customer, a
large US retailer, more than halving its spending.
As Manager we remain highly engaged with the
management teams within the portfolio, sharing insight
and best practice to help them both manage risk and
spot opportunities in a quickly changing environment.
We have continued to invest in our portfolio and in-house
talent teams, which alongside our extensive network of
earlier stage, high growth company experts, ensure we
are well positioned to help the companies we invest in to
navigate the challenges they face whilst also continuing to
develop and scale.
12
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Annual Report and Audited Financial Statements 2024
Divestments
There was one full realisation in the unquoted portfolio
during the year with proceeds of £0.1 million received from
the realisation of FundingXchange, for a gross multiple
of 0.1x cost. In addition to this, earn out proceeds were
received on Evotix of £0.1 million with a gross money
multiple of 0.8x cost. Our investment in Armstrong Craven,
a provider of executive search and business intelligence
services, was written off during the year although the value
of this investment had largely decreased in previous years.
Collective investment vehicles
The Company’s investments in the WS Gresham House
UK Micro Cap Fund (“Micro Cap”), WS Gresham House
UK Multi Cap Income Fund (“Multi Cap”) and WS Gresham
House UK Smaller Companies Fund (“Small Cap”) remain a
core component of the Company’s portfolio construction.
These investments provide shareholders with additional
diversification through exposure to an additional 77underlying
companies, as well as access to the potential returns available
from a larger and more established group of companies that
fall within the Manager’s core area of expertise.
Over the year, Small Cap and Micro Cap delivered returns of
31.8 per cent and 9.8 per cent respectively, compared to the
IA UK Smaller Companies sector which returned 16.1 per cent.
Multi Cap delivered a return of 20.5 per cent, compared to the
IA UK Equity Income sector which returned 15.0 per cent.
Micro Cap and Multi Cap continue to be both highly rated
by independent ratings agencies. Micro Cap’s cumulative
performance is currently second quartile within the IAUK
Smaller Companies sector over the past 10 years. Multi Cap’s
cumulative performance has remained the top quartile within
the IA UK Equity Income sector since launch in June 2017
and is the best performer over five years. Small Cap has also
achieved top quartile cumulative performance since launch in
2019 and is the third best performing fund over the past five
years within the IA UK Smaller Companies sector.
Liquid assets (cash and near cash)
The Company had cash and liquidity OEICs of approximately
£25.8 million at the year-end. This asset class is conservatively
managed to take minimal or no capital risk. The average
7 day yield on the liquidity OEICs was 4.9 per cent at the
end of the year.
Third‑party independent valuations
During the year, the Company engaged the services of
Lincoln International and Kroll to conduct independent
third party valuations as a means of managing the Board’s
risk in respect of a systematic error regarding the valuation
of one or more of the material VCT portfolio assets. The
responsibility for the preparation of draft valuations lies
with the Manager, and this does not constitute outsourcing
of any part of the valuation process, and the Board is
responsible for the approval of valuations. The Manager
uses these independent valuations in conjunction with their
own valuations to provide independent assurance and risk
mitigation to the Board and the Board continues to support
this. Four unquoted investment were selected focussing
on the higher valued assets in the portfolio, which also
covered different characteristics such as value based
on both revenue and EBITDA multiples and those with a
range of both equity and loan instruments. In July 2024,
the Board assessed the use of the third party valuations
and concluded that the process had provided comfort on
the Manager’s controls and the quality of the Manager’s
processes compared to the market. Furthermore, the Board
agreed to reassess the use of third party independent
valuations on a regular basis.
ESG highlights
Following the year end, we commenced our latest ESG
survey of our unquoted portfolio companies, to identify
how these companies think about ESG and which ESG data
is already being reported and monitored. Further details
on our ESG approach and policies can be found in the
strategic report on page 26.
Outlook
Geo-political flux is likely to persist throughout 2025,
although the UK election result will hopefully allow more
clarity on the future economic and political landscape. That
being said, the impact of the UK Government’s first budget
has caused an element of short term market turbulence,
potential inflationary pressures and pausing of interest
rate reductions.
This environment should present attractive opportunities
with the advantage of being able to take a longer-term view
of both new and portfolio follow-on investments. The early
stage cohort of investments are taking on the challenges
presented and are expected to accelerate their funding
plans, however this should also produce some compelling
follow-on investment opportunities.
Gresham House’s seasoned investment managers are
a vital source of knowledge and experience available to
support the Company’s portfolio of management teams.
In this respect, Gresham House is well placed by having
one of the largest and most experienced portfolio teams
in the industry.
Looking into 2025, the Manager remains cautiously
optimistic that the combination of a somewhat improving
economic backdrop, greater political stability and a more
attractive valuation environment will produce attractive
investment opportunities when viewed with a long-
term perspective.
Gresham House Asset Management Ltd
Manager
23 December 2024
13
01 Strategic report - Manager’s review
Annual Report and Audited Financial Statements 2024
October 2023
Q
X
Quoted
Unquoted
Follow-on investment
New investment
Q
Business services
Developer of biological fungicides and bio equivalents
Technology
Open banking infrastructure provider
Technology
SaaS product for bus operators and local
authorities to aggregate bus networks data
Technology
Automating customs declarations
Technology
Leading integration platform for fast-growing retail
and ecommerce businesses
December 2023
Technology
Research and development tech business focused
on global navigation and satellite systems
* Investments in to unquoted and AIM investments only.
Invested a total of £13.4 million in to:
£5.520 million in to five new unquoted investments
£3.814 million in to nine existing unquoted investments
£2.820 million in to two new AIM-traded investments
£1.253 million in to three existing AIM-traded investments
£0.9mn
X
X
X
£0.5mn
£0.2mn
X
£0.9mn
£1.8mn
X
£0.9mn
X
£0.7mn
Healthcare & education
Ion channel drug discovery and safety assessment
service provider
14
Annual Report and Audited Financial Statements 2024
01 Strategic report
Investments in the year*
March 2024
April 2024
Q
X
Quoted
Unquoted
Follow-on investment
New investment
X
Q
X
Healthcare & education
Provider of intensive day care treatments for
eating disorders
Consumer markets
Supplier of customisable pet products
* Investments in to unquoted and AIM investments only.
X
Consumer markets
Seafood restaurant chain
£0.2mn
£0.3mn
Technology
Secure payment service provider
£0.2mn
X
Technology
Data-intelligence platform for Life Science
companies to identify, track and convert customers
£0.9mn
£0.1mn
15
01 Strategic report - Investments in the year
Annual Report and Audited Financial Statements 2024
* Investments in to unquoted and AIM investments only.
Q
X
Quoted
Unquoted
Follow-on investment
New investment
May 2024
X
Business services
X
X
£1.2mn
£0.1mn
Technology
B2B cybersecurity services business - tech
platform to automate scoping, scheduling,
reporting of human-based penetration tests
Technology
Product-level sustainability impact
assessment software tool
June 2024
July 2024
X
Q
£2.1mn
£0.2mn
Technology
Provider of a machine learning platform
for manufacturing
Banking and accounting software for
small businesses
Healthcare & education
Provider of intensive day care treatments for
eating disorders
£0.5mn
16
01 Strategic report - Investments in the year
Annual Report and Audited Financial Statements 2024
Q
X
Quoted
Unquoted
Follow-on investment
New investment
* Investments in to unquoted and AIM investments only.
August 2024
X
Q
Business services
Specialist energy and heat decarbonisation platform
Technology
Product-level sustainability impact assessment
software tool
£0.7mn
£0.1mn
September 2024
X
Q
Healthcare & education
Provides real time life science intelligence as a
subscription service
Business services
Wealth advisory service for individuals & businesses
£0.7mn
£0.1mn
17
01 Strategic report - Investments in the year
Annual Report and Audited Financial Statements 2024
Realisations in the year
Company
First
investment
date
Original
book cost
#
£’000
Proceeds
‡
£’000
Overall
multiple
return (x)
IRR
(%)
Unquoted realisations
Funding Xchange Ltd Full trade sale Nov 19 795 50 0.1 –
Armstrong Craven Ltd Written off Jun 13 664 – 1.1* 1.6
Total unquoted realisations 1,459 50
AIM-traded realisations
Cerillion plc Market sale Nov 15 388 8,171 21.1 43.4
Gama Aviation plc Tender offer Nov 10 1,004 573 0.6 –
Gresham House plc Takeover Nov 14 137 530 3.9 15.9
Deepverge plc Written off Jun 21 1,590 – – –
Total AIM-traded realisations 3,119 9,274
Total realisations in the year** 4,578 9,324
During the year, liquidation proceeds of £114k were received from InterQuest Group plc, which was written off in September 2023; earn out
proceeds of £69k were received from Evotix Ltd, which was realised in May 2023; and liquidation proceeds of £14k were received from Crawshaw
Group plc, which was written off in October 2018.
#
Residual book cost at realisation date.
‡
Proceeds at time of realisation including interest.
* Includes interest/dividends received, loan note redemptions and partial realisations accounted for in prior periods.
** Includes unquoted and AIM investments only.
18 Annual Report and Audited Financial Statements 2024
01 Strategic report
Ten largest investments
The top ten investments by value at 30 September 2024 illustrate the diversity of investee companies within the portfolio.
For consistency across the top ten and based on guidance from the AIC, data extracted from the last set of published
audited accounts is shown in the tables below. However, this may not always be representative of underlying financial
performance for several reasons. Published accounts lodged at Companies House may be out of date and the Manager
works from up-to-date management accounts and has access to draft but unpublished annual audited accounts prepared
by the companies. In addition, pre-tax profit in statutory accounts is often not a representative indicator of underlying
profitability as it can be impacted by, for example, deductions of non-cash items, such as amortisation, that relate to
investment structures rather than operating performance.
1
Cerillion plc
London
Quoted
www.cerillion.com
Cerillion provides billing, charging and CRM software
solutions, predominantly to the telecommunications
sector but also to other sectors, including finance
and utilities. Cerillion has c.80 customer installations
worldwide, delivering a broad range of cloud
solutions, managed services and on-premise
enterprise software.
All funds managed by Gresham House
First investment: July 2015
Total original cost: £1,958,000
Total equity held: 8.7%
Baronsmead Second Venture Trust only
Original cost: £1,077,000
Valuation: £25,226,000
Valuation basis: Bid price
Income recognised in the year: £216,000
% of equity held: 4.8%
Voting rights: 4.8%
Year ended 30September
2024
£million
2023
£million
Sales: 43.8 39.2
Pre-tax profits: 19.7 16.1
Net assets: 48.5 36.9
No. of employees: 354 324
Source: Cerillion plc, Annual Report and Financial Statements,
30 September 2024
2
Netcall plc
Bedfordshire
Quoted
www.netcall.com
Netcall is a provider of intelligent automation and
customer engagement software, helping organisations
to become more customer-centric. Solutions are
focused on enabling customer contact across multiple
channels and improving customer satisfaction whilst
driving operational efficiency through increases process
automation. Netcall has over 700 customers, spanning
enterprise, healthcare and government sectors.
All funds managed by Gresham House
First investment: July 2010
Total original cost: £4,354,000*
Total equity held: 24.4%
Baronsmead Second Venture Trust only
Original cost: £2,616,000
Valuation: £12,869,000
Valuation basis: Bid price
Income recognised in the year: £123,000
% of equity held: 9.0%
Voting rights: 9.0%
Year ended 30June
2024
£million
2023
£million
Sales: 39.1 36.0
Pre-tax profits: 6.3 4.0
Net assets: 40.5 35.4
No. of employees: 283 270
Source: Netcall plc, Annual Report and Accounts, 30 June 2024
*Includes Baronsmead VCTs only
19Annual Report and Audited Financial Statements 2024
01 Strategic report
3
Patchworks Integration Ltd
London
Unquoted
www.wearepatchworks.com
Patchworks provides the software to integrate
an ecommerce customer’s front and back office
operational systems, managing the flow of data
across their entire business and providing data and
analytics to power decision-making.
All funds managed by Gresham House
First investment: July 2021
Total original cost: £10,550,000
Total equity held: 25.0%
Baronsmead Second Venture Trust only
Original cost: £5,486,000
Valuation: £6,753,000
Valuation basis: Revenue multiple
Income recognised in the year: £188,000
% of equity held: 11.4%
Voting rights: 11.4%
Year ended 30June
2023
£million
2022
£million
Net Assets: 2.6 2.7
No. of Employees: 4 4
A full set of accounts is not publicly available.
Source: Patchworks Integration Ltd, Unaudited Financial
Statements, 30 June 2023
4
IDOX plc
Surrey
Quoted
www.idoxgroup.com
IDOX provides legislative compliance and document
process management software, in a variety of cloud and
on-premise applications, for local governments and the
NHS. Additionally, IDOX delivers document collaboration
software for the oil & gas, energy, and infrastructure
sectors, enabling accurate record keeping for project
management. IDOX’s solutions seek to deliver process
automation to support enhanced citizen and customer
experience, improved operational efficiency and
reduced overheads.
All funds managed by Gresham House
First investment: May 2002
Total original cost: £1,642,000*
Total equity held: 6.5%
Baronsmead Second Venture Trust only
Original cost: £1,028,000
Valuation: £6,683,000
Valuation basis: Traded price
Income recognised in the year: £66,000
% of equity held: 2.4%
Voting rights: 2.4%
Year ended 31 October
2023
£million
2022
£million
Sales: 73.3 66.2
Pre-tax profits: 7.8 6.6
Net Assets: 73.3 67.4
No. of Employees: 626 578
Source: Idox plc, Annual Report & Accounts, 31 October 2023
*Includes Baronsmead VCTs only
20 Annual Report and Audited Financial Statements 2024
01 Strategic report - Ten largest investments
6
Airfinity Ltd
London
Unquoted
www.airfinity.com
Airfinity is a science information data analytics platform
which provides deep information by therapeutic area on
a real time basis to the life sciences industry and public
entities including governments, NGOs and healthcare
authorities. It grew rapidly during the pandemic
on the back of its COVID-19 health analytics and
intelligence platform.
All funds managed by Gresham House
First investment: July 2021
Total original cost: £8,155,000
Total equity held: 20.1%
Baronsmead Second Venture Trust only
Original cost: £4,237,000
Valuation: £5,302,000
Valuation basis: Earnings Multiple
Income recognised in the year: £75,000
% of equity held: 9.3%
Voting rights: 9.3%
Year ended 31 December
2022
£million
2021
£million
Sales: 5.4 2.4
Pre-tax profits: (3.5) (1.9)
Net Assets: 2.6 3.2
No. of employees 83 57
Source: Airfinity Ltd, Annual Report & Financial Statements,
31 December 2022
5
The Property Franchise Group plc
Dorset
Quoted
www.thepropertyfranchisegroup.co.uk
Property Franchise Group (“TPFG”) is the UK’s largest
multi-brand lettings and estate agency franchising
group, which has completed two transformational
acquisitions in 2024 augmented by strong organic
growth. With c.1,900 outlets across the UK, TPFG
manages over 150,000 tenanted properties across its
18 brand portfolio. TPFG’s franchise model generates
multiple income streams, with the majority of earnings
being driven by lettings revenue, with additional fees
generated from financial and other service revenues.
All funds managed by Gresham House
First investment: December 2013
Total original cost: £3,196,000*
Total equity held: 18.2%
Baronsmead Second Venture Trust only
Original cost: £1,758,000
Valuation: £6,020,000
Valuation basis: Bid price
Income recognised in the year: £163,000
% of equity held: 2.3%
Voting rights: 2.3%
Year Ended 31 December
2023
£million
2022
£million
Sales: 27.3 27. 2
Pre-tax profits: 9.0 8.8
Net Assets: 57.7 57. 8
No. of Employees: 176 185
Source: The Property Franchise Group plc, Annual Report and
Accounts, 31 December 2023
*Includes Baronsmead VCTs only
21Annual Report and Audited Financial Statements 2024
01 Strategic report - Ten largest investments
7
Bioventix plc
Surrey
Quoted
www.bioventix.com
Bioventix manufactures and supplies high
affinity sheep monoclonal antibodies for use in
immunodiagnostics. Focusing on clinical diagnostics,
the company’s strategy is to identify new assays for
which there is a need for improved antibodies.
All funds managed by Gresham House
First investment: June 2013
Total original cost: £562,000*
Total equity held: 11.1%
Baronsmead Second Venture Trust only
Original cost: £309,000
Valuation: £4,476,000
Valuation basis: Bid price
Income recognised in the year: £186,000
% of equity held: 2.3%
Voting rights: 2.3%
Year ended 30 June
2024
£million
2023
£million
Sales: 13.6 12.8
Pre-tax profits: 10.6 10.1
Net Assets: 12.0 12.1
No. of Employees: 17 16
Source: Bioventix plc, Annual Report & Financial
Statements, 30 June 2024
*Includes Baronsmead VCTs only
8
Panthera Biopartners
Lancashire
Unquoted
www.panthera-bio.com
Panthera is an independent site management
organisation providing patient recruitment services to
clinical research organisations, pharma and biotech
companies. The primary focus is phase 2 and 3 clinical
trials for new drugs across multiple therapeutic areas.
Panthera supports all aspects of new clinical trials
including feasibility assessments, site set up, patient
recruitment and engagement and day to day running of
clinical trials in line with strict regulatory criteria.
All funds managed by Gresham House
First investment: September 2020
Total original cost: £6,424,000
Total equity held: 26.7%
Baronsmead Second Venture Trust only
Original cost: £3,338,000
Valuation: £4,007,000
Valuation basis: Earnings Multiple
Income recognised in the year: Nil
% of equity held: 12.2%
Voting rights: 12.2%
Year ended 31 December
2023
£million
2022
£million
Sales: 11.3 4.9
Pre-tax profits: 0.9 (5.6)
Net Assets: 5.7 1.4
No. of Employees: 108 104
Source: Panthera Biopartners Ltd, Annual Report & Financial
Statements, 31 December 2023
22 Annual Report and Audited Financial Statements 2024
01 Strategic report - Ten largest investments
10
Anpario plc
Nottinghamshire
Quoted
www.anpario.com
Anpario is a producer of natural feed additives for
the global agriculture and aquaculture markets. Their
products are designed to boost growth and improve
the health of the animals to which they are fed. In an
era where the traditional antibiotic based growth
supplements are being steadily phased out, Anpario’s
natural solutions can help to fill the gap. Sales growth
is supported by both the increasing global demand
for meat (and hence feed) as well as the trend towards
organic foods and healthy eating.
All funds managed by Gresham House
First investment: November 2006
Total original cost: £965,000
Total equity held: 6.9%
Baronsmead Second Venture Trust only
Original cost: £662,000
Valuation: £3,212,000
Valuation basis: Bid price
Income recognised in the year: £42,000
% of equity held: 4.7%
Voting rights: 4.7%
Year ended 31 December
2023
£million
2022
£million
Sales: 31.0 33.1
Pre-tax profits: 2.8 3.7
Net Assets: 33.6 41.3
No. of Employees: 115 124
Source: Anpario plc, Annual Report, 31 December 2023
9
Popsa Holdings Ltd
Surrey
Unquoted
www.popsa.com
Popsa is a photobook app that uses proprietary machine
learning algorithms to reduce the average time it takes
for customers to produce photobooks from two hours
to just five minutes. Popsa was founded in 2017 with the
aim to disrupt an industry that has not innovated with
consumer habits, in particular the shift to mobile as the
key photo repository.
All funds managed by Gresham House
First investment: December 2021
Total original cost: £6,500,000
Total equity held: 8.1%
Baronsmead Second Venture Trust only
Original cost: £3,379,000
Valuation: £3,379,000
Valuation basis: Earnings Multiple
Income recognised in the year: Nil
% of equity held: 3.7%
Voting rights: 3.7%
Year ended 31 December
2023
£million
2022
£million
Sales: 27.5 26.7
Pre-tax profits: (0.8) (2.1)
Net Assets: 11. 2 11.3
No. of Employees: 58 58
Source: Popsa Holdings Ltd, Group Strategic Report, Report
of the Directors and Consolidated Financial Statements,
31 December 2023
23Annual Report and Audited Financial Statements 2024
01 Strategic report - Ten largest investments
Principal risks and uncertainties
The Board has carried out a robust assessment of the principal and emerging risks and uncertainties facing the Company
and has assessed the appropriate measures to be taken in order to mitigate these risks as far as practicable. There is an
ongoing process for identifying, evaluating and managing these risks which is part of the governance framework detailed
further in the Corporate Governance section of this report.
Principal risk Context Specific risks we face Possible impact Mitigation
Loss of approval
as a Venture
Capital Trust
The Company must comply with section 274 of the Income
Tax Act 2007 which enables its investors to take advantage
of tax relief on their investment and on future returns.
Breach of any of the rules enabling the Company
to hold VCT status could result in the loss of that
status.
The loss of VCT status would result in shareholders
who have not held their shares for the designated
holding period having to repay the income tax relief
they had already obtained and future dividends and
gains would be subject to income tax and capital
gains tax.
The Board maintains a safety margin on all VCT tests to ensure that breaches are
unlikely to be caused by unforeseen events or shocks. The Manager monitors all
of the VCT tests on an ongoing basis and the Board reviews the status of these
tests on a quarterly basis. Specialist advisors review the tests on a bi-annual
basis and report to the Audit & Risk Committee on their findings.
Legislative VCTs were established in 1995 to encourage private
individuals to invest in early stage companies that are
considered to be risky and therefore have limited funding
options. In return the state provides these investors with
tax reliefs which fall under the definition of state aid.
A change in government policy regarding the
funding of small companies or changes made to
VCT regulations to comply with EU State Aid rules
could result in a cessation of the tax reliefs for
VCT investors or changes to the reliefs that would
make them less attractive to investors.
The Company might not be able to maintain its
asset base leading to its gradual decline and
potentially an inability to maintain either its buy
back or dividend policies.
The Board and the Manager engage on a regular basis with HMT and industry
representative bodies to demonstrate the cost benefit of VCTs to the economy
in terms of employment generation and taxation revenue. In addition, the Board
and the Manager have considered the options available to the Company in the
event of the loss of tax reliefs to ensure that it can continue to provide a strong
investment proposition for its shareholders despite the loss of tax reliefs.
Investment
performance
The Company invests in small, mainly UK based
companies, both unquoted and quoted. Smaller companies
often have limited product lines, markets or financial
resources and may be dependent for their management on
a smaller number of key individuals and hence tend to be
riskier than larger businesses.
Investment in poor quality companies with
the resultant risk of a high level of failure in the
portfolio.
Reduction in both the capital value of investors’
shareholdings and in the level of income
distributed.
The Company has a diverse portfolio where the cost of any one investment is
typically less than 5 per cent of NAV thereby limiting the impact of any one failed
investment. The Investment Management team has a strong and consistent
track record over a long period.
The Manager undertakes extensive due diligence procedures on every new
investment and reviews the portfolio composition maintaining a wide spread
of holdings in terms of financing stage and industry sector.
Economic,
political and other
external factors
Whilst the Company invests in predominantly UK
businesses, the UK economy relies heavily on Europe and
the US as its largest trading partners. This, together with
the increase in globalisation, means that economic unrest
and shocks in other jurisdictions, as well as in the UK, can
impact on UK companies, particularly smaller ones that are
more vulnerable to changes in trading conditions.
Events such as fiscal policy changes, economic
recession, movement in interest or currency
rates, civil unrest, war or political uncertainty
or pandemics can adversely affect the trading
environment for underlying investments and
impact on their results and valuations.
Reduction in the value of the Company’s assets
with a corresponding impact on its share price may
result in the loss of investors through buy backs
and may limit its ability to pay dividends.
The Company invests in a diversified portfolio of companies across a number
of industry sectors, which provides protection against shocks as the impact on
individual sectors can vary depending upon the circumstances. In addition, the
Manager uses a limited amount of bank gearing in its investments which enables
its investments to continue trading through difficult economic conditions.
The Board monitors and reviews the position of the Company, ensuring that
adequate cash balances exist to allow flexibility. The Board reviews the make up
and progress of the portfolio each quarter to ensure that it remains appropriately
diversified and funded.
Regulatory &
Compliance
The Company is authorised as a self managed Alternative
Investment Fund Manager (“AIFM”) under the Alternative
Investment Fund Managers Directive (“AIFMD”) and is also
subject to the Prospectus and Transparency Directives. It
is required to comply with the Companies Act 2006 and the
UKLA Listing Rules.
Failure of the Company to comply with any of
its regulatory or legal obligations could result in
the suspension of its listing by the UKLA and/or
financial penalties and sanction by the regulator or
a qualified audit report.
The Company’s performance could be
impacted severely by financial penalties and a
loss of reputation resulting in the alienation of
shareholders, a significant demand to buy back
shares and an inability to attract future investment.
The suspension of its shares would result in the
loss of its VCT taxation status and most likely the
ultimate liquidation of the Company.
The Board and the Manager employ the services of leading regulatory lawyers,
sponsors, auditors and other advisers to ensure the Company complies with
all of its regulatory obligations. The Board has strong systems in place to
ensure that the Company complies with all of its regulatory responsibilities. The
Manager has a strong compliance culture and employs dedicated compliance
specialists within its team who support the Board in ensuring that the Company
is compliant.
Operational The Company relies on a number of third parties, in
particular the Manager, to provide it with the necessary
services such as registrar, sponsor, custodian, receiving
agent, lawyers and tax advisers.
The risk of failure of the systems and controls
of any of the Company’s advisers including a
cyber attack leading to an inability to service
shareholder needs adequately, to provide
accurate reporting and accounting and to ensure
adherence to all VCT legislation rules.
Errors in shareholders’ records or shareholdings,
incorrect marketing literature, non compliance
with listing rules, loss of assets, breach of legal
duties and inability to provide accurate reporting
and accounting all leading to reputational risk and
the potential for litigation. A cyber attack or data
breach could lead to loss of sensitive shareholder
data resulting in a breach and liability under GDPR.
The Board has appointed an Audit & Risk Committee who review the internal
control (“ISAE3402”) and/or internal audit reports from all significant third party
service providers, including the Manager, on a bi-annual basis to ensure that
they have strong systems and controls in place including Business Continuity
Plans and matters relating to cyber security. The Board regularly reviews the
performance of its service providers to ensure that they continue to have the
necessary expertise and resources to provide a high class service and always
where there has been any changes in key personnel or ownership.
The operational requirements of the Company, including from its service
providers, have been subject to rigorous testing (including remote working and
virtual meetings) as to their application since the COVID-19 pandemic, where
increased use of out of office working and online communication has been
required. To date the operational arrangements have proven robust.
The financial risks faced by the Company are covered within the Notes to the Financial Statements on pages87 to 91.
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The Board has carried out a robust assessment of the principal and emerging risks and uncertainties facing the Company
and has assessed the appropriate measures to be taken in order to mitigate these risks as far as practicable. There is an
ongoing process for identifying, evaluating and managing these risks which is part of the governance framework detailed
further in the Corporate Governance section of this report.
Principal risk Context Specific risks we face Possible impact Mitigation
Loss of approval
as a Venture
Capital Trust
The Company must comply with section 274 of the Income
Tax Act 2007 which enables its investors to take advantage
of tax relief on their investment and on future returns.
Breach of any of the rules enabling the Company
to hold VCT status could result in the loss of that
status.
The loss of VCT status would result in shareholders
who have not held their shares for the designated
holding period having to repay the income tax relief
they had already obtained and future dividends and
gains would be subject to income tax and capital
gains tax.
The Board maintains a safety margin on all VCT tests to ensure that breaches are
unlikely to be caused by unforeseen events or shocks. The Manager monitors all
of the VCT tests on an ongoing basis and the Board reviews the status of these
tests on a quarterly basis. Specialist advisors review the tests on a bi-annual
basis and report to the Audit & Risk Committee on their findings.
Legislative VCTs were established in 1995 to encourage private
individuals to invest in early stage companies that are
considered to be risky and therefore have limited funding
options. In return the state provides these investors with
tax reliefs which fall under the definition of state aid.
A change in government policy regarding the
funding of small companies or changes made to
VCT regulations to comply with EU State Aid rules
could result in a cessation of the tax reliefs for
VCT investors or changes to the reliefs that would
make them less attractive to investors.
The Company might not be able to maintain its
asset base leading to its gradual decline and
potentially an inability to maintain either its buy
back or dividend policies.
The Board and the Manager engage on a regular basis with HMT and industry
representative bodies to demonstrate the cost benefit of VCTs to the economy
in terms of employment generation and taxation revenue. In addition, the Board
and the Manager have considered the options available to the Company in the
event of the loss of tax reliefs to ensure that it can continue to provide a strong
investment proposition for its shareholders despite the loss of tax reliefs.
Investment
performance
The Company invests in small, mainly UK based
companies, both unquoted and quoted. Smaller companies
often have limited product lines, markets or financial
resources and may be dependent for their management on
a smaller number of key individuals and hence tend to be
riskier than larger businesses.
Investment in poor quality companies with
the resultant risk of a high level of failure in the
portfolio.
Reduction in both the capital value of investors’
shareholdings and in the level of income
distributed.
The Company has a diverse portfolio where the cost of any one investment is
typically less than 5 per cent of NAV thereby limiting the impact of any one failed
investment. The Investment Management team has a strong and consistent
track record over a long period.
The Manager undertakes extensive due diligence procedures on every new
investment and reviews the portfolio composition maintaining a wide spread
of holdings in terms of financing stage and industry sector.
Economic,
political and other
external factors
Whilst the Company invests in predominantly UK
businesses, the UK economy relies heavily on Europe and
the US as its largest trading partners. This, together with
the increase in globalisation, means that economic unrest
and shocks in other jurisdictions, as well as in the UK, can
impact on UK companies, particularly smaller ones that are
more vulnerable to changes in trading conditions.
Events such as fiscal policy changes, economic
recession, movement in interest or currency
rates, civil unrest, war or political uncertainty
or pandemics can adversely affect the trading
environment for underlying investments and
impact on their results and valuations.
Reduction in the value of the Company’s assets
with a corresponding impact on its share price may
result in the loss of investors through buy backs
and may limit its ability to pay dividends.
The Company invests in a diversified portfolio of companies across a number
of industry sectors, which provides protection against shocks as the impact on
individual sectors can vary depending upon the circumstances. In addition, the
Manager uses a limited amount of bank gearing in its investments which enables
its investments to continue trading through difficult economic conditions.
The Board monitors and reviews the position of the Company, ensuring that
adequate cash balances exist to allow flexibility. The Board reviews the make up
and progress of the portfolio each quarter to ensure that it remains appropriately
diversified and funded.
Regulatory &
Compliance
The Company is authorised as a self managed Alternative
Investment Fund Manager (“AIFM”) under the Alternative
Investment Fund Managers Directive (“AIFMD”) and is also
subject to the Prospectus and Transparency Directives. It
is required to comply with the Companies Act 2006 and the
UKLA Listing Rules.
Failure of the Company to comply with any of
its regulatory or legal obligations could result in
the suspension of its listing by the UKLA and/or
financial penalties and sanction by the regulator or
a qualified audit report.
The Company’s performance could be
impacted severely by financial penalties and a
loss of reputation resulting in the alienation of
shareholders, a significant demand to buy back
shares and an inability to attract future investment.
The suspension of its shares would result in the
loss of its VCT taxation status and most likely the
ultimate liquidation of the Company.
The Board and the Manager employ the services of leading regulatory lawyers,
sponsors, auditors and other advisers to ensure the Company complies with
all of its regulatory obligations. The Board has strong systems in place to
ensure that the Company complies with all of its regulatory responsibilities. The
Manager has a strong compliance culture and employs dedicated compliance
specialists within its team who support the Board in ensuring that the Company
is compliant.
Operational The Company relies on a number of third parties, in
particular the Manager, to provide it with the necessary
services such as registrar, sponsor, custodian, receiving
agent, lawyers and tax advisers.
The risk of failure of the systems and controls
of any of the Company’s advisers including a
cyber attack leading to an inability to service
shareholder needs adequately, to provide
accurate reporting and accounting and to ensure
adherence to all VCT legislation rules.
Errors in shareholders’ records or shareholdings,
incorrect marketing literature, non compliance
with listing rules, loss of assets, breach of legal
duties and inability to provide accurate reporting
and accounting all leading to reputational risk and
the potential for litigation. A cyber attack or data
breach could lead to loss of sensitive shareholder
data resulting in a breach and liability under GDPR.
The Board has appointed an Audit & Risk Committee who review the internal
control (“ISAE3402”) and/or internal audit reports from all significant third party
service providers, including the Manager, on a bi-annual basis to ensure that
they have strong systems and controls in place including Business Continuity
Plans and matters relating to cyber security. The Board regularly reviews the
performance of its service providers to ensure that they continue to have the
necessary expertise and resources to provide a high class service and always
where there has been any changes in key personnel or ownership.
The operational requirements of the Company, including from its service
providers, have been subject to rigorous testing (including remote working and
virtual meetings) as to their application since the COVID-19 pandemic, where
increased use of out of office working and online communication has been
required. To date the operational arrangements have proven robust.
The financial risks faced by the Company are covered within the Notes to the Financial Statements on pages87 to 91.
The Company is facing the key emerging risks of climate change and ESG, given the regulatory, operational and potentially
reputational implications if not appropriately addressed. In order to address these emerging risks, when looking to make a
new investment, the Manager uses an ESG Decision Tool to identify any material ESG risks that need to be managed and
mitigated. For further detail, see pages26 to 28.
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Annual Report and Audited Financial Statements 2024
Environmental, Social & Governance (ESG)
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The Company is required, by company law, to provide details
of environmental (including the impact of the Company’s
business on the environment), employee, human rights,
social and community issues, including information about
any policies it has in relation to these matters and the
effectiveness of these policies. Since the Company does
not have any employees and it has no direct impact on the
community or the environment due to its status as a VCT,
the Company does not maintain specific policies in relation
to these matters. However, the Board is conscious of the
potential ESG risks associated with its investments as well as
its social and corporate governance responsibilities.
The Board and the Manager believe that responsible
investment involves the integration of ESG factors within
the investment process and that these factors should be
considered alongside financial and strategic issues. The
Company therefore complies with current reporting and
other ESG standards for investment companies, through
its monitoring of the ESG risks and opportunities of its
investee companies. The Company will continue to evolve
its processes and reporting as ESG requirements change.
More broadly, the Company complies with the AIC Code of
Corporate Governance.
The Manager incorporates ESG considerations throughout
the investment process including valuation and this
is communicated with the Board on a quarterly basis.
A framework based on ten key ESG themes is used to
structure analysis, and monitor and report on ESG risks and
opportunities across the lifecycle of investments.
The Manager’s investment philosophy means that it is an
actively engaged shareholder. The Manager’s assessments
of management, board and governance form a critical part
of the investment case, which necessitates that it works
with companies on strategy, M&A, remuneration and related
matters, from the holding period onwards. The Manager will
meet face-to-face with the management team of a publicly
listed company at least twice a year, and more frequently
when it owns a material stake of a company. These meetings
form the basis for the ongoing monitoring of a company’s
strategy, financial performance and ESG considerations.
Voting is an important part of the Manager’s investment
strategy. The Manager’s voting decisions are based on
the course of action that will be in the best interest of the
investee company. Decisions are informed by various
sources including procedures, research, engagement with
the company, discussions with other stakeholders and
advisers, internal discussions and consultations, and other
relevant information (Stewardship-Code-Report-2024.pdf).
For details of our voting records (Public Equity | Gresham
House | Alternative asset management).
For the twelve months to 30 September 2024, the Manager
had the opportunity to vote on 1,886 issues. Of these, the
Manager voted for 94.4 per cent of resolutions, against
on 3.9 per cent, abstained on 1.7 per cent. Of the 74
votes against, the majority were because the resolutions
conflicted with the Manager’s house policy, notably to vote
against political donations.
The Manager has been a signatory to the United Nations
supported Principles of Responsible Investment (UN PRI)
since February 2018. In the 2024 Private Equity module, the
Manager scored 93 per cent versus a median for the sector
of 80per cent. It is also a signatory of the UK Stewardship
Code. In July 2024, it was announced that the Manager
had met the expected standard of reporting for 2023 and
remained a signatory to the UK Stewardship Code 2020 for
the fourth year in a row.
The Manager undertakes an annual ESG survey to
understand how its VCT unquoted investments respond
to relevant ESG risks and opportunities and how these
are considered as part of their operations. The survey
asked unquoted investee businesses a range of questions
based on the ESG_VC framework across a range of
material environmental, social and governance factors.
It asked them to indicate the relevance of those material
ESG factors to their business, as well as their ability to
influence those factors. Repeating the survey annually
allows companies to demonstrate progression against
material ESG issues and forms the basis of meaningful ESG
engagements between Gresham House Ventures and its
unquoted portfolio companies.
For more information on the Manager’s commitments
and approach to ESG integration and engagement, and
the Manager’s climate related disclosures please see the
following documents:
Sustainable Investment Report
Stewardship Code
Private Equity Sustainable Investment Policy / Public
Equity Sustainable Investment Policy
Engagement and Voting Policy
TCFD report
Diversity
On 18 July 2023, the House of Commons Treasury Committee
published its report (the “Report”) on Venture Capital, which
included growth capital funding provided by Venture Capital
Trusts, and which was broadly positive. MPs recommended
that venture capital firms and their investment companies
should collect and publish their diversity statistics. The Report
also considered the allocation of investment capital to the
various regions of the UK.
The Company and the Manager have long supported the
creation of opportunities for everyone across the UK through
its investment portfolio.
The investment due diligence process for any proposed new
investment includes a consideration of the board structure
and composition as part of the Manager’s governance
considerations within the ESG Decision Tool.
We have considered the findings of the Report and set out
the relevant metrics pertaining to the Company’s portfolio of
unquoted investments as at 30 September 2024, Gresham
House and the Gresham House Strategic Equity division,
responsible for managing the public and private equity
portfolios managed or advised by the Manager.
Table 1 below shows that the portfolio companies were
predominantly set up by males, or groups of male founders,
with 11% (2023: 14%) being founded by all females or groups
of mixed male and female founders.
Table 1
Portfolio company founders
Based on number of companies
Founders 2024 2023
All male 89% 86%
Mixed gender 8% 8%
All female 3% 6%
100% 100%
Table 2
Portfolio company board composition
1
Based on number of directors
Directors 2024 2024
Male 85% 85%
Female 15% 15%
100% 100%
1. excluding Gresham House representatives
Table 2 above shows that board composition within the
portfolio was similarly predominantly male, with 15% of
board members being female (2023: 15%), after excluding
representatives of Gresham House.
Table 3 below shows the regions of the UK where the
Company’s capital has been invested, with the majority of
capital being invested in London and/or the South East.
Table 3
Allocation of capital by region
2
2024 2023
London and South East 62% 65%
Other regions 38% 35%
100% 100%
2. based on cost of investment
In 2024, Gresham House signed up to the Investing in
Women Code. This is a commitment to support the
advancement of female entrepreneurship in the United
Kingdom by improving female entrepreneurs’ access
to tools, resources and finance from the financial
services sector.
In September 2024, the Manager hosted its second annual
female-led event bringing together innovators, investors,
and advisers to foster relationships and share learnings.
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27Annual Report and Audited Financial Statements 2024
Gresham House released their Diversity, Equity & Inclusion
(“DEI”) strategy at the start of 2022 to help understand the
changing landscape of DEI. Included within the strategy are
initiatives to improve DEI such as carrying out unconscious
bias training for all employees; evolving Human Resources
systems to include DEI data which is now shared quarterly
with our Group Management Committee and divisional
heads and developing clear DEI guidelines for recruiters.
During the year Gresham House have promoted or
actively attended a number of events targeted at women
entrepreneurs and the senior women from across
Gresham House continued to attend a 12-week external
Resilient Women’s Leadership Programme to develop their
capability to lead.
Gresham House is committed to improving the diversity
of its investment teams, the management teams of the
investee companies that they support and increasing the
amount and number of investments across the UK. As an
example, Gresham House has participated in the 10,000
Black Intern programme for a number of years; in summer
2024 3 interns joined the investment teams, and one
person was successfully hired as an Analyst into the GH
Ventures team.
Table 4 below shows the gender diversity within Gresham
House as at 30 September 2024.
Table 4
Gresham House gender diversity
3
Gender 2024 2023
Male 62% 62%
Female 38% 38%
100% 100%
3. as at 30 September 2024
Table 5 below shows the gender diversity within the
Strategic Equity division of Gresham House, responsible for
managing the Company’s portfolio.
Table 5
Gresham House strategic equity division
genderdiversity
4
Gender 2024 2023
Male 74% 70%
Female 26% 30%
100% 100%
4. as at 30 September 2024
28
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01 Strategic report - Environmental, Social & Governance (ESG)
29Annual Report and Audited Financial Statements 2024
Other matters
Applying the business model
This section of the Strategic Report sets out the practical
steps that the Board has taken in order to apply the
business model, achieve the investment objective and
adhere to the investment policy. The investment policy,
which is set out in full on page2, is designed to ensure that
the Company continues to qualify, and is approved, asa
VCT by HM Revenue and Customs.
Portfolio Management
The AIM portfolio is managed with a private equity
approach applied to public market investments. This
involves a proactively engaged approach to interactions
with management and boards of portfolio companies and
seeking to challenge, influence and support key areas such
as strategy, capital allocation, management incentives,
board governance and composition. The Manager
views these areas as critical components of long-term
shareholder value creation.
The unquoted portfolio is actively managed by a large
team of investment executives including over ten highly
experienced, dedicated portfolio directors who provide
access to a far-reaching network of potential partners.
Value creation is driven through board representation in
order to influence areas such as the go-to-market strategy,
capital efficiency, corporate governance and exit planning.
An in-house talent function partners with portfolio
companies to help strengthen management teams and
shape boards of directors at each stage of the investment.
Investing in the right companies
Investments are primarily made in companies which are
substantially based in the UK, although many of these
investees may have some trade overseas. Investments are
selected in the expectation that the application of private
equity disciplines, including an active management style for
unquoted companies, will enhance value and enable profits
to be realised from planned exits.
The Board has delegated the management of the
investment portfolio to Gresham House. The Manager has
adopted a ‘top-down, macro economic and sector-driven’
approach to identifying and evaluating potential investment
opportunities, by assessing a forward view of firstly the
broader business environment, then the sector and finally
the specific potential investment opportunity.
Based on its research, the Manager has selected a number
of sectors that it believes will offer attractive growth
prospects and investment opportunities. Diversification is
also achieved by spreading investments across different
asset classes and making investments for a variety of
different periods.
The Manager’s policy is not to invest in any of the following
areas: human cloning; arms/munitions; or adult content.
The Manager’s Review on pages 10 to 13 provides a review
of the investment portfolio and of market conditions during
the year, including the main trends and factors likely to
affect the future development, performance and position
of the business.
Risk is spread by investing in a number of different
businesses within different qualifying industry sectors
using a mixture of securities. The maximum the Company
will invest in a single company (including a collective
investment vehicle) is 15 per cent of the value of its
investments calculated in accordance with Section 278 of
the Income Tax Act 2007 (as amended) (“VCT Value”). The
value of an individual investment is expected to increase
over time as a result of trading progress and a continuous
assessment is made of its suitability for sale.
The Company invests in a range of securities including,
but not limited to, ordinary and preference shares, loan
stocks, convertible securities and permitted non qualifying
investments as well as cash. Unquoted investments are
usually structured as a combination of ordinary shares
and loan stocks or preferred shares, while AIM-traded
investments are primarily held in ordinary shares.
Pending investment in VCT qualifying investments, the
Company’s cash and liquid funds are held in permitted
non-qualifying investments.
VCT status
Compliance with the required VCT rules and regulations
is considered when all investment decisions are made.
Shoosmiths LLP and Philip Hare & Associates advise
the Company on compliance with VCT requirements
when evaluating investment opportunities. Internally,
this is monitored on a continuous basis and it is also
reviewed by PwC every six months to ensure ongoing
compliance. PwC have been appointed by the Company
to advise on compliance with VCT requirements, which
includes appropriate and regular review of the portfolio.
Although PwC works closely with the Manager, it reports
directly to the Board.
The principal tests are summarised overleaf. Throughout
the year ended 30 September 2024 and at the date of this
report, the Company continued to meet these tests.
01 Strategic report
30 Annual Report and Audited Financial Statements 2024
Continuing appointment of the Manager
The Board keeps the performance of the Manager under
continual review. The Management Engagement and
Remuneration Committee, comprising all Directors,
conducts an annual review of the Manager’s performance
and makes a recommendation to the Board about its
continuing appointment.
It is considered that the Manager has executed the
Company’s investment strategy according to the Board’s
expectations. Accordingly, the Directors believe that
the continuing appointment of Gresham House Asset
Management Limited as the Manager of the Company, on
the terms agreed, is in the best interests of the Company
and its Shareholders as a whole
The management agreement
Under the management agreement, up to 30 September
2023, the Manager received a fee of 2.5 per cent per
annum of the net assets of the Company. From 1 October
2023, the Manager will receive a fee of 2.5 per cent
per annum of the net assets of the Company up to and
including £209,658,860 (being the total net assets as at
30 September 2023) and 2.0 per cent per annum of the
amount by which the net assets exceed £209,658,860.
In addition, the Manager is responsible for providing all
secretarial, administrative and accounting services to the
Company for an additional fee. The Manager has appointed
Waystone Administration Solutions (UK) Ltd to provide
these services to the Company on its behalf. The Company
is responsible for paying the fee charged by Waystone
Administration Solutions (UK) Ltd to the Manager in relation
to the performance of these services.
Annual running costs are capped at 3.5 per cent of the net
assets of the Company (excluding any performance fee
payable to the Manager and irrecoverable VAT), any excess
being refunded by the Manager by way of an adjustment to
its management fee. The running cost as at 30 September
2024 was 2.5 per cent.
The management agreement may be terminated at
any date by either party giving 12 months’ notice of
termination and, if terminated, the Manager is only entitled
to the management fees paid to it and any interest due
on unpaid fees.
Performance fees
A performance fee is payable to the Manager when the
total return on net proceeds of the ordinary shares exceeds
8 per cent per annum (simple). To the extent that the total
return exceeds the threshold over the relevant period then
a performance fee of 10 per cent of the excess will be
paid to the Manager. Theamount of any performance fee
which is paid in an accounting period is capped at 5 per
cent of net assets.
Nil performance fee is payable for the year to 30 September
2024 (2023: £nil).
VCT status tests
1 To ensure that the VCT’s income in the period has
been derived wholly or mainly (70 per cent plus)
from shares or securities;
2
To ensure that the VCT has not retained more than
15 per cent of its income from shares and securities;
3
To ensure that the VCT has not made a prohibited
payment to shareholders derived from an issue of
shares since 6 April 2014;
4
To ensure that at least 80 per cent by value of
the VCT’s investments has been represented
throughout the period by shares or securities
comprised in qualifying holdings of the VCT;
5
To ensure that at least 70 per cent by value of the
VCT’s qualifying holdings has been represented
throughout the period by holdings of eligible shares;
6
To ensure that no investment in any company has
represented more than 15 per cent by VCT value at
the time of investment;
7
To ensure that the VCT’s ordinary capital has
throughout the period been listed on a regulated
European market;
8
To ensure that the VCT has not made an investment
in a company which causes it to receive more than
the permitted investment from State Aid sources;
9
To ensure that since 17 November 2015, the VCT
has not made an investment in a company which
exceeds the maximum permitted age requirement;
10
To ensure that since 17 November 2015, funds
invested by the VCT in another company have not
been used to make a prohibited acquisition; and
11
To ensure that since 6 April 2016, the VCT has not
made a prohibited non-qualifying investment.
Appointment of the Manager
The Board expects the Manager to deliver a performance
which meets the objective of achieving positive long-term
investment returns, including tax free dividends. A review of
the Company’s performance during the financial year, the
position of the Company at the year end and the outlook for
the coming year is contained within the Chair’s Statement
on pages7to9. The Board assesses the performance of
the Manager in meeting the Company’s objective against
the KPIs highlighted on page5 of the report.
31
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Annual Report and Audited Financial Statements 2024
Viability statement
In accordance with principle 21 of the Association of
Investment Companies Code of Corporate Governance
2019 (“AIC Code”), the Directors have assessed the
prospects of the Company over the three-year period to
30September 2027.
This period is used by the Board during the strategic
planning process and is considered reasonable for a
business of our nature and size. The three-year period is
considered the most appropriate given the forecasts that
the Board require from the Manager and the estimated
timeline for finding, assessing and completing investments.
In making this three-year assessment, the Board has taken
the following factors into consideration:
The nature of the Company’s portfolio
The Company’s investment strategy
The potential impact of the principal risks
and uncertainties
Share buy-backs and dividends
The liquidity of the Company’s portfolio
Market falls and gains
Maintaining VCT approval status
The Board has carried out a robust assessment of the
above factors, as they have the potential to threaten the
Company’s business model, future performance, solvency,
or liquidity. This review has considered the principal risks as
outlined on pages24 and 25.
The Board has considered the ability of the Company
to raise funds and deploy capital. Its assessment took
account of the availability and likely effectiveness of the
mitigating actions that could be taken to avoid or reduce
the impact of the underlying risks, and the large listed
portfolio that could be liquidated if necessary.
The Company’s portfolio currently includes a large position
in cash or liquid money market funds. Over the last five
years, cash and liquid money market funds have averaged
c.17 per cent of the NAV and comprised 11 per cent of the
30 September 2024 NAV. Cash balances can fluctuate over
time due to changes in market conditions, but positive cash
levels are expected to be maintained over the period. The
Company has no debt, and it is expected that the Company
will remain ungeared for the foreseeable future.
Management retention
The Board is keen to ensure that the Manager continues
to have one of the best investment teams in the VCT and
private equity sector.
The Manager currently operates a hybrid portfolio
management model whereby the significant majority of
unquoted investee companies have a Gresham House
appointed Investor Director drawn from one of: the new
investment team, the in-house portfolio team or an external
group of nine highly experienced portfolio consultants.
A VCT Incentive Scheme was introduced in November
2004 under which members of the Manager’s investment
and in-house portfolio teams invest their own money
into a proportion of the ordinary shares of each eligible
unquoted investment made by the Baronsmead VCTs. The
scheme was reviewed in 2024 and retained with no material
changes. In addition, in 2024, the Manager introduced a
Parallel Investment Incentive Scheme (each a “Scheme”
and together “the Schemes”) for the portfolio consultants
allowing them to invest in the same instruments on the
same terms as the VCTs in any deal where they become the
Investor Director.
The Board regularly monitors the Schemes’ arrangements
and considers them to be essential in order to attract,
retain and incentivise the best talent. The Schemes are
in line with current market practice in the private equity
industry and the Board believes that it aligns the interests
of the Manager with those of the Baronsmead VCTs.
Currently, 25 members of the Manager’s investment
and portfolio teams and consultants are included in
the Schemes and have invested a total of £62,000
in 46 companies.
Advisory and Directors’ fees
During the year, Gresham House Asset Management
Limited received £287,000 (2023: £191,000) advisory fees,
£426,000 (2023: £412,000) directors’ fees for services
provided to companies in the investment portfolio and
incurred abort costs of £10,000 (2023: £4,000) with respect
to investments attributable to the Company
Alternative Investment Fund Managers
Directive (“AIFMD”)
The AIFMD regulates the management of alternative
investment funds, including VCTs. On 22 July 2014,
the Company was registered as a Small UK registered
Alternative Investment Fund Manager under the AIFMD.
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01 Strategic report - Other matters
Annual Report and Audited Financial Statements 2024
Buy back of shares: From time to time, the Company
buys its own shares through the market in accordance
with its share price discount policy. Subject to certain
conditions, the Company seeks to maintain a mid-share
price discount of approximately 5 per cent to net asset
value where possible. However, shareholders should
note this discount may widen during the periods of
market volatility.
Secondary market: The Company’s shares are listed on
the London Stock Exchange and can be bought using
a stockbroker or authorised share dealing service in
the same way as shares of any other listed company.
Approximately 1,017,000 shares were bought by
investors in the Company’s existing shares in the year to
30September 2024.
Board diversity
Information on Board diversity can be found on page 54
of this Report.
The Directors have also considered the Company’s
income and expenditure projections and find these to be
realistic and sensible. The Directors have assessed the
Company’s ability to cover its annual running costs under
several liquidity scenarios in which the value of liquid assets
(including AIM-traded investments and OEICs) has been
subject to sensitivity analysis. The Directors noted that
under none of these scenarios was the Company unable to
cover its costs.
Based on the Company’s processes for monitoring costs,
share price discount, the Manager’s compliance with the
investment objective, policies and business model, asset
allocation and the portfolio risk profile, the Directors have
concluded that there is a reasonable expectation that the
Company will be able to continue in operation and meet
its liabilities as they fall due over the three-year period to
30September 2027.
Shareholder choice
The Board wishes to provide shareholders with a number
of choices that enable them to utilise their investment
in the Company in ways that best suit their personal
investment and tax planning and in a way that treats all
shareholders equally.
Fundraising: From time to time, the Company seeks to
raise additional funds by issuing new shares at a premium
to the latest published net asset value to account for
costs. The Company intends to launch a new offer for
subscription in January 2025.
Dividend Reinvestment Plan: The Company offers a
Dividend Reinvestment Plan which enables shareholders
to purchase additional shares through the market in lieu
of cash dividends. Approximately 2,536,000 shares were
bought in this way during the year to 30 September 2024.
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01 Strategic report - Other matters
Annual Report and Audited Financial Statements 2024
Directors’ duties
Overview
Section 172 of the Companies Act 2006 (the “Act”) requires
the Directors to act in good faith and in a way that is most
likely to promote the success of the Company for the
benefit of its shareholders.
Directors must consider the long-term consequences
of any decision they make. They must also consider the
interests of the various stakeholders of the Company,
the impact the Company has on the environment and
community, and operate in a manner which maintains their
reputation for having high standards of business conduct
and fair treatment between shareholders.
Fulfilling this duty naturally supports the Company in its
investment objective of achieving long-term investment
returns for private investors and helps ensure that all
decisions are made in a responsible and sustainable way.
In accordance with the requirements of the Companies
(Miscellaneous Reporting) Regulations 2018, and the AIC
Code, the information below explains how the Directors
have individually and collectively discharged their duties
under Section 172.
To ensure they are aware of, and understand their duties,
Directors are provided with a detailed induction outlining
their legal and regulatory duties as a Director of a UK public
limited company upon appointment. They also receive
regular regulatory updates and training as appropriate.
ACompany Secretarial report is included within the papers
of every Board meeting, which reminds the Directors of
their duties and emphasises the importance of stakeholder
consideration during decision making. Directors also
receive technical updates from the Company’s advisers
and the Manager on a regular basis.
The Directors have access to the advice and services
of the Company Secretary, and a range of other service
providers and, when deemed necessary, the Directors may
seek independent professional advice in the furtherance of
their duties at the Company’s expense.
The Company has a Schedule of Matters Reserved
for the Board which describe the Board’s duties and
responsibilities. Terms of Reference of the Board’s
Committees are in place, which outline the duties of those
Committees that are delegated to them by the Board,
including their statutory and regulatory responsibilities.
The Board’s Schedule of Matters Reserved and the
Committees’ Terms of Reference are all reviewed at
least annually.
The Audit & Risk Committee has responsibility for the
ongoing review of the Company’s risk management and
internal controls. To the extent that they are applicable,
risks related to the matters set out in Section 172 are
included within the Company’s Risk Register and are
subject to regular review and monitoring
Decision making
The importance of stakeholder considerations, in the
context of decision making, is taken into account at
every Board meeting. All discussions involve careful
consideration of the longer-term consequences of any
decisions and their implications for stakeholders. Further
information on the role of the Board in safeguarding
stakeholder interests and monitoring ongoing investment
activity can be found on pages35 to 37.
Stakeholder engagement
Following a comprehensive review by the Board, which
regularly keeps stakeholder engagement mechanisms
under review, it was agreed that, as the Company is an
externally managed Venture Capital Trust and does not
have any employees or customers, the Company’s key
stakeholders are:
The Company’s shareholders
The Manager
The portfolio of investee companies, and the wider
communities in which they operate
HMRC and the Company’s governing bodies,
including the FCA
The AIC
A range of external service providers
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Annual Report and Audited Financial Statements 2024
01 Strategic report
Details of how the Board seeks to understand the needs and priorities of these stakeholders and how these are taken into
consideration during its discussions as part of its decision-making, are described in the table below:
Stakeholder group Importance Board engagement
Shareholders Continued shareholder
support is critical to
the sustainability of the
Company and delivery of
the long-term strategy of
the business.
The Board is committed to maintaining open channels of
communication with shareholders and during the year has
engaged with shareholders in various ways to understand their
views. These include:
Annual General Meeting (“AGM”) – The Company encourages
attendance and participation from shareholders at the AGM and
values any feedback and questions it may receive.
The Company’s forthcoming 2025 Baronsmead Shareholder
event & AGM will take place on 12 March 2025. The Board has
enhanced the event by introducing more relevant and interactive
content in the joint investment management presentation for the
shareholders of the Company. The AGM will be held in person,
and those unable to attend will be able to watch a recording of
the session afterwards.
Further information regarding the 2025 Baronsmead Shareholder
event & AGM can be found in the inside cover and in the Chair’s
Statement on pages 7 to 9 and within the Notice of AGM, which is
being sent to shareholders separately from this Annual Report.
Publications – The Company’s Annual and Half-Yearly Reports are
made available on the Company’s website (www.baronsmeadvcts.
co.uk) and sent to shareholders. These publications provide
shareholders with information on the Company’s business model,
strategy and investment portfolio and provide a clear picture of the
Company’s financial position. This is supplemented by the monthly
publication of the NAV and the quarterly factsheets published
on the Company’s website. Feedback and questions received
by the Company from shareholders enables the Company to
improve its reporting, which in turn helps to deliver transparent and
understandable updates.
Shareholder communication and shareholder concerns –
TheManager communicates with shareholders periodically
and shareholders are welcome to raise any comments,
issues or concerns with the Board at any time. Shareholders
are invited to do so by writing to the Chair at the Company’s
registered office. Mr Groat, as Senior Independent Director,
is also available to shareholders if they have any questions or
concerns. Mr McDonald will be available to shareholders as the
Senior Independent Director upon Mr Groat’s retirement from
31 December 2024.
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Annual Report and Audited Financial Statements 2024
01 Strategic report - Directors’ duties
Stakeholder group Importance Board engagement
The Manager The Manager’s
performance is critical
for the Company to
successfully deliver its
investment strategy
and meet its objective
to achieve long-term
investment returns for
private investors.
The Board invites the Manager to attend Valuation Forums,
Board and Committee meetings to update the Directors on the
performance of the portfolio and execution of the investment
strategy. The Board holds detailed discussions with the Manager
on all key strategic and operational topics on an ongoing basis. In
addition, the Chair regularly meets with the Manager to ensure that
a close dialogue is maintained. In line with the Company’s culture,
the Board recognises the importance of working together with the
Manager in a way that:
encourages open, honest, and collaborative discussions
at all levels, allowing time and space for original and
innovative thinking;
draws on Board members’ individual experience and knowledge
to support and challenge the Manager in its monitoring of and
engagement with portfolio investee companies;
ensures that the impact on the Manager is fully considered and
understood before any business decision is made; and
ensures that any potential conflicts of interest are avoided or
managed effectively.
The portfolio of
investee companies
The Company invests in
growth businesses across
a range of sectors to meet
the Company’s investment
objectives in accordance
with VCT legislation.
Day-to-day engagement with the portfolio of investee companies
is undertaken by the Manager, so a transparent and objective
relationship between the Board and the Manager is vital. For
unquoted and larger AIM holdings, the Manager is an influential and
engaged shareholder (on behalf of the Company) and Manager
representatives often join the boards of these companies.
External service
providers
To function as a VCT listed
on the London Stock
Exchange, the Company
relies on a diverse range
of advisers for support
in meeting all relevant
obligations.
The Board maintains regular contact with its external providers and
receives reports from them at Board and Committee meetings, as
well as outside of the regular meeting cycle. Their advice, as well as
their needs and views are routinely considered. During the period,
the Management Engagement and Remuneration Committee
formally assessed the external service providers’ performance,
fees and individually, their continuing appointment to ensure that
they continue to fulfil their role in support of the Company and the
Board and are appropriately remunerated to deliver the expected
level of service. The Audit & Risk Committee reviews and evaluates
the control environments in place at each service provider as
appropriate.
HMRC and
governing bodies
The Company must comply
with HMRC VCT rules and
must comply or explain its
adherence to the AIC Code.
HMRC and the AIC have a
legitimate interest in how
the Company operates in
the market and treats its
shareholders.
The Board regularly considers how it meets regulatory and
statutory obligations and follows voluntary and best-practice
guidance, including how any governance decisions it makes
impacts the Company’s stakeholders, both in the short and
longer-term. The Audit & Risk Committee obtains confirmation
from its VCT Status Adviser on the Company’s compliance with the
HMRC VCT rules and at every Board meeting, the Board considers
the latest governance updates and developments to keep the
Board abreast of any relevant regulatory changes. The Company
Secretary reviews the Company’s ongoing compliance with the AIC
Code, on at least an annual basis, which informs the Company’s
corporate governance disclosures in the Annual Report. In
addition, the Board receives regular reports on regulatory
compliance and any inspections or reviews that are commissioned
by regulatory bodies. The Company ensures it meets all required
HMRC obligations and payments promptly.
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01 Strategic report – Directors’ duties
The mechanisms for engaging with stakeholders are kept under review by the Directors and discussed at Board meetings
to ensure they remain effective. Examples of the Board’s principal decisions during the year, and how the Board fulfilled its
duties under Section 172, and the related engagement activities, are set out below.
Principal decision Long-term impact Stakeholders and engagement
Approval of
fundraising
Providing shareholders and
potential new investors the
opportunity to subscribe
for shares in BSVT, which in
turn provides opportunities
for Company growth
and increased investor
engagement.
In deciding to launch a fundraising during the reporting period, the
Board considered:
the expectations and preference of the Company’s shareholders;
the ability to adhere to the Company’s dividend policy;
the effect on the NAV and the ability of the Company to be able to
meet HMRC’s VCT investment rules and timelines;
the new investment pipeline;
the costs involved in issuing a prospectus and of fundraising; and
the advantages and disadvantages of a joint prospectus across
the two Baronsmead VCTs which Gresham House manages.
The Baronsmead
Shareholder event
and AGMs
Providing shareholders
with more relevant, in-
depth information, in an
interactive setting, and an
opportunity to interact with,
and question the Board and
the Manager.
The Board takes into account any and all feedback it receives from
shareholders. Working with the Manager, and to further enhance
the opportunity to engage with shareholders in a meaningful way,
the Directors decided to build on the agenda for the Company’s
AGM and in 2025, will introduce additional presentations, panel
discussions, interviews and an extended Q&A session for the
shareholders of the Company.
Third party
independent
valuations
Providing comfort and
risk mitigation on the
Manager’s process for the
valuation of the portfolios
unquoted assets.
During 2023 and 2024, the Company engaged the services
of Lincoln International and Kroll to undertake a sample of
independent third party valuations as a means of managing
the Board’s risk in respect of the valuation of the VCT portfolio
unquoted assets. The responsibility for the preparation of the draft
valuations lies with the Manager, and the Board is responsible for
the approval of the valuations. The Investment Manager used these
independent valuations in conjunction with their own valuations
to provide independent assurance and risk mitigation to the
Board. InJuly2024, the Board assessed the use of the third party
valuations and concluded that the process had provided comfort
on the Manager’s controls and the quality of the Manager’s
processes compared to the market. Furthermore, the Board
agreed to reassess the use of third party independent valuations
on a regular basis.
The Strategic Report has been approved by the Board of Directors.
On behalf of the Board
Sarah Fromson
Chair
23 December 2024
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Annual Report and Audited Financial Statements 2024
01 Strategic report - Directors’ duties
Board of Directors
Sarah Fromson
Chair and Nomination
Committee Chair
Appointed: 1 October 2019
Graham McDonald
Non‑Executive Director
Appointed: 16 February 2021
Malcolm Groat
Senior Independent Director and
Audit & Risk Committee Chair
Appointed: 11 March 2016
Tim Farazmand
Non‑Executive Director and
Management Engagement &
Remuneration Committee Chair
Appointed: 1 May 2020
Sarah is an experienced, independent non-executive who
has served on a variety of boards and committees, after a
varied career in the asset and wealth management industry.
She is a non-executive board member of Boston-based
Arrowstreet Capital Partners and is also a Pension Trustee
Director of Genome Research Pensions Trustee Limited
and Wellcome Trust Pensions Trustee Limited. She chairs
the Cambridge University Endowment Fund Investment
Advisory Board and also serves on the board of Quilter
Investors Ltd, a subsidiary of Quilter plc. In March 2023,
Sarah became an Advisory Member of the Investment
Committee to Calouste Gulbenkian Foundation, a
Lisbon-based entity.
Sarah retired from her executive role as Head of Risk at
Wellcome Trust in 2019 and as Chair of JP Morgan Global
Emerging Markets Income Trust plc in 2022. Sarah was
previously Chief Investment Risk Officer at RBS Asset
Management (formerly Coutts).
Shareholding: 91,118 ordinary shares
Malcolm is a fellow of the Institute of Directors, the Institute
of Chartered Accountants in England and Wales, and the
Royal Society for the Encouragement of Arts, Manufactures
and Commerce. During his executive career, Malcolm held
C-suite positions with global businesses in engineering,
construction and financial services. Since 2004, whilst
co-founding a series of ventures that attracted growth
capital from the private equity sector, he has also served
as Chairman or Non Executive Director in more mature
companies, often listed in London.
He is currently Chairman of Tomco Energy, an
AIMcompany. Malcolm retired as Chairman of
Harland&Wolff Group Holdings in August 2024.
Shareholding: 263,740 ordinary shares*
*Shares held by Person Closely Associated to Malcolm Groat.
Graham has spent almost 40 years in banking and private
equity. His previous executive role was Global Head of
Private Equity and Venture Capital at Aberdeen Standard
Investments. Prior to that he was responsible for the global
private equity and venture capital businesses in Aberdeen
Asset Management, SWIP, Lloyds Bank and HBoS. He is
Strategic Advisor to Par Equity LLP.
Graham stepped down from his position as Chair of
Continulus Limited in August 2023 and as advisor to
Arcano Capital Partners and Vedra Partners in December
2022 and April 2023, respectively.
Shareholding: 54,749 ordinary shares
Tim has spent 35 years in private equity. His last full-time
role was as a Managing Director at LDC, the private equity
arm of Lloyds Bank. He previously worked for 3i Group plc
and Royal Bank of Scotland Private Equity.
He was chair of the British Venture Capital Association
(BVCA) for the 2014-2015 term. He currently chairs the
Palatine Impact Fund, sits on the board of Ricardo plc
and the advisory boards of Beechbrook Capital and
Pitalia Capital.
Shareholding: 193,248 ordinary shares
39
02 Directors’ report
Annual Report and Audited Financial Statements 2024
Adriana Stirling
Non‑Executive Director
Appointed: 1 December 2024
Adriana was appointed as a Non-Executive Director on
1December 2024 and will succeed Malcolm Groat as the
Chair of the Audit and Risk Committee from 31December
2024. Further details of Adriana’s appointment can be
found on page 53.
Adriana is a qualified chartered accountant and developed
extensive organisational and anti-financial crime technical
expertise whilst working for PwC for over 17 years, leading
client engagements across both the financial and non-
financial service industries.
In 2014, Adriana became the Managing Director of a
private family office and has overall responsibility for the
investment and operational aspects of the office, including
managing significant shareholder positions in several
unquoted companies.
Shareholding: 0 ordinary shares
02 Directors’ report - Board of Directors
40 Annual Report and Audited Financial Statements 2024
Directors’ report
The Directors of Baronsmead Second
Venture Trust plc (Reg: 04115341) present
their Annual Report and Audited Financial
Statements of the Company for the year to
30September 2024.
Shares and shareholders
Share capital
Pursuant to the prospectus published by the Company
on 24 November 2023 in conjunction with Baronsmead
Venture Trust plc in relation to an offer for subscription
to each raise up to £30 million in aggregate with an
over-allotment facility to raise up to a further £20million,
the Company issued a total of 41,136 ,289 ordinary
shares (nominal value of £4,113,628.9) in the year ended
30 September 2024 by way of three allotments, raising
approximately £25million (before costs). Details of these
allotments are as set out below:
Allotment
date
Admission
date
No. shares
issued Issue price
26/01/2024 02/02/2024 11,054,746 Between
60.46p – 63.54p
15/02/2024 22/02/2024 2,413,724 Between
59.61p – 62.83p
03/04/2024 05/04/2024 27,667, 819 Between
59.71p – 62.61p
At the AGM held on 5 March 2024, the Company was
granted authority to purchase up to 14.99 per cent of the
Company’s ordinary share capital in issue at that date on
which the Notice of AGM was published, amounting to
54,050,906 ordinary shares.
During the year, the Company bought back a total
of 7,205,780 ordinary shares to be held in Treasury,
representing 1.6 per cent of the issued share capital as
at 30 September 2024, with an aggregate nominal value
of £720,578. The total amount paid for these shares was
£4,020,959. As at 30 September 2024, the Company had
the remaining authority to buy back 49,678,346 shares
under the resolution approved at the 2024 AGM.
As at 30 September 2024, the Company’s issued share
capital was as follows:
Shares Total
% of
Shares in
issue
Nominal
Value
In issue 437,415 , 822 100 £43,741,582.20
Held in Treasury 41,232,147 9.43 £4,123, 214.70
In circulation 396,183,675 90.57 £39,618,367.50
The total voting rights as at 30 September 2024 were
396,183,675. Since then, the Company has bought back
4,513,447 shares, resulting in the total voting rights being
391,670,228 as at the date of this report.
Shareholders
Each 10p ordinary share entitles the holder to attend and
vote at general meetings of the Company, to participate in
the profits of the Company, to receive a copy of the Annual
Report and Financial Statements and to a final distribution
upon the winding up of the Company.
There are no restrictions on voting rights, no securities
carry special rights and the Company is not aware of any
agreement between holders of securities that result in
restrictions on the transfer of securities or on voting rights.
There are no agreements to which the Company is party
that may affect its control following a takeover bid.
In addition to the powers provided to the Directors
under UK company law and the Company’s Articles of
Association, at each AGM the shareholders are asked to
authorise certain powers in relation to the issuing and
purchasing of the Company’s own shares. Details of the
powers granted at the AGM held in 2024, all of which remain
valid, can be found in the previous Notice of AGM.
The Company is not, and has not been throughout the year,
aware of any beneficial interests exceeding 3 per cent of
the total voting rights.
41
Annual Report and Audited Financial Statements 2024
02 Directors’ report
Conflicts of interest
The Directors have declared any conflicts or potential
conflicts of interest to the Board of Directors which has
the authority to approve such situations. The Company
Secretary maintains the Register of Directors’ Conflicts
of Interests which is reviewed quarterly by the Board.
Directors advise the Company Secretary and the Board
as soon as they become aware of any conflicts of interest.
Directors who have conflicts of interest do not take part in
discussions which relate to any of their conflicts.
Financial instruments
The Company’s financial instruments comprise equity
and fixed interest investments, cash balances and liquid
resources including debtors and creditors that arise
directly from its operations such as sales and purchases
awaiting settlement and accrued income. The financial
risk management objectives and policies arising from its
financial instruments and the exposure of the Company to
risk are disclosed in note 3.3 of the accounts.
Responsibility for accounts
The Directors who held office at the date of approval of
this Directors’ Report confirm that, so far as they are each
aware, there is no relevant audit information of which the
Company’s Auditor is unaware and each Director has taken
all the steps that they ought to have taken as a Director to
make themselves aware of any relevant audit information
and to establish that the Company’s Auditor is aware of
that information.
Going concern
After making enquiries and bearing in mind the nature of
the Company’s business and assets, the Directors consider
that the Company has adequate resources to continue
in operational existence for the foreseeable future. The
going concern assumption assumes that the Company will
maintain its VCT status with HMRC.
The Directors acknowledge the uncertainty in the
macroeconomic and equity market. The Board
nevertheless considers the Company to be well placed to
continue to operate for at least 12 months from the date of
this report, as the Company has sufficient liquidity to pay its
liabilities as and when they fall due and also to invest in new
opportunities as they arise.
Tax free dividends
The Company has paid or declared the following dividends
for the year paid or proposed to 30 September 2024:
Dividends £’000
Interim dividend of 1.75p per ordinary share
paid on 9 September 2024
6,954
Final dividend of 2.25p per ordinary share to
be paid on 17 March 2025*
8,914
Total dividends paid for the year 15,868
* Calculated on shares in circulation as at 30 September 2024.
Subject to shareholder approval at the AGM, a final
dividend of 2.25p per share will be paid on 17March 2025
to shareholders on the register at 14 February 2025. The
ex-dividend date will be 13 February 2025.
Directors
Appointments
The rules concerning the appointment and replacement
of Directors are contained in the Company’s Articles of
Association and the Companies Act 2006. Further details
in relation to the appointed Directors and the governance
arrangements of the Board can be found on page 47 and in
the Corporate Governance Statement.
Directors are entitled to a payment in lieu of three months’
notice by the Company for loss of office in the event of
a takeover bid.
Directors’ indemnity
Directors’ and officers’ liability insurance cover is in place
in respect of the Directors and was in place throughout the
year under review. The Company’s Articles of Association
provide, subject to the provisions of UK legislation, an
indemnity for Directors in respect of costs which they may
incur relating to the defence of any proceedings brought
against them arising out of their positions as Directors,
in which they are acquitted or judgement is given in their
favour by the Court.
Save for such indemnity provisions in the Company’s
Articles of Association and in the Directors’ letters of
appointment, there are no qualifying third party indemnity
provisions in force.
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Annual Report and Audited Financial Statements 2024
Further information in relation to the Manager’s integration
of ESG factors in management of the Company’s portfolio
is set out on pages 26 to 28 of the Strategic Report.
Under Listing Rule 11.4. 22(R), the Company, as a
closed-ended investment fund, is exempt from
complying with the Task Force on Climate-related
Financial Disclosures.
Annual General Meeting
The Company intends to hold the next AGM on 12 March
2025, and all shareholders are invited to attend. The details
of the business put to the meeting, as well as information
on how to register will be included in the Notice of AGM and
on the Baronsmead Second Venture Trust website. The
Board is of the opinion that the passing of all resolutions
being put to the AGM would be in the best interests of
BSVT and its shareholders. The Directors recommend that
shareholders vote in favour of all resolutions as set out in
the Notice of Meeting, as they intend to do in respect of
their own shareholdings.
Post balance sheet events
Post balance sheet events are disclosed in note 3.6
of the accounts.
By Order of the Board
Gresham House Asset Management Ltd
Company Secretary
5 New Street Square, London EC4A 3TW
23 December 2024
The Directors have considered the liquidity of the Company
and its ability to meet obligations as they fall due for a
period of at least 12 months from the date that these
financial statements are approved. As at 30 September
2024, the Company held cash balances and investments
in readily realisable securities with a value of £26 million,
representing 11 per cent of the Company’s NAV.
The Company has no debt, and it is expected that the
Company will remain ungeared for the foreseeable future.
The Directors have assessed the Company’s ability to
cover its annual running costs under several liquidity
scenarios in which the value of liquid assets (including
AIM-traded investments and OEICs) has been subject
to sensitivity analysis. The Directors noted that under
none of these scenarios was the Company unable to
cover its costs.
The Company’s forecasts and cash flow projections,
taking into account the current economic environment and
other, potential changes in performance, show that the
Company has sufficient funds to meet both its contracted
expenditure and its discretionary cash outflows in the form
of the share buyback programme and dividend policy.
Future developments
The outlook for the Company is set out in the Chair’s
Statement on page 9.
Listing rule disclosure
The Company confirms that there are no items which
require disclosure under listing rule 6.6.4R in respect of the
year ended 30 September 2024.
Information required by DTR 4.1.8 is included in the
Strategic Report on pages 4 to 37 and incorporated into
this Directors’ report by reference.
Streamlined energy and
carbon reporting
The Company has no greenhouse gas emissions to
report from its operations nor does it have responsibility
for any other emissions producing sources under the
Companies Act 2006 (Strategic Report and Directors’
Report) Regulations 2013. Consequently, the Company
consumed less than 40,000 kWh of energy during the year
in respect of which the Directors’ Report is prepared and
therefore is exempt from the disclosures required under the
Streamlined Energy and Carbon Reporting criteria.
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Annual Report and Audited Financial Statements 2024
Corporate governance
This Corporate Governance statement forms
part of the Directors’ report.
Background
Under the UK Listing Rules, listed companies are required
to disclose how they have applied the principles and
complied with the provisions of the corporate governance
code they follow. The provisions of the UK Corporate
Governance Code (“UK Code”), as issued by the Financial
Reporting Council (“FRC”) in July 2018, are applicable to the
year under review and can be viewed at www.frc.org.uk.
The related AIC Code issued by the AIC in February 2019,
addresses all the principles set out in the UK Code. The
FRC has confirmed that AIC member companies, such as
Baronsmead Second Venture Trust plc, who report against
the AIC Code, will be meeting their obligations in relation to
the UK Code and the associated disclosure requirements
under the Listing Rules. The AIC Code can be viewed at
www.theaic.co.uk where it includes an explanation of how
it adapts the principles and provisions set out in the UK
Code to make them relevant for investment companies.
The Board believes that high standards of governance
help make sure that consideration of stakeholders’
interests is embedded in our discussions and decision-
making, that the Board maintains a long term perspective,
that the Company maintains its reputation for fairness,
high quality corporate reporting and business conduct,
and ultimately, good governance helps support BSVT in
delivering its strategy.
Compliance
Throughout the year ended 30 September 2024, the
Company complied with the principles and provisions of
the AIC Code and the table on the following pages reports
on the Company’s AIC Code compliance.
The principles of the AIC code
The AIC Code is comprised of five sections:
Board leadership and purpose
Division of responsibilities
Composition, succession, and evaluation
Audit, risk and internal control
Remuneration
The Board’s Corporate Governance statement sets out
how the Company complies with each of the provisions
of the AIC Code.
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AIC
Code Principle Compliance Statement
BOARD LEADERSHIP AND PURPOSE
A. A successful company
is led by an effective
board, whose role is to
promote the long-term
sustainable success of
the company, generating
value for shareholders
and contributing to wider
society.
Directors are fully engaged and committed to using their collective, extensive
experience to foster healthy debate and drive business strategy for the long-term
sustainable success of the Company.
The Company’s investment objective is to achieve long-term investment returns
for private investors within a tax efficient structure and the Board ensures that all
decisions are made responsibly. The Board and the Manager are committed to
managing the business and its investment strategy in a sustainable manner and
the Board emphasises the importance of ESG in its investment decisions and
risk management. At each Board meeting, time is committed to assessing and
monitoring the ESG impact of new investee companies through the Manager’s
ESG Decision Tool.
B. The board should establish
the company’s purpose,
values, and strategy, and
satisfy itself that these
and its culture are aligned.
All directors must act with
integrity, lead by example,
and promote the desired
culture.
The purpose of the Company is also its investment objective, which is to achieve
long-term investment returns for private investors within a tax efficient structure.
It does this by investing primarily in a diverse portfolio of UK growth businesses
whether unquoted or traded on AIM.
The Directors agree that establishing and maintaining an open and inclusive
culture among the Board, and in its interaction with the Manager, shareholders,
and other stakeholders, will support the delivery of its purpose, values and
strategy. During the Board’s annual evaluation process, it was apparent that
all Directors seek to promote a culture of openness, integrity and debate
through ongoing engagement and dialogue with the Manager, the Company’s
stakeholders and the Company’s service providers. Further details of what the
Directors consider an important element of culture can be found on page 36.
C. The board should ensure
that the necessary
resources are in place for
the company to meet its
objectives and measure
performance against
them. The board should
also establish a framework
of prudent and effective
controls, which enable
risk to be assessed and
managed.
The Board and Audit & Risk Committee regularly review the performance of
the Company and the performance and resources of the Manager and service
providers, to ensure the Company can meet its objectives.
At each quarterly meeting, the Board receives a report on Company performance,
the performance of its investments and the VCT sector (including its competitors)
any industry issues, as well as forecasts for future periods.
Additionally, at each quarterly Board meeting, the Board is presented with a report
from Kaso Legg Communications highlighting the media coverage received by
the Company and the Manager to enhance the profile of the Company and, in
turn, attract new shareholders.
The Board has agreed specific KPIs with the Manager that enable both parties
to monitor compliance with the agreed investment policy and risk management
framework. Directors regularly review the risk management framework, and seek
additional information from the Manager, where appropriate, to supplement these
reports and formally review the risk framework, performance measures and KPIs.
The Manager also keeps the Board informed on all investor relations matters and
peer group information as appropriate.
Additionally, the Board has established a framework for monitoring and evaluating
the performance of its third-party services providers and, on the Company’s
behalf, the Manager monitors the performance and systems and controls
employed by them.
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Code Principle Compliance Statement
D. In order for the company
to meet its responsibilities
to shareholders and
stakeholders, the board
should ensure effective
engagement with, and
encourage participation
from, these parties.
The Board takes its responsibility to shareholders and stakeholders into account
and considers the opinions of all such parties when making any decision.
The Directors place considerable importance on shareholder engagement and
on communications with them and all other stakeholders. Shareholders who
wish to contact the Board may do so by writing to the Chair at the Company’s
Registered Office. All Directors make themselves available to meet shareholders
at the Company’s AGM.
The Directors’ Statement on meeting their responsibilities under Section 172 of
the Companies Act 2006 can be found on pages 34 to 37.
DIVISION OF RESPONSIBILITIES
F. The Chair leads the board
and is responsible for its
overall effectiveness in
directing the company.
They should demonstrate
objective judgement
throughout their tenure
and promote a culture of
openness and debate.
In addition, the Chair
facilitates constructive
board relations and the
effective contribution of all
non-executive directors,
and ensures that directors
receive accurate, timely
and clear information.
There is a clear division of responsibility between the Chair, the Directors, the
Manager, and the Company’s other third-party service providers. The Board also
has a policy setting out the responsibilities of the Chair and Senior Independent
Director, which is available on the Company’s website. The Chair is responsible for
leading the Board, its overall effectiveness in directing the affairs of the Company,
ensures that all Directors receive accurate, timely and clear information and helps
promote a culture of openness and debate in Board meetings by encouraging and
facilitating the effective contribution of other Directors towards a consensus view.
The Chair also takes a leading role in ensuring effective communications with
shareholders and other stakeholders. All of these areas are considered as part of
the annual Board evaluation, and more information on the outcome of the latest
review can be found on page 53.
The Board meets regularly throughout the year and prior to each Board and
Committee meeting, Directors are provided with a comprehensive set of papers.
Directors also have timely access to all relevant management, financial and
regulatory information.
G. The board should
consist of an appropriate
combination of directors
(and, in particular,
independent non-executive
directors) such that no one
individual or small group of
individuals dominates the
board’s decision making.
The Board comprises of five
independent Non-Executive Directors. Mr Groat
served as the Senior Independent Director throughout the reported year
and served
as an intermediary for the other Non-Executive Directors and the
Company’s shareholders.
As at the date of this report, the Board comprises two female and three male
Non-Executive Directors. Further details on the composition of Directors can be
found on page 53.
Having considered the performance and independence of each Director, the
Board has determined that each Director is independent in character and
judgement and that there are no other relationships or circumstances which are
likely to affect their judgement nor impair their independence. The Chair, Sarah
Fromson, was deemed to be independent at the time of her appointment and
remains so.
The Board is aware that Tim Farazmand acted as a consultant to the Manager
until October 2019. Having considered the role that Mr Farazmand undertook and
the period of time that has elapsed since he acted in this role for the Manager,
the Board has resolved that Mr Farazmand is independent of the Manager for
the purposes of the AIC Code. Therefore, the Board remains independent of
theManager.
As a result of the Board evaluation process, the Board determined that each
Director provided expert and valued contributions to Board deliberations and no
one individual, or small group of individuals dominated Board decision making.
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Code Principle Compliance Statement
H.
Non-executive directors
should have sufficient
time to meet their
board responsibilities.
They should provide
constructive challenge,
strategic guidance, offer
specialist advice and
hold third-party service
providers to account.
As part of the Board evaluation process, the contributions of each Director, and
the time commitment made by each Director are considered. Directors’ other
commitments are regularly reviewed, and any new appointments are considered
by the other Directors to ensure there is no conflict of interest.
It was concluded that each Director provided appropriate levels of commitment
and challenge to the Board and provided the Company and service providers with
guidance and advice when required.
I. The board, supported by
the company secretary,
should ensure that it has
the policies, processes,
information, time, and
resources it needs in order
to function effectively and
efficiently.
The Directors have access to the advice and services of the Company Secretary
who is responsible for ensuring that Board procedures are in place and followed
and that the applicable rules and regulations are complied with. The Company
Secretary is also responsible for ensuring good information flows between all
parties. The Directors also have access to independent professional advice
at the Company’s expense where they judge it necessary to discharge their
responsibilities properly.
COMPOSITION, SUCCESSION AND EVALUATION
J. Appointments to the
board should be subject
to a formal, rigorous, and
transparent procedure, and
an effective succession
plan should be maintained.
Both appointments and
succession plans should
be based on merit and
objective criteria and,
within this context, should
promote diversity of
gender, social and ethnic
backgrounds, cognitive
and personal strengths.
The Board has established a Nomination Committee, which recommends to the
Board the appointment process of new Directors as and when vacancies arise
and as part of the Directors’ ongoing succession planning.
On 5 September 2024, the Nomination Committee recommended that the Board
adopt a formal Diversity Policy. The Board approved this policy on 28 October
2024. Further details of the policy can be found on page 54.
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Code Principle Compliance Statement
K. The board and its
committees should
have a combination of
skills, experience, and
knowledge. Consideration
should be given to the
length of service of the
board as a whole and
membership regularly
refreshed.
The Directors’ biographical details are set out on pages 39 and 40. These
demonstrate the wide range of skills and experience that each Director brings to
the Board.
The Board maintains a Tenure and Reappointment policy, which encompasses
the whole Board and Chair, to ensure that the Board continues to have the right
balance of skills and experience.
The Board recognises the value of regular refreshment of its composition and
remains committed to ensuring that Directors have the right mix of skills and
experience that are aligned with the strategic plans of the Company. The Board
recognises the importance of Directors maintaining independence of character
and judgement. However, the Directors believe that the value brought through
continuity and experience of Directors with longer periods of service can be
desirable in an investment company.
Both the Nomination Committee and the Board regularly consider the
composition of the Board and the succession plans for each Director.
With an objective to deliver long-term and consistent returns to shareholders,
it is important that the Board can maintain its long-term perspective, supported
by a long corporate memory, but with the regular challenge provided by fresh
thinking. The composition, skills and effectiveness of the Board are reviewed at
least annually to ensure that the Board has the skills and experience necessary
for the management of the Company, having regard to anticipated challenges and
opportunities.
L. Annual evaluation of the
board should consider its
composition, diversity and
how effectively members
work together to achieve
objectives. Individual
evaluation should
demonstrate whether
each director continues to
contribute effectively.
The Board evaluates its own performance and that of its Committees and the
Chair on an annual basis. For the period under review, this was carried out by
way of a questionnaire and individual meetings. The details of, and results of the
annual Board Evaluation process conducted during the period can be found on
page 53.
AUDIT, RISK AND INTERNAL CONTROL
M. The board should establish
formal and transparent
policies and procedures to
ensure the independence
and effectiveness of
external audit functions
and satisfy itself on the
integrity of financial and
narrative statements.
The Audit & Risk Committee has put in place a N
on-Audit Services policy which
ensures that any work outside the scope of the standard audit work requires
prior approval by the Audit & Risk Committee or the Board to avoid impairing the
external auditor’s independence.
No non-audit services have been provided by the Company’s external auditor,
BDO, therefore the Committee continues to believe that the external auditor
remains independent.
Further information on the independence of the external auditor and the work of
the Audit & Risk Committee can be found on pages 50 to 52.
N. The board should
present a fair, balanced,
and understandable
assessment of the
company’s position and
prospects.
The Audit & Risk Committee has considered the Annual Report and Audited
Financial Statements as a whole and agreed that it presents a fair, balanced, and
understandable assessment of the Company’s position and prospects.
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AIC
Code Principle Compliance Statement
O. The board should establish
procedures to manage
risk, oversee the internal
control framework, and
determine the nature and
extent of the principal risks
the company is willing to
take in order to achieve
its long-term strategic
objectives.
Risks faced by the business are considered, monitored and assessed on a regular
basis. Details of the Company’s principal risks and uncertainties can be found on
pages 24 and 25.
The Audit & Risk Committee receives service provider internal control reports
which are collated by the Manager. The performance of all third party service
providers is reviewed at least annually by the Management Engagement and
Remuneration Committee. Further details can be found on page 56.
REMUNERATION
P. Remuneration policies
and practices should
be designed to support
strategy and promote
long-term sustainable
success.
In respect to Directors’ remuneration, the Company follows the recommendation
of the AIC Code that Non-Executive Directors’ remuneration should reflect the
time commitment and responsibilities of the role. The Company’s policy is that
remuneration of Non-Executive Directors should reflect the experience of the
Board as a whole, the responsibilities and time commitments each Director would
have to devote to the Company’s affairs and be in line with that of other relevant
venture capital trusts.
Q. A formal and transparent
procedure for developing
policy remuneration should
be established. Nodirector
should be involved
in deciding their own
remuneration outcome.
The Board’s Management Engagement and Remuneration Committee
considers at least annually the level of the Board’s fees, in accordance with the
Remuneration Policy approved by shareholders at the AGM held in 2023. Further
details on the Directors’ remuneration is contained in the Directors’ Remuneration
Report on pages 56 to 60.
R. Directors should exercise
independent judgement
and discretion when
authorising remuneration
outcomes, taking account
of company and individual
performance, and wider
circumstances.
All Directors of the Company are independent Non-Executive Directors, and
all Directors are members of the Management Engagement and Remuneration
Committee (“MERC”). Any decision about remuneration is taken after considering
the performance of the Company and the current market conditions.
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The Board’s Committees
The Board has delegated certain responsibilities to its Audit & Risk, Management Engagement & Remuneration and
Nomination Committees. Given the size and nature of the Board, it is felt appropriate that all Directors are members of the
Committees. The Board has Terms of Reference for each of its Committees which are available on the Company’s website
and from the Company Secretary upon request.
Audit & Risk Committee report
Chair: Malcolm Groat
Membership
Given the size and nature of the Board, it is felt appropriate
that all Directors are members of the Audit & Risk
Committee. The Audit & Risk Committee members
consider that, individually and collectively, they are each
independent and have recent, relevant financial and risk
management experience gained from the venture capital
and/or financial services sector to fulfil the role of a
member. The constitution and performance of the Audit &
Risk Committee is reviewed regularly.
Key responsibilities of the Audit & Risk Committee:
1 Reviewing the content and integrity of the Annual and
Half-Yearly Financial Statements;
2 Reviewing the Company’s internal controls and risk
management systems;
3
Reviewing the remuneration and terms of appointment of
the external auditor;
4
Reviewing the effectiveness of the external audit process
in accordance with applicable regulatory requirements;
5
Ensuring auditor objectivity and independence is
always safeguarded, particularly in the provision of
non-audit services; and
6 Providing a forum through which the auditor may
report to the Board.
.
The matters considered by the Audit & Risk
Committee during the year:
Reviewed the Company’s Annual and Half-Yearly financial
statements and made recommendations to the Board;
Reviewed the Company’s going concern and
viability statements;
Reviewed the Company’s Risk Register, reflecting on the
current and emerging risks faced by the Company;
Reviewed the internal controls and cyber security of the
Company and its third-party service providers, including
ESG risks and mitigation of the associated risks;
Agreed the audit plan for the year ended 30 September
2024 and audit fees with BDO; and
Reviewed its performance as a Committee and its
Terms of Reference.
The significant issues considered by the Committee during
the year ended 30 September 2024 were:
Valuation of investments
The Committee spent a considerable amount of time
discussing the valuation process, methodology and
the systems in place at Gresham House to derive an
appropriate valuation of the Company’s portfolio.
TheManager also used independent valuations in
conjunction with their own to provide third-party assurance
and risk mitigation to the Committee. The Audit & Risk
Committee received assurances from the Manager on
the robust valuation processes in place, including the
monitoring of potential ESG risks.
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The Audit & Risk Committee oversees the operation of the
Company’s risk management and internal control systems,
with the underpinning procedures designed to identify
and manage, rather than eliminate, risk. This involves
maintaining a Risk Register to record the risks the Company
is exposed to, including, among others, market, investment,
operational and regulatory risks, and the controls employed
to mitigate these risks. The residual risks are rated, taking
into account their potential impact, as well as mitigating
factors and, where necessary, corrective action is taken.
The Committee receives service provider internal control
reports which are collated by the Manager at each meeting
and provide an overview of the main risks identified by the
Company’s third-party service providers and the mitigating
actions put in place. The Committee was satisfied that
each service provider could continue to deliver their
service effectively.
During the year under review, and in addition to work
described above, the Committee also devoted time to
governance, monitoring the latest developments and
reviewing whether any changes to its processes and
procedures will be necessary in order for the Company
to comply with the upcoming changes to reporting on
the review and effectiveness of internal controls. From
1 January 2026, Provision 34 of the AIC Corporate
Governance Code will require that, in addition to monitoring
and reviewing the Company’s risk management and internal
controls framework, the Board will also need to report on,
in more detail, how that is carried out; the Directors will
also need to make a declaration to shareholders on the
effectiveness of the material controls, and describe any,
that have not operated effectively at the end of our financial
year. The Committee is considering these coming changes,
and will report in more detail on any changes we might
introduce in order to prepare for these enhancements to
current reporting.
Following a formal review of the risk profile of the
Company, the Audit & Risk Committee concluded that the
effectiveness of the risk management and internal controls
systems during the year remained appropriate.
Internal audit function
The Company does not have an internal audit function.
All the Company’s management functions are delegated
to independent third parties whose controls are monitored
by the Audit & Risk Committee and the Board. It is therefore
felt that there is no need for an internal audit function
however, the Audit & Risk Committee will review this
position annually.
Compliance with the VCT tests
The Committee engaged with PwC as its VCT Status
Adviser on its compliance with the legislative requirements
relating to VCTs. PwC provides a VCT status monitoring
report to the Committee which details the Company’s
position against each of the VCT qualification tests.
The Audit & Risk Committee intends to continue to work
with the Company’s advisers to continue to maintain the
correct policies in place to provide the necessary comfort
and uphold compliance with the VCT rules.
Going concern and long-term viability
The Committee considered the Company’s long-term
financial requirements and viability for the forthcoming
year and for the period of three years, particularly in light
of the ongoing effects of rising inflation. This assessment
included a review of possible declines in investment
valuations and the impact of rising inflation on financial
statements disclosures including those relating to principal
risks. As a result of this assessment, the Committee
concluded that the Company had adequate resources to
continue in operation and meet its liabilities as they fall due
both for the forthcoming year and until 2027. Related going
concern and long-term viability statements are included on
pages 42 and 32 respectively.
Cyber security
The Manager reviewed the cyber security procedures and
controls of its service providers to mitigate cyber risk and
the Manager’s Compliance Officer has presented Gresham
House’s cyber security procedures to the Committee. The
Committee will continue to receive updates from, and to
work with, the Manager to consider whether the procedures
in place are robust and enable continuous compliance with
the applicable legislation and regulations.
Internal controls and risk management systems
The Company is exposed to a variety of risks and
uncertainties. The Board, through delegation to the Audit &
Risk Committee, has undertaken a robust assessment and
review of the principal risks facing the Company, together
with a review of any emerging risks that may have arisen
during the year to 30 September 2024, including those that
would threaten its business model, future performance,
solvency or liquidity. A statement of the principal risks
and uncertainties faced by the Company can be found on
pages 24 and 25.
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Non-audit services
In line with the FRC’s guidance, the Audit & Risk Committee
has maintained a Non-Audit Services policy since May
2017 to help ensure that the auditor’s independence and
objectivity is not impaired. Thepolicy is reviewed annually
and outlines those services that the external auditor is
prohibited from providing, as well as those that require
pre-approval from the Committee.
During the period, no non-audit services have been
provided by the Company’s current Auditor, BDO. Taking
into account the confirmation from the auditor on the
result of BDO’s independence checks, the Audit & Risk
Committee was satisfied that BDO Remained independent.
Malcolm Groat
Audit & Risk Committee Chair
23 December 2024
External Auditor
In accordance with professional guidelines, the senior
audit partner is rotated at least every five years. The
current senior audit partner started working with the
Company in 2021 and is set to change in 2026. A resolution
to re-appoint BDO as the Company’s auditors will be
proposed at the 2025 AGM.
An audit fee of £53,000 (exclusive of VAT) has been agreed
in respect of the year ended 30 September 2024.
Review of effectiveness of external audit and
the independence of the Auditor
The Audit & Risk Committee meets at least twice a
year with the Auditor. The Auditor provides a planning
report in advance of the annual audit and a report on
the annual report and financial statements. The Audit &
Risk Committee questions and challenges the Auditor in
respect of each of these reports. In addition, at least once
a year, the Audit & Risk Committee discusses any aspect
of the Auditor’s work with the Auditor in the absence of
the Manager. After each audit, the Audit & Risk Committee
reviews the audit process and considers its effectiveness.
The Committee also considers the results of the FRC’s
annual Audit Quality Reviews, and discusses the results
with the auditor. BDO are invited to address the regulator’s
findings and recommendations.
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Nomination Committee report
Chair: Sarah Fromson
Sarah Fromson is the Chair of the Nomination Committee
except when considering Chair succession.
Key responsibilities:
1 Lead the process for the appointment of additional
Directors to the Board as and when appropriate;
2
Consider the resolutions relating to the election and
re-election of Directors; and
3 Consider the orderly succession planning of the Board
and the need to have a balance of skills, experience,
knowledge, and diversity.
Board Composition and Directorate changes
There were no changes to the composition of the Board
during the year to 30 September 2024, however, after
serving almost nine years on the Board, and in line with the
Company’s Tenure and Reappointment Policy, Mr Groat
informed the Board of his intention to step down as a
Non-Executive Director, the Senior Independent Director
and Chair of the Audit & Risk Committee with effect from
31 December 2024. The Nomination Committee reviewed
the composition of the Board and its Committees and
in conjunction with the Manager’s talent team, a list of
candidates was provided to the Nomination Committee for
review. Following a thorough interview process, Ms Stirling
was deemed the most suitable candidate and appointed
as a Non-Executive Director from 1 December 2024.
MrGroat will be succeeded by Ms Stirling as the Chair of
the Audit & Risk Committee and Mr McDonald as the Senior
Independent Director from 31 December 2024.
Board Evaluation
In order to review the effectiveness of the Board as a
whole, its Committees, the individual Directors (including
the independence of each Director) and the Chair, the
Company undertakes a thorough annual evaluation
process by way of an extensive and tailored questionnaire,
meetings between Board members and the Chair and
completion of self-evaluation questionnaires, confidentially
shared between Directors and the Chair.
The Chair led the evaluation, which covered the functioning
of the Board as a whole, composition and diversity of
the Board, the effectiveness of the Board Committees
and the independence and contribution made by each
Director. Each Director also completed a self-evaluation
questionnaire reflecting on their personal contribution
and commitment as a Director during the period and
discussed any key individual areas of focus with the Chair.
This thorough evaluation process enables each Director
to evaluate, assess and reflect on the Board’s operations,
individual Director contributions and the Company’s
leadership with a view to identify and address any areas
requiring improvement.
This year, some of the key themes that emerged from the
process included developing a deeper understanding of
the views of shareholders and shareholder engagement
and enhancing the AGM in 2025. The results of the
evaluation process indicated that the Board continued to
function well and there are no significant concerns raised
regarding the effectiveness of the Board, its Committees
and that of individual Directors and the Chair. Accordingly,
the Nomination Committee remains satisfied with the
performance of the Board, its Committees and that of
individual Directors and the Chair.
Succession planning, diversity and
appointment process
The Nomination Committee aims to attract directors
with diverse skills and experience and recommends
appointments to the Board, based on merit, so that
vacancies are filled by the most qualified candidates.
When considering future appointments, the Nomination
Committee seeks to promote diversity of gender, social
and ethnic backgrounds as well as cognitive and personal
strengths to aid effective decision making, and looks
for candidates, whose skills, knowledge and experience
align with the Company’s longer-term strategic aims. The
Committee considers the use of external consultants when
shortlisting candidates, if required.
In accordance with the AIC Code, all Directors, apart from
Mr Groat, will stand for annual re-election at the Company’s
forthcoming AGM. Ms Stirling will stand for election
following her appointment to the Board. The resolutions
to elect/re-elect the Directors are contained within
the Notice of AGM.
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Tenure and Reappointment Policy
The Board maintains a Tenure and Reappointment Policy
(the “Policy”), according to which the Board will seek to
recruit a Director on average every 4 years, with no Director
serving longer than nine years; the Policy covers the whole
Board, including the Chair. The Board intends to maintain
a range of experience from Directors who have served on
the Board for varying periods of time. This approach aims
to reserve the cumulative experience and understanding of
the Company, the commitments and the knowledge of the
investment portfolio amongst Directors, while benefiting
from fresh thinking and promoting diversity. The full Policy
can be found on the Company’s website and is reviewed by
the Nomination Committee annually.
Board Diversity
On 5 September 2024, the Nomination Committee
reviewed and recommended to the Board the adoption of
a Diversity Policy. The Diversity Policy was approved by
the Board on 28 October 2024 and in accordance with this
Policy, the Nomination Committee and Board will consider
issues of Board balance and diversity when making
new appointments.
The FCA requires companies like BSVT to report against
the following diversity and inclusion targets:
a) At least 40 per cent of individuals on the
Board to be women;
b) At least one senior Board position to be held by a
woman (such as Chair, /SID, Chief Executive Officer
(“CEO”) or Chief Financial Officer (“CFO”); and
c) At least one individual on the Board to be from a minority
ethnic background.
Accordingly, in line with Listing Rule 6 Annex 1R, the below
tables in the prescribed format, show the gender and ethnic
background of the Directors at 30 September 2024.
Gender identity
or sex
Number
of Board
members
Percentage
of the Board
Number
of senior
positions on
the Board
(CEO, CFO,
SID and
Chair)*
Men 3 75% 1
Women 1 25% 1
Not specified/
prefer not to say – –
Ethnic
background
Number
of Board
members
Percentage
of the Board
Number
of senior
positions on
the Board
(CEO, CFO,
SID and
Chair)*
White British
or other White
(including
minority White
groups) 3 75% 2
Mixed/Multiple
Ethnic Groups 1 25%
Asian/Asian
British – –
Black/African/
Caribbean/Black
British – –
Other ethnic
group, including
Arab – –
Not specified/
prefer not to say – –
* The company is externally managed and does not have executive
management functions, specifically it does not have a CEO or CFO.
The information presented in these tables was collected on a
self-reporting basis.
The Board is pleased to have met recommendation b). Since
30September 2024 and with the addition of Ms Stirling to the Board
from 1 December 2024, the Board has increased its percentage
of women on the Board to meet target a). Appointments are based
on merit, with the Board seeking to fill vacancies with the most
qualified candidates.
54 Annual Report and Audited Financial Statements 2024
02 Directors’ report - Nomination Committee report
Directors’ meeting attendance
The table below sets out the Directors’ attendance at scheduled, quarterly meetings held during the year, as well as
scheduled Committee meetings held during the year, against the number of meetings each Director was eligible to attend.
Board of Directors Audit Committee
Management
Engagement and
Remuneration
Committee
Nomination
Committee
Eligible Attended Eligible Attended Eligible Attended Eligible Attended
Sarah Fromson 4 4 3 3 1 1 1 1
Malcolm Groat 4 4 3 3 1 1 1 1
Tim Farazmand 4 4 3 3 1 1 1 1
Graham McDonald 4 4 3 3 1 1 1 1
Additional meetings were also held during the year in respect of the valuations of unquoted investments in the portfolio
and the Company’s fundraising offer to shareholders for subscription.
Sarah Fromson
Nomination Committee Chair
23 December 2024
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Annual Report and Audited Financial Statements 2024
02 Directors’ report - Nomination Committee report
Directors’ remuneration report
The Board has prepared this report in
accordance with the requirements of the
Large and Medium Sized Companies and
Groups (Accounts and Reports) (Amendment)
Regulations 2013.
The law requires the Company’s auditor, BDO, to audit
certain disclosures. Where disclosures have been audited,
they are indicated as such. The Auditor’s opinion is included
in the Independent Auditor’s Report on pages62 to 68.
An ordinary resolution to approve the Directors’
Remuneration Report will be proposed at the forthcoming
AGM on 12March 2025.
Annual statement from the Chair of
the Management Engagement and
Remuneration Committee
The Management Engagement and Remuneration
Committee is chaired by Mr Farazmand and comprises all
the Directors of the Company.
Given the size and nature of the company, it is felt
appropriate that all Directors are members of the
Management Engagement & Remuneration Committee.
The Company has no executive directors and the
Non-Executive Directors are considered independent.
The Management Engagement and Remuneration
Committee’s key responsibilities are:
1
Determining and recommending to the Board the
Directors’ remuneration policy and the fees for the
Company’s Chair and Non-Executive Directors, within the
limits set in the Company’s Articles of Association;
2
Reviewing the appropriateness of the Manager’s
appointment (including key executives thereof) together
with the terms and conditions of the appointment; and
3
Reviewing (at least annually), the contractual relationship
with the Manager and scrutinising and holding Gresham
House to account for its performance.
Manager duties
The Board delegates the execution of the Company’s
investment strategy and the management of assets
to the Manager, through the Management Agreement,
subject to the Board being kept informed of all material
developments (including proposed acquisitions or
divestment of investments) in the Company’s portfolio.
The Board remains confident in the Manager’s capabilities
and its ability to continue to achieve results by adapting
to an ever-changing regulatory environment. The Board
continues to work closely with the Manager and notes
that Gresham House supports the UK Stewardship Code
and complies with its guidelines regarding proxy voting
and engagement.
Relationship with the Manager
The Management Engagement and Remuneration
Committee keeps the performance of the Manager
under continual review. In addition, in accordance with
the requirements of the AIC Code, the Management
Engagement and Remuneration Committee reviews
the performance of the Manager’s obligations under
the Management Agreement and considers the need
for any variation to the terms of the Management
Agreement annually.
The Management Engagement and Remuneration
Committee then makes a recommendation to the Board
on the continuing appointment of the Manager. The
Management Engagement & Remuneration Committee
also reviews annually the performance of all other
service providers and any matters concerning their
respective agreements.
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02 Directors’ report
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Remuneration
Each year, when the Committee reviews the Directors’
fees, it takes into account all of the Directors’ duties and
responsibilities, and how the Board members discharged
them. The Committee also considers whether the fees
are comparable with others in the VCT industry, relative to
the NAV, so that the Board can attract and retain suitably
qualified candidates. In addition, the Board also has
regard to the workload that individual Directors and the
Chair undertake as members of the Board; feedback from
shareholders; the performance of the Company’s portfolio;
and the prevailing rate of Consumer Price Index (“CPI”) at
the time. In recent years, the Board has seen a significant
increase in regulation in the industry, which has in turn
resulted in an increase in the workload of the Directors. In
addition, the Directors spend a considerable amount of
time monitoring the 80 per cent test, the other continuing
VCT tests, the co-investment scheme and fundraises.
They are also responsible for monitoring the key risks to
the Company and for scrutiny of all costs. The Directors
set the strategy for the Company’s continuing success and
decide when fundraising is appropriate. They then monitor
the performance of the Company against the strategic
objectives set.
Directors spend further time preparing for Board meetings,
and the quarterly valuation meetings, through which they
rigorously review the valuations of unquoted investee
companies to arrive at appropriate valuations.
Where needed, the Directors usually lead and attend a
number of other ad hoc meetings. This work is in addition to
the time taken up in the formal meetings of the Board.
All Directors act in a non-executive capacity and the fees
for their services are approved by the Committee. Thefees
for the Directors are determined within the limits set out in
the Company’s Articles of Association.
In December 2024, the Management Engagement and
Remuneration Committee met to consider the level of
Directors fees for the year ending 30 September 2025.
Following a recommendation from the Committee, the
Board agreed that the Non-Executive Director fee would
be increased from £29,400 to £31,000. Additionally, the
supplement for the Chair of the Board was reduced from
£8,400 to £6,800, resulting in a total of £37,800. These
adjustments took effect on 1October 2024.
The changes to the description of the Directors’ Remuneration as well as the amounts paid to the each of Director are
shown in the table below.
Expected fees for year ending
30 September 2025
Fees for year to
30September 2024
% change
from 2024
to 2025Supplement
Base
NED fee Total Supplement Tot al
Non Executive Director – £31,000 £31,000 – £29,400 5.4%
Chair £6,800 £31,000 £37, 8 0 0 £8,400 £37, 80 0 –
Audit & Risk Committee Chair £2,100 £31,000 £33,10 0 £2,100 £31,500 5.1%
Senior Independent Director £2,100 £31,000 £33,10 0 £2,100 £31,500 5.1%
Directors’ remuneration policy
The Board’s policy is that the remuneration of
Non-Executive Directors should reflect the
experience of the Board as a whole, be fair and
comparable to that of other relevant venture capital
trusts that are similar in size and have similar
investment objectives and structures. Furthermore,
the level of remuneration should be sufficient to
attract and retain the Directors needed to oversee
properly the Company and to reflect the specific
circumstances of the Company, the duties and
responsibilities of the Directors and the value and
amount of time committed to the Company’s affairs.
The remuneration policy, as set out in the box, was
approved by the members at the AGM held on 1February
2023. The Directors are proposing an amendment to the
Policy to widen the comparable companies to include
venture capital trusts as well as other investments
companies, in particular those that are similar in size
and have similar investment objectives and structures.
Therefore, an ordinary resolution to approve the updated
Policy will be proposed at the next AGM in March 2025.
If approved by shareholders, the refreshed policy will
continue for the year ending 30 September 2024 and
subsequent years. Regardless of whether the Company
proposes any changes to the Directors’ Remuneration
Policy, an Ordinary Resolution to approve the it will be put to
shareholders at least once every three years.
Fees for any new Non-Executive Director who is appointed
to the Board will be made in accordance with the
Company’s Remuneration Policy.
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Annual Report and Audited Financial Statements 2024
The Directors are not eligible to receive pension
entitlements or bonuses and no other benefits are
provided. They are not entitled to participate in any
long-term incentive plan or share option schemes. Fees
are paid to the Directors on a monthly basis and in no way
performance related.
The Directors do not have service contracts with the
Company; however, their appointment letters do include
a three-month notice period. As a result, the Company’s
policy on termination payments is for a payment of three
months in lieu for Directors that are not requested to
work their notice period. Directors’ terms and conditions
for appointment are set out in letters of appointment
which are available for inspection at the registered office
of the Company.
Statement of implementation
of the Remuneration Policy in
respect of the financial year ending
30September 2025
The Management Engagement and Remuneration
Committee intends to review Directors’ fees in late 2025,
when it will determine the fees effective from 1 October
2025. In the absence of unforeseen circumstances, the
Committee does not expect any other changes.
Shareholder views on remuneration
Shareholder views in respect of Directors’ remuneration are
communicated at the Company’s AGM and are taken into
account in formulating the Directors’ remuneration policy.
The votes cast at the last AGM were as follows:
Remuneration report
(2024 AGM voting figures)
Number
of votes
Percentage of
votes cast
For 7,394,711 93.68%
Against 498,495 6.32%
Votes withheld 176,205
Remuneration policy
(2023 AGM voting figures)
Number of
votes
Percentage of
votes cast
For 12,10 4,133 90.38%
Against 1,287,708 9.62%
Votes withheld 297,131
Annual remuneration report
Scheme interests awarded during the
financial year
The Company does not operate any share incentive
plans. The Directors do not receive any remuneration or
any part of their fee in the form of shares in the Company,
options to subscribe for shares, warrants or any other
equity-based scheme.
Company performance
The Board is responsible for the Company’s investment
strategy and performance, although the management of
the Company’s investment portfolio is delegated to the
Manager through the management agreement, as referred
to in the Directors’ report.
The graph below compares, for the ten periods, the
percentage change over each period in the share price
total return (assuming all dividends are reinvested) to
shareholders compared to the share price total return of
approximately 40 generalist VCTs (source: FE Analytics),
which the Board considers to be the most appropriate
benchmark for investment performance measurement
purposes. An explanation of the performance of the
Company is given in the Chair’s Statement and Manager’s
Review on pages7 to 13.
At least annually, the Management Engagement
and Remuneration Committee formally reviews the
performance of the Manager and the appropriateness of its
continuing appointment.
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BSVT Share Price and the VCT Generalist Share Price Total Return Performance Graph
BSVT Share Price Total Return
VCT Generalist All-Share Total Return Source: FE Analytics
200
180
160
140
120
100
Sep-24Sep-23Sep-22Sep-21Sep-20Sep-19Sep-18Sep-17Sep-16Sep-15Sep-14
%
Directors’ emoluments for the year (audited) and annual percentage change
The Directors who served in the year received the following emoluments in the form of fees:
Year to 30September Percentage change from
2024
£
2023
£
2022
£
2021
£
2020
£
2023 to
2024
%
2022 to
2023
%
2021 to
2022*
%
2020 to
2021*
%
Sarah Fromson (Chair) 37,800 37, 80 0 36,000 36,000 32,733 – 5.0 – 10.0
Tim Farazmand 29,400 29,400 28,000 28,000 11,666 – 5.0 – –
Malcolm Groat 31,500 31,500 30,000 30,000 30,000 – 5.0 – –
Graham McDonald** 29,400 29,400 28,000 15,050 N/A – 5.0 – N/A
Total 128,10 0 128,10 0 122,000 109,050 74,399 –
* Individual Director fees did not change between the year ended 30September 2021 and 30September 2022. The percentage changes
reflected in the table are solely as a result of changes to Board composition and roles, which includes the appointment of Sarah Fromson as
Chair on 27September 2020, the appointment of Tim Farazmand as a Non-Executive Director on 1May 2020 and the appointment of Graham
McDonald as a Non-Executive Director on 16February 2021.
** MrMcDonald also received £3,760 to cover travel expenses during the year to 30September 2024.
Relative importance of spend on Directors’ fees
The below table is required to be included in accordance with The Large and Medium Sized Companies and Groups
(Accounts and Reports) (Amendment) Regulations 2008. It should be noted that the figures below are not directly
comparable due to:
the payment of the final dividend for the prior year within the current financial year; and
the fundraising which was conducted between December 2023 and April 2024.
Year to
30September
2024
£
Year to
30September
2023
£
Percentage
change
Total Directors’ fees 128,10 0 128,100 –
Shares repurchased 4,021,000 3,141,000 28.0
Dividends 15,290,000 18,276,000 (16.3)
NAV 227,444,000 209,659,000 8.5
The Directors’ fees as a percentage of NAV for the year to 30September 2024 were 0.056per cent and for the year to
30September 2023 were 0.061per cent.
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There have been no changes to these holdings between
30September 2024 and the date of this report.
Approved by the Board of Directors and signed by
Tim Farazmand
Chair of the Management Engagement and
Remuneration Committee
23 December 2024
Directors’ interests (audited)
There is no requirement under the Company’s Articles
of Association or the terms of their appointment for
Directors to hold shares in the Company. The interests
of the Directors in the shares of the Company (including
their connected persons) as at 30September 2024
were as follows:
30September
2024
Ordinary
10p shares
30September
2023
Ordinary
10p shares
Sarah Fromson (Chair) 91,118 77, 988
Tim Farazmand 193,248 180,383
Malcolm Groat* 263,740 306,772
Graham McDonald 54,749 51,105
Total 602,855 616,248
* These shares are held by a person closed associated
to Malcolm Groat.
02 Directors’ report - Directors’ remuneration report
60 Annual Report and Audited Financial Statements 2024
Statement of Directors’ responsibilities
Statement of Directors’
responsibilities in respect of
the Annual Report and the
Financial Statements
The Directors are responsible for preparing the Annual
Report and the financial statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law, they have
elected to prepare the financial statements in accordance
with UK Accounting Standards, including FRS102 The
Financial Reporting Standard applicable in the UK and
Republic of Ireland.
Under company law, the Directors must not approve the
financial statements unless they are satisfied that they give
a true and fair view of the state of affairs of the company
and of the profit or loss of the company for that period.
In preparing these financial statements, the directors
are required to:
select suitable accounting policies and then apply
them consistently;
make judgements and estimates that are
reasonable and prudent;
state whether applicable UK Accounting Standards
have been followed, subject to any material departures
disclosed and explained in the financial statements;
assess the Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to
going concern; and
use the going concern basis of accounting unless they
either intend to liquidate the Company or to cease
operations or have no realistic alternative but to do so.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Company’s transactions and disclose with reasonable
accuracy at any time the financial position of the Company
and enable them to ensure that its financial statements
comply with the Companies Act 2006. They are responsible
for such internal control as they determine is necessary
to enable the preparation of financial statements that are
free from material misstatement, whether due to fraud or
error, and have general responsibility for taking such steps
as are reasonably open to them to safeguard the assets
of the Company and to prevent and detect fraud and
otherirregularities.
Under applicable law and regulations, the Directors are also
responsible for preparing a Strategic Report, Directors’
Report, Directors’ Remuneration Report and Corporate
Governance Statement that complies with that law and
those regulations.
The Directors are responsible for ensuring the Annual
Report and the financial statements are made available
on a website. Financial statements are published on
the Company’s website in accordance with legislation
in the United Kingdom governing the preparation and
dissemination of financial statements, which may vary from
legislation in other jurisdictions. The maintenance and
integrity of the Company’s website is the responsibility of
the Directors. The Directors’ responsibility also extends
to the ongoing integrity of the financial statements
contained therein.
Responsibility statement of the
directors in respect of the annual
financial report
We confirm that to the best of our knowledge:
the financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and
fair view of the assets, liabilities, financial position and
profit or loss of the Company taken as a whole; and
the management report, which incorporates the
Strategic Report and Directors’ report includes a fair and
balanced review of the development and performance
of the business and the position of the Company,
together with a description of the principal risks and
uncertainties it faces.
We consider the Annual Report and financial statements,
taken as a whole, is fair, balanced and understandable and
provides the information necessary for shareholders to
assess the Company’s position and performance, business
model and strategy.
On behalf of the Board
Sarah Fromson
Chair
23 December 2024
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Annual Report and Audited Financial Statements 2024
Opinion on the financial statements
In our opinion the financial statements:
give a true and fair view of the state of the Company’s
affairs as at 30 September 2024 and of its profit for the
year then ended;
have been properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements
of the Companies Act 2006.
We have audited the financial statements of Baronsmead
Second Venture Trust plc (the ‘Company’) for the year
ended 30 September 2024 which comprise the income
statement, the balance sheet, the statement of changes
in equity, the statement of cash flows and notes to the
financial statements, including a summary of significant
accounting policies. The financial reporting framework that
has been applied in their preparation is applicable law and
United Kingdom Accounting Standards, including Financial
Reporting Standard 102 The Financial Reporting Standard
applicable in the UK and Republic of Ireland (United
Kingdom Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further
described in the Auditor’s responsibilities for the audit of
the financial statements section of our report. We believe
that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion. Our audit
opinion is consistent with the additional report to the
audit committee.
Independence
Following the recommendation of the audit committee,
we were appointed by the Board of Directors on 28 May
2021 to audit the financial statements for the year ended
30 September 2021 and subsequent financial periods.
The period of total uninterrupted engagement including
retenders and reappointments is 4 years, covering the
years ended 30 September 2021 to 30 September 2024.
We remain independent of the Company in accordance
with the ethical requirements that are relevant to our audit
of the financial statements in the UK, including the FRC’s
Ethical Standard as applied to listed public interest entities,
and we have fulfilled our other ethical responsibilities
in accordance with these requirements. The non-audit
services prohibited by that standard were not provided
to the Company.
Conclusions relating
to going concern
In auditing the financial statements, we have concluded
that the Directors’ use of the going concern basis of
accounting in the preparation of the financial statements
is appropriate. Our evaluation of the Directors’ assessment
of the Company’s ability to continue to adopt the going
concern basis of accounting included:
Obtaining the Venture Capital Trust (“VCT”) compliance
reports prepared by management’s expert during the
year and as at year end and reviewing the calculations
therein to check that the Company was meeting its
requirements to retain VCT status;
Consideration of the Company’s expected future
compliance with VCT legislation, the absence of bank
debt, contingencies and commitments and any market or
reputational risks;
Reviewing the forecasted cash flows that support the
Directors’ assessment of going concern, challenging
assumptions and judgements made in the forecasts,
and assessing them for reasonableness. In particular, we
considered the available cash resources relative to the
forecast expenditure which was assessed against the
prior year for reasonableness; and
Evaluating the Directors’ method of assessing the going
concern in light of market volatility and the present
Based on the work we have performed, we have not
identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast
significant doubt on the Company’s ability to continue as a
going concern for a period of at least twelve months from
when the financial statements are authorised for issue.
In relation to the Company’s reporting on how it has
applied the UK Corporate Governance Code, we have
nothing material to add or draw attention to in relation to
the Directors’ statement in the financial statements about
whether the Directors considered it appropriate to adopt
the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors
with respect to going concern are described in the relevant
sections of this report.
Independent auditor’s report
to the members of Baronsmead Second Venture Trust plc
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Overview
2024 2023
Key audit matters Valuation of unquoted investments
4 4
Materiality Company financial statements as a whole
£4.05m (2023: £3.69m) based on 2% (2023: 2%) of net assets
adjusted for significant fundraising in the year.
An overview of the scope of our audit
Our audit was scoped by obtaining an understanding of the Company and its environment, including the Company’s
system of internal control, and assessing the risks of material misstatement in the financial statements. We also addressed
the risk of management override of internal controls, including assessing whether there was evidence of bias by the
Directors that may have represented a risk of material misstatement.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) that we identified, including those which had the greatest effect on: the overall audit strategy,
the allocation of resources in the audit, and directing the efforts of the engagement team. These matters were addressed
in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
Key audit matter How the scope of our audit addressed the key audit matter
Valuation of unquoted
investments
(Notes 2.3, 3.3 of the
financial statements)
We consider the valuation
of unquoted investments to
be the most significant audit
area as there is a high level of
estimation uncertainty involved
in determining the unquoted
investment valuations.
There is an inherent risk of
management override arising
from the unquoted investment
valuations being prepared by
the Investment Manager, who is
remunerated based on the value
of the net assets of the VCT, as
shown in note 2.6.
Our unquoted investments valuation testing was risk based
where individual investments were assessed based on
criteria such as fair value at year end exceeding performance
materiality, fair value at year end exceeding performance
materiality and untested in detail in the prior year, movement
between current year and prior year fair value exceeding
performance materiality, change in the valuation methodology
from prior year, change in the multiples (Revenue/Earning)
from prior year by 10% or more, change in the gross enterprise
value from prior year by 10% or more and any change in the
discount/premium from prior year.
For 100% of the unquoted portfolio we:
Considered whether the valuation methodology was
the most appropriate in the circumstances under the
International Private Equity and Venture Capital Valuation
(“IPEV”) Guidelines. Where there was a change in valuation
methodology from prior year, we assessed whether the
change was appropriate
Considered the change in market multiples and discount
applied from prior year and if they were supported by the
performance of the underlying investment
Checked that the valuation was based on recent financial
information and reviewed the arithmetic accuracy
of the valuation
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Key audit matter How the scope of our audit addressed the key audit matter
Valuation of unquoted
investments
(continued)
(Notes 2.3, 3.3 of the
financial statements)
Further, for the unquoted investments samples selected for
detailed testing we:
Re-performed the calculation of the investment
Corroborated and benchmarked key inputs and estimates to
independent information from our own research and against
metrics from the most recent investments
Challenged the assumptions inherent to valuation of
unquoted investments and assessed the impact of the
estimation uncertainty concerning these assumptions
and the disclosure of these uncertainties in the
financial statements
Where appropriate, we performed sensitivity analysis on the
valuation calculations where there was sufficient evidence to
suggest reasonable alternative inputs might exist
Key observations
Based on the procedures performed we consider the
investment valuations to be appropriate considering the level
of estimation uncertainty.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of
misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could influence
the economic decisions of reasonable users that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a
lower materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements
below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified
misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial
statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole and performance
materiality as follows:
Company financial statements
2024
£
2023
£
Materiality £4,049,000 £3,690,000
Basis for determining materiality 2% of net assets adjusted for significant fundraising in the year.
Rationale for the
benchmarkapplied
In setting materiality, we have had regard to the nature and disposition of the
investment portfolio. Given that the VCT’s portfolio is highly weighted in listed
equities and also comprising unquoted investments which would typically have
a wider spread of reasonable alternative possible valuations, we have applied a
percentage of 2% of net assets adjusted for significant fundraising in the year.
Performance materiality £3,037,000 £2,760,000
Basis for determining
performancemateriality
75% of materiality
Rationale for the percentage
applied for performance
materiality
The level of performance materiality applied was set after having considered
a number of factors including the expected total value of known and likely
misstatements and the level of transactions in the year.
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Reporting threshold
We agreed with the Audit Committee that we would
report to them all individual audit differences in excess
of £202,000 (2022: £130,000). We also agreed to report
differences below this threshold that, in our view, warranted
reporting on qualitative grounds.
Other information
The directors are responsible for the other information.
The other information comprises the information included
in the annual report other than the financial statements
and our auditor’s report thereon. Our opinion on the
financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in
our report, we do not express any form of assurance
conclusion thereon. Our responsibility is to read the other
information and, in doing so, consider whether the other
information is materially inconsistent with the financial
statements, or our knowledge obtained in the course of
the audit, or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent
material misstatements, we are required to determine
whether this gives rise to a material misstatement in the
financial statements themselves. If, based on the work
we have performed, we conclude that there is a material
misstatement of this other information, we are required to
report that fact.
We have nothing to report in this regard.
Corporate governance statement
The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability and
that part of the Corporate Governance Statement relating to the Company’s compliance with the provisions of the UK
Corporate Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the
Corporate Governance Statement is materially consistent with the financial statements, or our knowledge obtained
during the audit.
Going concern and
longer-term viability
The Directors’ statement with regards to the appropriateness of adopting the
going concern basis of accounting and any material uncertainties identified set out
on page 42 and;
The Directors’ explanation as to their assessment of the Company’s prospects, the
period this assessment covers and why the period is appropriate set out on page 32.
Other Code provisions
Directors’ statement on fair, balanced and understandable set out on page 61;
Board’s confirmation that it has carried out a robust assessment of the emerging and
principal risks set out on page 24;
The section of the annual report that describes the review of effectiveness of risk
management and internal control systems set out on page 51; and
The section describing the work of the audit committee set out on page 50
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Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course of the audit, we are required by
the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below.
Strategic report and
Directors’ report
In our opinion, based on the work undertaken in the course of the audit:
the information given in the Strategic report and the Directors’ report for the financial
year for which the financial statements are prepared is consistent with the financial
statements; and
the Strategic report and the Directors’ report have been prepared in accordance with
applicable legal requirements.
In the light of the knowledge and understanding of the Company and its environment
obtained in the course of the audit, we have not identified material misstatements in the
strategic report or the Directors’ report.
Directors’ remuneration In our opinion, the part of the Directors’ remuneration report to be audited has been
properly prepared in accordance with the Companies Act 2006.
Matters on which
we are required to
report by exception
We have nothing to report in respect of the following matters in relation to which the
Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit
have not been received from branches not visited by us; or
the financial statements and the part of the Directors’ remuneration report to be
audited are not in agreement with the accounting records and returns; or
certain disclosures of Directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of Directors
As explained more fully in the Statement of Directors’
responsibilities, the Directors are responsible for the
preparation of the financial statements and for being
satisfied that they give a true and fair view, and for such
internal control as the Directors determine is necessary to
enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are
responsible for assessing the Company’s ability to continue
as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis
of accounting unless the Directors either intend to liquidate
the Company or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities for the
audit of the financial statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance but is
not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when
it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the
economic decisions of users taken on the basis of these
financial statements.
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Extent to which the audit was capable of
detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-
compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above,
to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are
capable of detecting irregularities, including fraud is
detailed below:
Non-compliance with laws and regulations
Based on:
Our understanding of the Company and the industry in
which it operates;
Discussion with the Investment Manager, the
Administrator and those charged with governance and
the Audit Committee; and
Obtaining and understanding of the Company’s policies
and procedures regarding compliance with laws and
regulations; and
we considered the significant laws and regulations to be
the Companies Act 2006, the FCA listing and DTR rules, the
principles of the UK Corporate Governance Code, industry
practice represented by the Statement of Recommended
Practice: Financial Statements of Investment Trust
Companies and Venture Capital Trusts (“the SORP”) with
consequential amendments and the applicable financial
reporting framework. We also considered the Company’s
qualification as a VCT under UK tax legislation.
Our procedures in respect of the above included:
Agreement of the financial statement disclosures to
underlying supporting documentation;
Enquiries of the Investment Manager, the Administrator
and those charged with governance relating to
the existence of any non-compliance with laws
and regulations;
Obtaining the VCT compliance reports prepared by
management’s expert during the year and as at year
end and reviewing their calculations to check that
the Company was meeting its requirements to retain
VCT status; and
Reviewing minutes of meeting of those charged with
governance throughout the period for instances of non-
compliance with laws and regulations.
Fraud
We assessed the susceptibility of the financial statement to
material misstatement including fraud.
Our risk assessment procedures included:
Enquiry with the Investment Manager, the Administrator
and those charged with governance and the Audit
Committee regarding any known or suspected
instances of fraud;
Obtaining an understanding of the VCT policies and
procedures relating to:
– Detecting and responding to the risks of fraud; and
– Internal controls established to mitigate risks
related to fraud.
Review of minutes of meeting of those charged
with governance for any known or suspected
instances of fraud;
Discussion amongst the engagement team as to how and
where fraud might occur in the financial statements; and
Considering performance incentive schemes and
performance targets and the related financial statement
areas impacted by these.
Based on our risk assessment, we considered the areas
most susceptible to fraud to be the valuation of unquoted
investments and management override of controls.
Our procedures in respect of the above included:
In addressing the risk of valuation of unlisted investments,
the procedures set out in the key audit matter section in
our report were performed;
In addressing the risk of management override
of control, we:
– Tested journals posted in the preparation of the
financial statements which met a defined risk criteria by
agreeing to supporting documentation and evaluating
whether there was evidence of bias by the Investment
Manager and the Administrator that represented a risk
of material misstatements due to fraud.
– Incorporated unpredictability into our testing by
selecting a sample of immaterial expenses that would
not otherwise have been selected for testing
– Reviewed the significant judgements made in the
unlisted investment valuations and considering
whether the valuation methodology is the
most appropriate;
– Considered any indicators of bias in our audit
as a whole; and
– Performed a review of unadjusted audit differences, if
any, for indications of bias or deliberate misstatement.
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Use of our report
This report is made solely to the Company’s members,
as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken
so that we might state to the Company’s members those
matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility
to anyone other than the Company and the Company’s
members as a body, for our audit work, for this report, or for
the opinions we have formed.
Vanessa Bradley
(Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, UK
23 December 2024
BDO LLP is a limited liability partnership registered in
England and Wales (with registered number OC305127).
We also communicated relevant identified laws and
regulations and potential fraud risks to all engagement
team members, who were deemed to have the appropriate
competence and capabilities and remained alert to any
indications of fraud or non-compliance with laws and
regulations throughout the audit.
Our audit procedures were designed to respond to risks
of material misstatement in the financial statements,
recognising that the risk of not detecting a material
misstatement due to fraud is higher than the risk of
not detecting one resulting from error, as fraud may
involve deliberate concealment by, for example, forgery,
misrepresentations or through collusion. There are inherent
limitations in the audit procedures performed and the
further removed non-compliance with laws and regulations
is from the events and transactions reflected in the financial
statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on
the Financial Reporting Council’s website at: www.frc.org.
uk/auditorsresponsibilities. This description forms part of
our auditor’s report.
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Financial
Statements
03
Income statement
For the year ended 30September 2024
Year ended
30September 2024
Year ended
30September 2023
Notes
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Gains/(losses) on investments 2.3 – 15,024 15,024 – (4,284) (4,284)
Income 2.5 3,804 – 3,804 3,082 – 3,082
Investment management fee 2.6 (1,252) (3,757) (5,009) (1,252) (3,758) (5,010)
Other expenses 2.6 (721) (1) (722) (700) – (700)
Profit/(loss) before taxation 1,831 11,266 13,097 1,130 (8,042) (6,912)
Taxation 2.9 – – – – – –
Profit/(loss) for the year,
being total comprehensive
income for the year 1,831 11,266 13,097 1,130 (8,042) (6,912)
Returnper ordinary share:
Basic and diluted 2.2 0.48p 2.95p 3.43p 0.33p (2.32p) (1.99p)
All items in the above statement derive from continuing operations.
There are no recognised gains and losses other than those disclosed in the Income Statement.
The revenue column of the Income Statement includes all income and expenses. The capital column accounts for the
realised and unrealised profit or loss on investments and the proportion of the management fee charged to capital.
The total column of this statement is the Statement of Total Comprehensive Income of the Company prepared in
accordance with Financial Reporting Standards (
“
FRS”) 102. The supplementary revenue return and capital return columns
are prepared in accordance with the Statement of Recommended Practice issued by the Association of Investment
Companies (“AIC SORP”).
The notes on pages75 to 91 form part of these financial statements.
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03 Financial Statements
Annual Report and Audited Financial Statements 2024
Statement of changes in equity
For the year ended 30September 2024
Non-distributable reserves Distributable reserves
Notes
Called-up
share
capital
£’000
Share
premium
£’000
Revaluation
reserve
£’000
Capital
reserve*
£’000
Revenue
reserve
£’000
Total
£’000
At 1 October 2023 39,628 – 23,062 144,092 2,877 209,659
Profit after taxation – – 10,414 852 1,831 13,097
Net proceeds of share
issues, share buybacks &
sale of shares from treasury 4,114 20,193 – (4,325) – 19,982
Dividends paid 2.4 – – – (14,522) (768) (15,290)
Share premium
cancellation costs – – – (4) – (4)
At 30 September 2024 43,742 20,193 33,476 126,093 3,940 227,444
For the year ended 30September 2023
Non-distributable reserves Distributable reserves
Notes
Called-up
share
capital
£’000
Share
premium
£’000
Revaluation
reserve
£’000
Capital
reserve*
£’000
Revenue
reserve
£’000
Total
£’000
At 1October 2022 35,789 106,099 18,834 49,142 3,122 212,986
(Loss)/profit after taxation – – 4,228 (12,270) 1,130 (6,912)
Net proceeds of share
issues, share buybacks &
sale of shares from treasury 3,839 20,452 – (2,413) – 21,878
Dividends paid 2.4 – – – (16,901) (1,375) (18,276)
Cancellation of share
premium – (126,551) – 126,551 – –
Share premium
cancellationcosts – – – (17) – (17)
At 30September 2023 39,628 – 23,062 144,092 2,877 209,659
* Of the distributable reserves noted above £52,321,000 (2023: £79,777,000) is not available for dividend distribution due to HMRC VCT rules.
The notes on pages75 to 91 form part of these financial statements.
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03 Financial Statements
Annual Report and Audited Financial Statements 2024
Balance sheet
As at 30September 2024
Company Number: 04115341
Notes
As at
30September
2024
£’000
As at
30September
2023
£’000
Fixed assets
Investments 2.3 228,169 210,243
Current assets
Debtors 2.7 599 235
Cash at bank and on deposit 357 670
956 905
Creditors (amounts falling due within one year) 2.8 (1,681) (1,489)
Net current liabilities (725) (584)
Net assets 227,444 209,659
Capital and reserves
Called-up share capital 3.1 43,742 39,628
Share premium 3.2 20,193 –
Capital reserve 3.2 126,093 144,092
Revaluation reserve 3.2 33,476 23,062
Revenue reserve 3.2 3,940 2,877
Equity shareholders’ funds 2.1 227,444 209,659
Net asset value per share
– Basic and diluted 2.1 57.41p 57. 8 8p
The notes on pages75 to 91 form part of these financial statements.
The financial statements were approved, and authorised for issue, by the board of Directors of Baronsmead Second
Venture Trust plc on 23 December 2024 and were signed on its behalf by:
Sarah Fromson
Chair
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03 Financial Statements
Annual Report and Audited Financial Statements 2024
Statement of cash flows
For the year ended 30September 2024
Year ended
30September
2024
£’000
Year ended
30September
2023
£’000
Cash flows from operating activities
Investment income received 2,080 2,060
Deposit interest received 43 83
Other income received 1 –
Investment management fees paid (4,882) (5,031)
Other cash payments (746) (700)
Net cash outflow from operating activities (3,504) (3,588)
Cash flows from investing activities
Purchases of investments (39,652) (92,959)
Disposals of investments 38 ,172 56,993
Net cash outflow from investing activities (1,480) (35,966)
Cash flows from financing activities
Gross proceeds of share issues 25,000 25,000
Gross proceeds from sale of shares from treasury – 1,063
Gross costs of share buybacks (4,021) (3,141)
Cost of Share issues (977) (1,028)
Costs of share buybacks (20) (16)
Equity dividends paid (15,290) (18,276)
Other costs charged to capital (21) –
Net cash inflow from financing activities 4,671 3,602
Decrease in cash (313) (35,952)
Reconciliation of new cash flow to movement in net cash
Decrease in cash (313) (35,952)
Opening cash at bank and on deposit 670 36,622
Closing cash at bank and on deposit 357 670
Reconciliation of profit/(loss) before taxation to net cash outflow from
operating activities
Profit/(loss) before taxation 13,097 (6,912)
(Gains)/losses on investments (15,024) 4,284
Income reinvested (1,422) (856)
Increase in debtors (364) (83)
Increase/(decrease) in creditors 209 (21)
Net cash outflow from operating activities (3,504) (3,588)
The notes on pages75 to 91 form part of these financial statements.
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03 Financial Statements
Annual Report and Audited Financial Statements 2024
Notes to the financial statements
For the year ended 30September 2024
We have grouped notes into sections under three key categories:
1. Basis of preparation
2. Investments, performance and shareholder returns
3. Other required disclosures
The key accounting policies have been incorporated throughout the notes to the financial statements adjacent to the
disclosure to which they relate. All accounting policies are included within an outlined box.
1 Basis of preparation
1.1 Basis of accounting
These Financial Statements have been prepared under FRS 102 ‘The Financial Reporting Standard applicable in the UK
and Republic of Ireland’ and in accordance with the Statement of Recommended Practice (“SORP”) for investment trust
companies and venture capital trusts issued by the Association of Investment Companies (“AIC”) in November 2014 and
last updated in July 2022 and on the assumption that the Company maintains VCT status with HMRC.
The application of the Company’s accounting policies requires judgement, estimation and assumptions about the
carrying amount of assets and liabilities. These estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
After making the necessary enquiries, including those made during the preparation of the viability statement in the
Strategic Report, the Directors believe that the Company will continue to be able to meet its liabilities as and when they
fall due for a period of at least 12 months, therefore it is appropriate to apply the going concern basis in preparing the
financial statements.
The Directors acknowledge the current economic and geo-political environment, however the Directors consider the
Company to be well placed to continue to operate for at least 12 months from the date of this report. The Company has
no debt and has sufficient liquidity to meet both its contracted expenditure and its discretionary cash outflows, including
to invest in new opportunities as they arise. The Directors note that the Company’s third-party suppliers are not
experiencing any significant operational difficulties affecting their respective services to the Company. The Directors
have also assessed the Company’s ability to cover its annual running costs under several liquidity scenarios in which
the value of liquid assets (including AIM-traded investments and OEICs) has been subject to sensitivity analysis, taking
into account the current economic environment and other, plausibly possible changes in performance. It is therefore
appropriate to apply the going concern basis in preparing the financial statements.
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03 Financial Statements
Annual Report and Audited Financial Statements 2024
2 Investments, performance and shareholder returns
2.1 Net asset valueper share
Number of
ordinary shares
Net asset value per
share attributable
Net asset value
attributable
30September
2024
number
30September
2023
number
30September
2024
pence
30September
2023
pence
30September
2024
£’000
30September
2023
£’000
Ordinary shares (basic) 396,183,675 362,253,166 57.41 57. 8 8 227,444 209,659
2.2 Returnper share
Weighted average number
of ordinary shares
Return per
ordinary share
Net profit
after taxation
30September
2024
number
30September
2023
number
30September
2024
pence
30September
2023
pence
30September
2024
£’000
30September
2023
£’000
Revenue 381,575,206 346,626,977 0.48 0.33 1,831 1,130
Capital 381,575,206 346,626,977 2.95 (2.32) 11,266 (8,042)
Total 3.43 (1.99) 13,097 (6,912)
2.3 Investments
The Company has fully adopted sections 11 and 12 of FRS 102.
Purchases or sales of investments are recognised at the date of transaction at fair value.
Investments are subsequently measured at fair value through profit and loss. For listed securities this is either bid price
or the last traded price, depending on the convention of the market on which the investment is traded.
In respect of collective investment vehicles, which consists of investments in open-ended investment companies
authorised in the UK, this is the published price.
In respect of unquoted investments, these are valued at fair value by the Directors using methodology which is
consistent with the International Private Equity and Venture Capital Valuation Guidelines (“IPEV Guidelines”).
Judgements
The key judgements in the fair valuation process are:
i) The Manager’s determination of the appropriate application of IPEV Guidelines to each unquoted investment;
ii) The Directors’ consideration of whether each fair value is appropriate following detailed review and challenge.
The judgement applied in the selection of the methodology used for determining the fair value of each unquoted
investment can have a significant impact upon the valuation.
76
Annual Report and Audited Financial Statements 2024
03 Financial Statements - Notes to the financial statements
Estimates
The key estimate in the financial statements is the determination of the fair value of the unquoted investments. This
estimate is key as it significantly impacts the valuation of the unlisted investments at the balance sheet date. The fair
valuation process involves estimates using inputs that are unobservable (for which market data is unavailable). Fair
value estimates are cross-checked to alternative estimation methods where possible to improve the robustness of the
estimate. As the valuation outcomes may differ from the fair value estimates a price sensitivity analysis is provided in
Other Price Risk Sensitivity in note 3.3 on pages87 to 91. The risk of an over or underestimation of fair values is greater
when methodologies are applied using more subjective inputs.
Assumptions
The determination of fair value for unquoted investments involves key assumptions dependent upon the valuation
methodology used. The primary methodologies applied are:
i) Cost of recent investment
ii) Multiple basis
The enterprise value of the investment may be determined by applying a suitable price-earnings ratio, revenue or
gross profit multiple to that company’s historic, current or forecast earnings before interest, tax, depreciation and
amortisation, or revenue, or gross profit (the ratio used being based on a comparable sector but the resulting value
being adjusted to reflect points of difference identified by the Manager compared to the sector including, inter alia, scale
and liquidity).
iii) Offer less 10 per cent.
Where Heads of Terms have been agreed or a formal offer received from a third party for an investee company, and it is
the intention of the Manager to accept it, a discount of 10% is applied to the offer price.
The nature of the unquoted portfolio will influence the valuation technique applied. The valuation approach recognises
that, as stated in the IPEV Guidelines, the price of a recent investment, if resulting from an orderly transaction, generally
represents fair value as at the transaction date and may be an appropriate starting point for estimating fair value at
subsequent measurement dates.
The cost of recent investment approach involves holding the investment at the price set in the latest available funding
round, taking into account, amongst other things, factors such as the time lapsed since the last round.
However, consideration is given to the facts and circumstances as at the subsequent measurement date, including
changes in the market or performance of the investee company. Milestone analysis is used where appropriate to
incorporate the operational progress of the investee company into the valuation. Additionally, the background to the
transaction must be considered.
As a result, various multiples based techniques are employed to assess the valuations particularly in those
companies with established revenues. All valuations are cross-checked for reasonableness by employing relevant
alternative techniques.
The multiple approach involves more subjective inputs than the Cost of recent investment and Offer approaches and
therefore presents a greater risk of over or under estimation.
The key assumptions for the multiples basis are:
the selection of companies on which to determine a basket of comparative multiples;
the determination of maintainable historic or forecast earnings, revenue or gross profit;
the appropriateness of the discount magnitude applied for reduced liquidity and other qualitative factors;
identifying surplus cash.
Gains and losses arising from changes in the fair value of the investments are included in the Income statement for the
year as a capital item. Transaction costs on acquisition are included within the initial recognition and the profit or loss on
disposal is calculated net of transaction costs on disposal.
All investments are initially recognised and subsequently measured at fair value. Changes in fair value are recognised in
the Income statement.
77
Annual Report and Audited Financial Statements 2024
03 Financial Statements - Notes to the financial statements
The methods of fair value measurement are classified into a hierarchy based on reliability of the information used to
determine the valuation.
Level 1 – Fair value is measured based on quoted prices in an active market.
Level 2 – Fair value is measured based on directly observable current market prices or indirectly being derived
from market prices.
Level 3 – Fair value is measured using a valuation technique that is not based on data from an observable market.
As at
30September
2024
£’000
As at
30September
2023
£’000
Level 1
Investments traded on AIM 85,635 78,973
Level 2
Collective investment vehicles 87,948 80,764
Level 3
Unquoted investments 54,586 50,506
228,169 210,243
For the year ended 30September 2024
Level 1 Level 2 Level 3
Traded
on AIM
£’000
Collective
investment
vehicles
£’000
Unquoted
£’000
Total
£’000
Opening book cost 64,431 65,537 57,213 187,181
Opening unrealised appreciation/(depreciation) 14,542 15,227 (6,707) 23,062
Opening fair value 78,973 80,764 50,506 210,243
Movements in the year:
Transfer between levels (2,290) – 2,290 –
Purchases at cost 4,073 27, 667 9,334 41,074
Sale – proceeds (9,273) (28,651) (248) (38,172)
Sales – realised gains/(losses) on sales 1,776 1,460 (2,285) 951
Unrealised gains/(losses) realised during the year 5,752 200 (2,293) 3,659
Increase/(decrease) in unrealised appreciation 6,624 6,508 (2,718) 10,414
Closing fair value 85,635 87,948 54,586 228 ,169
Closing book cost 64,469 66,213 64,011 194,693
Closing unrealised appreciation/(depreciation) 21,166 21,735 (9,425) 33,476
Closing fair value 85,635 87,948 54,586 228 ,169
Equity shares 85,635 – 7,025 92,660
Preference shares – – 37,173 37,173
Loan notes – – 10,388 10,388
Collective investment vehicles – 87,948 – 87,948
Closing fair value 85,635 87,948 54,586 228 ,169
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Annual Report and Audited Financial Statements 2024
03 Financial Statements - Notes to the financial statements
For the year ended 30September 2023
Level 1 Level 2 Level 3
Traded
on AIM
£’000
Listed on
LSE
£’000
Collective
investment
vehicles
£’000
Unquoted
£’000
Total
£’000
Opening book cost 63,764 3,429 36,557 55,121 158,871
Opening unrealised appreciation/(depreciation) 11, 287 (3,395) 12,945 (2,003) 18,834
Opening fair value 75,051 34 49,502 53,118 177,705
Movements in the year:
Transfer between levels (1,590) – – 1,590 –
Purchases at cost 2,303 – 82,878 8,634 93,815
Sale – proceeds (661) – (53,898) (2,434) (56,993)
Sales – realised gains/(losses) on sales 149 (34) – 203 318
Unrealised gains/(losses) realised during the year 466 (3,395) – (5,901) (8,830)
Increase/(decrease) in unrealised appreciation 3,255 3,395 2,282 (4,704) 4,228
Closing fair value 78,973 – 80,764 50,506 210,243
Closing book cost 64,431 – 65,537 57,213 187,181
Closing unrealised appreciation/(depreciation) 14,542 – 15,227 (6,707) 23,062
Closing fair value 78,973 – 80,764 50,506 210,243
Equity shares 78,973 – – 8,514 87,487
Preference shares – – – 31,121 31,121
Loan notes – – – 10,871 10,871
Collective investment vehicles – – 80,764 – 80,764
Closing fair value 78,973 – 80,764 50,506 210,243
The gains and losses included in the above table have all been recognised in the Income Statement on page71.
In the year ending 30 September 2024, two investments held, Fulcrum Utility Services Ltd and LoopUp Group plc
previously Level 1 were transferred to Level 3 following their delistings from AIM.
In the year ending 30September 2023, an investment held, Deepverge plc previously Level 1 was transferred to Level 3
following its delisting from AIM.
The Company received £9.5
million (2023: £3.1million) from investments sold in the year, excluding liquidity funds
redeemed of £28.7million (2023: £53.9million). The book cost of these investments when they were purchased was
£6.6million (2023: £11.6million). These investments have been revalued over time and until they were sold any unrealised
gains or losses were included in the fair value of the investments.
79
Annual Report and Audited Financial Statements 2024
03 Financial Statements - Notes to the financial statements
2.4 Dividends
Equity dividends payable are recognised when the shareholders’ right to receive payment is established. For interim
dividends this is when they are paid and for final dividends this is when they are approved by shareholders.
Year ended
30September 2024
Year ended
30September 2023
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Amounts recognised in the year:
For the year ended 30 September 2024
Interim dividend of 1.75p per ordinary share
paid on 9 September 2024 397 6,557 6,954 – – –
For the year ended 30 September 2023
Final dividend of 2.25p per ordinary share
paid on 8 March 2024 371 7,965 8,336 – – –
Interim dividend of 2.25p per ordinary
share paid on 8 September 2023 – – – 362 7,785 8,147
For the year ended 30 September 2022
Final dividend of 3.0p per ordinary share
paid on 3 March 2023 – – – 1,013 9,116 10,129
768 14,522 15,290 1,375 16,901 18,276
2.5 Income
Interest income on loan notes and dividends on preference shares are accrued on a daily basis. Provision is made
against this income where recovery is doubtful.
Where the terms of unquoted loan notes only require interest or a redemption premium to be paid on redemption,
theinterest and the redemption premium is recognised as income once redemption is reasonably certain. Until such
date interest is accrued daily and included within the valuation of the investment. When a redemption premium is
designed to protect the value of the instrument holder’s investment rather than reflect a commercial rate of revenue
return the redemption premium should be recognised as capital. The treatment of redemption premiums is analysed
to consider if they are revenue or capital in nature on a company by company basis. A redemption premium of £nil
(2023:£nil) was received in the year ended 30September 2024.
Income from fixed interest securities and deposit interest is included on an effective interest rate basis.
Dividends on quoted shares are recognised as income when the related investments are marked ex-dividend and where
no dividend date is quoted, when the Company’s right to receive payment is established.
80
Annual Report and Audited Financial Statements 2024
03 Financial Statements - Notes to the financial statements
Year ended
30September 2024
Year ended
30September 2023
Quoted
Securities
£’000
Unquoted
securities
£’000
Total
£’000
Quoted
securities
£’000
Unquoted
securities
£’000
Total
£’000
Income from investments
Dividend income 2,540 – 2,540 1,822 – 1,822
Interest income 851 378 1,229 747 431 1,178
3,391 378 3,769 2,569 431 3,000
Other income
Deposit interest 34 82
Other income 1 –
Total income 3,804 3,082
All investments have been included at fair value through profit or loss on initial recognition, therefore all investment income
arises on investments at fair value through profit or loss.
2.6 Investment management fee and other expenses
All expenses are recorded on an accruals basis.
Management fees are allocated 25per cent income and 75per cent capital derived in accordance with the board’s
expected split between long-term income and capital returns. Performance fees are allocated 100per cent to capital.
Year ended
30September 2024
Year ended
30September 2023
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Investment management fee 1,252 3,757 5,009 1,252 3,758 5,010
Performance fee – – – – – –
1,252 3,757 5,009 1,252 3,758 5,010
The management agreement may be terminated by either party giving 12 months notice of termination.
The Manager, Gresham House, receives a fee of 2.5per centper annum of the net assets of the Company, up to and
including £209,658,860 (being the total net assets of the Company as at 30 September 2023) and 2.0 per cent. per annum
of the amount by which the net assets of the Company exceed £209,658,860, calculated and payable on a quarterly basis.
The WS Gresham House Equity Funds, are also managed by Gresham House. Arrangements are in place to avoid the
double charging of fees.
The Manager is entitled to a performance fee when the total return on net proceeds of the ordinary shares exceeds 8per
centper annum (on a simple basis). The Manager is entitled to 10per cent of the excess. The amount of any performance
fee which is paid in respect of a calculation period shall be capped at 5per cent of the shareholders’ funds at the end of the
calculation period. £nil performance fee is payable for the year ended 30September 2024 (2023: £nil).
81
Annual Report and Audited Financial Statements 2024
03 Financial Statements - Notes to the financial statements
Other expenses
Year ended
30September
2024
£’000
Year ended
30September
2023
£’000
Directors’ fees 128 128
Secretarial and accounting fees paid to the Manager 178 167
Auditor’s fees for statutory audit (including VAT) 64 61
Other 351 344
721 700
Information on Directors’ remuneration is given in the Directors’ emoluments table on page59. During the year there was
no remuneration due to the auditors for non-audit services (2023: £nil).
During the year ended 30 September 2024 the company incurred £1,000 of legal fees relating to an investment, these have
been recognised as a capital expense.
2.7 Debtors
As at
30September
2024
£’000
As at
30September
2023
£’000
Prepayments and accrued income 599 235
599 235
2.8 Creditors (amounts falling due within one year)
As at
30September
2024
£’000
As at
30September
2023
£’000
Management, secretarial and accounting fees due 1,535 1,361
Share premium cancellation costs – 17
Other creditors 146 111
1,681 1,489
82
Annual Report and Audited Financial Statements 2024
03 Financial Statements - Notes to the financial statements
2.9 Tax
UK corporation tax payable is provided on taxable profits at the current rate.
Provision is made for deferred taxation, without discounting, on all timing differences and is calculated using
substantively enacted tax rates.
This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be
suitable profits from which the future reversal of the can underlying timing differences be deducted.
A reconciliation of the tax charge/(credit) to the profit before taxation is shown below:
Year ended
30September 2024
Year ended
30September 2023
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Profit/(loss) on ordinary activities before
taxation 1,831 11, 266 13,097 1,130 (8,042) (6,912)
Corporation tax at a rate of 25 per cent
(2023: 22.0 per cent) 458 2,817 3,275 248 (1,769) (1,521)
Effect of:
Non-taxable (gains)/losses – (3,756) (3,756) – 942 942
Non-taxable dividend income (635) – (635) (401) – (401)
Losses carried forward 177 939 1,116 153 827 980
Tax charge/(credit) for the year – – – – – –
At 30September 2024 the Company had unrealised losses of £30,589,857 (2023: £26,129, 035). A deferred tax asset of
£7,647,4 6 4 (2023: £6,532,259) has not been recognised because the Company is not expected to generate taxable income
in a future year in excess of the deductible expenses of that future year. Accordingly the Company is unlikely to be able to
reduce future tax liabilities through the use of existing surplus expenses. Due to the Company’s status as a VCT, and the
intention to continue meeting the conditions required to obtain approval in the foreseeable future, the Company has not
provided deferred tax on any capital gains and losses arising on the revaluation or disposal of investments.
83
Annual Report and Audited Financial Statements 2024
03 Financial Statements - Notes to the financial statements
3 Other required disclosures
3.1 Called-up share capital
Allotted, called‑up and fully paid:
For the year ended 30September 2024 £’000
396,279,533 ordinary shares of 10p each listed at 30 September 2023 39,628
41,136,289 ordinary shares of 10p each issued during the year 4,114
437,415,822 ordinary shares of 10p each listed at 30 September 2024 43,742
34,026,367 ordinary shares of 10p each held in treasury at 30 September 2023 (3,403)
7,205,780 ordinary shares of 10p each repurchased during the year and held in treasury (721)
41,232,147 ordinary shares of 10p each held in treasury at 30 September 2024 (4,124)
396,183,675 ordinary shares of 10p each in circulation* at 30 September 2024 39,618
For the year ended 30September 2023 £’000
357,889,473 ordinary shares of 10p each listed at 30September 2022 35,789
38,390,060 ordinary shares of 10p each issued during the year 3,839
396,279,533 ordinary shares of 10p each listed at 30September 2023 39,628
30,601,089 ordinary shares of 10p each held in treasury at 30September 2022 (3,060)
5,247,081 ordinary shares of 10p each repurchased during the year and held in treasury (525)
1,821,803 ordinary shares of 10p each sold from treasury during the year 182
34,026,367 ordinary shares of 10p each held in treasury at 30September 2023 (3,403)
362,253,166 ordinary shares of 10p each in circulation* at 30September 2023 36,225
* Carrying one vote each.
The 41,136,289 (2023: 38,390,060) ordinary shares were issued at an average price of 60.77p (2023: 65.12p).
During the year the Company bought back into treasury 7,205,780 (2023: 5,247,081) ordinary shares, representing1.99
(2023: 1.61)per cent of the ordinary shares in circulation at the beginning of the financial year. During the year the Company
sold no (2023: 1,821,803) shares from treasury.
Treasury shares
When the Company reacquires its own shares, they are held as treasury shares and not cancelled where permitted
under legislation.
Shareholders have authorised the board to re-issue treasury shares at a discount to the prevailing NAV subject to the
following conditions:
It is in the best interests of the Company;
Demand for the Company’s shares exceeds the shares available in the market;
A full prospectus must be produced if required; and
HMRC will not consider these ‘new shares’ for the purposes of the purchasers’ entitlement to initial income tax relief.
84
Annual Report and Audited Financial Statements 2024
03 Financial Statements - Notes to the financial statements
3.2 Reserves
Gains and losses on realisation of investments of a capital nature are dealt with in the capital reserve. Purchases of the
Company’s own shares to be either held in treasury or cancelled are also funded from this reserve. When shares are
reissued from treasury the original cost is allocated to the capital reserve with any gains allocated to share premium.
75per cent of management fees are allocated to the capital reserve in accordance with the board’s expected split
between long-term income and capital returns.
For the year ended 30September 2024
Distributable reserves Non-distributable reserves
Capital
reserve
†
£’000
Revenue
reserve
£’000
Total
£’000
Share
premium
£’000
Revaluation
reserve*
£’000
Total
£’000
At 1 October 2023 144,092 2,877 146,969 – 23,062 23,062
Gross proceeds of share issues – – – 20,886 – 20,886
Share premium cancellation costs (4) – (4) – – –
Purchase of shares for treasury (4,021) – (4,021) – – –
Expenses of share issue and buybacks (304) – (304) (693) – (693)
Reallocation of prior year unrealised gains 3,659 – 3,659 – (3,659) (3,659)
Realised gain on disposal of investments
#
951 – 951 – – –
Net increase in value of investments
#
– – – – 14,073 14,073
Management fee charged to capital
#
(3,757) – (3,757) – – –
Profit after taxation
#
(1) 1,831 1,830 – – –
Dividends paid in the year (14,522) (768) (15,290) – – –
At 30 September 2024 126,093 3,940 130,033 20,193 33,476 53,669
85
Annual Report and Audited Financial Statements 2024
03 Financial Statements - Notes to the financial statements
For the year ended 30September 2023
Distributable reserves Non-distributable reserves
Capital
reserve
†
£’000
Revenue
reserve
£’000
Total
£’000
Share
premium
£’000
Revaluation
reserve*
£’000
Total
£’000
At 1October 2022 49,142 3,122 52,264 106,099 18,834 124,933
Gross proceeds of share issues – – – 21,161 – 21,161
Cancellation of share premium 126,551 – 126,551 (126,551) – (126,551)
Share premium cancellation costs (17) – (17) – – –
Purchase of shares for treasury (3,141) – (3,141) – – –
Sale of shares from treasury 1,063 – 1,063 – – –
Expenses of share issues and buybacks (335) – (335) (709) – (709)
Reallocation of prior year unrealised
losses/gains (8,830) – (8,830) – 8,830 8,830
Realised gain on disposal of investments
#
318 – 318 – – –
Net decrease in value of investments
#
– – – – (4,602) (4,602)
Management fee charged to capital
#
(3,758) – (3,758) – – –
Profit after taxation
#
– 1,130 1,130 – – –
Dividends paid in the year (16,901) (1,375) (18,276) – – –
At 30September 2023 144,092 2,877 146,969 – 23,062 23,062
* Changes in fair value of investments are dealt with in this reserve.
#
The total of these items is £13,097,000 (2023: £(6,912,000)) which agrees to the total profit for the year.
†
Of the distributable reserves noted above £52,321,000 (2023: £79,777,000) is not available for dividend distribution due to HMRC VCT rules.
Distributable reserves may also include any net unrealised gains on investments whose prices are quoted in an active
market and deemed readily realisable in cash.
Share premium is recognised net of issue costs.
The Company does not have any externally imposed capital requirements.
86
Annual Report and Audited Financial Statements 2024
03 Financial Statements - Notes to the financial statements
3.3 Financial instruments risks
The Company’s financial instruments comprise equity and fixed interest investments, cash balances and liquid resources
including debtors and creditors. The Company holds financial assets in accordance with its investment policy to invest in a
diverse portfolio of UK growth businesses.
The Company’s investing activities expose it to a range of financial risks. These key risks and the associated risk
management policies to mitigate these risks are described below.
Market risk
Market risk includes price risk on investments and interest rate risk on investments and other financial assets and liabilities.
Price risk
The investment portfolio is managed in accordance with the policies and procedures described in the full Annual Report
and Audited Financial Statements.
Investments in companies listed on the AIM market usually involve a higher risk than investments in larger companies
quoted on a recognised stock exchange. The spread between the buying and selling price of such shares may be wide
and the price used for valuation may be limited and many may not be achievable. The valuation of the portfolios and
opportunities for realisation of AIM-traded investments within the portfolios may also depend on stock market conditions.
The Company aims to reduce these risks by diversifying the portfolio across business sectors and asset classes. The
Board monitors the portfolio on a quarterly basis.
Investments in unquoted companies, by their nature, usually involve a higher degree of risk than investments in companies
quoted on a recognised stock exchange. The fair valuation of these unquoted investments is influenced by the estimates,
assumptions and judgements made in the fair valuation process (see note 2.3 above).
Price risk sensitivity
The fair valuation of unquoted investments is influenced by the estimates, assumptions and judgements made in the fair
valuation process (see note 2.3 on pages76 to 79). A sensitivity analysis is provided below which recognises that the
valuation methodologies employed involve different levels of subjectivity in their inputs. The sensitivity analysis below
applied a wider range of input variable sensitivity to the Multiple method due to the increased subjectivity involved in the
use of this method compared to the rebased cost method, which refers to the price of a recent investment.
87
Annual Report and Audited Financial Statements 2024
03 Financial Statements - Notes to the financial statements
As at 30September 2024
Security Valuation basis Key variable inputs
Fair
Value
£’000s
Sensitivity
%
Impact
£’000s
Impact
pence
per
share
Impact
% of net
assets
Unquoted
Multiple Estimated sustainable revenue/
EBITDA
Selection of comparable
companies
Application of illiquidity discount 53,409 +/-20% 10,682 2.7 +/-4.7
Offer less 10% Current offer price received for sale
Discount applied to offer – +/-10% – – –
AIM
Bid price 78,968 +/-20% 15,794 4.0 +/-6.9
Traded price 7,8 44 +/-20% 1,569 0.4 +/-0.7
Gresham
House
Equity
Funds
Published price 62,544 +/-20% 12,509 3.2 +/-5.5
As at 30September 2023
Security Valuation basis Key variable inputs
Fair
Value
£’000s
Sensitivity
%
Impact
£’000s
Impact
pence
per
share
Impact
% of net
assets
Unquoted
Rebased cost Latest funding round price 3,342 +/-10% 334 0.1 +/-0.2
Multiple
Estimated sustainable
revenue/EBITDA
Selection of comparable
companies
Application of illiquidity discount 46 ,112 +/-20% 9,222 2.4 +/-4.4
AIM
Bid price 70,632 +/-20% 14,126 3.9 +/-6.7
Traded price 8,341 +/-20% 1,093 0.5 +/-0.5
Gresham
House
Equity
Funds
Published price 62,954 +/-20% 12,591 3.5 +/-6.0
88
Annual Report and Audited Financial Statements 2024
03 Financial Statements - Notes to the financial statements
Key variable inputs/valuation bases
The key variable inputs applicable to each valuation basis will vary dependent on the particular circumstances of each
unquoted company valuation. Where there has been a recent transaction, such as an initial investment being made into
the company, or where there has been a subsequent external funding round, the key variable input will be the last funding
round price. Where this is not the case, the valuation has been based on a multiple of estimated sustainable earnings.
Anexplanation of each of the key variable inputs is provided below and includes an indication of the range in value for each
input, where relevant.
Latest funding round price
The latest funding round price is the key variable input in the valuation of a company when there has been a recent
investment either by the Company or by another investor. This transaction provides evidence of the price an independent
third party would be willing to pay for the investment. There is lower estimation uncertainty where this third party is an
external investor, and higher estimation uncertainty where this is an internal investor (i.e. where the investor already has an
investment in the company).
Estimated sustainable revenue/EBITDA
The selection of sustainable revenue or EBITDA will depend upon whether the company is sustainably profitable or not,
and where it is not then revenues will be used in the valuation. The valuation approach may use prior year actuals, the last
12 months, or a forecast of revenue/EBITDA where deemed appropriate. The valuation approach will typically assess
companies based on the prior year actuals or last 12 months of revenue or EBITDA, as this represents the most recently
available trading information and therefore is viewed as the most reliable. Where the company has a history of accurate
forecasting, or where there is a change in circumstance at the business which will impact revenue/EBITDA going forward,
then a forecast or budget will be deemed most appropriate.
Selection of comparable companies or indices
The selection of comparable companies or indices is assessed individually for each investment at the point of investment,
and at each valuation thereafter. The key criteria in selecting appropriate comparable companies or indices are the
industry sector, the business model, and the respective revenue/EBITDA growth rates of the company. Typically up to 15
comparable companies or indices will be selected for each investment to derive the adopted revenue/EBITDA multiple.
The Multiples can be derived from either listed companies with similar characteristics or recent comparable transactions.
The value of the unquoted element of the portfolio may therefore also indirectly be affected by price movements on the
listed exchanges.
Application of illiquidity discount
An illiquidity discount is applied to the majority of unquoted investments, reflecting that the Company usually holds a
minority stake and that the realisation of the investment may require cooperation on the timing and sale price from other
stakeholders. A standard illiquidity discount of 25 per cent is applied on all unquoted investments reflecting that the
Company usually holds a minority stake and that the realisation of the investment may require cooperation on the timing
and sale price from other stakeholders.
89
Annual Report and Audited Financial Statements 2024
03 Financial Statements - Notes to the financial statements
Interest rate risk
The Company has the following investments in fixed and floating rate financial assets:
As at 30September 2024 As at 30September 2023
Total
investment
£’000
Weighted
average
interest
rate
%
Weighted
average
time for
which rate
is fixed
Years
Total
investment
£’000
Weighted
average
interest
rate
%
Weighted
average
time for
which rate
is fixed
Years
Fixed rate loan note securities 10,388 11.79 4.30 3,814 10.80 4.56
Floating rate sterling liquidity funds 25,404 – – 17,810 – –
Cash at bank and on deposit 357 – – 670 – –
36,149 22,294
The fixed rate loan notes are not subject to interest rate risk and would therefore not impact the net assets.
Movements in interest rates would not significantly affect net assets attributable to the Company’s shareholders and total
profits, a movement of 1% in interest rates would cause a movement in net assets of £196,000.
Credit risk
Credit risk refers to the risk that a counterparty will default on its obligation resulting in a financial loss to the Company. The
Manager monitors credit risk on an ongoing basis.
At the reporting date, the Company’s financial assets exposed to credit risk amounted to the following:
As at
30September
2024
£’000
As at
30September
2023
£’000
Cash at bank and on deposit 357 670
Interest, dividends and other receivables 599 235
956 905
Credit risk on unquoted loan stock held within unlisted investments is considered to be part of market risk as disclosed
earlier in the note.
Credit risk arising on transactions with brokers relates to transactions awaiting settlement. Risk relating to unsettled
transactions is considered to be small due to the short settlement period involved and the high credit quality of the brokers
used. The Board monitors the quality of service provided by the brokers used to further mitigate this risk.
All the assets of the Company which are traded on a recognised exchange are held by JP Morgan Chase (“JPM”), the
Company’s custodian. The board monitors the Company’s risk by reviewing the custodian’s internal controls reports as
described in the Corporate Governance section of this report.
The majority of cash held by the Company is held by JPM. The board monitors the Company’s risk by reviewing regularly
the internal control reports. Should the credit quality or the financial position of the bank deteriorate significantly the
Investment Manager will seek to move the cash holdings to another bank.
There were no significant concentrations of credit risk to counterparties at 30September 2024 or 2023. No individual
investment in a portfolio company exceeded 11.1per cent of the net assets attributable to the Company’s shareholders at
30September 2024 (2023: 12.0per cent).
90
Annual Report and Audited Financial Statements 2024
03 Financial Statements - Notes to the financial statements
Liquidity risk
The Company’s financial instruments include investments in unquoted companies which are not traded in an organised
public market, all of which generally may be illiquid. AIM traded equity investments also carry a degree of liquidity risk. As a
result, the Company may not be able to liquidate quickly some of its investments in these instruments at an amount close
to their fair value in order to meet its liquidity requirements, or to respond to specific events such as deterioration in the
creditworthiness of any particular issuer.
The Company’s liquidity risk is managed on an ongoing basis by the Investment Manager. The Company’s overall liquidity
risks are monitored on a quarterly basis by the Board. The Company is a closed-end fund, assets do not need to be
liquidated to meet redemptions, and sufficient liquidity is maintained to meet obligations as they fall due.
At the year end the Company had financial liabilities of £1,681,000 (2023: £1,489,000). All financial liabilities were due within
three months and were undiscounted (2023: same).
The Company maintains sufficient investments in cash and readily realisable securities to pay accounts payable and
accrued expenses. At 30September 2024, these investments were valued at £25,761,000 (2023: £18,481,000).
3.4 Related parties
Related party transactions include Management, Secretarial, Accounting and Performance fees payable to the Manager,
Gresham House Asset Management Ltd, as disclosed in notes 2.6 and 2.8, and fees paid to the Directors along with their
shareholdings as disclosed in the Directors’ Remuneration Report. In addition, the Manager operates a VCT Incentive
Scheme, detailed in the Management retention section of the Strategic Report on page32, whereby members of staff and
portfolio consultants of the Manager are entitled to participate in all eligible unquoted investments alongside the Company.
During the year, Gresham House Asset Management Ltd received £287,000 (2023: £191,000) of advisory fees, £426,000
(2023: £412,000) of directors’ fees for services provided to companies in the investment portfolio and incurred abort costs
of £10,000 (2023: £4,000) with respect to investments attributable to Baronsmead Second Venture Trust plc.
3.5 Segmental reporting
The Company has one reportable segment being investing in primarily a portfolio of UK growth businesses, whether
unquoted or traded on AIM.
3.6 Post balance sheet events
The following events occurred between the balance sheet date and the signing of these financial statements:
The 31 October 2024 NAV of 57.6p was announced on 8 November 2024 and the 30 November 2024 NAV of 56.9p was
announced on 5 December 2024. At the date of publishing this report, the Board is unaware of any matter that will have
caused the NAV per share to have changed significantly since the latest NAV.
On 18 November 2024, purchased 2.6 million shares of 10.0p at a price of 54.7p per share to be held in Treasury; and on
19December 2024, purchased 1.9 million shares of 10.0p at a price of 54.1p per share to be held in Treasury.
Completed two new unquoted investments, totalling £1.5 million.
Completed four follow-on investments, into two quoted and two unquoted companies, totalling £1.0 million.
Partially realised Cerillion plc in November 2024, receiving proceeds of £0.1 million and making a return of 25.7x cost.
Crossword Cybersecurity plc delisted from AIM and entered into Administration in November 2024.
91
Annual Report and Audited Financial Statements 2024
03 Financial Statements - Notes to the financial statements
Appendices
04
The table below shows the cash and total returns to shareholders dependent on their subscription cost, including their
income tax reclaimed on subscription.
Year subscribed
Cash
invested
(p)
Income tax
reclaim
(p)
Net cash
invested
(p)
Cumulative
dividends
paid
#
(p)
Return
on cash
invested
(%)
Current
NAV
(p)
Total
return
(%)
2001 (January) 100.00 20.00 80.00 168.80 188.8 57.41 237.7
2005 (March) – C share* 100.00 40.00 60.00 123.05 163.1 57.41 157.0
2010 (March) 103.09 30.93 72.16 120.50 146.9 57.41 108.6
2012 (December) 117.40 35.22 82.18 102.50 117. 3 57.41 55.3
2014 (March) 112.4 0 33.72 78.68 82.50 103.4 57.41 31.5
2016 (February) 107.20 32.16 75.04 66.00 91.6 57.41 19.9
2017 (October) 97.48 29.24 68.24 46.00 77.2 57.41 8.2
2019 (February) 85.30 25.59 59.71 38.50 75.1 57.41 14.0
2019 (November) 78.90 23.67 55.23 31.00 69.3 57.41 8.0
2020 (January) 84.80 25.44 59.36 31.00 66.6 57.41 2.4
2020 (February) 82.50 24.75 57.75 27.50 63.3 57.41 7.4
2020 (March) 64.30 19.29 45.01 27. 50 72.8 57.41 23.3
2020 (November) 77.90 23.37 54.53 24.50 61.5 57.41 1.9
2020 (December) 80.90 24.27 56.63 24.50
60.3 57.41 (2.3)
2021 (January) 84.40 25.32 59.08 24.50 59.0 57.41 (4.0)
2021 (February) 82.20 24.66 57.54 21.00 55.5 57.41 (6.9)
2021 (March) 84.90 25.47 59.43 21.00 54.7 57.41 (9.2)
2021 (December) 88.10 26.43 61.67 18.00 50.4 57.41 (14.9)
2022 (January) 87.10 26 .13 60.97 18.00 50.7 57.41 (12.4)
2022 (March) 76.60 22.98 53.62 14.50 48.9 57.41 (6.0)
2023 (January)
‡
68.19 20.46 47.73 11. 50 46.9 57.41 0.4
2023 (March)
‡
65.72 19.72 46.00 8.50 42.9 57.41 4.5
2023 (April)
‡
62.96 18.89 44.07 8.50 43.5 57.41 2.3
2024 (January)
‡
61.05 18.32 42.73 6.25 40.2 57.41 1.4
2024 (February)
‡
60.63 18.19 42.44 4.00 36.6 57.41 1.7
2024 (April)
‡
60.67 18.20 42.47 4.00 36.6 57.41 0.9
The total return could be higher for those shareholders who were able to defer a capital gain on subscription and the net sum
invested may be less.
* Dividends paid to C shareholders post conversion have been adjusted by the conversion ratio (0.85642528).
#
Includes proposed final dividend of 2.25p per share.
‡
Cash invested is the average effective offer price. Shares were allotted pursuant to the 2023 & 2024 Offers at individual prices for each
investor in accordance with the allotment formula as set out in each Offer’s Securities Note.
Cash and total returns to shareholders
93
04 Appendices
Annual Report and Audited Financial Statements 2024
The chart below shows cash returned to shareholders based on the subscription price and the income tax reclaimed
on subscription.
0
20
40
60
80
100
120
140
160
180
200
220
Cash invested (p) Income tax reclaim (p) Cumulative dividends (p)*
2001 (Jan)
2005 (Mar) – C share
2010 (Mar)
2012 (Dec)
2014 (Mar)
2016 (Feb)
2017 (Oct)
2019 (Feb)
2019 (Nov)
2020 (Jan)
2020 (Feb)
2020 (Mar)
2020 (Nov)
2020 (Dec)
2021 (Jan)
2021 (Feb)
2021 (Mar)
2021 (Dec)
2022 (Jan)
2022 (Mar)
2023 (Jan)
#
2023 (Mar)
#
2023 (Apr)
#
2024 (Jan)
#
2024 (Feb)
#
2024 (Apr)
#
* Includes proposed final dividend of 2.25p.
#
Cash invested is the average effective offer price. Shares were allotted pursuant to the 2023 & 2024 Offers at individual prices for each
investor in accordance with the allotment formula as set out in each Offer’s Securities Note.
Cash returned to shareholders by date of investment
94 Annual Report and Audited Financial Statements 2024
04 Appendices
Ordinary share
Year ended
Dividend
history
per ordinary
share
(p)
Cumulative
dividends
(p)
Average total
dividend
per ordinary
share
(p)
31/12/01 2.30 2.30 2.30
31/12/02 2.80 5.10 2.55
31/12/03 4.20 9.30 3.10
31/12/04 4.50 13.80 3.45
31/12/05 5.50 19.30 3.86
31/12/06 6.50 25.80 4.30
31/12/07 7.50 33.30 4.76
31/12/08 7.50 40.80 5.10
31/12/09 7.50 48.30 5.37
31/12/10 7.50 55.80 5.58
31/12/11 7.50 63.30 5.75
31/12/12 7.50 70.80 5.90
31/12/13 7.50 78.30 6.02
31/12/14 17. 0 0 95.30 6.81
31/12/15 7.50 102.80 6.85
30/09/16 17. 0 0 119. 8 0 7.61
30/09/17 7.50 127.30 7.6 0
30/09/18 7.50 134.80 7.59
30/09/19 6.50 141.30 7.54
30/09/20 6.50 147. 80 7.48
30/09/21 6.50 154.30 7.44
30/09/22 6.00 160.30 7.37
30/09/23 4.50 164.80 7.24
30/09/24* 4.00 168.80 7.11
*Includes proposed final dividend of 2.25p.
Unclaimed Dividends
The Company’s Registrar was holding £1.2m in unclaimed dividends as at 30 September 2024. Of this amount, £0.1m has
been unclaimed for over 12 years.
Under the terms of the Company’s Articles of Association, any dividends unclaimed for a period of 12 years after having
become due for payment shall, if the Board so resolves, be forfeited and shall cease to remain owing by the Company.
Your Board would like to ensure shareholders receive dividends that are owing to them and I would like to remind
shareholders that it is their responsibility to keep their address, and for those who receive their dividends by bank
transfer, their bank account details, up to date by informing the Company’s Registrar of any changes. Any shareholders
who have not been able to claim their dividends are requested to contact the Company’s Registrar on 01484 240 910 or
by email at registrars@city.uk.com.
Dividends paid since launch
95Annual Report and Audited Financial Statements 2024
04 Appendices
Company Sector
Original
book cost
†
£’000
Accounting
book cost
†
£’000
30September
2024
fair value
£’000
30September
2023
fair value
£’000
% of net
assets
% of equity
held by
Baronsmead
Second
Venture
Trust plc
% of
equity
held by
all funds
#
Unquoted
Patchworks Integration Ltd Technology 5,486 5,486 6,753 6,031 3.0 11.4 25.0
Airfinity Ltd Healthcare & education 4,237 4,237 5,302 4,719 2.3 9.3 20.1
Panthera Biopartners Ltd Healthcare & education 3,338 3,338 4,007 1,781 1.8 12.2 26.7
Popsa Holdings Ltd Technology 3,379 3,379 3,379 3,379 1.5 3.7 8.1
Scurri Web Services Ltd Technology 2,293 2,293 2,818 2,719 1.2 6.9 14.7
Clarilis Ltd Technology 1,819 1,819 2,723 2,723 1.2 7.6 16.7
Huma Therapeutics Ltd Healthcare & education 2,792 2,792 2,518 – 1.1 0.4 0.8
Ozone Financial Technology
Ltd
Technology 1,847 1,847 2,371 – 1.0 2.3 11. 8
Fu3e Ltd Technology 1,819 1,819 2,147 2,001 0.9 13.6 29.7
TravelLocal Ltd Consumer markets 2,119 2,119 2,117 2,117 0.9 5.3 10.9
Metrion Biosciences Ltd Healthcare & education 1,740 1,740 1,999 1,447 0.9 12.5 26.8
SecureCloud+ Ltd Technology
789 789 1,687 1,904 0.7 8.8 16.7
Counting Ltd Business services 1,588 1,588 1,590 1,055 0.7 4.1 8.8
OnSecurity Technology Ltd
Technology
1,169 1,169 1,586 –
0.7
3.7 20.0
Orri Ltd Healthcare & education 1,362 1,362 1,576 1,413 0.7 7.6 38.2
Pointr Ltd Technology 526 526 1,259 1,129 0.6 2.7 5.2
Cognassist UK Ltd Healthcare & education 902 902 1,015 940 0.4 4.4 22.2
Huddl Mobility Ltd (trading as
CitySwift)
Technology 938 938 971 – 0.4 3.3 17.4
Lads Store Ltd (trading as
Bidnamic)
Technology 921 921 916 916 0.4 1.8 9.1
SciLeads Ltd Technology 915 915 915 – 0.4 3.0 16.5
RevLifter Ltd Technology 1,559 1,559 904 2,058 0.4 6.2 23.0
Proximity Insight Holdings Ltd Technology 1,152 1,152 863 1,152 0.4 4.1 20.4
Focal Point Positioning Ltd Technology 1,135 1,135 851 908 0.4 1.2 6.0
Branchspace Ltd Technology 609 609 843 609 0.4 4.6 25.5
Mable Therapy Ltd Healthcare & education 619 619 619 619 0.3 6.1 34.3
IWP Holdings Ltd Business services 1,587 1,587 397 1,510 0.2 4.0
8.5
Connect Earth Ltd Business services 451 451 338 451 0.1 2.9 14.7
Azarc.Io Inc Technology 652 652 326 – 0.1 4.4 23.1
Rockfish Group Ltd Consumer markets 986 986 255 187 0.1 6.1 11.6
Dayrize B.V. Technology 916 916 229 756 0.1 5.9 31.3
Yappy Ltd Consumer markets 2,265 2,265 136 115 0 .1 21.3 40.4
Cisiv Ltd Technology 789 789 – 536 0.0 6.3 12.0
Custom Materials Ltd Technology 3,092 3,092 – – 0.0 15.2 27. 8
Equipsme (Holdings) Ltd Business services 949 949 – – 0.0 6.4 12.7
Knight Recruitment Group Ltd Business services 795 795 – – 0.0 11.1 23.8
Full investment portfolio
96 Annual Report and Audited Financial Statements 2024
04 Appendices
Company Sector
Original
book cost
†
£’000
Accounting
book cost
†
£’000
30September
2024
fair value
£’000
30September
2023
fair value
£’000
% of net
assets
% of equity
held by
Baronsmead
Second
Venture
Trust plc
% of
equity
held by
all funds
#
Unquoted (continued)
Munnypot Ltd Technology 562 562 – – 0.0 1.5 2.7
SilkFred Ltd Consumer markets 966 966 – 396 0.0 2.8 5.1
Tribe Digital Holdings Ltd Technology 1,351 1,351 – 559 0.0 6.0 11. 5
60,414 60,414 53,410 23.4
Delisted (previously AIM)
MXC Capital Ltd Business services 240 267 – – 0.0 0.3 0.6
Fulcrum Utility Services Ltd Business services 342 1,650 – 4 0.0 0.9 1.0
LoopUp Group plc Technology 616 640 – 13 0.0 0.3 0.6
1,198 2,557 – 0.0
Total unquoted 61,612 62,971 53,410 23.4
AIM
Cerillion plc Technology 1,077 1,191 25,226 25,247 11.1 4.8 8.7
Netcall plc Technology 2,616 5,983 12,869 12,425 5.7 9.0 24.4
IDOX plc Technology 1,028 2,972 6,683 7, 014 3.0 2.4 6.5
Property Franchise Group plc Consumer markets 1,758 1,858 6,020 2,264
2.6 2.3 18.2
Bioventix plc Healthcare & education 309 940 4,476 4,476 2.0 2.3 11.1
Anpario plc Healthcare & education 662 2,239 3,212 2,493 1.4 4.7 6.9
Diaceutics plc Healthcare & education 1,590 1,590 2,762 2,155 1.2 2.5 13.0
Vianet Group plc Business services 2,092 1,724 2,090 1,244 0.9 5.6 17.3
PCI-PAL plc Technology 1,584 1,584 2,041 2,203 0.9 6.0 10.9
hVIVO plc Healthcare & education 1,445 1,437 2,029 1,425 0.9 1.1 1.9
Beeks Financial Cloud Group
plc
Technology 413 413 2,013 726 0.9 1.2 2.3
IntelliAM AI plc Technology 2,117 2,117 1,802 – 0.8 11. 8 23.5
Crossword Cybersecurity plc
‡
Technology 3,362 3,362 1,330 1,867 0.6 8 .1 15.6
Inspired plc Business services 861 2,682 1,232 1,943 0.5 2.6 28.5
Begbies Traynor Group plc Business services 545 513 1,161 1,326 0.5 0.7 3.8
Eden Research plc Business services 2,270 2,275 1,134 689 0.5 5.5 9.9
Oberon Investments Group plc Business services 1,549 1,549 1,059 957 0.5 5.1 9.7
Pulsar Group plc (formerly
Access Intelligence plc)
Business services 716 716 1,037 1,019 0.5 1.4 7. 3
Skillcast Group plc Healthcare & education
817 817 993 419 0.4 2.5 4.7
Merit Group plc Technology 3,267 4,253 940 734 0.4 6 .1 10.2
Tan Delta Systems plc Business services 956 956 919 883 0.4 5.0 9.8
SysGroup plc Technology 1,579 1,578 835 760 0.4 3.1 26.3
Diales plc (formerly Driver
Group plc)
Business services 1,529 1,747 733 733 0.3 5.6 20.1
Earnz plc Business services 703 703 674 – 0.3 9.2 24.5
Everyman Media Group plc Consumer markets 956 1,010 646 576 0.3 1.3 9.6
One Media iP Group plc Technology 1,008 912 527 724 0.2 5.9 10.8
SEEEN plc Technology 2,250 2,250 363 799 0.2 12.1 23.1
Scholium Group plc Consumer markets 1,10 0 682 352 352 0.2 8 .1 14.7
TPXimpact Holdings plc Technology 660 660 294 348 0.1 1.0 1.8
97
04 Appendices - Full investment portfolio
Annual Report and Audited Financial Statements 2024
Company Sector
Original
book cost
†
£’000
Accounting
book cost
†
£’000
30September
2024
fair value
£’000
30September
2023
fair value
£’000
% of net
assets
% of equity
held by
Baronsmead
Second
Venture
Trust plc
% of
equity
held by
all funds
#
AIM (continued)
Crimson Tide plc Technology 668 668 278 401 0.1 3.4 6.4
IXICO plc Healthcare & education 825 825 265 530 0.1 6.1 11.1
Poolbeg Pharma plc Healthcare & education 51 51 229 169 0.1 0.5 0.9
KRM22 plc Technology 550 550 176 192 0.1 1.5 2.8
Science In Sport plc Consumer markets 352 330 143 71 0.1 0.3 0.5
Rosslyn Data Technologies plc Technology 1,407 1,407 64 117 0.0 3.3 6.0
Tasty plc Consumer markets 2,033 6,085 58 65 0.0 2.5 10.2
Totally plc Healthcare & education 86 197 45 35 0.0 0.3 0.5
Zoo Digital Group plc Technology 817 586 36 41 0.0 0.1 0.2
Fusion Antibodies plc Healthcare & education 660 660 32 44 0.0 0.8 1.5
I-nexus Global plc Technology 688 688 26 35 0.0 2.9 5.4
Aptamer Group plc Healthcare & education 2,390
2,390 4 28 0.0 0.1 0.2
CloudCoco Group plc Technology 535 359 3 31 0.0 0.5 0.8
Total AIM 51,881 65,509 86,811 38.2
Collective investment vehicles
WS Gresham House UK Micro Cap Fund 6,334 10,480 27,039 24,617 11.9
WS Gresham House UK Multi Cap Income Fund 17,255 17,255 19,669 21,322 8.6
WS Gresham House UK Smaller Companies Fund 13,074 13,074 15,836 17,014 7.1
BlackRock Sterling Liquidity Fund 8,468 8,468 8,468 5,937 3.7
JPMorgan Sterling Liquidity Fund 8,468 8,468 8,468 5,937 3.7
Goldman Sachs Sterling Liquidity Fund 8,468 8,468 8,468 5,937 3.7
Total collective investment vehicles 62,067 66,213 87,948 38.7
Total investments 175,560 194,693 228 ,169 100.3
Net current assets (725) (0.3)
Net assets 227,444 100.0
†
The original cost column provides the combined cost of investments made by BVCT3, BVCT4 and BVCT5 prior to the merger of the three
VCT’s to become BSVT. This is included for information purposes for shareholders reviewing the portfolio.
The accounting cost column ties into the investment note on page78 of these accounts. For Investments owned before the assets of BVCT 4
and BVCT 5 were acquired by BVCT 3 the accounting book cost is a sum of the original cost of the investments held in BVCT 3 and the market
value of the investment in BVCT 4 and BVCT 5 at the date of each of the mergers.
#
All funds managed by the same Manager, Gresham House Asset Management Ltd.
‡
Includes unquoted convertible loan note; Cost £1,040,000, Fair Value £1,176,000. Since the year end, the Company has delisted from AIM and
entered into Administration.
98
04 Appendices - Full investment portfolio
Annual Report and Audited Financial Statements 2024
AIM The Alternative Investment Market, a sub-market of the London Stock Exchange,
designed to help smaller companies access capital from the public market.
Annual Dividend Yield The rate of dividend paid/declared for financial year divided by opening net
asset value per share.
BSVT Baronsmead Second Venture Trust plc
Book Cost (Original) Total acquisition value, including transaction costs, less the value of any
disposals or capitalised distributions allocated on a weighted average cost basis.
Book Cost (Accounting) The original book cost of an asset, rebased to the value at which it was used
in a subsequent transaction, such as a transfer between entities.
Collective Investment Vehicle An entity which allows investors to pool their money, investing the pooled
funds on their behalf.
Direct Investments Investments held by Baronsmead Second Venture Trust plc only. Does not
include investments held by Micro Cap, Multi Cap Income or Small Cap.
Discount/Premium If the share price is lower than the NAV per share, it is said to be trading at a
discount. The size of the Company’s discount is calculated by subtracting
the share price from the NAV per share and is usually expressed as a
percentage of the NAV per share. If the share price is higher than the NAV
per share, this situation is called a premium.
EBITDA Earnings before Interest, Tax, Depreciation and Amortisation – a proxy for
the cash flow generated by a business, most commonly used for businesses
that do not (yet) generate operating or shareholder profits.
IFA Independent Financial Advisers, professionals who offer independent advice
to their clients and recommend suitable financial products.
Key Performance Indicators (“KPIs”) A measurable value that demonstrates how effectively the Company is
achieving core business objectives.
NAV The total value of all the Company’s assets, at current market value, having
deducted all liabilities at their carrying value.
NAV per share Total Net Asset Value divided by the number of shares.
NAV total return A measure showing how the Net Asset Value has performed over a period
of time, taking into account both capital returns and dividends paid to
shareholders, assuming that dividends paid were reinvested at the NAV of
the Company at the time the shares were quoted ex-dividend.
Return on Cash Invested to shareholders The amount of cash returned to shareholders through income tax
reclaimed, and cumulative dividends paid, expressed as a percentage of the
initial investment.
Shares Held in Treasury Shares in the Company repurchased by itself, reducing the number of
freely traded shares.
SME
Small and medium-sized entities. These are independent companies which
meet two of the three recognition criteria for small or medium companies
according to EU Legislation.
Total Assets
All assets, both current and non-current. An asset is an economic resource
owned by an entity that can lead to an increase in economic value.
VCT Value The value of an investment when acquired, rebased if the holding is added to
or any payment is made which causes an increase or decrease in its value.
WS Gresham House Equity Funds Includes WS Gresham House UK Micro Cap Fund (“Micro Cap”), WS Gresham
House UK Multi Cap Income Fund (“Multi Cap”) and WS Gresham House UK
Smaller Companies Fund (“Small Cap”).
80 per cent test Ensuring that the Company meets the requirement to hold 80 per cent of its
investments in qualifying holdings.
Glossary
99Annual Report and Audited Financial Statements 2024
04 Appendices
NAV total return reconciliation Q1 Q2 Q3 Q4
Opening NAV total return (p) 318.5 335.1 329.7 342.3
NAV movement (p) 5.4 (5.3) 3.8 (4.0)
Dividend (p) 0.0 3.7 0.0 2.8
Total return (p) 5.4 (1.6) 3.8 (1.2)
Change in NAV total return (p)* 16.6 (5.4) 12.6 (4.6)
Closing NAV total return (p) 335.1 329.7 342.3 337.7
* The change in NAV total return is the sum of the monthly total returns calculated on a compound basis.
AIC methodology: The NAV total return to the investor, including the original amount invested (rebased to 100) from launch,
assuming that dividends paid were reinvested at the NAV of the Company at the time the shares were quoted ex-dividend.
Annual dividend yield reconciliation 2024 2023 2022
Interim dividend 1.75p 2.25p 3.0p
Recommended final dividend 2.25p 2.25p 3.0p
Total dividend 4.0p 4.5p 6.0p
Opening NAV (after final dividend) 55.6p 62.1p 84.3p
Dividend yield 7.2% 7. 2% 7.1%
100
04 Appendices - Glossary
Annual Report and Audited Financial Statements 2024
101Annual Report and Audited Financial Statements 2024
04 Appendices - Glossary
Information
05
Warning to Shareholders
Many companies are aware that their shareholders have received unsolicited phone calls or correspondence concerning
investment matters. These are typically from “brokers” based overseas who target UK shareholders offering to sell them
what often turn out to be worthless or high risk shares in US or UK investments. They can be very persistent and extremely
persuasive. shareholders are therefore advised to be very wary of any unsolicited advice, offers to buy shares at a discount
or offers for free company reports.
Please note that it is very unlikely that either the Company or the Company’s Registrar, The City Partnership (UK) Ltd ,
would make unsolicited telephone calls to shareholders and that any such calls would relate only to official documentation
already circulated to shareholders and never in respect of investment “advice”.
If you are in any doubt about the veracity of an unsolicited phone call, please call either the Company or the Registrar at the
numbers provided below.
Protect Yourself
If you are offered unsolicited investment advice, discounted shares, a premium price for shares you own, or free company
or research reports, you should take these steps before handing over any money or share certificates:
1
Get the name of the person and organisation contacting you.
2 Check the FCA Register at www.fca.org.uk/register to ensure they are authorised (or www.fca.org.uk/publication/
systems-information/aifmd-small-register.pdf).
3
Use the details on the FCA Register to contact the firm.
4 Call the FCA Consumer Helpline on 0800 111 6768 (freephone) from 8.00am to 6.00pm, Monday to Friday (except
public holidays) and 9.00am to 1.00pm, Saturday (from abroad call +44 20 7066 1000) if there are no contact details on
the Register or you are told they are out of date.
5
Search the FCA’s list of unauthorised firms and individuals to avoid doing business with.
6 REMEMBER: if it sounds too good to be true, it probably is!
If you use an unauthorised firm to buy or sell shares or other investments, you will not have access to the Financial
Ombudsman Service (https://www.financial-ombudsman.org.uk/) or Financial Services Compensation Scheme
(https://www.fscs.org.uk/) if things go wrong.
Report a Scam
If you are approached about a share scam, you should tell the FCA using the Share Fraud Reporting Form
(www.fca.org.uk/consumers/report-scam-unauthorised-firm), where you can find out about the latest investment
scams. You can also call the FCA Consumer Helpline on 0800 111 6768.
If you have already paid money (or otherwise dealt with share fraudsters), you should contact ActionFraud on
03001232040 or use the ActionFraud (https://www.actionfraudalert.co.uk/) Online Reporting Tool.
More detailed information on this or similar activity can be found on the FCA web site.
Shareholder information and contact details
103
05 Information
Annual Report and Audited Financial Statements 2024
Shareholder account queries
The Registrar for Baronsmead Second Venture Trust plc is The City Partnership (UK) Limited (“City”).
The Registrar will deal with all of your queries with regard to your shareholder account, such as:
Change of address
Latest net asset value
Your current shareholding balance
Your payment history including any outstanding payments and reissue requests
Your payment options (cheque, direct payment to your bank/building society account, reinvestment)
Paper or electronic communications
Request replacement share certificates (for which there may be additional administrative and other charges)
You can contact City with your queries in several ways:
On-line: Investor Hub
https://gresham-house-vcts.cityhub.uk.com/
City’s secure website, Investor Hub, allows you to
manage your own shareholding online
You will need to register to use this service on
the Investor Hub.
You should have your Access Token to hand, which is
available on the Change in Registrar letter, any recently
issued share certificates and the quarterly DRIP
statement (if applicable) which you should always keep
confidential for security reasons.
Telephone: 01484 240 910
Lines are open 9.00am to 5.30pm, Monday to Friday,
excluding public holidays in England and Wales.
Calls are charged at the standard geographic rate and
will vary by provider. Calls from outside the UK will be
charged at the applicable international rate.
Email: registrars@city.uk.com
Post: The City Partnership (UK) Limited
Mending Rooms, Park Valley Mills,
Meltham Road,Huddersfield HD4 7B
Share price
The Company’s shares are listed on the London Stock Exchange (LSE). The LSE code for the Company is “BMD”. The
mid-price of the Company’s shares is given daily in the Financial Times in the Investment Companies section of the
London Share Service. Share price information can also be obtained from the link on the Company’s website and many
financial websites.
Calendar
February 2025 Quarterly factsheet to 31 December 2024.
14 February 2025 FY24 final dividend record date.
12 March 2025 Annual General Meeting.
17 March 2025 FY24 final dividend payment, subject to shareholder approval at the AGM on 12 March 2025.
May/June 2025 Announcement and posting of interim report for the six months to 31 March 2025.
August 2025 Quarterly factsheet to 30 June 2025.
December 2025 Announcement and posting of final results for year to 30 September 2025.
104
05 Information - Shareholder information and contact details
Annual Report and Audited Financial Statements 2024
Additional information
The information provided in this report has been produced in order for shareholders to be informed of the activities of the
Company during the period it covers. Gresham House Asset Management Limited does not give investment advice and
the naming of companies in this report is not a recommendation to deal in them.
Baronsmead Second Venture Trust plc is managed by Gresham House Asset Management Limited which is authorised
and regulated by the FCA. Past performance is not necessarily a guide to future performance. Stock markets and currency
movements may cause the value of investments and the income from them to fall as well as rise and investors may not
get back the amount they originally invested. Where investments are made in unquoted securities and smaller companies,
their potential volatility may increase the risk to the value of, and the income from, the investment.
Secondary market in the shares of Baronsmead Second Venture Trust plc
The Company’s shares can be bought and sold in the same way as any other quoted company on the London Stock
Exchange via a stockbroker.
The market makers in the shares of Baronsmead Second Venture Trust plc are:
Panmure Liberum
020 3100 2000 (the Company’s broker)
Winterflood 020 3100 0000
Qualifying investors* who invest in the existing shares of the Company can benefit from:
Tax free dividends;
Realised gains are not subject to capital gains tax (although any realised losses are not allowable);
No minimum holding period; and
No need to include VCT dividends in annual tax returns.
The UK tax treatment of VCTs is on a first in first out basis and therefore tax advice should be obtained before shareholders
dispose of their shares and also if they deferred a capital gain in respect of new shares acquired prior to 6April 2004.
* UK income tax payers, aged 18 or over, who acquire no more than £200,000 worth of VCT shares in a tax year.
105
05 Information - Shareholder information and contact details
Annual Report and Audited Financial Statements 2024
Brokers
Panmure Liberum
Ropemaker Place, Level 12
25 Ropemaker Street
London EC2Y 9LY
England
Tel: 020 3100 2000
Auditor
BDO LLP
55 Baker Street
London W1U 7EU
Solicitors
Howard Kennedy LLP
1 London Bridge
London SE1 9BG
VCT Status Adviser
PricewaterhouseCoopers LLP
1 Embankment Place
London WC2N 6RH
Contact the Chair
chair@baronsmeadvcts.com
Website
www.baronsmeadvcts.co.uk
Directors
Sarah Fromson (Chair)
‡
Graham McDonald
Timothy Farazmand**
Malcolm Groat*
†
Adriana Stirling
Secretary
Gresham House Asset Management Ltd
Registered Office
5 New Street Square
London EC4A 3TW
Investment Manager
Gresham House Asset Management Ltd
5 New Street Square
London EC4A 3TW
Registered Number
04115341
Registrars and Transfer Office
The City Partnership (UK) Ltd
The Mending Rooms
Park Valley Mills
Meltham Road
Huddersfield HD4 7BH
Tel: 01484 240 910
Corporate information
‡
Chair of the Nomination Committee
* Chair of the Audit & Risk Committee
** Chair of the Management Engagement & Remuneration Committee
†
Senior Independent Director
106
05 Information
Annual Report and Audited Financial Statements 2024
