Prior to publication, the information contained within this announcement was deemed by the Company to constitute inside information as stipulated under the UK Market Abuse Regulation. With the publication of this announcement, this information is now considered to be in the public domain.

16 June 2022  

Braveheart Investment Group plc

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

Final Results for the year ended 31 March 2022 & Notice of AGM

Braveheart Investment Group plc (AIM: BRH) announces its audited annual results for the financial year ended 31 March 2022, highlights of which are set out below:

·      Earnings per share of 3.10 pence per share (2021: 36.30 pence per share)

·      Funds raised of £2.5 million before expenses during the year

·      Additional investment into Phase Focus Limited

·      Continued progress at Paraytec Limited

Chief Executive Officer's Report

I am pleased to report to shareholders for the year ended 31 March 2022.

Overview

Group strategy continues to be application of the Board's expertise and financial resources to those existing and newly acquired businesses which the Board consider have the greatest potential for outperformance. Details of these investments together with operational updates about each of these companies follow below. 

Portfolio and Strategic Investments

As in previous years we have continued to divide our investments into two categories, namely our Strategic Investments and Portfolio Investments. Each of the Strategic Investments, of which there were five at the end of the year under review, is summarised below in this annual report.  The Portfolio Investments are direct investments into third party companies that were made by Braveheart from 2002 until the summer of 2015 (the 'Portfolio Investments').  There are investments into a total of 13 different companies within the Portfolio Investments as at 31 March 2022.  Sentinel Medical Limited is held in the accounts at £33, the original cost of Braveheart's shareholding holding.  This investment has been moved out of Strategic Investments and into Portfolio Investments, until the business reaches a point where it is determined to have significant value. Therefore, at the end of the period under review there were investments into a total of 18 companies.  We will continue to manage the Portfolio Investments with a view to seeking exits wherever possible.

Strategic Investments Overview

Paraytec Limited (Braveheart owns 100% per cent of the company)

Paraytec Limited ("Paraytec") develops high performance specialist detectors for the analytical and life sciences instrumentation markets. In addition, the company has undertaken a programme with the University of Sheffield to develop a rapid test for identifying cancer and pathogens, including viruses.

As reported within our RNS on 15 November 2021, Paraytec has continued to refine the platform technology that underpins its proposed fast, sensitive COVID-19 test. The platform technology (product reference "CX300") comprises a low-cost instrument that utilises intense fluorescent light to detect small specific pathogens or cells in a biological sample.

Although the market for COVID-19 tests has dramatically changed in recent months, the Company believes there will continue to be a significant long-term global market for point-of-care COVID-19 testing. In addition, it is clear that Paraytec's technology platform has the potential for many other applications, and these are primarily the focus of interest in ongoing discussions with potential licensees and acquirers.

Paraytec has recently received ethical and HRA approval to proceed with a clinical study at the Sheffield Teaching Hospitals NHS Foundation Trust. This study will collect specimens from COVID-19 positive participants for up to ten days and monitor the ability of the Paraytec test to follow the course of infection by comparison with the culture of SARS-CoV-2 virus from the specimens. The test performance will also be compared with PCR (polymerase chain reaction) and lateral flow tests. If successful, the Directors believe these results will be a powerful demonstration of the accuracy and uniqueness of the Paraytec test.

Professor Carl Smythe's team has established a CAT 3 laboratory at the University of Sheffield to support the development of the CX300 technology platform. This will allow the research team to study a wide range of pathogens that cause infectious diseases, including COVID-19. Potential acquirers have focused their interest on a range of applications for the CX300, so the Paraytec team will now concentrate on developing multiple tests, including those previously commenced in bladder cancer and bacteraemia that causes sepsis.

Phasefocus Holdings Limited (Braveheart owns 42.67 per cent of the company)

Phasefocus Holdings Limited ("Phasefocus"), a spin-out from the University of Sheffield, has developed a series of patented computational imaging and analysis techniques that have a wide range of applications including live cell imaging, engineering metrology and electron microscopy. The company's novel method for high fidelity quantitative imaging and microscopy is known in the scientific literature as "ptychography".

Phasefocus's flagship product, Livecyte^TM, allows researchers and biotechnology companies to characterise the dynamic behaviour of live cells in ways previously not possible. Livecyte integrates Phasefocus's patented label-free Quantitative Phase Imaging technology with state-of-the-art automatic cell tracking algorithms. This enables users to automatically characterize growth, morphology and motility of large populations of cells in a 96-well plate assay format.

Since moving to a distribution sales model in 2019, partnerships with a wide range of distributors have resulted in a marked increase in awareness of the company's products in the marketplace. The reach of distributors, such as Cytena (part of the BICO group, formerly CELLINK Inc.) and SinsiTech in China, has helped Phasefocus enter new territories and has led to a rapid growth in revenues.

In the company's financial year ended 31 December 2021, revenue increased by more than 125% over the prior year. The company's head count also increased by more than 10% in 2021. To enable the company to keep up with production demand, in March 2022 Phasefocus opened an expanded production facility in Nottingham Science Park, Nottingham, UK. The new facility has more than four times the floor space of the previous production facility, with room to expand further as demand grows in future years.

Kirkstall Limited (Braveheart owns 80% of the company)

Kirkstall Limited ("Kirkstall") operates in the market known as 'organ-on-a-chip', where it has developed Quasi Vivo®, a system of chambers for cell and tissue culture in laboratories. Its patented technology is used by researchers in the growing 'organ-on-a-chip' market, where academia and drug development companies need to maintain living cells in a nutrient flow.

With most of Europe's university research laboratories operating fully again following relaxation of restrictions on non-COVID related research, Kirkstall has seen a steady upturn in sales enquiries and orders for its Quasi Vivo® products. The versatility and uniqueness of these products has been able to attract attention into wider application areas including inhalation toxicity, parasitic infections, nanotechnology, biosystem ecologies.

There has also been increased interest in its products from non-European countries including USA, China, India and Singapore in the field of non-animal micro-physiological in vitro models.

In the last year, the company identified three new peer reviewed publications from research teams utilising Kirkstall's Quasi Vivo® system. Kirkstall is a strong supporter of such research, as publications like these are an excellent marketing tool.

The first study involved the evaluation of drug absorption via gastrointestinal tract tissue and was conducted at Sheffield Hallam University in collaboration with the Croda Group.  The research is the result of Kirkstall's partnership with Animal Free Research UK that started two years ago to support human-relevant science and the principle of the replacement of animals in research. https://doi.org/10.3390/pharmaceutics14020364

The second study was conducted by the research group of Berthold Huppertz at the Medical University of Graz, Austria. The study involved ex vivo human placental tissue and concluded that Kirkstall's Quasi Vivo® system is the most native-like in vitro system that can be used to simulate blood flow from the mother to placenta and back, and thus can enable novel and more physiological study designs. https://doi.org/10.3390/ijms22147464

The third study was conducted by the group of Louise Carson, School of Mechanical and Aerospace Engineering, Queens University Belfast. The group utilised the Quasi Vivo® system to develop an in vitro model to evaluate long term biocompatibility of bone substitute biopolymer constructs. 10.1016/j.actbio.2021.07.049

Since September 2021, Kirkstall's Quasi Vivo® system has been on public display at the Francis Crick Institute, London at their 'Outwitting Cancer' exhibition. www.crick.ac.uk/whats-on/exhibitions/outwitting-cancer/outwitting-cancer-exhibition

A new Quasi Vivo®™ platform with advanced fluid flow is in late stage development at Kirkstall. The system is a complete redesign, incorporating new features which the directors of Kirkstall believe are highly desired by both pharmaceutical and academic users. Prototypes are currently undergoing user testing by Kirkstall's partners in the CyGenTig European consortium, in which new techniques are under development for the production of engineered tissues by optogenetics, aiming to build replacement human organs by controlling individual cell growth using coloured laser light.

Autins Group plc (Braveheart owns 8.7% of the company)

During the period, Braveheart invested in Autins Group plc ("Autins") (AIM: AUTG) through market purchases of shares. Autins specialises in solving acoustic and thermal problems in the automotive industry and other specialist applications. In particular, the company's leading product Neptune, a non-woven microfibre web, is produced by a mixture of engineered polyester fibre and melt-blown polypropylene. This material outperforms traditional automotive insulation and is gaining traction in office and flooring acoustics applications.

The Board considers that this investment fits well in its portfolio of advanced technology businesses and seeks to identify opportunities with Autins that will benefit both companies.

Velocity Composites plc (Braveheart owns 4.13% of the company)

In September 2021, Braveheart acquired 4.13% of Velocity Composites plc ("Velocity") (AIM: VEL) through the purchase of shares. Velocity is a leading supplier of advanced composite material kits to the Aerospace sector. Velocity Composites' clients include multi-national manufacturers of composite parts and assemblies, who in turn deliver to the world's leading civil and military aircraft manufacturers. The Airbus A320, A330, A350, A380, Eurofighter Typhoon, F35 Joint Strike Fighter, Boeing 737, Boeing 787 and V22 Osprey are all constructed using parts manufactured from Velocity's kits.

The Board considers that this investment fits well in its portfolio of advanced technology businesses.

Outlook

We have entered our new financial year acutely aware of the geo-political and macro-economic challenges the world is facing. However, we are hopeful that this turbulence will also present interesting new investment opportunities and we will be positioned to respond as events unfold.

Financial Review

During the year we continued the comprehensive review of our cost base and continued to reduce the central costs.

Income Statement

Fee-based revenue was generated by Braveheart Investment Group Plc. The principal revenue from the Group's operations comprises investment management fees, with total revenue during the year being £43,000 (2021: £60,000). Revenue derived from strategic subsidiary undertakings has decreased by £64,000 from £205,000 in 2021 to £141,000 in 2022. Finance income was £Nil (2021: £Nil), this being interest on outstanding loan notes within the directly held portfolio.

As at 31 March 2022, the total number of directly held investments in the portfolio of Strategic Investments and the Portfolio Investments was 18 companies (2021: 19), of which two have been consolidated into Braveheart's accounts.  The fair value of the directly held portfolio, excluding the two companies now consolidated into the Company's accounts, was £4,716,080 (2021: £613,847). During the year the group made investments of £1,467,000 into three portfolio companies, Autins Group Plc, Velocity Composites Plc and Phase Focus Holdings Limited. This excludes investments made into investments that are controlled by the Group. Two investments (being Kirkstall and Paraytec) that are considered as Strategic Investments by the Board are now deemed to be 'controlled' by the Company and as a result of this, those companies have been consolidated into Braveheart's accounts (but remain categorised by management as Strategic Investments). At the year end, the value of these two investments was £220,622 (2021: £220,622), although the value in the consolidation in terms of goodwill stands at £205,775 (2021: £205,775, two companies). Therefore, the fair value of the directly held portfolio (Strategic Investments and Portfolio Investments and including the two investments that have now been consolidated into the Company's accounts) was £4,921,855 (2021: £819,622). 

Total income for the year ended 31 March 2022, including realised gains and unrealised revaluation gains and losses, was £2,937,000 (2021: £16,562,000).

The average number of employees remained at 7 during the period under review. The number of employees working within the Group, excluding employees of Kirkstall and Paraytec, was 4 during the year under review (2021: 3). Employee benefits expense was £636,000 (2021: £1,341,000). Other operating and finance costs decreased to £753,000 (2021: £954,000). 

The total profit after tax decreased to £1,442,000 (2021: £13,907,000), equivalent to a basic profit per share of 3.10 pence (2021: 36.30 pence).

Financial Position

The Group's net assets of £6,607,000 (2021: £2,564,000), include goodwill of £206,000 (2021: £206,000).

The carrying value of goodwill was reviewed during the year. The income method was not deemed appropriate for the companies under review due to the difficulty of projecting the future income of these companies, so market value approach was considered more appropriate.

At the year end the Group had cash balances of £1,894,000 (2021: £2,143,000 (including discontinued operations)). There were no material borrowings.

A summary analysis of the Group's performance is as follows:

Key Performance Indicators (KPIs)

The KPIs we use to monitor business performance have been changed in order to better reflect the emphasis that the Board has placed upon the development of the Strategic Investments as the best way to increase shareholder value over the short and medium term. Given the nature of our business these KPI's remain as, primarily, financial measures.  They are:

On behalf of the Board

Trevor E Brown

Chief Executive Officer

15 June 2022

Consolidated Statement of comprehensive INCOME for the year ended 31 March 2022

consolidated statement of financial position as at 31 March 2022