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Braveheart Investment Group: THE INVESTMENT CASE

Braveheart Investment Group enjoys 'exceptional' year

The turnaround was in part due to the sale of one of its investee companies, mLED, which is developing ultra-high brightness technology
Braveheart Investment Group enjoys 'exceptional' year
INVESTMENT OVERVIEW: BRH The Big Picture
The company's investment strategy certainly appears to be working

Braveheart Investment Group PLC (LON:BRH) enjoyed an ‘exceptional’ year as it moved from a significant loss to a profit.

The turnaround was in part due to the sale of a stake in one of its investee companies, mLED, a developer of ultra-high brightness technology.

This disposal alone brought in £399,000 versus a book value of less than £100,000 and contributed towards a change in the fair value of the company’s assets of £450,000 for the year to March 31.

This filtered through to pre-tax profit, which was £780,000 for the 12 months compared with a loss in the comparable period of almost £1.7mln.

New addition

Braveheart retains significant holdings in Kirkstall (38%), which is developing an 'organ on chip' platform used by drug developers, and scientific instruments group Paraytec (46%).

It has added to the portfolio by taking a 40% stake in Gyrometric Systems, which has developed software that accurately monitors vibrations around a rotating shaft.  Warnings generated by this system help prevent expensive and untimely breakdowns in industry and transport. 

WATCH: Braveheart boss on the last year

The large stake taken by Braveheart represents a continuation of the change of strategy, with the company gaining in confidence and backing its judgement more heavily.

Not that Gyrometric seems like a particularly risky investment. Braveheart said it already has established sales partners in Germany and Asia on which it will now build and expects to break-even this year.

Selling a stake in a company provides a nice occasional bonus for the company, but the steady income is provided by its wholly-owned subsidiary, Viking Fund Managers.

Fund management

Viking's main fund management income comes from the Finance Yorkshire Equity Fund contract, but it also provides specialist fund management services to other funds that are in 'run-out' mode. 

This specialised management work tends to generate enhanced fees in excess of standard fund management fees due to the intensive nature of this work. 

The emphasis for the FYEF is now on portfolio management rather than in seeking new investments and the unit is seeking to win management contracts for further funds.

Laser focus

However, the main focus for chief executive Trevor Brown and the team will be on on Kirkstall, Paraytec and new addition Gyrometric Systems.

“All enterprises are now entering exciting periods of expansion and we look forward to updating shareholders as events unfold," he told investors.

“It is likely that headline revenue will decline in the first half of next year on a relative basis due to the exceptional nature of some of the revenue and realisation gains made this year, but we expect to report a continuing improvement in overall shareholder value.”

The shares, which have more than doubled in the last year, rose 6% to 15.9p.

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June 21 2017
The turnaround was in part due to the sale of one of its investee companies, mLED, which is developing ultra-high brightness technology

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