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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Mobeus Income & Growth 2 Vct Plc | LSE:MIG | London | Ordinary Share | GB00B0LKLZ05 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 59.00 | 57.50 | 60.50 | 59.00 | 59.00 | 59.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Trust,ex Ed,religious,charty | -7.57M | -9.64M | -0.0987 | -5.98 | 57.62M |
From Apr 2019 to Apr 2024
TIDMMIG
RNS Number : 1227Z
Mobeus Income & Growth 2 VCT PLC
12 December 2017
Mobeus Income & Growth 2 VCT plc
Half-Year Report for the six months ended 30 September 2017
Mobeus Income & Growth 2 VCT plc ("MIG2", the "Company", "VCT" or the "Fund") is a Venture Capital Trust ("VCT") advised by Mobeus Equity Partners LLP ("Mobeus"), investing primarily in established, unquoted companies.
Company Objective
The Objective of the Company is to provide investors with a regular income stream, arising both from the income generated by companies selected for the portfolio and from realising any growth in capital, while continuing at all times to qualify as a VCT.
Financial Highlights
Results for the six months ended 30 September 2017
As at 30 September 2017
Net assets: GBP38.83 million
Net asset value ("NAV") per share: 103.25 pence
-- Net Asset Value ("NAV") Total Return(1) per share was 3.3% while Share Price Total Return(2) per share was 5.8% for the Half-Year.
-- Shareholders received an interim dividend of 7.00 pence per share in respect of the current year ending 31 March 2018 on 27 July 2017. A further interim dividend of 9.00 pence per share has been declared, payable on 22 January 2018.
-- A total of GBP3.26 million was received following the successful realisation of Entanet in the Half-Year.
-- The Company made two new investments totalling GBP2.07 million and one follow-on investment of GBP0.09 million during the Half-Year.
-- Total liquidity at the Half-Year is GBP13.90 million.
(1) Calculated as closing NAV per share (103.25p) plus dividends paid in the year (7.00p) as a percentage increase of opening NAV (106.70p).
(2) Calculated as closing share price (mid-price) (93.00p) plus dividends paid in the year (7.00p) as a percentage increase of opening share price (mid-price) (94.50p).
Performance Summary
Cumulative total shareholder return per share (NAV basis)*:
The longer term trend of performance on this measure is shown in the chart below:-
Hot Features
Premium
Period Net asset value (NAV) per Cumulative dividends paid Cumulative total shareholder
share per share return per share
(NAV basis)
(p) (p) (p)
As at 30 September 2017 103.25 69.00 172.25
As at 31 March 2017 106.70 62.00 168.70
As at 31 March 2016 119.61 47.00 166.61
As at 31 March 2015 115.45 42.00 157.45
As at 31 March 2014 120.73 23.00 143.73
As at 30 April 2013 106.75 18.00 124.75
As at 30 April 2012 98.71 14.00 112.71
As at 30 April 2011 96.16 10.00 106.16
As at 30 April 2010 87.47 5.00 92.47
As at 30 April 2009 86.02 4.00 90.02
As at 30 April 2008 98.48 1.50 99.98
*Cumulative NAV total shareholder return is net asset value plus cumulative dividends paid to date on the current share class, launched in 2005.
Note: The above data does not reflect the benefit of income tax relief upon initial subscription for the Company's shares.
Chairman's Statement
I am pleased to present the Half-Year Report for Mobeus Income & Growth 2 VCT plc for the six months ended 30 September 2017.
Overview
The six-month period has provided a satisfactory return for shareholders, arising from income and solid portfolio performance. The successful realisation of the Company's investment in Entanet Holdings Limited for proceeds of GBP3.26 million made a significant contribution to performance.
The level of new investment has been in line with the Investment Adviser's plans for the period with two new growth capital investments and one follow-on investment. Further details of these investments are included under "Investment Portfolio" below. These new investments reflect the change in the VCT Rules focussing on the provision of growth capital to younger and smaller companies. Since the change to the VCT Rules in November 2015 a total of GBP5.53 million has been invested by this VCT in nine such companies. Whilst the VCT industry can no longer support management buyout investments these continue to be important, representing 77% of the portfolio by value. Overall the portfolio continues to perform satisfactorily.
Fundraising
In order to take advantage of a growing pipeline of investment opportunities, you will be aware that the Company launched an Offer for Subscription to raise up to GBP10 million, with an over-allotment facility to raise up to an additional GBP5 million, on 6 September 2017. I am pleased to report that demand for the Offer has been strong with the Board announcing on 13 October 2017 its decision to utilise the over-allotment facility. Applications amounting to GBP14.23 million have been received at the date of this Half-Year Report leaving a further GBP0.77 million to raise before the Offer is closed.
12,937,145 shares have so far been allotted to shareholders in several allotments at effective Offer prices ranging between 103.17p and 110.99p.
Performance for the six months ended 30 September 2017
The Net Asset Value ("NAV") Total Return was 3.3% for the Half-Year compared with a marginal rise for the comparative period in 2016. The share price total return for the Half-Year was 5.8%, compared with 2.9% for the equivalent period in 2016.
Half-Year ended 30 September 2017 2016
(pence (pence
per per
share) share)
Realised and net unrealised gains/(losses)
on the investment portfolio 2.63 (0.32)
Income on the investment portfolio
and on liquidity 2.44 2.10
Share buybacks and adjustments 0.25 0.08
Gross return 5.32 1.86
Less: Investment Adviser's fees and
other expenses (1.77) (1.83)
-------------------------------------------- -------- ---------
Net return 3.55 0.03
After accounting for the interim dividend of 7.00 pence per share paid on 27 July 2017, and this net return of 3.55 pence, the NAV per share at 30 September 2017 was 103.25 pence per share, compared to 106.70 pence per share at 31 March 2017.
Investment Portfolio
The value of the investment portfolio reduced by GBP0.72 million during the first half of the year (2.6% lower than the 31 March 2017 value) and was valued at GBP26.17 million (including GBP1.03 million held in companies preparing to trade ("CPTs")) at the period-end. However, the like for like change in valuation showed an overall increase in the value of the portfolio by 3.5%.
The 3.5% increase was mainly due to the Company having completed the sale of its investment in Entanet Holdings Limited during the period, realising proceeds of GBP3.26 million. This investment has achieved a return on original investment cost of 2.5 times to date, over the three and a half years that the investment was held. Up to a further GBP0.33 million of deferred consideration may be received over the next two years, which would increase this return further.
During the period the Company made two new investments. An investment of GBP0.35 million was made into MyTutorweb, a digital marketplace connecting school pupils seeking private one-to-one tutoring with university student tutors, and GBP1.72 million (including GBP1.30 million previously held in a company preparing to trade) was invested into Wetsuit Outlet, a leading online retailer in the water sports market. A further investment of GBP0.09 million was also made into MPB Group Limited.
The Company received cash proceeds of GBP3.76 million during the period, including GBP1.70 million of loan stock repayments. This loan stock repayment figure includes GBP1.51 million from the realisation of Entanet with the balance part of planned repayments.
The portfolio movements for the period are summarised below:
GBPm
--------------------------------- -------
Portfolio value at 31 March
2017 28.08
New and further investments
(excluding use of CPTs) 0.86
Disposal proceeds (3.76)
Realised gains 1.71
Valuation movements (0.72)
--------------------------------- -------
Portfolio value at 30 September
2017 26.17
Interim Dividend
The Board has declared a second interim dividend of 9.00 pence per share (2016: 5.00 pence), payable on 22 January 2018 to shareholders on the register on 22 December 2017 in line with the Company's dividend target. This will bring the total dividends paid in the current year to 16.00 pence per share. The Board does not expect to pay any further dividends during the current financial year, but regards 5.00p of this dividend as fulfilling its current annual dividend target of paying a dividend in respect of each financial year of not less than 5.00 pence per share. After paying this second interim dividend, cumulative dividends paid per share since the launch of the current share class will increase to 78.00 pence per share.
Liquidity
Liquidity of GBP13.90 million corresponds to 35.8% of net assets (31 March 2017: GBP12.58 million / 33.1%) and includes both GBP1.03 million (31 March 2017: GBP2.64 million) invested in CPTs and GBP2.29 million due from the first allotment of shares under the Offer. After including cash received from allotments made after the period-end and the payment of the second interim dividend of 9.00 pence per share referred to above, liquidity will become an estimated GBP16.81 million (36.9%).
Share buybacks
During the period under review, the Company bought back and cancelled 279,220 of its own shares, representing 0.8% of the issued share capital at the beginning of the period. The average price was 93 pence per share and cost a total GBP0.26 million, including expenses.
The Board continues to believe that the policy of maintaining the share price at an average discount of 10% to the prevailing NAV is appropriate in current market conditions. Continuing shareholders benefit from the difference between NAV per share and the price per share at which the shares are bought back.
Shareholder communications
The Investment Adviser holds an annual VCT event for shareholders in central London. Each event includes a presentation on the Mobeus Advised VCTs' investment activity and performance. The next event will be held on Tuesday 30 January 2018 at the Royal Institute of British Architects in central London. There will be a daytime and a separate evening session. Shareholders have been sent an invitation to this event with further details. If you have not replied to the invitation, but would like to attend, please apply to Mobeus (vcts@mobeusequity.co.uk) by email to register. The Board looks forward to meeting all shareholders able to attend.
Board Appointment
As mentioned in my Annual Report Statement, Ian Blackburn has joined the Board and Ken Vere Nicoll has retired. In accordance with the Articles of Association, Ian was elected as a Director at the Annual General Meeting held on 14 September 2017 and has been appointed as Chairman of the Nomination and Remuneration Committee. I am pleased to welcome Ian to the Board.
VCT legislation
As you may be aware, the UK Government recently conducted a Patient Capital Review aimed at expanding the provision of long-term capital for growing, innovative firms. Launched in November 2016, the closing date for responses to the consultation phase was 22 September 2017. Strong representations were made on behalf of the industry by the Investment Adviser, the Venture Capital Trust Association and The AIC. These submissions emphasised the benefits of the VCT scheme and argued that the structure of VCTs makes them a suitable vehicle to meet the Government's ambitions to provide such capital.
The measures proposed in the Autumn Budget of 22 November 2017 outlined the key findings from the review including a number of legislative changes to the VCT scheme the earliest of which are due to come into effect from 6 April 2018. We understand that these changes are designed to exclude tax-motivated investments where capital is not at risk (that is, principally seeking to preserve an investor's capital).
Your Board noted the intentions behind these changes. While some of these changes place further restrictions on the way investments may be structured, the Board currently has no reason to believe that they will materially affect the Company's existing investment policy or strategic objectives.
A summary of the current VCT regulations and those proposed in the Autumn Budget are stated below.
Outlook
Your Board remains of the opinion that your Company is well positioned to take advantage of the strong demand for growth capital investment despite the uncertainties faced by the UK economy. The fundraising is anticipated to be fully subscribed before the closing date and this will provide the Company with sufficient funds to continue the current investment rate in the short to medium term.
While the changes proposed in the recent Autumn Budget are likely to have an impact on the VCT industry, your Board believes that the existing and future investment portfolio should continue to deliver attractive returns and the Company is well positioned to adapt to the changes.
Your Board will shortly be issuing further guidance (in a joint announcement with the Boards of the other Mobeus advised VCTs) on the impact of the Budget changes, in a supplementary prospectus to the Offer. This document will be available on the Mobeus website at: www.obeusequity.co.uk/investor-area/fundraising and the National Storage Mechanism.
Finally, I would like to take this opportunity to thank shareholders for their continued support.
Nigel Melville
Chairman
12 December 2017
Investment Policy
The investment policy is designed to meet the Company's objective.
Investments
The Company invests primarily in a diverse portfolio of UK unquoted companies. Investments are made selectively across a number of sectors, principally in established companies. Investments are usually structured as part loan stock and part equity in order to produce a regular income stream and to generate capital gains from realisations.
There are a number of conditions within the VCT legislation which need to be met by the Company and which may change from time to time. The Company will seek to make investments in accordance with the requirements of prevailing VCT legislation.
Asset allocation and risk diversification policies, including the size and type of investments the Company makes, are determined in part by the requirements of prevailing VCT legislation. No single investment may represent more than 15% (by VCT tax value) of the Company's total investments at the date of investment.
Liquidity
The Company's cash and liquid funds are held in a portfolio of readily realisable interest bearing investments, deposit and current accounts, of varying maturities, subject to the overriding criterion that the risk of loss of capital be minimised.
Borrowing
The Company's articles of association permit borrowings of amounts up to 10% of the adjusted capital and reserves (as defined therein). However, the Company has never borrowed and the Board would only consider doing so in exceptional circumstances.
Summary of VCT Regulation
To assist shareholders, the following table contains a summary of the most important rules that determine VCT approval.
To achieve continuing status as a VCT, the Company must meet a number of conditions, the most
important of which are that:-
* The Company must hold at least 70%(2) , by VCT tax
value(1) , of its total investments (shares,
securities and liquidity) in VCT qualifying holdings,
within approximately three years of a fundraising;
* Of these qualifying holdings, an overall minimum of
30% by VCT tax value(1) (70% for funds raised on or
after 6 April 2011) must be in ordinary shares which
carry no preferential rights (save as may be
permitted under VCT rules)(3) ;
* No investment in a single company or group of
companies may represent more than 15% (by VCT tax
value(1) ) of the Company's total investments at the
date of investment;
* The Company must pay sufficient levels of income
dividend from its revenue available for distribution
so as not to retain more than 15% of its income from
shares and securities in a year;
* The Company's shares must be listed on a regulated
European stock market; and
* Non-qualifying investments can no longer be made,
except for certain exemptions in managing the
Company's short-term liquidity.
To be a VCT qualifying holding, new investments must be in companies:-
* which carry on a qualifying trade;
* which have no more than GBP15 million of gross assets
at the time of investment and GBP16 million
immediately following investment from VCTs;
* whose maximum age is generally seven years (ten years
for knowledge intensive businesses);
* that receive no more than an annual limit of GBP5
million and a lifetime limit of GBP12 million (GBP20
million for knowledge intensive companies), from VCTs
and similar sources of State Aid funding; and
* that use the funds received from VCTs for growth and
development purposes.
The conditions below take into account legislation up to the Finance Act 2017 which was enacted
with effect from 6 April 2017.
(1) VCT tax value means as valued in accordance with prevailing VCT legislation. The calculation
of VCT tax value is arrived at using tax values, based on the cost of the most recent purchase
of an investment instrument in a particular company, which differs from the actual cost of
each investment shown in the Investment Portfolio Summary.
(2) For accounting periods beginning on or after 6 April 2019, this percentage is expected
to increase to 80%.
(3) The requirement for VCTs to hold at least 30% of qualifying investments in "eligible shares"
(broadly ordinary equity) from funds raised prior to 6 April 2011 is expected to be withdrawn.
All qualifying investments made by VCTs after 5 April 2018 are expected to be included in
funds which are required to comprise at least 70% of qualifying investments in "eligible shares".
Summary of proposed changes to VCT regulation announced
in November 2017 Budget Statement
From 6 April 2018:
* VCTs will be required to invest 30% of funds raised
in an accounting period beginning on or after 6 April
2018 in qualifying holdings within 12 months of the
end of the accounting period;
From the date of Royal Assent (spring of 2018):
* VCTs may not make investments that do not appear to
meet the new 'risk to capital' condition (which
requires a company, at the time of investment, to be
an entrepreneurial company with the objective to grow
and develop, and where there is genuine risk of loss
of capital).
* VCTs may no longer offer secured loans to investee
companies, and any returns on loan capital above 10
per cent per annum must represent no more than a
commercial return on the principal.
For accounting periods beginning on or after 6 April
2019:
* The period for reinvestment of proceeds on disposal
of qualifying holdings investments will increase from
6 to 12 months;
* The proportion of VCT funds that must be held in
qualifying holdings will increase from 70% to 80%.
Please note that the above changes are not exhaustive,
are yet to be enacted and may change by the time Royal
Assent is granted.
------------------------------------------------------------------
Investment Review
There has been an encouraging level of investment activity during the Half-Year including one significant divestment, two new investments and one follow-on investment.
The Company faces further regulatory changes following the Government's Patient Capital Review and the resulting measures introduced in the Budget announced on 22 November 2017. Together with the continuing uncertainty of the Brexit process the current levels of uncertainty are set to continue for some time yet.
New investment
A total of GBP2.16 million was invested during the six months under review. Two new investments were made, into MyTutorweb and Wetsuit Outlet. MyTutorweb, a digital marketplace connecting school pupils seeking private one-to-one tutoring with university student tutors, received growth investment of GBP0.35 million. Wetsuit Outlet, a leading online retailer in the water sports market, received growth investment of GBP1.72 million. There was one follow-on investment into an existing portfolio company, with a further investment of GBP0.09 million made into MPB, a leading online retailer of used camera and video equipment, to further support growth.
Patient Capital Review
As the Chairman's Statement noted, the UK Government has conducted a review to identify and tackle factors considered to be adversely affecting the supply of longer term capital to small and developing firms. The consultation period closed on 22 September 2017 and strong representations were made on behalf of the VCT industry by Mobeus as Investment Adviser, the Venture Capital Trust Association and the Association of Investment Companies.
As anticipated, the recent Chancellor's Autumn Budget outlined the key findings from the review including a number of changes to the VCT Scheme, the earliest of which are due to come into effect from 6 April 2018.
Mobeus, as Investment Adviser, believe these changes should not overall affect the ability of the Company to continue to make successful growth capital investments.
New investment in the Half-Year
Company Business Date of investment Amount of
new investment
(GBPm)
--------------- ---------------- ------------------- ---------------
MyTutorweb Online tutoring May 2017 0.35
MyTutorweb is a digital marketplace that connects school
pupils who are seeking private one-to-one tutoring with
university student tutors. The business is satisfying
a growing demand from both schools and parents to improve
pupils' exam results and enhance their prospects. The
investment represents an opportunity to consolidate
the GBP2 billion UK tutoring market, expand MyTutorweb's
market presence and will also be used to drive technological
development. The company's latest audited accounts for
the year ended 31 December 2016 show a turnover of GBP0.21
million and loss before interest, tax and amortisation
of goodwill of GBP0.79 million.
Wetsuit Outlet Retailer July 2017 1.72*
B2C Holdings Limited (trading as Wetsuit Outlet) has
established itself as a leading online retailer in the
water sports market, stocking an impressive brand portfolio
including Musto, Billabong, Rip Curl, O'Neill, Red Paddle
(an existing Mobeus investment) and Gul. The investment
will enable management to expand existing activities
and enter two new markets. Established in 2005, the
company has developed into a successful and profitable
business with revenues of GBP11.51 million and GBP1.77
million profit before interest, tax and amortisation
of goodwill in the financial year ended 31 March 2017.
*GBP1.30 million previously held in Manufacturing Services
Investment Limited, a company preparing to trade, along
with GBP0.42 million from the Company was used for this
investment.
-----------------------------------------------------------------------
Further investments in existing portfolio companies in the Half-Year
Company Business Date of investment Amount of
new investment
(GBPm)
---------- --------------------------------- ------------------- ---------------
Online marketplace for September
MPB Group used camera and video equipment 2017 0.09
MPB is Europe's leading online marketplace for used
camera and video equipment. Based in Brighton, its custom-designed
pricing technology enables MPB to offer both buy and
sell services through the same platform and offers a
one-stop shop for all its customers. This further investment
is to provide additional working capital to fund continued
expansion of its platform globally, having launched
into both the US and German markets. The company's latest
audited accounts for the year ended 31 March 2017 show
turnover of GBP13.20 million and loss before interest,
tax and amortisation of goodwill of GBP0.47 million.
-----------------------------------------------------------------------------------
Realisations in the Half-Year
The Company realised one investment during the period under review, for cash proceeds totalling GBP3.26 million. This was the very successful sale of the Company's investment in Entanet Holdings Limited. Including the loan stock repayments of GBP0.19 million from TPSFF Holdings Limited (formerly The Plastic Surgeon Holdings Limited) and other receipts of GBP0.31 million, total cash proceeds for the Half-Year amounted to GBP3.76 million.
Company Business Period of investment Total cash
proceeds
over the
life of the
investment/Multiple
over cost
Entanet Wholesale voice and February 2014 GBP3.69 million
data communications to August 2017 2.5 times
provider cost
------- -------------------- -------------------- --------------------
The VCT sold this investment in Entanet to AIM quoted
CityFibre Infrastructure Holdings plc for GBP3.26 million
in August 2017. Deferred contingent consideration of
up to GBP0.33 million is potentially payable over the
next 24 months. Excluding this deferred consideration,
the Company has so far realised a gain of GBP1.82 million,
being 4.83 pence per share, and has returned an IRR
of 39% to date, an excellent outcome.
-------------------------------------------------------------------------
Loan stock repayments
The Company has received three loan stock repayments totalling GBP0.19 million during the period, from TPSFF Holdings Limited (formerly The Plastic Surgeon Holdings Limited).
Mobeus Equity Partners LLP
Investment Adviser
12 December 2017
Investment Portfolio Summary
as at 30 September 2017
Qualifying Date of Total Valuation Additions Disposals Valuation Change % of
investments first investment Book at 31 at at at 30 in net
/ Sector cost March cost valuation September valuation assets
at 30 2017 2017 for by
September period value
2017
GBP GBP GBP GBP GBP GBP
Unquoted
investments
ASL Technology
Holdings
Limited December
Printer 2010
and photocopier Support
services services 2,092,009 2,258,388 - - 2,186,975 (71,413) 5.6%
Tovey Management
Limited
(trading
as Access
IS)
Provider October
of data 2015
capture Software
and scanning and Computer
hardware Services 1,733,500 2,119,958 - - 2,067,254 (52,704) 5.3%
Virgin Wines
Holding
Company November
Limited 2013
Online General
wine retailer retailers 1,284,333 1,761,822 - - 1,629,743 (132,079) 4.2%
Manufacturing
Services
Investment
Limited
(trading
as Wetsuit
Outlet
Limited)(1)
Online February
retailer 2014
in the water General
sports market retailers 1,412,992 1,000,300 412,692 - 1,412,992 - 3.6%
Gro-Group
Holdings
Limited March 2013
Baby sleep General
products retailers 1,123,088 973,928 - - 1,220,331 246,403 3.1%
Vian Marketing
Limited
(trading
as Tushingham
Sails)
Design,
manufacture
and sale
of stand-up
paddleboards July 2015
and windsurfing Leisure
sails goods 717,038 987,739 - - 1,132,350 144,611 3.0%
---------------- ------------------- ---------- ---------- --------- --------- ----------- --------- --------
Fullfield
Limited
(trading
as Motorclean)
Vehicle
cleaning July 2011
and valet Support
services services 1,025,152 1,053,281 - - 1,091,000 37,719 2.9%
EOTH Limited
(trading
as Rab and
Lowe Alpine)
Branded October
outdoor 2011
equipment General
and clothing retailers 817,185 1,001,498 - - 1,069,172 67,674 2.8%
---------------- ------------------- ---------- ---------- --------- --------- ----------- --------- --------
Turner Topco
Limited
(trading
as ATG Media)
Publisher
and online
auction October
platform 2008
operator Media 1,320,963 1,151,484 - - 1,044,591 (106,893) 2.7%
Tharstern
Group Limited
Software
based
management
information July 2014
systems Software
to the print and Computer
sector Services 789,815 942,138 - - 961,550 19,412 2.5%
Master Removers
Group (formerly
Leap New
Co Limited
(trading
as Anthony
Ward Thomas,
Bishopsgate
and Aussie
Man & Van))
A specialist
logistics, December
storage 2014
and removals Support
business services 369,625 526,134 - - 747,355 221,221 2.0%
RDL Corporation
Limited
Recruitment
consultants
for the
pharmaceutical,
business October
intelligence 2010
and IT Support
industries services 1,000,000 1,031,100 - - 743,950 (287,150) 1.9%
Veritek
Global Holdings
Limited
Maintenance July 2013
of imaging Support
equipment services 967,780 715,856 - - 740,516 24,660 1.9%
TPSFF Holdings
Limited
(formerly
The Plastic
Surgeon
Holdings
Limited)
Snagging
and finishing
of domestic April 2008
and commercial Support
properties services 231,532 881,275 - 192,978 739,654 51,357 1.9%
Media Business
Insight
Holdings
Limited
A publishing
and events
business
focused
on the creative January
production 2015
industries Media 1,447,188 979,875 - - 714,925 (264,950) 1.8%
Redline
Worldwide
Limited
Provider
of security February
services 2016
to the aviation Support
industry services 682,222 837,283 - - 692,348 (144,935) 1.8%
Vectair
Holdings
Limited
Designer January
and distributor 2006
of washroom Support
products services 60,293 403,701 - - 678,593 274,892 1.7%
CGI Creative
Graphics
International
Limited
Vinyl graphics
to global
automotive,
recreation
vehicle June 2014
and aerospace General
markets Industrials 999,568 888,418 - - 669,295 (219,123) 1.7%
MPB Group
Limited
Online
marketplace
for
photographic June 2016
and video General
equipment retailers 463,350 374,244 89,106 - 589,291 125,941 1.5%
Pattern
Analytics
Limited
(trading
as Biosite)
Workforce
management
and security
services November
for the 2016
construction Support
industry services 495,479 495,479 - - 495,479 - 1.3%
Preservica
Limited
Seller December
of proprietary 2015
digital Software
archiving and Computer
software Services 485,770 485,770 - - 485,770 - 1.3%
Blaze Signs
Holdings
Limited
Manufacturing
and April 2006
installation Support
of signs services 437,030 526,492 - - 469,856 (56,636) 1.2%
Ibericos
Etc. Limited
(trading
as Tapas
Revolution) January
Spanish 2017
restaurant General
chain retailers 451,248 451,248 - - 451,248 - 1.2%
BookingTek October
Limited 2016
Software Software
for hotel and Computer
groups services 450,442 450,442 - - 450,442 - 1.2%
Buster and
Punch Holdings
Limited
(formerly
Chatfield
Services
Limited)
Industrial
inspired
lighting March 2017
and interiors General
retailer retail 436,391 436,391 - - 436,391 - 1.1%
Bourn Bioscience
Limited January
Management 2014
of In-vitro Healthcare
fertilisation Equipment
clinics & Services 757,101 504,586 - - 435,074 (69,512) 1.1%
MyTutorweb
Limited
Digital
marketplace
connecting
school pupils
seeking May 2017
one to one Support
online tutoring services 349,661 - 349,661 - 349,661 - 0.9%
Jablite
Holdings
Limited
Manufacturer
of expanded April 2015
polystyrene Construction
products and materials 281,398 401,864 - - 171,931 (229,933) 0.4%
Lightworks
Software
Limited
Provider
of software April 2006
for CAD Software
and CAM and Computer
vendors Services 25,727 92,737 - - 110,083 17,346 0.3%
Racoon
International
Group Limited
(formerly
Racoon
International
Holdings
Limited)
Supplier
of hair
extensions, December
hair care 2006
products Personal
and training goods 1,045,985 83,729 - - - (83,729) 0.0%
Entanet
Holdings
Limited
Wholesale
voice and February
data 2014
communications Fixed line
provider Telecommunications - 1,550,227 - 1,550,227 - - 0.0%
Newquay
Helicopters
(2013) Limited
(in members'
voluntary
liquidation)
Helicopter June 2006
service Support
operators services 30,469 - - - - - 0.0%
Total qualifying
investments 23,784,334 25,367,387 851,459 1,743,205 23,987,820 (487,821) 61.9%(2)
Non-qualifying
investments
Media Business
Insight
Limited as above 561,884 855,516 - - 624,192 (231,324) 1.6%
Hollydale
Management
Limited
Company
seeking
to carry
on a business March 2015
in the food Support
sector services 566,400 354,000 - - 354,000 - 0.9%
Manufacturing
Services
Investment Limited (trading as Wetsuit Outlet)(1) as above 304,000 608,000 - 304,000 304,000 - 0.8% Tovey Management Limited (trading as Access IS) as above 219,873 219,873 - - 219,873 - 0.6% ---------------- ------------------- ---------- ---------- --------- --------- ----------- --------- -------- Backhouse Management Limited Company seeking to carry on a business April 2015 in the motor Support sector services 441,220 169,700 - - 169,700 - 0.4% Barham Consulting Limited Company seeking to carry on a business April 2015 in the catering Support sector services 441,220 169,700 - - 169,700 - 0.4% Creasy Marketing Services Limited Company seeking to carry on a business April 2015 in the textile Support sector services 441,220 169,700 - - 169,700 - 0.4% McGrigor Management Limited Company seeking to carry on a business in the April 2015 pharmaceutical Support sector services 441,220 169,700 - - 169,700 - 0.4% 365 Agile Group (formerly lafyds plc) Development of energy March 2001 saving devices Electronic for domestic and electrical use equipment 254,586 - - - - - 0.0% ---------------- ------------------- ---------- ---------- --------- --------- ----------- --------- -------- Total non-qualifying investments 3,671,623 2,716,189 - 304,000 2,180,865 (231,324) 5.5% Total investment portfolio per note 9 27,455,957 28,083,576 851,459 2,047,205 26,168,685 (719,145) 67.4% Cash and current asset investments(3) 9,935,913 - - 10,579,961 27.2% Total investments including cash and current asset investments 27,455,957 38,019,489 851,459 2,047,205 36,748,646 (719,145) 94.6% Other current assets 185,596 2,512,800 6.5% ------------------------------------- ---------- ---------- --------- --------- ----------- --------- -------- Current liabilities (144,100) (429,540) (1.1)% Totals 27,455,957 851,459 2,047,205 Net assets at the period-end 38,060,985 38,831,906 100.0% ------------------------------------- ---------- ---------- --------- --------- ----------- --------- --------
(1) GBP1,608,300 previously held in Manufacturing Services Limited, a company preparing to trade, was used for the investment into Wetsuit Outlet resulting in a repayment of GBP304,000. An additional GBP412,692 of cash was also invested out of the VCT's cash resources.
(2) As at 30 September 2017, the Company held more than 70% of its total investments in qualifying holdings, and therefore complied with the VCT Qualifying Investment test. For the purposes of the VCT qualifying test, the Company is permitted to disregard disposals of investments for six months from the date of disposal. It also has up to three years to bring new funds raised, before these need to be included in the qualifying investment test.
(3) Disclosed as Current asset investments and cash at bank within Current assets in the Balance Sheet.
Statements of the Directors' Responsibilities
Responsibility Statement
In accordance with Disclosure and Transparency Rule (DTR) 4.2.10, Nigel Melville (Chairman), Adam Kingdon (Chairman of the Audit Committee), Sally Duckworth (Chairman of the Investment Committee) and Ian Blackburn (Chairman of the Nomination & Remuneration Committee), being the Directors of the Company confirm that to the best of their knowledge:
(a) the unaudited condensed set of financial statements, which has been prepared in accordance with Financial Reporting Standard 104 "Interim Financial Reporting" gives a true and fair view of the assets, liabilities, financial position and profit of the Company, as required by DTR 4.2.10;
(b) the Half-Year Management Report which comprises the Chairman's Statement, Investment Policy, Investment Review and the Investment Portfolio Summary includes a fair review of the information required by DTR 4.2.7, being an indication of the important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements;
(c) a description of the principal risks and uncertainties facing the Company for the remaining six months is set out below, in accordance with DTR 4.2.7; and
(d) there were no related party transactions in the first six months of the current financial year that are required to be disclosed, in accordance with DTR 4.2.8.
Principal Risks and Uncertainties
In accordance with DTR 4.2.7, the Board confirms that the principal risks and uncertainties facing the Company have not materially changed from those identified in the Annual Report and Accounts for the year ended 31 March 2017 ("the Annual Report").
The principal risks faced by the Company are:
-- economic; -- investment and strategic; -- loss of approval as a VCT; -- VCT regulatory changes; -- regulatory; -- financial and operating; -- market; -- asset liquidity; -- market liquidity; -- counterparty; and -- cyber and data security.
A more detailed explanation of these risks can be found in the Strategic Report on pages 20 and 21 and in Note 15 on pages 54 - 61 of the Annual Report and Accounts for the year ended 31 March 2017, copies of which are available on the Investment Adviser's website, www.mobeusequity.co.uk or by going directly to the VCT's website, www.mig2vct.co.uk.
Going Concern
The Board has assessed the Company's operation as a going concern. The Company's business activities, together with the factors likely to affect its future development, performance and position are set out in the Half-Year management report which comprises the Chairman's Statement, Investment Policy, Investment Review and Investment Portfolio Summary. The Directors have satisfied themselves that the Company continues to maintain a significant cash position. The majority of companies in the portfolio continue to trade profitably and the portfolio taken as a whole remains resilient and well-diversified. The major cash outflows of the Company (namely investments, buybacks and dividends) are within the Company's control.
The Board's assessment of liquidity risk and details of the Company's policies for managing its capital and financial risks are shown in Note 15 on pages 54 - 61 of the Annual Report and Accounts for the year ended 31 March 2017. Accordingly, the Directors continue to adopt the going concern basis of accounting in preparing the Half-Year report and annual financial statements.
Cautionary Statement
This report may contain forward looking statements with regards to the financial condition and results of the Company, which are made in the light of current economic and business circumstances. Nothing in this report should be construed as a profit forecast.
For and on behalf of the Board
Nigel Melville
Chairman
12 December 2017
Unaudited Condensed Income Statement
for the six months ended 30 September 2017
Six months ended 30 September 2017 Year ended 31 March 2017 Six months ended 30 September 2016
(unaudited) (audited) (unaudited)
Notes Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP GBP GBP GBP GBP GBP GBP GBP GBP
--------------- ----- ---------- ---------- -------------- --------- --------- --------- ------------ ----------- -----------
Unrealised
(losses)/gains
on investments
held at fair
value 9 - (719,145) (719,145) - 229,772 229,772 - (115,329) (115,329)
Realised gains
on investments
held at fair
value 9 - 1,709,101 1,709,101 - 76,067 76,067 - - -
Income 4 916,695 - 916,695 1,679,033 - 1,679,033 752,727 - 752,727
Investment
Adviser's fees 5 (111,214) (333,641) (444,855) (237,791) (713,374) (951,165) (121,482) (364,445) (485,927)
Investment
Adviser's
performance
fee - - - - (2,692) (2,692) - - -
Other expenses (183,118) - (183,118) (304,306) - (304,306) (168,991) - (168,991)
--------------- ----- ---------- ---------- -------------- --------- --------- --------- ------------ ----------- -----------
Profit/(loss)
on ordinary
activities
before
taxation 622,363 656,315 1,278,678 1,136,936 (410,227) 726,709 462,254 (479,774) (17,520) Tax on profit/(loss) on ordinary activities 6 (102,619) 63,392 (39,227) (172,122) 143,213 (28,909) (72,889) 72,889 - --------------- ----- ---------- ---------- -------------- --------- --------- --------- ------------ ----------- ----------- Profit/(loss) and total comprehensive income 519,744 719,707 1,239,451 964,814 (267,014) 697,800 389,365 (406,885) (17,520) --------------- ----- ---------- ---------- -------------- --------- --------- --------- ------------ ----------- ----------- Basic and diluted earnings per share Ordinary Shares 7 1.43p 1.99p 3.42p 2.69p (0.75)p 1.94p 1.08p (1.13)p (0.05)p --------------- ----- ---------- ---------- -------------- --------- --------- --------- ------------ ----------- -----------
The revenue column of the Income Statement includes all income and expenses. The capital column accounts for the unrealised (losses)/gains and realised gains on investments and the proportion of the Investment Adviser's fee and performance fee charged to capital.
The total column is the Statement of Total Comprehensive Income of the Company prepared in accordance with Financial Reporting Standards ("FRS"). In order to better reflect the activities of a VCT and in accordance with the 2014 Statement of Recommended Practice ("SORP") (updated in January 2017) by the Association of Investment Companies ("AIC"), supplementary information which analyses the Income Statement between items of a revenue and capital nature has been presented alongside the Income Statement. The revenue column of profit attributable to equity shareholders is the measure the Directors believe appropriate in assessing the Company's compliance with certain requirements set out in Section 274 Income Tax Act 2007.
All the items in the above statement derive from continuing operations of the Company. No operations were acquired or discontinued in the period.
Unaudited Condensed Balance Sheet
as at 30 September 2017
30 September 2017 31 March 2017 30 September 2016
(unaudited) (audited) (unaudited)
Notes GBP GBP GBP
Fixed assets
Investments at fair value 9 26,168,685 28,083,576 29,532,744
Current assets
Debtors and prepayments 2,512,800 185,596 171,789
Current asset investments 10 7,947,301 5,197,301 6,934,362
Cash at bank and in hand 10 2,632,660 4,738,612 4,531,812
----------------------------------------------- ----- ----------------- ------------- -----------------
13,092,761 10,121,509 11,637,963
Creditors: amounts falling due within one year (429,540) (144,100) (100,084)
----------------------------------------------- ----- ----------------- ------------- -----------------
Net current assets 12,663,221 9,977,409 11,537,879
----------------------------------------------- ----- ----------------- ------------- -----------------
Net assets 38,831,906 38,060,985 41,070,623
----------------------------------------------- ----- ----------------- ------------- -----------------
Capital and reserves
Called up share capital 376,099 356,724 358,248
Share premium reserve 18,167,334 15,901,497 15,901,497
Capital redemption reserve 90,375 87,583 86,059
Revaluation reserve 1,311,778 2,001,764 1,656,663
Special distributable reserve 6,843,441 7,540,615 7,979,631
Realised capital reserve 10,492,795 11,142,462 13,741,824
Revenue reserve 1,550,084 1,030,340 1,346,701
----------------------------------------------- ----- ----------------- ------------- -----------------
Equity shareholders' funds 38,831,906 38,060,985 41,070,623
----------------------------------------------- ----- ----------------- ------------- -----------------
Basic and diluted net asset value per share 11 103.25p 106.70p 114.64p
----------------------------------------------- ----- ----------------- ------------- -----------------
Unaudited Condensed Statement of Changes in Equity
for the six months ended 30 September 2017
Non-distributable reserves Distributable reserves
Called Share Capital Revaluation Special Realised Revenue Total
up
share premium redemption reserve distributable capital reserve
capital reserve reserve reserve reserve
(Note (Note (Note
a) b) b)
GBP GBP GBP GBP GBP GBP GBP GBP
-------------------- ------- ---------- ---------- ----------- ------------- ----------- --------- -----------
At 1 April
2017 356,724 15,901,497 87,583 2,001,764 7,540,615 11,142,462 1,030,340 38,060,985
Comprehensive
income
for the
period
(Loss)/profit
for the
period - - - (719,145) - 1,438,852 519,744 1,239,451
-------------------- ------- ---------- ---------- ----------- ------------- ----------- --------- -----------
Total comprehensive
income
for the
period - - - (719,145) - 1,438,852 519,744 1,239,451
Contributions
by and
distributions
to owners
Shares
issued
under Offer
for Subscription
(note d) 22,167 2,299,457 - - (796) - - 2,320,828
Expenses
of share
offers
(note d) - (33,620) - - - - - (33,620)
Shares
bought
back (note
c) (2,792) - 2,792 - (258,671) - - (258,671)
Dividends
paid - - - - - (2,497,067) - (2,497,067)
-------------------- ------- ---------- ---------- ----------- ------------- ----------- --------- -----------
Total contributions
by and
distributions
to owners 19,375 2,265,837 2,792 - (259,467) (2,497,067) - (468,530)
Other movements
Realised
losses
transferred
to special
reserve
(note a) - - - - (437,707) 437,707 - -
Realisation
of previously
unrealised
depreciation - - - 29,159 - (29,159) - -
-------------------- ------- ---------- ---------- ----------- ------------- ----------- --------- -----------
Total other
movements - - - 29,159 (437,707) 408,548 - -
-------------------- ------- ---------- ---------- ----------- ------------- ----------- --------- -----------
At 30 September
2017 376,099 18,167,334 90,375 1,311,778 6,843,441 10,492,795 1,550,084 38,831,906
Notes
a): The cancellation of the formerly named C Share Fund's share premium reserve (as approved at the Extraordinary General meeting held on 10 September 2008 and by the order of the Court dated 28 October 2009), together with the previous cancellation of the share premium reserve attributable to the former Ordinary Share Fund and C Shares, has provided the Company with a special distributable reserve. The purpose of this reserve is to fund market purchases of the Company's own shares as and when it is considered by the Board to be in the interests of the shareholders, and to write-off existing and future losses as the Company must take into account capital losses in determining distributable reserves. The total transfer of GBP437,707 from the realised capital reserve to the special distributable reserve above is the total of realised losses incurred by the Company in the period.
b): The realised capital reserve and the revenue reserve together comprise the Profit and Loss Account of the Company.
c): During the period, the Company purchased 279,220 of its own shares at the prevailing market price for a total cost of GBP258,671, which were subsequently cancelled. The difference between the total cost above of GBP258,671 and that per the Statement of Cash Flows of GBP18,002 is due to two share repurchases totalling GBP240,669 held in creditors at 30 September 2017.
d): Shares issued as part of Offer for Subscription (net of expenses) per the Cash Flow Statement of GBPnil differ to that shown above of GBP2,287,208 (net of expenses of GBP33,620). This is due to net funds receivable by the Company, arising from an allotment of shares on 28 September 2017, which was held as a debtor as at 30 September 2017.
The composition of each of these reserves is explained below:
Called up share capital The nominal value of shares originally issued, increased for subsequent share issues either via an Offer for Subscription or reduced due to shares bought back by the Company. Capital redemption reserve The nominal value of shares bought back and cancelled is held in this reserve, so that the company's capital is maintained. Share premium reserve This reserve contains the excess of gross proceeds less issue costs over the nominal value of shares allotted under Offers for Subscription. Revaluation reserve Increases and decreases in the valuation of investments held at the period end are accounted for in this reserve, except to the extent that the diminution is deemed permanent. In accordance with stating all investments at fair value through profit and loss (as recorded in note 9), all such movements through both revaluation and realised capital reserves are shown within the Income Statement for the period. Special distributable reserve The cost of share buybacks is charged to this reserve. In addition, any realised losses on the sale or impairment of investments (excluding transaction costs), and 75% of the Investment Adviser's fee and 100% of any performance fee expense, and the related tax effect, are transferred from the realised capital reserve to this reserve. Realised capital reserve The following are accounted for in this reserve: -- Gains and losses on realisation of investments; -- Permanent diminution in value of investments; -- Transaction costs incurred in the acquisition of investments; -- 75% of the Investment Adviser's fee (subsequently transferred to the Special distributable reserve along with the related tax effect) and 100% of any performance fee payable, together with the related tax effect to this reserve in accordance with the policies, and -- Capital dividends paid. Revenue reserve Income and expenses that are revenue in nature are accounted for in this reserve togther with the related tax effect, as well as income dividends paid that are classified as revenue in nature. -------------------------------------------------------------
Unaudited Condensed Statement of Changes in Equity
for the six months ended 30 September 2016
Non-distributable reserves Distributable reserves
Called Share Capital Revaluation Special Realised Revenue Total
up
share premium redemption reserve distributable capital reserve
capital reserve reserve reserve reserve
GBP GBP GBP GBP GBP GBP GBP GBP
-------------------- ------- ---------- ---------- ----------- ------------- ----------- --------- -----------
At 1 April
2016 360,685 15,901,497 83,622 1,783,724 8,524,729 15,529,419 957,336 43,141,012
Comprehensive
income
for the period
(Loss)/profit
for the period - - - (115,329) - (291,556) 389,365 (17,520)
-------------------- ------- ---------- ---------- ----------- ------------- ----------- --------- -----------
Total comprehensive
income for
the period - - - (115,329) - (291,556) 389,365 (17,520)
-------------------- ------- ---------- ---------- ----------- ------------- ----------- --------- -----------
Contributions
by and
distributions
to owners
Shares bought
back (2,437) - 2,437 - (253,542) - - (253,542)
Dividends
paid - - - - - (1,799,327) - (1,799,327)
-------------------- ------- ---------- ---------- ----------- ------------- ----------- --------- -----------
Total contributions
by and
distributions
to owners (2,437) - 2,437 - (253,542) (1,799,327) - (2,052,869)
-------------------- ------- ---------- ---------- ----------- ------------- ----------- --------- -----------
Other movements
Realised losses
transferred
to special
reserve - - - - (291,556) 291,556 - -
Realisation
of previously
unrealised
appreciation - - - (11,732) - 11,732 - -
-------------------- ------- ---------- ---------- ----------- ------------- ----------- --------- -----------
Total other
movements - - - (11,732) (291,556) 303,288 - -
At 30 September
2016 358,248 15,901,497 86,059 1,656,663 7,979,631 13,741,824 1,346,701 41,070,623
-------------------- ------- ---------- ---------- ----------- ------------- ----------- --------- -----------
Unaudited Condensed Statement of Cash Flows
for the six months ended 30 September 2017
Six months ended Year ended Six months ended
30 September 2017 31 March 2017 30 September 2016
(unaudited) (audited) (unaudited)
Notes GBP GBP GBP
------------------------------------------------------- ----- ------------------ -------------- ------------------
Cash flows from operating activities
Profit/(loss) for the financial period 1,239,451 697,800 (17,520)
Adjustments for:
Unrealised losses/(gains) on investments 719,145 (229,772) 115,329
Realised gains on investments (1,709,101) (76,067) -
Tax change for the current period 39,227 28,909 -
(Increase)/decrease in debtors (39,996) 80,712 94,519
Increase/(decrease) in creditors and accruals 5,544 (44,914) (60,850)
------------------------------------------------------- ----- ------------------ -------------- ------------------
Net cash inflow from operations 254,270 456,668 131,478
------------------------------------------------------- ----- ------------------ -------------- ------------------
Cash flows from investing activities
Purchase of investments 9 (851,459) (2,257,183) (374,244)
Disposal of investments 9 3,756,306 3,812,501 59,226
No change/decrease in bank deposits with a maturity
over three months - 507,061 -
------------------------------------------------------- ----- ------------------ -------------- ------------------
Net cash inflow/(outflow) from investing activities 2,904,847 2,062,379 (315,018)
Cash flows from financing activities
Equity dividends paid 8 (2,497,067) (5,366,566) (1,799,327)
Purchase of own shares (18,002) (412,046) (253,498)
------------------------------------------------------- ----- ------------------ -------------- ------------------
Net cash outflow from financing activities (2,515,069) (5,778,612) (2,052,825)
------------------------------------------------------- ----- ------------------ -------------- ------------------
Net increase/(decrease) in cash and cash equivalents 644,048 (3,259,565) (2,236,365)
Cash and cash equivalents at start of period 9,935,913 13,195,478 13,195,478
------------------------------------------------------- ----- ------------------ -------------- ------------------
Cash and cash equivalents at end of period 10,579,961 9,935,913 10,959,113
------------------------------------------------------- ----- ------------------ -------------- ------------------
Cash and cash equivalents comprise:
Cash at bank and in hand 10 2,632,660 4,738,612 4,531,812
Cash equivalents 10 7,947,301 5,197,301 6,427,301
Notes to the Unaudited Condensed Financial Statements
for the six months ended 30 September 2017
1. Company information
Mobeus Income and Growth 2 VCT plc is a public limited company incorporated in England, registration number 03946235. The registered office is 30 Haymarket, London, SW1Y 4EX.
2. Basis of preparation
These Financial Statements are prepared in accordance with accounting policies consistent with Financial Reporting Standard 102 ("FRS 102"), Financial Reporting Standard 104 ("FRS 104") - Interim Financial Reporting, with the Companies Act 2006 and the 2014 Statement of Recommended Practice, 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' ('the SORP') (updated in January 2017) issued by the Association of Investment Companies ("AIC"). The Financial Statements have been prepared on the historical cost basis except for the modification to a fair value basis for certain financial instruments as specified in note 9.
The Half-Year Report has not been audited, nor has it been reviewed by the auditor pursuant to the Financial Reporting Council's (FRC) guidance on Review of Interim Financial Information.
3. Principal accounting policies
The accounting policies have been applied consistently throughout the period. Full details of principal accounting policies will be disclosed in the Annual Report, while the policy in respect of investments is included within an outlined box at the top of note 9 on investments.
4. Income
Six months Year ended Six months
ended ended
30 September 31 March 30 September
2017 2017 2016
(unaudited) (audited) (unaudited)
Income from investments GBP GBP GBP
------------------------ ------------- ----------- -------------
Dividends 82,264 181,950 51,144
Money-market
funds 6,899 24,154 14,127
Loan stock interest 823,112 1,443,335 666,444
Bank deposit
interest 4,420 29,594 21,012
Total Income 916,695 1,679,033 752,727
------------------------ ------------- ----------- -------------
5. Investment Adviser's fees and performance fee
Six months Year ended Six months
ended ended
30 September 31 March 30 September
2017 2017 2016
(unaudited) (audited) (unaudited)
GBP GBP GBP
--------------------------------- -------------- ----------- --------------
Mobeus Equity Partners
LLP
Investment Adviser's fees 444,855 951,165 485,927
Investment Adviser's performance
fee - 2,692 -
Total 444,855 953,857 485,927
--------------------------------- -------------- ----------- --------------
Investment Adviser's fees
25% of the Investment Adviser's fees are charged to the revenue column of the Income Statement, while 75% is charged against the capital column of the Income Statement. This is in line with the Board's expected long-term split of returns from the investment portfolio of the Company.
100% of any performance incentive fee payable for the year is charged against the capital column of the Income Statement. This is because although the incentive fee is linked to an annual dividend target, it is ultimately based upon the achievement of capital growth.
Performance fees
New Ordinary and former C share fund shares
Basis of calculation
The performance incentive fee payable is calculated as an amount equivalent to 20 per cent of the excess of a "Target rate" comprising:-
i) an annual dividend target (indexed each year for RPI), and
ii) a requirement that any cumulative shortfalls below the annual dividend target must be made up in later years. Any excess is not carried forward, whether a fee is payable for that year or not.
Payment of a fee is also conditional upon the average Net Asset Value ("NAV") per share for each such year equalling or exceeding the average "Base NAV" per share for the same year. Base NAV commenced at GBP1 per share when C fund shares were first issued in 2005, which is adjusted for subsequent shares issued and bought back.
Any performance fee will be payable annually. It will be reduced to the proportion which the number of "Incentive Fee Shares" represent of the total number of shares in issue at any calculation date. Incentive Fees Shares are the only shares upon which an incentive fee is payable. They will be the number of C fund shares in issue just before the Merger of the two former share classes on 10 September 2010, (which subsequently became Ordinary shares) plus Ordinary shares issued under new fundraisings since the Merger. This total is then reduced by an estimated proportion of the shares bought back by the Company since the Merger, that are attributable to the Incentive Fee Shares.
There has been no performance incentive fee accrued for the current period.
6. Taxation
There is a tax charge for the period as the Company has taxable income in excess of the deductible expenses.
Six months ended Year ended Six months ended
30 September 2017 31 March 2017 30 September
2016
(unaudited) (audited) (unaudited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP GBP GBP GBP GBP GBP GBP GBP GBP
----------------------- -------- --------- --------- --------- --------- -------- -------- --------- --------
a) Analysis
of tax change:
UK Corporation
tax on profits
for the period 102,619 (63,392) 39,227 172,122 (143,213) 28,909 72,889 (72,889) -
----------------------- -------- --------- --------- --------- --------- -------- -------- --------- --------
Total current
tax charge 102,619 (63,392) 39,227 172,122 (143,213) 28,909 72,889 (72,889) -
----------------------- -------- --------- --------- --------- --------- -------- -------- --------- --------
Corporation
tax is based
on a rate
of 19% (2016:
20%)
b) Profit/(loss)
on ordinary
activities
before tax 622,363 656,315 1,278,678 1,136,936 (410,227) 726,709 462,254 (479,774) (17,520)
Profit/(loss)
on ordinary
activities
multiplied
by small company
rate of corporation
tax in the
UK of 19%
(2016: 20%) 118,249 124,699 242,948 227,387 (82,046) 145,341 92,451 (95,955) (3,504)
Effect of:
UK dividends (15,630) - (15,630) (36,390) - (36,390) (10,229) - (10,229)
Tax losses
brought forward
from previous
years now
utilised - - - - - - (9,333) - (9,333)
Unrealised
losses/(gains)
not taxable/allowable - 136,638 136,638 - (45,954) (45,954) - 23,066 23,066
Realised gains
not taxable - (324,729) (324,729) - (15,213) (15,213) - - -
Utilisation
of losses
on which deferred
tax not recognised - - - (18,875) - (18,875) - - -
----------------------- -------- --------- --------- --------- --------- -------- -------- --------- --------
Actual tax
charge 102,619 (63,392) 39,227 172,122 (143,213) 28,909 72,889 (72,889) -
----------------------- -------- --------- --------- --------- --------- -------- -------- --------- --------
7. Basic and diluted earnings per share
Six months Year ended Six months
ended ended
30 September 31 March 30 September
2017 2017 2016
(unaudited) (audited) (unaudited)
GBP GBP GBP
-------------------------------------- -------------- ----------- --------------
Total earnings after taxation: 1,239,451 697,800 (17,520)
Basic and diluted earnings
per share (note a) 3.42p 1.94p (0.05)p
Net revenue from ordinary
activities after taxation 519,744 964,814 389,365
Basic and diluted revenue
earnings per share (note
b) 1.43p 2.69p 1.08p
Net unrealised capital (losses)/gains (719,145) 229,772 (115,329)
Net realised capital gains 1,709,101 76,067 - Capital expenses (net of taxation) (270,249) (570,161) (291,556) Investment Adviser's performance fee - (2,692) - -------------------------------------- -------------- ----------- -------------- Total capital return 719,707 (267,014) (406,885) Basic and diluted capital earnings per share (note c) 1.99p (0.75)p (1.13)p -------------------------------------- -------------- ----------- -------------- Weighted average number of shares in issue in the period 36,279,026 35,877,280 36,025,948
Notes
a) Basic and diluted earnings per share is total earnings after taxation divided by the weighted average number of shares in issue.
b) Basic and diluted revenue earnings per share is revenue earnings after taxation divided by the weighted average number of shares in issue.
c) Basic and diluted capital earnings per share is total capital earnings divided by the weighted average number of shares in issue.
8. Dividends paid
Dividend Type For Pence Date Paid Six months Year ended Six months
year per share ended 30 31 March ended 30
ended September 2017 September
31 2017 GBP 2016
March GBP GBP
--------- -------- ------- ---------- ---------- ---------- ---------- ----------
Interim Capital 2017 5.00p 08/08/2016 - 1,799,327 1,799,327
Second
Interim Income 2017 2.50p 31/03/2017 - 891,810 -
Second
Interim Capital 2017 7.50p 31/03/2017 - 2,675,429 -
Interim Capital 2018 7.00p 27/07/2017 2,497,067 - -
--------- -------- ------- ---------- ---------- ---------- ---------- ----------
2,497,067 5,366,566 1,799,327
-------------------------- ---------- ---------- ---------- ---------- ----------
9. Investments at fair value
The most critical estimates, assumptions and judgements relate to the determination of
the
carrying value of investments at "fair value through profit and loss" (FVTPL). All
investments
held by the Company are classified as FVTPL and measured in accordance with the
International
Private Equity and Venture Capital Valuation ("IPEV") guidelines, as updated in
December 2015.
This classification is followed as the Company's business is to invest in financial
assets
with a view to profiting from their total return in the form of capital growth and
income.
For investments actively traded on organised financial markets, fair value is generally
determined
by reference to Stock Exchange market quoted bid prices at the close of business on the
balance
sheet date. Purchases and sales of quoted investments are recognised on the trade date
where
a contract of sale exists whose terms require delivery within a time frame determined
by the
relevant market. Purchases and sales of unlisted investments are recognised when the
contract
for acquisition or sale becomes unconditional.
Unquoted investments are stated at fair value by the Directors in accordance with the
following
rules, which are consistent with the IPEV guidelines:
All investments are held at the price of a recent investment for an appropriate period
where
there is considered to have been no change in fair value. Where such a basis is no
longer
considered appropriate, each investment is considered as a whole on a 'unit of account'
basis,
alongside the following factors:
(i) Where a value is indicated by a material arms-length transaction by an
independent third
party in the shares of a company, this value will be used.
(ii) In the absence of i), and depending upon both the subsequent trading performance
and
investment structure of an investee company, the valuation basis will usually move to
either:-
a) a multiple basis. The shares may be valued by applying a suitable
price-earnings ratio
or revenue multiple to that company's historic, current or forecast post-tax
earnings before
interest and amortisation of goodwill or revenue (the ratio used being based
on a comparable
sector but the resulting value being adjusted to reflect points of
difference identified by
the Investment Adviser compared to the sector including, inter alia, a lack
of marketability).
or:-
b) where a company's underperformance against plan indicates a diminution in the
value of
the investment,
provision against cost is made, as appropriate.
(iii) Premiums, to the extent that they are considered capital in nature,
and that will be
received upon repayment of loan stock investments, are accrued at fair value
when the Company
receives the right to the premium and when considered recoverable.
(iv) Where an earnings multiple or cost less impairment basis is not appropriate and
overriding
factors apply, discounted cash flow or net asset valuation bases may be applied.
All investments are initially recognised and subsequently measured at fair value.
Changes
in fair value are recognised in the Income Statement.
A key judgement made in applying the above accounting policy relates to investments
that are
permanently impaired. Where the value of an investment has fallen permanently below
cost,
the loss is treated as a permanent impairment and as a realised loss, even though the
investment
is still held. The Board assesses the portfolio for such investments and, after
agreement
with the Investment Adviser, will agree the values that represent the extent to which
an investment
loss has become realised and treated as a realised loss in the Income Statement. This
is based
upon an assessment of objective evidence of that investment's future prospects, to
determine
whether there is potential for the investment to recover in value.
The methods of fair value measurement are classified in to hierarchy based on the
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 valuation techniques using inputs that are not
based
on observable market data.
-------------------------------------------------------------------------------------------
Traded Unquoted Unquoted Total
on AIM Ordinary Preference Unquoted
shares shares Loan Stock
Level 1 Level 3 Level 3 Level 3
GBP GBP GBP GBP GBP
-------------------------------------------------- --------- ----------- ----------- ----------- ----------------
Cost at 31 March 2017 254,586 10,571,020 23,395 17,664,403 28,513,404
Unrealised (losses)/gains at 31 March 2017 - (2,271,287) 377,118 3,895,933 2,001,764
Permanent impairment at 31 March 2017 (254,586) (1,365,869) (739) (810,398) (2,431,592)
-------------------------------------------------- --------- ----------- ----------- ----------- ----------------
Valuation at 31 March 2017 - 6,933,864 399,774 20,749,938 28,083,576
Purchases at cost - 762,353 - 89,106 851,459
Sale proceeds - (2,054,727) (760) (1,700,819) (3,756,306)
Reclasification at value - 445,804 - (445,804) -
Increase/(decrease) in unrealised
gains on investments - 427,160 (849) (1,145,456) (719,145)
Realised gains/(losses) on investments - 1,750,727 760 (42,386) 1,709,101
-------------------------------------------------- --------- ----------- ----------- ----------- ----------------
Valuation at 30 September 2017 - 8,265,181 398,925 17,504,579 26,168,685
-------------------------------------------------- --------- ----------- ----------- ----------- ----------------
Book cost at 30 September 2017 254,586 11,201,560 22,635 15,977,176 27,455,957
Unrealised gains/(losses) at 30 September 2017 - (730,965) 376,290 1,666,453 1,311,778
Permanent impairment at 30 September 2017 (254,586) (2,205,414) - (139,050) (2,599,050) -------------------------------------------------- --------- ----------- ----------- ----------- ---------------- Valuation at 30 September 2017 - 8,265,181 398,925 17,504,579 26,168,685 Unrealised (losses)/gains at 1 April 2017 (254,586) (3,637,156) 376,379 3,085,535 (429,828) Net movement in unrealised appreciation/(depreciation) in the period - 427,160 (849) (1,145,456) (719,145) Permanent impairments in the period - (83,729) - (83,729) (167,458) Realisation of previously unrealised gains/(losses) - 357,346 760 (328,947) 29,159 -------------------------------------------------- --------- ----------- ----------- ----------- ---------------- (Losses)/gains on investments at 30 September 2017 (254,586) (2,936,379) 376,290 1,527,403 (1,287,272) -------------------------------------------------- --------- ----------- ----------- ----------- ----------------
There has been no significant change in the risk analysis as disclosed in note 15 of the Financial Statements in the Company's Annual Report.
The decrease in unrealised valuations of the loan stock investments above reflects the changes in the entitlement to loan premiums, and/or in the underlying enterprise value of the investee company. The decrease does not arise from assessments of credit or market risk upon these instruments.
Level 3 unquoted equity and loan investments are valued in accordance with IPEV guidelines as follows:
As at As at As at
30 September 2017 31 March 30 September
GBP 2017 2016
GBP GBP
Investment methodology
Cost (reviewed for impairment) - 83,729 -
Recent investment price 5,418,783 5,334,674 10,988,211
Price earnings or revenue multiple 20,577,971 22,665,173 18,544,531
Net asset value 171,931 - -
----------------------------------- ------------------ ---------- -------------
26,168,685 28,083,576 29,532,742
10. Current asset investments
As at As at As at
30 September 2017 31 March 30 September
2017 2016
(unaudited) (audited) (unaudited)
GBP GBP GBP
OEIC Money market funds 7,947,301 5,197,301 6,427,301
--------------------------------------------- ------------------ ---------- -------------
Cash equivalents per Condensed
Statement of Cash Flows 7,947,301 5,197,301 6,427,301
Bank deposits that mature after three months - - 507,061
--------------------------------------------- ------------------ ---------- -------------
Current asset investments 7,947,301 5,197,301 6,934,362
--------------------------------------------- ------------------ ---------- -------------
Cash at bank 2,632,660 4,738,612 4,531,812
--------------------------------------------- ------------------ ---------- -------------
11. Net asset value per share
As at As at As at
30 September 31 March 30 September
2017 2017 2016
(unaudited) (audited) (unaudited)
---------------------------------- ------------- ------------- -------------
Net assets GBP38,831,906 GBP38,060,985 GBP41,070,623
Number of shares in issue 37,609,938 35,672,387 35,824,744
Net asset value per share (pence) 103.25 p 106.70 p 114.64 p
---------------------------------- ------------- ------------- -------------
12. Post Balance Sheet Events
Between 20 October 2017 and 21 November 2017 10,720,374 new shares were allotted under the 2017 Offer at effective offer prices ranging from 103.17 pence to 110.99 pence, raising net funds of GBP11,061,015.
On 21 November 2017, a further equity investment of GBP0.05 million was made into BookingTek Limited.
On 5 December 2017, a further loan investment of GBP0.09 million was made into MPB Group Lmited.
13. Financial statements for the six months ended 30 September 2017
The financial information set out in this Half-Year financial report does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The information for the year ended 31 March 2017 has been extracted from the latest published audited financial statements, which have been filed with the Registrar of Companies. The auditors have reported on these financial statements and that report was unqualified and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.
14. Half-Year Report
Copies of this statement are being sent to all shareholders. Further copies are available free of charge from the Company's registered office, 30 Haymarket, London, SW1Y 4EX, or can be downloaded via the Company's website at www.mig2vct.co.uk.
Contact details for further enquiries:
Rob Brittain or Jonathan McGuire at Mobeus Equity Partners LLP (the Company Secretary) on 020 7024 7600 or by e-mail on vcts@mobeusequity.co.uk .
Mobeus Equity Partners LLP (the Investment Adviser), on 020 7024 7600 or by e-mail on info@mobeusequity.co.uk.
DISCLAIMER
Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.
..................................................
Director
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR FFMFLEFWSEFE
(END) Dow Jones Newswires
December 12, 2017 09:21 ET (14:21 GMT)
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