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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 : 2914S
Mobeus Income & Growth 2 VCT PLC
22 June 2018
Mobeus Income & Growth 2 VCT plc ("MIG2" or the "Company" or the "VCT")
Annual Results Announcement for the year ended 31 March 2018
INVESTMENT OBJECTIVE
Mobeus Income & Growth 2 VCT plc, ("MIG2", the "Company" or the "Fund") is a Venture Capital Trust ("VCT") advised by Mobeus Equity Partners LLP ("Mobeus"), investing primarily in established, unquoted companies.
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.
DIVID POLICY
The Company seeks to pay dividends at least annually out of income and capital as appropriate, and subject to fulfilling certain regulatory requirements.
FINANCIAL HIGHLIGHTS
Annual results for the year ended 31 March 2018
Net assets: GBP47.60 million
Net Asset Value ("NAV") per share: 96.54 pence
Hot Features
Premium
-- NAV Total Return per share was 5.5% and Share Price Total per
share was 8.5%.
-- Paid an interim dividend and second interim of 7.00 pence and
9.00 pence per share respectively.
-- A total of GBP5.29 million was received following two successful
realisations of Entanet and Gro-Group.
-- A total of GBP3.18(1) million was invested into five new investments
and GBP0.86 million into three follow-on investments.
-- GBP15 million raised from a successful Offer for Subscription
which closed in March 2018, fully subscribed.
-- Total liquid assets at the year-end are GBP21.59 million.
Note: The above data does not reflect the benefit of income tax relief.
(1) Includes GBP1.30 million previously held in a company preparing to trade.
Performance Summary
The NAV per share as at 31 March 2018 was 96.54 pence.
The table below shows the recent past performance of the current share class, first raised in 2005/06 at an original subscription price of 100 pence per share before the benefit of income tax relief. Performance data for all fundraising rounds are shown in tables in the Annual Report and Financial Statements (the "Annual Report").
Cumulative total return per share
since launch(2)
---------------- ----------- -------------------------- ---------------------------------- ------------------------------------ ---------------------------------- --------------------------------------------------------
(NAV basis) (Share price basis)
Net asset value (NAV) per (p) (p)
Reporting date Net assets share Share price(1) (mid-market price) Cumulative dividends paid per share
as at (GBP m) (p) (p) (p) Dividends paid and proposed in respect of each year (p)
---------------- ----------- -------------------------- ---------------------------------- ------------------------------------ ------------ -------------------- --------------------------------------------------------
31 March 2018 47.60 96.54 86.50 78.00 174.54 164.50 16.00
31 March 2017 38.06 106.70 94.50 62.00 168.70 156.50 15.00
31 March 2016 43.14 119.61 105.25 47.00 166.61 152.25 5.00
31 March 2015 42.10 115.45 104.50 42.00 157.45 146.50 19.00
31 March
2014(3) 33.88 120.73 103.50 23.00 143.73 126.50 4.90
(1) Source: Panmure Gordon & Co (mid-market price).
(2) Cumulative total return per share comprises the NAV per share (NAV basis) or the mid-market price per share (share price basis) plus cumulative dividends paid since shares were first allotted in the fund in December 2005.
(3) Data relates to an 11 month period, as the Company shortened its 2014 accounting period by 1 month.
CHAIRMAN'S STATEMENT
I am pleased to present the annual results of Mobeus Income & Growth 2 VCT plc for the year ended 31 March 2018.
Overview
This has been a year of solid performance by the Company. Returns to shareholders have again been positive due to profitable portfolio investment realisations as well as a good income return, despite a fall in value of the remaining portfolio. Further comment can be found under the 'Performance' section below and in the Investment Review in the Annual Report.
The Company and the Investment Adviser have responded well to the significant changes to the VCT Rules introduced by the Finance (No 2) Act 2015, having completed twelve growth capital investments that reflect the change in the Company's investment policy in September 2016. The Investment Adviser has continued to recruit additional experienced growth capital investors into the team and reports a healthy pipeline of prospective investments.
Following the Patient Capital Review, additional changes to VCT legislation were proposed in the 2017 Autumn Budget and enacted in the Finance Act 2018. Your Board believes that these changes will not materially affect the Company's existing strategic objectives. Further details can be found under the 'Industry and Regulatory Developments' section of my Statement below.
Fundraising
As reported in my Half-Year Statement, the Company launched an Offer for Subscription on 6 September 2017 to raise up to GBP15 million (including GBP5 million from the use of an over-allotment facility). The Offer closed on 13 March 2018 having raised the full amount. The Board is delighted with the strong support from investors for this fundraising. The Board appreciates continued support from existing shareholders and welcomes new shareholders.
A total of 14,303,289 shares were allotted to shareholders under the Offer at prices ranging between 95.21 pence and 110.99 pence.
Performance
The NAV total return per share for the year was 5.5%. (2017: 1.7%) (closing NAV per share plus dividends paid per share in the year less the opening NAV per share, as a percentage of the opening NAV per share). These returns, expressed by the number of shares in issue at the year end, were derived from:
Year ended 31 March 2018 2017
(pence (pence
per share) per share)
Realised gains and net unrealised losses on
the investment portfolio 4.08 0.86
Income on the investment portfolio and on liquidity 3.48 4.71
Share buybacks and adjustments 1.09 0.13
Gross return 8.65 5.70
Less: Investment Adviser's fees and other expenses (2.81) (3.61)
----------------------------------------------------- ------------ ------------
Net return 5.84 2.09
After accounting for interim dividends of 16.00 pence per share paid during the year and a net return of 5.84 pence, the NAV at 31 March 2018 was 96.54 pence, compared to 106.70 pence at the start of the year. The share price total return for the year, also after accounting for the dividends paid, was 8.5% (compared with 4.0% for the previous year).
Your Board regards these returns as satisfactory in the context of the significant changes in the VCT Rules and the resultant necessity to invest in younger companies.
At 31 March 2018, your Company was rated 1(st) out of 39 VCTs, over the last five years, in the Association of Investment Companies' analysis of NAV Cumulative Total Return for all Generalist VCTs. For further performance details please see the Strategic Report in the Annual Report.
For more details on the performance of your investment in the Company, please consult the Performance Data at 31 March 2018 in the Annual Report and on the Company's website.
Target Return
During the six years to 31 March 2016, the actual average annual total NAV return was 12.0% compared to the minimum target of 8.0%. The Board recognised that the investment strategy had to change significantly following VCT Rule changes in 2015 and the previous 8.0% annual target was therefore suspended for the year ended 31 March 2017. As stated in last year's Annual Report, the Board reverted to the minimum average annual total return NAV target of 8.0% per annum, for the year ended 31 March 2018. The annual total NAV return for the year ended 31 March 2018 was 5.5% (2017: 1.7%).
Dividends
The Board declared two interim dividends in respect of the year ended 31 March 2018. The first interim dividend of 7.00 pence and the second interim dividend of 9.00 pence per share were paid on 27 July 2017 and 22 January 2018 respectively. Therefore dividends paid in respect of the year ended 31 March 2018 amount to 16.00 pence (2017: 15.00 pence) per share and cumulative dividends paid since inception to 78.00 pence (2017: 62.00 pence) per share.
The Company's target of paying a regular dividend, at a current level of not less than 5.00 pence (increased from 4.00 pence per share in 2014) per share in respect of each financial year, has been exceeded in each of the last eight years. The dividend referred to above met this target during the year under review. While the Board still believes in the attainment of the dividend target, the recent focus towards growth capital investments is likely to result, at least in the medium term, in more variable dividends than have been paid in the recent past.
A chart showing the annual and cumulative dividends paid in respect of each of the last five years is included in the Strategic Report.
Investment Portfolio
For the year under review, the value of the investment portfolio increased by GBP2.02 million, due to an increase of GBP2.77 million on investments realised but a decrease of GBP0.75 million on investments still held. Investment realisations resulted in GBP2.61 million of capital gains over the original investment costs.
The portfolio movements for the year are summarised below.
GBPm
---------------------------------------- -------
Portfolio value at 31 March 2017 28.08
New and further investments (excluding
use of CPTs) 2.73
Disposal proceeds (5.94)
Realised gains 2.77
Valuation movements (0.75)
---------------------------------------- -------
Portfolio value at 31 March 2018 26.89
During the year GBP4.04 million (GBP1.30 million of which was previously held in a company preparing to trade) was invested into five new companies and three existing portfolio companies. The new growth capital investments were: My Tutorweb, an online tutoring business; Wetsuit Outlet, a leading online retailer in the water sports market; Proactive Investors, a provider of investor media services; SuperCarers, an online carer matching service; and Hemmels, a classic car restorer.
After the year-end a further GBP0.63 million was invested into My Tutorweb.
It is important to note that several of these growth investments are currently loss-making, as is often the case for early stage investment opportunities. Early receipts from dividends or interest payments are therefore likely to be limited while the companies build long term value. In accordance with International Private Equity Valuation ("IPEV") guidelines, valuations of some growth investments in the portfolio are consequently now based on a revenue or gross margin multiple, rather than an earnings multiple (more common for MBO investments).
Shareholders should note that, at the year-end, 54.4% of the value of the investment portfolio was held in MBO type investments and 45.6% was held in growth capital investments.
Overall, performance is steady, but some valuations have fallen whilst others have experienced gains. It is believed that the portfolio as a whole should continue to yield annual income returns to shareholders, supplemented by capital returns as they are realised over time.
Cash proceeds totalling GBP5.94 million were received; GBP5.29 million from the realisation of two investments; GBP0.35 million from loan repayments; and other receipts of GBP0.30 million. Of the realisation total, GBP3.26 million was received as cash from the disposal of Entanet Holdings Limited, (realising a gain of 3.68 pence per share) generating a return on the original investment of 2.5 times at completion. This may increase upon receipt of potential deferred consideration of up to GBP0.33 million. GBP2.03 million was also received following the profitable disposal of Gro-Group (realising a gain of 1.83 pence per share) generating a return on the original investment of 2.3 times.
Full details of the investment activity during the year and a summary of the performance highlights can be found in the Investment Review in the Annual Report and below.
Liquidity
At 31 March 2018, net assets were GBP47.60 million (2017: GBP38.06 million), comprising principally GBP25.85 million (2017: GBP25.44 million) in investments (54.3% of net assets (2017: 66.8%)) and liquidity was GBP21.59 million (2017: GBP12.58 million) which includes funds held in companies preparing to trade of GBP1.03 million (2017: GBP2.64 million). Liquid assets thus represent 45.4% (2017: 33.1%) of net assets at the year-end.
Industry and regulatory developments
As mentioned in my overview, the 2017 Autumn Budget Statement outlined the key findings from the Patient Capital Review, which was tasked with identifying and tackling factors considered to be adversely affecting the supply of longer-term capital to small and developing firms. These findings have resulted in a number of legislative changes to the VCT scheme in the Finance Act 2018 which are designed to exclude tax motivated investments where capital is not at risk (that is, principally seeking to preserve investors' capital) and to encourage VCTs to put their funds to work faster.
Your Board notes the UK Government's initiatives behind these changes, and whilst they include further restrictions on the way investments can be structured, it does not believe that they will materially affect the Company's existing investment strategy.
A summary of the current VCT regulations is included in the Annual Report.
Share buybacks
During the year ended 31 March 2018, the Company bought back 1.9% of the issued share capital of the Company for cancellation. Further details of the purchases are included in the Directors' Report in the Annual Report.
Shareholder Communications
The annual shareholder event was held on Tuesday 30 January 2018 at the Royal Institute of British Architects in central London. This annual event included presentations on the Mobeus advised VCTs' investment activity and performance including presentations from investee companies. There were separate day-time and evening sessions which around 300 shareholders attended. The feedback received was that shareholders found it informative and worthwhile. The next shareholder event will be held in February 2019.
Succession planning
As announced on 14 June 2018, I have confirmed that I will be retiring as a Board member and Chairman following the forthcoming AGM on 12 September 2018, having served as a Board member since 10 May 2000 and as Chairman since 5 September 2006. I will therefore not be seeking re-election at the AGM.
Ian Blackburn, an existing non-executive director of the Company and chairman of the Nomination and Remuneration Committee, has agreed to become non-executive Chairman of the Company following the conclusion of the AGM on 12 September 2018, as announced on 14 June 2018. His brief biographical details are available in the Annual Report.
Annual General Meeting
The Annual General Meeting of the Company will be held at 11.00 am on Wednesday, 12 September 2018 at The Clubhouse, 8 St James's Square, London SW1Y 4JU. Both the Board and the Investment Adviser look forward to welcoming shareholders to the meeting which will include a presentation from the Investment Adviser on the investment portfolio and provide an opportunity to ask questions of the Board and the Investment Adviser. The Notice of the meeting is included in the Annual Report and an explanation of the resolutions to be proposed can also be found in the Directors' Report in the Annual Report.
Future prospects
The UK economy is projected to continue to grow, albeit at lower levels than projected for other economies. Over the next year, the outcome of the Brexit negotiations, and their impact upon the UK economy, should become clearer. In the meantime, the share of the portfolio represented by the new growth investments will increase. As I stated last year, these investments inevitably carry not only higher risk but also the prospect of potentially higher, but more variable, returns.
Your Board has noted how Mobeus has expanded its investment team to adapt to the new rules for VCTs and believe that your Company should benefit from this strengthened investment team.
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 within the UK economy, outlined above. The portfolio has a solid foundation of investments made under the previous MBO strategy, and the Investment Adviser continues to source interesting growth capital investment opportunities to complement the portfolio.
Once again, I would like to take this opportunity to thank all Shareholders for their continued support and wish the Company continued success under Ian Blackburn's leadership.
Nigel Melville
Chairman
22 June 2018
Investment Review
Patient Capital Review
The UK Government conducted this 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 the Company's Investment Adviser, the Venture Capital Trust Association, and the Association of Investment Companies.
As the Chairman's Statement notes, the Company has faced further regulatory changes following the Government's Review and the resulting measures introduced in the Budget announced on 22 November 2017. These have now been enacted in the Finance Act 2018.
As the Company's Investment Adviser, Mobeus believes these regulatory changes should not overall affect the ability of the Company to continue to make successful growth capital investments. We hope for a period of relative stability in respect of these VCT rules. This should create an environment of greater certainty in which to make growth investments.
Portfolio Review
This has been a year of continued progress within the portfolio, with the addition of five new growth capital investments totalling GBP3.18 million, three existing investments receiving follow-on funding totalling GBP0.86 million, and two significant, profitable disposals. One disposal (Entanet) generated net proceeds of GBP3.26 million resulting in a 2.5 times multiple over cost over the three and a half year life of the investment, while the second (Gro-Group) generated net proceeds of GBP2.03 million representing a 2.3 times multiple over the four year and nine month life of the investment. Total cash proceeds were GBP5.94 million, comprising the two realisations above, loan repayments of GBP0.35 million and GBP0.30 million of other receipts.
The investment and divestment activity completed during the year has increased the proportion of the growth capital element of the investment portfolio to 45.6% by value. The Company has now invested GBP8.85 million at value in new growth capital investments since the introduction of the changes to VCT regulations in 2015.
The value of the portfolio that was held at 31 March 2017 increased by 7.2% over the year. This like-for-like* basis comprised significant uplifts via realised gains generated from investment disposals of GBP2.77 million, but net of a reduction in the value of the remaining portfolio of GBP0.75 million.
* - Like-for-like basis is calculated by dividing the value of the portfolio at 31 March 2018 plus the proceeds of any realisations that occurred in the year less the total cost of new investments made in the year, with the portfolio valuation at 31 March 2017.
The decrease in value in the remaining portfolio was primarily due to reductions in the valuations of Motorclean, Media Business Insight and Veritek Global. This outweighed gains achieved elsewhere in the portfolio, including EOTH, as well as MPB and Preservica (both growth investments). Movements in valuations during the year under review are detailed in note 8 to the Annual Report. A small number of new growth investments have shown initial uplifts from cost, due in large part to the structure of the Company's investment, but also due to the underlying investee company performance. On the whole, we are encouraged by the early performance of the investments in the growth portfolio.
Demand for growth capital investment remains strong and there is a large pipeline of investment opportunities. We expect that follow on funding into existing companies to support growth plans will be a feature over the coming months and years.
New and Follow-on Investments
We are pleased to have made eight investments in the year, totalling GBP4.04 million. This comprised new investments into My Tutorweb, Wetsuit Outlet, Proactive Investors, SuperCarers and Hemmels as well as follow on investments into BookingTek, MPB, and Tapas Revolution which are existing portfolio growth companies. After the year-end, GBP0.63 million was further invested into My Tutorweb.
Principal new investments in the year
Company Business Date of Investment Amount of
new investment
(GBPm)
My Tutorweb Online tutoring May 2017 0.35
------------------------- -------------------- ----------------
My Tutorweb Limited is a digital marketplace that connects school
pupils who are seeking private one-to-one tutoring with university
students. The business is satisfying a growing demand from both
schools and parents to improve pupils' exam results to enhance their
academic and career prospects. This investment supports an opportunity
to consolidate the sizeable GBP2 billion UK tutoring market, grow
My Tutorweb's market presence and drive technological development
within the company. The company's latest unaudited accounts for
the year ended 31 December 2017 show turnover of GBP0.56 million
and a loss before interest, tax and amortisation of goodwill of
GBP1.40 million.
Since the year end, the Company has invested a further GBP0.63 million
as part of a larger GBP5.00 million funding round. This additional
capital is to support further growth in order to capitalise on its
position as the largest provider of online tutoring into both private
and school customers.
Wetsuit Outlet Retailer July 2017 1.72*
------------------------- -------------------- ----------------
B2C Distribution 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 Co (an existing Mobeus VCT investment)
and Gul. The investment is to fund working capital and growth in
the existing activity 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 GBP1.98 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.
Proactive Investors Investor media services January 2018 0.29
------------------------- -------------------- ----------------
Proactive Investors specialises in up-to-the-minute multi-media
news provision, events organisation, digital services and investor
research. Proactive provides breaking news, commentary and analysis
on hundreds of small-cap listed companies and pre-IPO businesses
across the globe, 24/7. The investment will enable Proactive to
expand its services into the US market, which is the largest global
market for investor media services in the world. The company's accounts
for the year ended 30 June 2017 show turnover of GBP3.99 million
and a profit before interest, tax and amortisation of goodwill of
GBP0.53 million.
Online care provision
SuperCarers platform March 2018 0.38
------------------------- -------------------- ----------------
SuperCarers provides an online platform connecting people, typically
family members seeking care for their elderly parents, with experienced
independent carers. Carers and care-seekers manage care directly,
thus reducing the administrative burden and the need for care managers,
enabling care to be delivered with greater flexibility and more
cost effectively. The company's accounts for the year ended 31 March
2017 generated revenues of GBP0.18 million and a loss before interest,
tax and amortisation of GBP0.72 million.
Hemmels Classic car restoration March 2018 0.44
------------------------- -------------------- ----------------
Hemmels commenced trading in September 2016 and specialises in the
sourcing, restoration, selling and servicing of high value classic
cars. Hemmels currently focuses on classic Mercedes Benz, and plans
to expand into the Porsche marque under a separate brand. The investment
will enable Hemmels to proceed with its expansion plans and secure
sufficient development stock. For the year ended 31 December 2017,
the company generated revenues of GBP1.21 million and a loss before
interest, tax and amortisation of goodwill of GBP0.31 million.
Further investment into existing portfolio companies in the year
Company Business Date of investment Amount of
new investment
(GBPm)
A provider of direct-booking
systems to major hotel November
BookingTek groups 2017 0.05
------------------------------ -------------------- ----------------
London-based BookingTek provides software that enables hotels to
reduce their reliance on third-party booking systems through an
enterprise-grade, real-time booking platform for meeting rooms and
restaurant reservations. BookingTek's existing clients include two
of the world's top 10 hotel groups and the UK's largest hotel chain.
The company's latest audited accounts for the year ended 31 December
2017 show turnover of GBP2.15 million and a loss before interest,
tax and amortisation of goodwill of GBP1.55 million.
September
Online marketplace for 2017/December
used camera and video 2017/February
MPB Group equipment 2018 0.45
------------------------------ -------------------- ----------------
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. Having
expanded into the US (opening a New York office) and German markets
as part of the initial VCT investment round, this follow on investment,
alongside funds provided by the Proven VCTs, is to support its continued
growth plan. This investment will give the company sufficient capital
to achieve its next planned expansion. 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.
Tapas Revolution Restaurant chain March 2018 0.36
------------------------------ -------------------- ----------------
Based in London, Tapas Revolution is a leading Spanish restaurant
chain in the casual dining sector focusing on shopping centre sites
with high footfall. Having opened its first restaurant in Shepherd's
Bush Westfield, the business now operates six established restaurants
with the support of the initial VCT investment in 2017. This follow
on investment is to finance the opening of several new locations
around the UK. The company's latest audited accounts for the year
ended 25 October 2016 show a turnover of GBP4.25 million and loss
before interest, tax and amortisation of goodwill of GBP0.28 million.
Realisations
There were two realisations during the year under review, namely: Entanet Holdings Limited and Gro-Group Holdings Limited, as set out below:
Company Business Period of Total cash
investment proceeds over
the life of
the investment/Multiple
over cost
Entanet Wholesale voice and February GBP3.69 million
data communications 2014 to 2.5 times cost
provider August 2017
----------------------- -------------- ---------------------------
The Company sold its investment in Entanet to AIM quoted CityFibre
Infrastructure Holdings Limited for GBP3.26 million in August 2017.
Deferred consideration of up to GBP0.33 million is potentially receivable
over the next two years. Excluding this deferred consideration,
the Company has so far realised a gain over the life of the investment
of GBP1.82 million, a multiple of 2.5 times cost, and has returned
an IRR of 39% to date - an excellent outcome.
Gro-Group Baby sleep products March 2013 GBP2.54 million
to December 2.3 times cost
2017
----------------------- -------------- ---------------------------
The Company sold its investment in Gro-Group for GBP1.96 million
in December 2017 and subsequently received deferred consideration
of GBP0.07 million. The Company realised a gain over the life of
the investment of GBP1.42 million. This equates to a multiple of
2.3 times cost of GBP1.12 million and has returned an IRR of 21%.
Loan stock repayments
Loan stock repayments totalled GBP0.35 million for the year, all from TPSFF Holdings Limited (formerly, Plastic Surgeon).
Funds available for investment
As a result of the successful fundraising (GBP14.64 million raised) and also the divestments referred to above (GBP5.29 million received) cash and other liquid investments amounted to GBP21.59 million. Of this, GBP2.27 million is held as cash in bank and deposit accounts, and the balance is placed in AAA rated money market funds. The returns on these funds remain low, but the Board retains its policy of seeking above all to preserve capital for its uninvested funds.
Investment Portfolio Summary
at 31 March 2018
Qualifying investments Total Book Valuation Valuation % of
Cost at at 31 March at 31 March Net assets
31 March 2017 2018 by value
2018 GBP GBP
GBP
Unquoted investments
----------------------- ------------- ------------- ------------
ASL Technology Holdings
Limited
Printer and photocopier
services 2,092,009 2,258,388 2,126,379 4.5%
----------------------- ------------- ------------- ------------
Tovey Management Limited
(trading as Access IS)
Provider of data capture
and scanning hardware 1,733,500 2,119,958 2,027,582 4.3%
----------------------- ------------- ------------- ------------
EOTH Limited (trading as
Rab and Lowe Alpine)
Branded outdoor equipment
and clothing 817,185 1,001,498 1,521,873 3.2%
----------------------- ------------- ------------- ------------
Manufacturing Services
Investment Limited (trading
as Wetsuit Outlet)(1)
Online retailer in the
water sports market 1,412,992 1,000,300 1,412,992 3.0%
----------------------- ------------- ------------- ------------
Virgin Wines Holding Company
Limited
Online wine retailer 1,284,333 1,761,822 1,371,490 2.9%
----------------------- ------------- ------------- ------------
MPB Group Limited
Online marketplace for
used photographic and video
equipment 819,773 374,244 1,254,114 2.6%
----------------------- ------------- ------------- ------------
CGI Creative Graphics International
Limited
Vinyl graphics to global
automotive, recreation
vehicle and aerospace markets 999,568 888,418 1,030,727 2.2%
----------------------- ------------- ------------- ------------
Vian Marketing Limited
(trading as Red Paddle
Co)
Design, manufacture and
sale of stand-up paddleboards
and windsurfing sails 717,038 987,739 987,179 2.1%
----------------------- ------------- ------------- ------------
Tharstern Group Limited
Software based management
information systems to
the print sector 789,815 942,138 887,870 1.9%
----------------------- ------------- ------------- ------------
Master Removers Group Limited
(trading as Anthony Ward
Thomas, Bishopsgate and
Aussie Man & Van)
A specialist logistics,
storage and removals business 369,625 526,134 874,317 1.8%
----------------------- ------------- ------------- ------------
Preservica Limited
Seller of proprietary digital
archiving software 485,770 485,770 865,666 1.8%
----------------------- ------------- ------------- ------------
Ibericos Etc. Limited (trading
as Tapas Revolution)
Spanish restaurant chain 812,248 451,248 854,224 1.8%
----------------------- ------------- ------------- ------------
Turner Topco Limited (trading
as Auction Technology Group
(formerly ATG Media))
SaaS based online auction
market place platform 1,317,100 1,151,484 777,645 1.6%
----------------------- ------------- ------------- ------------
Pattern Analytics Limited
(trading as Biosite)
Workforce management and
security services for the
construction industry 495,479 495,479 743,219 1.6%
----------------------- ------------- ------------- ------------
Vectair Holdings Limited
Designer and distributor
of washroom products 60,293 403,701 740,670 1.6%
----------------------- ------------- ------------- ------------
TPSFF Holding Limited (formerly
The Plastic Surgeon Holdings
Limited)
Snagging and finishing
of domestic and commercial
properties 101,942 881,275 731,523 1.5%
----------------------- ------------- ------------- ------------
BookingTek Limited
Software for hotel groups 504,336 450,442 714,211 1.5%
----------------------- ------------- ------------- ------------
Redline Worldwide Limited
Provider of security services
to the aviation industry 682,222 837,283 689,047 1.4%
----------------------- ------------- ------------- ------------
Media Business Insight
Holdings Limited
A publishing and events
business focused on the
creative production industries 1,447,188 979,875 651,225 1.4%
----------------------- ------------- ------------- ------------
Blaze Signs Holdings Limited
Manufacturer and installation
of signs 437,030 526,492 639,342 1.3%
----------------------- ------------- ------------- ------------
Bourn Bioscience Limited
Management of In-vitro
fertilisation clinics 757,101 504,586 558,620 1.2%
----------------------- ------------- ------------- ------------
Buster and Punch Holdings
Limited (formerly Chatfield
Services Limited)
Industrial inspired lighting
and interiors retailer 436,391 436,391 553,896 1.2%
----------------------- ------------- ------------- ------------
RDL Corporation Limited
Recruitment consultants
for the pharmaceutical,
business intelligence and
IT industries 1,000,000 1,031,100 515,476 1.1%
----------------------- ------------- ------------- ------------
Hemmels Limited
Company specialising in
the sourcing, restoration,
selling and servicing of
high price, classic cars 437,238 - 437,238 0.9%
----------------------- ------------- ------------- ------------
Fullfield Limited (trading
as Motorclean)
Vehicle cleaning and valet
services 1,025,152 1,053,281 433,939 0.9%
----------------------- ------------- ------------- ------------
Super Carers Limited
Online platform that connects
people seeking home care
from experienced independent
carers 384,720 - 384,720 0.8%
----------------------- ------------- ------------- ------------
My Tutorweb Limited
Digital marketplace connecting
school pupils seeking one-to-one
online tutoring 349,661 - 349,661 0.7%
----------------------- ------------- ------------- ------------
Proactive Group Holdings
Inc
Provider of media services
and investor conferences
for companies primarily
listed on secondary public
markets 288,952 - 288,952 0.6%
----------------------- ------------- ------------- ------------
Jablite Holdings Limited
Manufacturer of expanded
polystyrene products 281,398 401,864 171,931 0.4%
----------------------- ------------- ------------- ------------
Veritek Global Holdings
Limited
Maintenance of imaging
equipment 967,780 715,856 102,972 0.1%
----------------------- ------------- ------------- ------------
Lightworks Software Limited
Provider of software for
CAD and CAM vendors 25,727 92,737 61,163 0.1%
----------------------- ------------- ------------- ------------
Racoon International Group
Limited
Supplier of hair extensions,
hair care products and
training 906,935 - - 0.0%
----------------------- ------------- ------------- ------------
Newquay Helicopters (2013)
Limited (in creditors'
voluntary liquidation)
Helicopter service operator 30,469 - - 0.0%
----------------------- ------------- ------------- ------------
Entanet Holdings Limited
Wholesale communications
provider - 1,550,227 - 0.0%
----------------------- ------------- ------------- ------------
Gro-Group Holdings Limited
Baby sleep products - 973,928 - 0.0%
----------------------- ------------- ------------- ------------
Total qualifying investments 24,270,970 25,283,658 24,759,863 52.0%(2)
----------------------- ------------- ------------- ------------
Non-qualifying Investments
----------------------- ------------- ------------- ------------
Companies preparing to
trade 2,331,280 1,032,800 1,032,800 2.3%
----------------------- ------------- ------------- ------------
Media Business Insight
Limited
A publishing and events
business focused on the
creative production industries 561,884 855,516 568,576 1.2%
----------------------- ------------- ------------- ------------
Manufacturing Services
Investment Limited (trading
as Wetsuit Outlet)(1)
Online retailer in the
water sports market 304,000 608,000 304,000 0.6%
----------------------- ------------- ------------- ------------
Tovey Management Limited
(trading as Access IS)
Provider of data capture
and scanning hardware 219,873 219,873 219,873 0.5%
----------------------- ------------- ------------- ------------
Racoon International Group
Limited
Supplier of hair extensions,
hair care products and
training 139,050 83,729 - 0.0%
----------------------- ------------- ------------- ------------
365 Agile Group plc (formerly
Iafyds plc)
Development of energy saving
devices for domestic use 254,586 - - 0.0%
----------------------- ------------- ------------- ------------
Turner Topco Limited (trading
as Auction Technology Group
(formerly ATG Media))
SaaS based online auction
market place platform 3,863 - - 0.0%
----------------------- ------------- ------------- ------------
Total non-qualifying investments 3,814,536 2,799,918 2,125,249 4.6%
----------------------- ------------- ------------- ------------
Total investment portfolio 28,085,506 28,083,576 26,885,112 56.6%(2)
----------------------- ------------- ------------- ------------
Total investments including
cash and current asset
investments 28,085,506 38,019,489 47,444,886 99.7%
----------------------- ------------- ------------- ------------
Net assets at the year
end 28,085,506 38,060,985 47,598,197 100.0%
----------------------- ------------- ------------- ------------
Notes
(1) GBP1,716,992 was invested into Wetsuit Outlet, a leading online retailer in the water sports market. This investment utilised GBP1,304,300 previously held in Manufacturing Services Investment Limited, a company preparing to trade, after a net repayment to the Company of GBP304,000. A further GBP412,692 was invested directly by the Company into Wetsuit Outlet.
(2) As at 31 March 2018, 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 in new funds raised, before these need to be included in the qualifying investment test.
Principal risks
The Directors acknowledge the Board's responsibilities for the Company's internal control systems and have instigated systems and procedures for identifying, evaluating and managing the significant risks faced by the Company. This includes a key risk management review which takes place at each quarterly Board meeting. Further details of these are contained in the Corporate Governance section of the Directors' Report in the Annual Report.
The risk profile of the Company has changed as a result of the changes to the VCT Rules. As the Company's investment focus is on growth capital investments in younger companies it is anticipated that investment returns will be more volatile and will have a higher risk profile. The Board is confident that the Investment Adviser will continue to adapt to changes in investment requirements. The Company continues to have high liquidity levels in advance of the proceeds of the fundraising being deployed, which may have an adverse impact on performance.
The principal risks identified by the Board are set out below:
Risk Possible consequence How the Board manages risk
Economic Events such as an economic
recession * The Board monitors (1) the portfolio as a whole to
and movements in interest ensure that the Company invests in a diversified
rates portfolio of companies and (2) developments in the
could affect trading macro-economic environment such as changes caused by
conditions withdrawal from the EU and movements in interest
for smaller companies and rates.
consequently
the value of the Company's
qualifying
investments. The impact of
the UK's
withdrawal from the EU
upon the
UK economy is uncertain.
--------------------------- ----------------------------------------------------------------------
Investment Investment in unquoted
and strategic small companies * The Board regularly reviews the Company's investment
can involve a higher strategy.
degree of risk
than investment in larger,
and/or
fully listed companies and * Investee companies are carefully selected by the
will Investment Adviser for recommendation to the Board.
likely have more variable The investment portfolio is reviewed by the Board on
returns. a regular basis.
Smaller companies often
have limited
product lines, markets or
financial * The Investment Adviser is appointed to the Board of
resources and may be each new investee company.
dependent for
their management on a
smaller number
of key individuals.
--------------------------- ----------------------------------------------------------------------
Loss of The Company must comply
approval with section * The Board receives regular reports from Philip Hare &
as a Venture 274 of the Income Tax Act Associates LLP ("PHA") who have been retained to
Capital 2007 ("ITA") undertake an independent VCT status monitoring role.
Trust which allows it to be
exempted from
capital gains tax on
investment * The Company's VCT qualifying status is reviewed by
gains. Any breach of these PHA and the Investment Adviser on a regular basis.
rules
may lead to the Company
losing its
approval as a VCT,
qualifying shareholders
who have not held their
shares for
the designated holding
period having
to repay the income tax
relief they
obtained and that future
dividends
paid by the Company become
subject
to tax. The Company would
also lose
its exemption from
corporation tax
on capital gains.
--------------------------- ----------------------------------------------------------------------
VCT Regulatory The Company is required to
changes comply * The Board receives advice from PHA in respect of
with frequent changes to these requirements, including those that may arise
the VCT from the withdrawal from the EU, and conducts its
specific regulations affairs in order to comply with these requirements.
relating to
European State Aid
regulations as
enacted by the UK
Government. Non-compliance
would result in a loss of
VCT status.
The Board is also aware
that VCTs
are to be considered
within the
Government's Patient
Capital Review.
--------------------------- ----------------------------------------------------------------------
Regulatory The Company is required to
comply * Regulatory and legislative developments are kept
with the Companies Act, under review by the Company's solicitors and the
the listing Board.
rules of the UK Listing
Authority
and United Kingdom
Accounting Standards.
Changes to and breaches of
any of
these might lead to
suspension of
the Company's Stock
Exchange listing,
financial penalties or a
qualified
audit report.
--------------------------- ----------------------------------------------------------------------
Financial Failure of the systems at
and operating any of * The Board carries out an annual review of the
the third party service internal controls in place and reviews the risks
providers facing the Company at each quarterly Board meeting.
that the Company has
contracted
with could lead to
inaccurate reporting * It reviews the performance of the service providers
or monitoring. Inadequate annually.
controls
could lead to the
misappropriation
or insecurity of assets.
--------------------------- ----------------------------------------------------------------------
Market Movements in the
valuations of the * The Board receives quarterly valuation reports from
VCT's investments will, the Investment Adviser and remains focused on the
inter alia, investments being at fair value, after considering
be connected to movements many factors, including the impact of market
in UK movements.
Stock Market indices.
* The Investment Adviser alerts the Board about any
adverse movements.
--------------------------- ----------------------------------------------------------------------
Asset liquidity The Company's investments
may be * The Board receives reports from the Investment
difficult to realise. Adviser and reviews the portfolio at each quarterly
Board meeting. It carefully monitors investments
where a particular risk has been identified.
--------------------------- ----------------------------------------------------------------------
Market liquidity Shareholders may find it
difficult * The Board has a share buyback policy which seeks to
to sell their shares at a mitigate market liquidity risk. This policy is
price reviewed at each quarterly Board meeting.
which is close to the net
asset
value given the limited
secondary
market in VCT shares.
--------------------------- ----------------------------------------------------------------------
Counterparty A counterparty may fail to
discharge * The Board regularly reviews and agrees policies for
an obligation or managing these risks. Further details can be found
commitment that under 'Credit risk' in Note 15 to the Financial
it has entered into with Statements in the Accounts.
the Company.
--------------------------- ----------------------------------------------------------------------
Cyber and The Company and its
Data Security shareholders * Cyber security matters are kept under review and
may suffer losses in the continually monitored.
event of
the IT systems at
principal suppliers
being compromised by cyber * The Board monitors and seeks assurance from the VCT's
attack. principal suppliers in respect of the systems and
processes they have adopted to counter these risks.
--------------------------- ----------------------------------------------------------------------
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Financial Statements for each financial year and the Directors have elected to prepare the Financial Statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss for the Company for that period.
In preparing these Financial Statements, the Directors are required to:
-- select suitable accounting policies and then apply them consistently; -- make judgements and accounting estimates that are reasonable and prudent;
-- state whether the Financial Statements have been prepared in accordance with United Kingdom accounting standards, subject to any material departures disclosed and explained in the Financial Statements;
-- prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business;
-- prepare a Strategic Report, a Directors' Report and Directors' Annual Remuneration Report which comply with the requirements of the Companies Act 2006.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the Financial Statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Website publication
The Directors are responsible for ensuring the Annual Report and the Financial Statements are made available on a website. Financial Statements are published on the Company's website in accordance with legislation in the United Kingdom governing the preparation and dissemination of Financial Statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company's website is the responsibility of the Directors. The Directors' responsibility also extends to the ongoing integrity of the Financial Statements contained therein.
Directors' responsibilities pursuant to Disclosure and Transparency Rule 4 of the UK Listing Authority
The Directors confirm to the best of their knowledge that:
(a) The Financial Statements, which have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice, give a true and fair view of the assets, liabilities, financial position and the profit of the Company.
(b) The Annual Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.
Having taken advice from the Audit Committee, the Board considers that the Annual Report and Financial Statements, taken as a whole, as fair, balanced and understandable and that it provides the information necessary for shareholders to assess the Company's performance, business model and strategy.
Neither the Company nor the Directors accept any liability to any person in relation to the Annual Report except to the extent that such liability could arise under English law. Accordingly, any liability to a person who has demonstrated reliance on any untrue or misleading statement or omission shall be determined in accordance with section 90A and schedule 10A of the Financial Services and Markets Act 2000.
The names and functions of the Directors are stated in the Annual Report.
For and on behalf of the Board
Nigel Melville
Chairman
22 June 2018
FINANCIAL STATEMENTS
Income Statement
for the year ended 31 March 2018
Year ended 31 March Year ended 31 March
2018 2017
Notes Revenue Capital Total Revenue Capital Total
GBP GBP GBP GBP GBP
--------------------------------- ----- --------- --------- --------- --------- --------- ---------
Unrealised (losses)/gains
on investments 8 - (755,510) (755,510) - 229,772 229,772
Realised gains on investments 8 - 2,766,722 2,766,722 - 76,067 76,067
Income 3 1,715,664 - 1,715,664 1,679,033 - 1,679,033
Investment Adviser's fees 4a (247,177) (741,530) (988,707) (237,791) (713,374) (951,165)
Investment Adviser's performance
fees 4b - - - - (2,692) (2,692)
Other expenses 4c (348,568) - (348,568) (304,306) - (304,306)
--------------------------------- ----- --------- --------- --------- --------- --------- ---------
Profit/(loss) on ordinary
activities before taxation 1,119,919 1,269,682 2,389,601 1,136,936 (410,227) 726,709
Taxation on profit/(loss)
on ordinary activities 5 (191,512) 140,891 (50,621) (172,122) 143,213 (28,909)
Profit/(loss) for the year
and total comprehensive
income 928,407 1,410,573 2,338,980 964,814 (267,014) 697,800
Basic and diluted earnings
per ordinary share: 7 2.25p 3.43p 5.68p 2.69p (0.75)p 1.94p
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 year.
Balance Sheet
As at 31 March 2018
31 March 31 March
2018 2017
Notes GBP GBP
Fixed assets
Investments at fair value 8 26,885,112 28,083,576
Current assets
Debtors and prepayments 339,187 185,596
Current asset investments 18,287,301 5,197,301
Cash at bank 2,272,473 4,738,612
20,898,961 10,121,509
Creditors: amounts falling due within
one year (185,876) (144,100)
Net current assets 20,713,085 9,977,409
Net assets 47,598,197 38,060,985
Capital and reserves
Called up share capital 493,042 356,724
Share premium reserve 30,498,349 15,901,497
Capital redemption reserve 94,298 87,583
Revaluation reserve 1,398,656 2,001,764
Special distributable reserve 6,052,525 7,540,615
Realised capital reserve 7,943,475 11,142,462
Revenue reserve 1,117,852 1,030,340
Equity shareholders' funds 47,598,197 38,060,985
Basic and diluted net asset value
per ordinary share 96.54p 106.70p
Statement of changes in equity
for the year ended 31 March 2018
Non-distributable reserves Distributable reserves
Called
up Share Capital Special Realised
share premium redemption Revaluation distributable capital Revenue
capital reserve reserve reserve reserve reserve Reserve Total
(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
year
(Loss)/profit
for the year - - - (755,510) - 2,166,083 928,407 2,338,980
Total
comprehensive
income for the
year - - - (755,510) - 2,166,083 928,407 2,338,980
Contributions
by and
distributions
to owners
Shares issued
via Offer for
Subscription
(note c) 143,033 14,596,852 - - (103,872) - - 14,636,013
Shares bought
back
(note d) (6,715) - 6,715 - (616,121) - - (616,121)
Dividends paid - - - - - (5,980,765) (840,895) (6,821,660)
Total
contributions
by and
distributions
to owners 136,318 14,596,852 6,715 - (719,993) (5,980,765) (840,895) 7,198,232
Other movements
Realised losses
transferred to
special reserve
(note a) - - - - (768,097) 768,097 - -
Realisation of
previously
unrealised
depreciation - - - 152,402 - (152,402) - -
Total other
movements - - - 152,402 (768,097) 615,695 - -
At 31 March 2018 493,042 30,498,349 94,298 1,398,656 6,052,525 7,943,475 1,117,852 47,598,197
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 GBP768,097 from the
realised capital reserve to the special distributable reserve above
is the total of realised losses incurred by the Company in the year.
b): The realised capital reserve and the revenue reserve together
comprise the Profit and Loss Account of the
Company.
c): Under an Offer for Subscription launched on 6 September 2017,
14,303,289 shares were allotted between September 2017 and March
2018, raising net funds of GBP14,636,013 for the Company. This figure
is net of issue costs of GBP260,115. Having raised the full amount
of funds sought, the Offer was closed on 13 March 2018.
d): During the year, the Company purchased 671,517 of its own shares
at the prevailing market price for a total cost of GBP616,121, which
were subsequently cancelled.
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
year-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 8), all such movements through both revaluation and realised
capital reserves are shown within the Income Statement for the year.
Special distributable reserve
The cost of share buybacks is charged to this reserve. In addition,
any realised losses on the sale (excluding transaction costs) of
an investment or if an investment has permanently fallen in value,
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. The cost of any IFA facilitation
fee payable as part of the Offer for Subscription is also charged
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 and disposal 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 together with the related tax effect, as well as
income dividends paid that are classified as revenue in nature.
Statement of changes in equity
for the year ended 31 March 2017
Non-distributable reserves Distributable reserves
Called
up Share Capital Special Realised
share Premium redemption Revaluation distributable capital Revenue
capital reserve reserve reserve reserve reserve Reserve Total
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
year
Profit/(loss)
for the year - - - 229,772 - (496,786) 964,814 697,800
Total
comprehensive
income for
the
year - - - 229,772 - (496,786) 964,814 697,800
Contributions
by and
distributions
to owners
Shares bought
back (3,961) - 3,961 - (411,261) - - (411,261)
Dividends paid - - - - - (4,474,756) (891,810) (5,366,566)
Total
contributions
by and
distributions
to owners (3,961) - 3,961 - (411,261) (4,474,756) (891,810) (5,777,827)
Other
movements
Realised
losses
transferred
to special
reserve - - - - (572,853) 572,853 - -
Realisation
of previously
unrealised
appreciation - - - (11,732) - 11,732 - -
Total other
movements - - - (11,732) (572,853) 584,585 - -
At 31 March
2017 356,724 15,901,497 87,583 2,001,764 7,540,615 11,142,462 1,030,340 38,060,985
Statement of Cash Flows
for the year ended 31 March 2018
Year ended
Year ended 31 March
31 March 2018 2017
Notes GBP GBP
Cash flows from operating activities Profit for the financial year 2,338,980 697,800 Adjustments for: Net unrealised losses/(gains) on investments 755,510 (229,772) Net gains on realisations on investments (2,766,722) (76,067) Tax charge for the current year 50,621 28,909 (Increase)/decrease in debtors (100,281) 80,712 Increase/(decrease) in creditors and accruals 20,273 (44,914) ------------------------------------------------ ----------- -------------------------- ----------- Net cash inflow from operations 298,381 456,668 Corporation tax paid (29,118) - Net cash inflow from operating activities 269,263 456,668 Cash flows from investing activities Purchase of investments 8 (2,733,686) (2,257,183) Disposal of investments 8 5,890,052 3,812,501 No change/decrease in bank deposits with a maturity over three months - 507,061 Net cash inflow from investing activities 3,156,366 2,062,379 Cash flows from financing activities Shares issued as part of Offer for subscription 14,636,013 - Equity dividends paid 6 (6,821,660) (5,366,566) Purchase of own shares (616,121) (412,046) Net cash inflow/(outflow) from financing activities 7,198,232 (5,778,612) Net increase/(decrease) in cash and cash equivalents 10,623,861 (3,259,565) Cash and cash equivalents at start of year 9,935,913 13,195,478 Cash and cash equivalents at end of the year 20,559,774 9,935,913 Cash and cash equivalents comprise: Cash equivalents 18,287,301 5,197,301 Cash at bank and in hand 2,272,473 4,738,612
NOTES TO THE ACCOUNTS
for the year ended 31 March 2018
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
A summary of the principal accounting policies, all of which have been applied consistently throughout the year are set out at the start of the related disclosure throughout the Notes to the Financial Statements within an outlined box.
These Financial Statements have been prepared in accordance with applicable United Kingdom accounting standards, including Financial Reporting Standard 102 ("FRS102"), 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. The Company has a number of
financial instruments which are disclosed under FRS102 s11/12 as shown in Note 15 of the Annual Report.
3 Income
Dividends receivable on quoted equity shares are brought into
account on the ex-dividend date. Dividends receivable on unquoted
equity shares are brought into account when the Company's right
to receive payment is established and there is no reasonable
doubt that payment will be received.
Interest income on loan stock is accrued on a daily basis. Provision
is made against this income where recovery is doubtful or where
it will not be received in the foreseeable future. Where the
loan stocks only require interest or a redemption premium to
be paid on redemption, the interest and redemption premium is
recognised as income or capital as appropriate once redemption
is reasonably certain. When a redemption premium is designed
to protect the value of the instrument holder's investment rather
than reflect a commercial rate of revenue return, the redemption
premium is recognised as capital. The treatment of redemption
premiums is analysed to consider if they are revenue or capital
in nature on a company by company basis. Accordingly, the redemption
premium recognised in the year ended 31 March 2018 has been classified
as capital and has been included within gains on investments.
2018 2017
GBP GBP
Income from bank deposits 11,161 29,594
------------------------------- ----------------- -------------------
Income from investments
- from equities 114,698 181,950
- from overseas based OEICs 21,687 15,605
- from UK based OEICs 11,450 8,549
- from loan stock 1,551,995 1,443,335
- from interest on preference
share dividend arrears 218 -
------------------------------- ----------------- -------------------
1,700,048 1,649,439
Other income 4,455 -
Total income 1,715,664 1,679,033
------------------------------- ----------------- -------------------
Total income comprises
Dividends 147,835 206,104
Interest 1,563,374 1,472,929
Other 4,455 -
------------------------------- ----------------- -------------------
1,715,664 1,679,033
------------------------------- ----------------- -------------------
Total loan stock interest due but not recognised in the year was GBP243,675 (2017: GBP275,960).
4 Investment Adviser's fees and Other expenses
All expenses are accounted for on an accruals basis.
a) 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.
2018 2017
Revenue Capital Total Revenue Capital Total
Mobeus Equity Partners LLP GBP GBP GBP GBP GBP GBP
Investment Adviser's fees 247,177 741,530 988,707 237,791 713,374 951,165
Investment Adviser's performance fee - - - - 2,692 2,692
247,177 741,530 988,707 237,791 716,066 953,857
======== ======== ======== ======== ======== ========
Under the terms of a revised investment management agreement dated 10 September 2010, Mobeus Equity Partners LLP ("Mobeus") provides investment advisory, administrative and company secretarial services to the Company, for a fee
of 2% per annum calculated on a quarterly basis by reference to the net assets at the end of the preceding quarter, plus a
fee of GBP113,589 per annum, the latter being subject to changes in the retail prices index each year. In 2013, Mobeus
has agreed to waive such further increases due to indexation, until otherwise agreed by the Board. In accordance
with the policy statement published under "Management and Administration" in the Company's prospectus
dated 10 May 2000, the Directors have charged 75% of the investment management expenses to the capital account.
This is in line with the Board's expectation of the long term split of returns from the investment portfolio of the Company.
Under the terms of the management agreement the total Investment Adviser and administration expenses of the Company excluding any irrecoverable VAT, exceptional costs and any performance incentive fee, are linked to a maximum of 3.6% of the value of the Company's closing net assets. For the year ended 31 March 2018, the expense cap has not been breached (2017: GBPnil).
The Company is responsible for external costs such as legal and accounting fees, incurred on transactions that do not
proceed to completion ("abort expenses") subject to the cap on total annual expenses referred to above.
In accordance with general market practice, the Investment Adviser earned arrangement fees and fees for supplying Directors and/or monitoring services from investee companies. The share of such fees attributable to the investments made by the Company were GBP85,289 (2017: GBP67,353) and GBP164,993 (2017: GBP139,556) respectively. The fees for supplying directors and/or monitoring services were from 34 (2017: 28) investee companies during the year.
b) Performance fees
Performance incentive agreement
The following performance incentive fee arrangement dated 20 September 2005 continues to be in place, and operated as detailed below:
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.
Clarifications to the agreement
During the year ended 31 March 2016, the Board and the Investment Adviser agreed to confirm and clarify in more detail a number of principles and interpretations applied to the agreement. The principal ones are reflected in the paragraphs
above and explained below:-
First, the incentive fee is paid upon dividends paid in a year, not declared and paid in a year, as the original agreement stated. Secondly, the average NAV referred to above is calculated on a daily weighted average basis throughout the year.
In turn, this average NAV is compared to a Base NAV that is also calculated on a daily weighted average basis throughout
the year. Thirdly, the methodologies to account for new shares issued and buybacks of shares, their inclusion in the
incentive fee calculations and to identify the proportion of all shares upon which an incentive fee is payable have been
clarified.
Finally, it has been agreed that any excess of cumulative dividends paid over the cumulative annual dividend target is not
carried forward, whether a fee is paid for that year or not.
These clarifications have been incorporated into the performance incentive agreement. The Board has been advised that, as
these and a number of more minor clarifications, are clarifications of the Incentive Agreement, rather than changes to it,
there was no need to seek shareholder approval for them.
Position at 31 March 2018
The cumulative dividends paid exceeded the annual cumulative dividend target at 31 March 2018 by 7.24p
per share (GBP2,788,162 surplus in aggregate being 78.1% of the total surplus) at the year-end, (where 78.1% is the proportion of
Incentive Fee Shares to the total number of shares in issue at the year-end date) and taking into account the target rate of
dividends and the dividends paid to shareholders.
The 6p annual dividend hurdle was 7.80p per share at the year-end after adjustment for RPI. The Base NAV was 105.97p per share
at the year-end and an average of 106.09p for the year, compared to an average NAV for the year of 103.51p.
Therefore no incentive fee is payable for the year (2017: GBP2,692).
c) Other expenses
Expenses are charged wholly to revenue, with the exception of
expenses incidental to the acquisition or disposal of an investment,
which are written off to the capital column of the Income Statement
or deducted from the disposal proceeds as appropriate.
2018 2017
GBP GBP
Directors' remuneration (including NIC of GBP5,318
(2017: GBP5,080) (note a) 104,373 96,080
IFA trail commission 47,511 15,395
Broker's fees 12,000 12,000
Auditor's fees - Audit of Company (excluding
VAT) 22,807 22,550
- tax compliance services (note b) (excluding
VAT) 1,503 3,550
- audit related assurance services (note b)
(excluding VAT) 4,562 4,510
Registrar's fees 46,614 30,707
Printing 41,250 33,215
Legal & professional fees 8,129 13,059
VCT monitoring fees 8,400 8,400
Directors' insurance 8,094 8,310
Listing and regulatory fees 24,760 23,219
Sundry 18,565 18,466
Running costs 348,568 289,461
Provision against loan interest receivable
(note c) - 14,845
---------------------------------------------------------------------------- ---------------- ------------
Other expenses 348,568 304,306
---------------------------------------------------------------------------- ---------------- ------------
a): See analysis in the Directors' emoluments table in the Annual Report, which excludes the NIC above. The key management personnel are the non-executive directors. The Company has no employees.
b): The Directors consider the Auditor was best placed to provide the other services disclosed above. The audit related assurance services are in relation to the review of the Financial Statements within the Company's Half-Year Report. The Audit Committee reviews the nature and extent of these services to ensure that auditor independence is maintained. In this regard, compliance tax services (excluding iXBRL services), with effect from the current year, are to be carried out by another firm, so are included within legal and professional fees.
c): Provision against loan interest receivable of GBPnil (2017: GBP14,845) is a provision made against loan stock interest recognised in previous years.
5 Taxation on ordinary activities
The tax expense for the year comprises current tax and is recognised
in profit or loss. The current income tax charge is calculated
on the basis of tax rates and laws that have been enacted or
substantively enacted by the reporting date.
Any tax relief obtained in respect of Investment Adviser fees
allocated to capital is reflected in the realised capital reserve
and a corresponding amount is charged against revenue. The tax
relief is the amount by which corporation tax payable is reduced
as a result of these capital expenses.
Deferred tax is recognised in respect of all timing differences
that have originated but not reversed at the balance sheet date
where transactions or events that result in an obligation to
pay more tax in the future or a right to pay less tax in the
future have occurred at the balance sheet date. Timing differences
are differences between the Company's taxable profits and its
results as stated in the financial statements that arise from
the inclusion of gains and losses in the tax assessments in periods
different from those in which they are recognised in the Financial
Statements.
Deferred tax is measured at the average tax rates that are expected
to apply in the years in which the timing differences are expected
to reverse based on tax rates and laws that have been enacted
or substantively enacted at the balance sheet date. Deferred
tax is measured on a non-discounted basis.
A deferred tax asset would be recognised only to the extent that
it is more likely than not that future taxable profits will be
available against which the asset can be utilised.
2018 2017
Revenue Capital Total Revenue Capital Total
GBP GBP GBP GBP GBP GBP
a) Analysis of tax charge:
UK Corporation tax on profits
for the year 191,512 (140,891) 50,621 172,122 (143,213) 28,909 ------------------------------------ ---------- ---------- ---------- ---------- ---------- --------- Total current tax charge 191,512 (140,891) 50,621 172,122 (143,213) 28,909 ------------------------------------ ---------- ---------- ---------- ---------- ---------- --------- Corporation tax is based on a rate of 19% (2017: 20%) b) Profit/(loss) on ordinary activities before tax 1,119,916 1,269,682 2,389,601 1,136,936 (410,227) 726,709 Profit/(loss) on ordinary activities multiplied by small company rate of corporation tax in the UK of 19% (2017: 20%) 212,785 241,239 454,024 227,387 (82,046) 145,341 Effect of: UK dividends (21,792) - (21,792) (36,390) - (36,390) Unrealised losses/(gains) not deductible/taxable - 143,547 143,547 - (45,954) (45,954) Realised gains not taxable - (525,677) (525,677) - (15,213) (15,213) Unrelieved expenditure 310 - 310 - - - Utilisation of losses on which deferred tax not recognised - - - (18,875) - (18,875) Under provision in prior period 209 - 209 - - - Actual tax charge 191,512 (140,891) 50,621 172,122 (143,213) 28,909 ------------------------------------ ---------- ---------- ---------- ---------- ---------- ---------
Tax relief relating to Investment Adviser fees is allocated between revenue and capital where such relief can be utilised.
No asset or liability has been recognised for deferred tax in relation to capital gains or losses on revaluing investments as the Company is exempt from corporation tax in relation to capital gains or losses as a result of qualifying as a Venture Capital Trust.
There is no potential liability to deferred tax (2017: GBPnil). There is no unrecognised deferred tax asset in 2018 (2017: GBPnil).
6 Dividends paid and payable
Dividends payable are recognised as distributions in the Financial
Statements when the Company's liability to pay them has been established.
This liability is established for interim dividends when they are
paid, and for final dividends when they are approved by the shareholders,
usually at the Company's Annual General Meeting.
A key judgement in applying the above accounting policy is in determining
the amount of minimum income dividend to be paid in respect of a
year. The Company's status as a VCT means it has to comply with
Section 259 of the Income Tax Act 2007, which requires that no more
than 15% of the income from shares and securities in a year can
be retained from the revenue available for distribution for the
year.
Amounts recognised as distributions to equity
shareholders in the year:
For year
ended 31 Pence 2018 2017
Dividend Type March per share Date Paid GBP GBP
Interim Capital 2017 5.00p 08/08/2016 - 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 -
Second interim Income 2018 1.75p 22/01/2018 840,894 -
Second interim Capital 2018 7.25p 22/01/2018 3,483,699 -
6,821,660 5,366,566
Any proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these Financial Statements.
Set out below are the total income dividends payable in respect of the financial year, which is the basis on which the requirements of section 274 of the Income Tax Act 2007 are considered.
Recognised income distributions in the financial
statements for the year:
For year
ended 31 Pence 2018 2017
Dividend Type March per share Date Paid GBP GBP
Revenue available for distribution by way of
dividends for the year 928,407 964,814
Second interim Income 2017 2.50p 31/03/2017 - 891,810
Second interim Income 2018 1.75p 22/01/2018 840,894 -
Total income dividends for the year 840,894 891,810
7 Basic and diluted earnings per share
2018 2017
GBP GBP
---------------------------------------------------- ---------- ----------
Total earnings after taxation: 2,338,980 697,800
Basic and diluted earnings per share (note
a) 5.68p 1.94p
Net revenue earnings from ordinary activities
after taxation 928,407 964,814
Basic and diluted revenue earnings per share
(note b) 2.25p 2.69p
Unrealised capital (losses)/gains (755,510) 229,772
Realised capital gains 2,766,722 76,067
Capital Investment Adviser's fees (net of taxation) (600,639) (570,161)
Investment Adviser's performance fee - (2,692)
Total capital earnings 1,410,573 (267,014)
Basic and diluted capital earnings per share
(note c) 3.43p (0.75)p
Weighted average number of shares in issue
in the year 41,190,198 35,877,280
Notes:
a) Basic earnings per share is total earnings after taxation divided by the weighted average number of shares in issue.
b) Revenue earnings per share is the revenue return after taxation divided by the weighted average number of shares in issue.
c) Capital earnings per share is the total capital return after taxation divided by the weighted average number of shares in issue.
d) There are no instruments that will increase the number of shares in issue in future. Accordingly, the above figures currently represent both basic and diluted earnings.
8 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. Where the terms of
a disposal state that consideration may be received at some future
date and, subject to the conditionality and materiality of the amount
of deferred consideration, an estimate of the fair value, discounted
for the time value of money may be recognised through the Income
Statement. In other cases, the proceeds will only be recognised once
the right to receive payment is established and there is no reasonable
doubt that payment will be received.
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 consideration of:
(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, revenue or gross profit multiple to that company's
historic, current or forecast post-tax earnings before interest and
amortisation, revenue, or gross profit (the ratio used being based
on a comparable sector but the resulting value being adjusted to
reflect points of difference identified by the 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 a multiple or cost less impairment basis is not appropriate
and overriding factors apply, a discounted cash flow, net asset valuation
or realisation proceeds basis may be applied.
Capital gains and losses on investments, whether realised or unrealised,
are dealt with in the profit and loss and revaluation reserves, and
movements in the period are shown in the Income Statement.
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. 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 into 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.
Movements in investments during the year are summarised as follows:
Unquoted Unquoted
Traded equity preference Unquoted
on AIM shares shares Loan Stock Total
GBP GBP GBP GBP GBP
------------------------------ --------- ------------ ----------- ------------ ------------
Cost at 31 March 2017 254,586 10,571,020 23,395 17,664,403 28,513,404
Permanent impairment at 31
March 2017 (254,586) (1,365,869) (739) (810,398) (2,431,592)
Unrealised gains/(losses)
at 31 March 2017 - (2,271,287) 377,118 3,895,933 2,001,764
Valuation at 31 March 2017 - 6,933,864 399,774 20,749,938 28,083,576
Purchases at cost - 1,810,907 - 922,779 2,733,686
Sale proceeds (notes a and
b) - (3,069,069) (1,236) (2,873,057) (5,943,362)
Reclassification at value
(note c) - 445,804 - (445,804) -
Realised gains on investments - 2,765,069 1,236 417 2,766,722
Unrealised gains/(losses)
on investments (note d) - 1,844,353 (719) (2,599,144) (755,510)
Valuation at 31 March 2018 - 10,730,928 399,055 15,755,129 26,885,112
Cost at 31 March 2018 - 12,398,820 22,159 15,664,527 28,085,506
Permanent impairments at 31
March 2018 (note e) - (1,704,184) (739) (894,127) (2,599,050)
Unrealised gains at 31 March
2018 - 36,292 377,635 984,729 1,398,656
Valuation at 31 March 2018 - 10,730,928 399,055 15,755,129 26,885,112
A breakdown of the increases and the decreases in unrealised valuations of the portfolio is shown in the Investment Portfolio Summary in the Annual Report.
Major movements in investments
Note a) Disposals of investment portfolio companies during the year were:
Type Investment Disposal Opening Realised
Cost Proceeds valuation gain in
year
GBP GBP GBP GBP
Entanet
Holdings
Limited(1) Full exit 1,444,090 3,259,328 1,550,227 1,709,101
Gro-Group
Holdings
Limited Full exit 1,123,088 2,026,442 973,928 1,052,514
TPSFF Holdings Loan
Limited repayments 290,406 348,485 348,485 -
Manufacturing
Services
Investment Share
Limited buyback 304,000 304,000 304,000 -
Others - 5,107 - 5,107
---------------------- ----------------- ------------------- --------------------------
3,161,584 5,943,362 3,176,640 2,766,722
---------------------- ----------------- ------------------- --------------------------
(1) Deferred contingent consideration of GBP0.33 million is potentially receivable over the next 9-15 months. There are conditions attached to this deferred consideration such that the amount receivable is uncertain and so has not been recognised in the current year's financial statements.
Note b) The cash flow from investment proceeds shown above of GBP5,943,362 differs from the sales proceeds shown in the Statements of Cash Flows of GBP5,890,052, by GBP53,310. These are deferred proceeds payable from the sale of Gro-Group and are held in debtors at the year end.
Note c) During the year, Manufacturing Services Investment Limited, a company preparing to trade, acquired Wetsuit Outlet. Part of the original holding was reorganised whereby GBP445,804 of loan stock was reclassified into ordinary shares.
Note d) Within net unrealised losses of GBP755,510 for the year, the significant losses in value compared to last year were as follows: GBP619,342 in Fullfield Limited (trading as Motorclean), GBP615,590 in Media Business Insight Holdings Limited, GBP612,884 in Veritek Global Limited, GBP515,624 in RDL Corporation Limited, GBP390,332 in Virgin Wines Holding Company Limited and GBP373,839 in Turner Topco Limited (trading as Auction Technology Group (formerly ATG Media)). These losses were partially offset by unrealised gains in valuation compared to last year, including: GBP520,375 in EOTH Limited, GBP434,341 in MPB Group Limited, GBP379,896 in Preservica Limited, GBP348,183 in Master Removers Group Limited and GBP336,969 in Vectair Limited.
The decrease in unrealised valuations of the loan stock investments above reflects the changes in the entitlements to loan premiums, and/or in the underlying enterprise value of the investee company. The increase does not arise from assessments of credit risk or market risk upon these investments.
Note e) During the year, permanent impairments of the cost of investments have risen from GBP2,431,592 to GBP2,599,050. The increase of GBP167,458 is due to the impairment of one investee company's remaining investment cost.
9 Post balance sheet events
On 30 April 2018, TPSFF Holdings Limited made a loan repayment of GBP0.07 million to the Company.
On 25 May 2018, MPB Group Limited made a loan repayment of GBP0.09 million to the Company.
On 31 May 2018, the Company invested a further GBP0.63 million into My Tutorweb.
On 15 June 2018, the Company invested GBP0.06 million as loan stock into Proactive Investors.
10 Statutory information
The financial information set out in these statements does not constitute the Company's statutory accounts for the year ended 31 March 2018 in terms of section 434 of the Companies Act 2006 but is derived from those accounts. Statutory accounts for the year ended 31 March 2018 will be delivered to Companies House following the Company's Annual General Meeting. The auditors have reported on those accounts: their report was unqualified and did not contain a statement under Section 498 of the Companies Act 2006.
11 Annual Report
The Annual Report for the year ended 31 March 2018 will shortly be made available on the Company's website: www.mig2vct.co.uk. and shareholders will be notified of this by email or post or sent a hard copy in the post in accordance with their instructions. Copies will be available thereafter to members of the public from the Company's registered office.
12 Annual General Meeting
The Annual General Meeting of the Company will be held at 11.00 am on Wednesday, 12 September 2018 at The Clubhouse, 8 St James's Square, London SW1Y 4JU.
Contact details for further enquiries:
Robert Brittain of Mobeus Equity Partners LLP (the Company Secretary) on 020 7024 7600 or by e-mail to vcts@mobeusequity.co.uk.
Mark Wignall or Clive Austin at Mobeus Equity Partners LLP (the Investment Adviser) on 020 7024 7600 or by e-mail to 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.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
FR UUSORWVANUAR
(END) Dow Jones Newswires
June 22, 2018 10:04 ET (14:04 GMT)
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