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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Mobeus Income & Growth Vct Plc | LSE:MIX | London | Ordinary Share | GB00B01WL239 | 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% | 56.00 | 54.50 | 57.50 | 56.00 | 56.00 | 56.00 | 1,773 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Investors, Nec | -15.97M | -18.79M | -0.1128 | -4.96 | 93.29M |
From Apr 2019 to Apr 2024
TIDMMIX
RNS Number : 2420U
Mobeus Income & Growth VCT PLC
27 March 2019
mobeus Income & Growth VCT plc
Annual Financial Results of the Company for the Year ended 31 December 2018
Hot Features
Premium
Mobeus Income & Growth VCT plc (the "Company") today announces
its final results for the year ended 31 December 2018. These results
were approved by the Board of Directors on 27 March 2019.
You may, in due course, view the Annual Report & Financial Statements,
comprising the statutory accounts of the Company by visiting www.migvct.co.uk.
Financial Highlights
As at 31 December 2018:
Net assets: GBP75.08 million
Net asset value ("NAV") per share: 70.25 pence
- Net asset value ("NAV") total return per share for the year
was 4.9%*.
- Share price total return per share was 6.3% for the year*.
- Dividends paid and proposed in respect of the year total 7.00
pence per share. The proposed final dividend of 5.00 pence per
share, if approved, will bring cumulative dividends paid to
shareholders in respect of the past five years to 71.50 pence
per share*.
- The Company realised investments for a total of GBP2.94 million,
a realised gain over original investment cost of GBP0.17 million.
- The Company invested a total of GBP7.24 million into five new
growth capital investments and five follow-on investments during
the year.
* Further details on these alternative performance measures ("APMs")
are contained in the Strategic Report within the Annual Report.
PERFORMANCE SUMMARY
The table below shows the recent past performance of the Company's
existing class of shares for each of the last five years.
Reporting Net NAV Share Cumulative Cumulative total Dividends
date assets per price(1) dividends return per share paid and
share paid per to shareholders(2) proposed
share per share
in respect
of each
year
as at (NAV basis) (Share
31 December price basis)
(GBPm) (p) (p) (p) (p) (p) (p)
2018 75.08 70.25 62.00 113.80 184.05 175.80 7.00 (3)
2017 69.90 71.75 63.00 108.80 180.55 171.80 16.00
2016 63.15 83.53 74.75 89.80 173.33 164.55 14.50
2015 74.11 97.54 86.50 74.30 171.84 160.80 10.00
2014 60.41 99.44 86.00 64.30 163.74 150.30 24.00
(1) Source: Panmure Gordon & Co. (mid-market price). The discount
on the Company's shares at 31 December 2018 was 10.0%, as the
share price was based on the NAV per share at 30 September 2018
of 68.88 pence per share, which was the latest published figure
at that time.
(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 launch in October 2004.
(3) This figure of 7.00 pence includes the proposed final dividend
of 5.00 pence per share referred to in the Financial Highlights
above, payment of which, if approved, will reduce the net assets
per share from the 31 December 2018 figure of 70.25 pence by
the amount of the dividend.
CHAIRMAN'S STATEMENT
I am pleased to present the annual results of Mobeus Income &
Growth VCT plc for the year ended 31 December 2018.
Overview
This has been another year of solid performance by the Company.
Returns to shareholders have again been positive, principally
due to a strong income return and a rise in the value of the
unrealised portfolio. During the year, the Company made investments
into five new companies, provided follow-on funding to five existing
portfolio companies and realised its investment in three portfolio
companies. Further details of this investment activity can be
found under the 'Investment portfolio' section of my Statement
below and in the Investment Adviser's Review.
The Company and the Investment Adviser have responded well to
the changes in the VCT Rules introduced by the Finance (No2)
Act 2015. Fourteen growth capital investments totalling GBP16.30
million have been completed since this change. Shareholders should
note that, at the year end, 65.7% (2017: 75.4%) of the value
of the investment portfolio was held in more mature investments
made before the rules changed and 34.3% (2017: 24.6%) was held
in younger growth capital investments.
The Investment Adviser continues to report an interesting pipeline
of further growth capital opportunities. Meanwhile the existing,
more mature portfolio constructed under the previous rules continues
to provide a healthy yield.
As mentioned in my half-year statement, we are delighted with
the strong support from investors for our last fundraising, which
closed fully subscribed in March 2018. The Board appreciates
the continued support from existing shareholders and extends
a warm welcome to new shareholders.
Performance
As explained more fully in the Strategic Report in the Annual
Report, the Company's NAV total return per share for the year
ended 31 December 2018 was 4.9% (2017: 8.6%) (being the closing
NAV plus dividends paid in the year, divided by the opening NAV)
while the share price total return was 6.3% (2017: 9.7%). As
a result of this performance, the NAV cumulative total return
per share (being the closing NAV plus total dividends paid to
date since launch in 2004) rose during the year by 1.9% from
180.55 pence to 184.05 pence.
This NAV return for the year was primarily attributable to good
revenue returns arising principally from income from loan stock
investments, as well as an increase in value of the portfolio
of investee companies. Further information is contained in the
Investment Adviser's Review and the Strategic Report in the Annual
Report.
Dividends
Your Board is proposing a final dividend in respect of the year
ended 31 December 2018 of 5.00 pence per share (2017: 3.00 pence
per share).
The dividend, comprising 3.25 pence from capital (special) and
1.75 pence from income, will be proposed to shareholders at the
Annual General Meeting of the Company to be held on 8 May 2019,
to shareholders on the register on 26 April 2019, for payment
on 17 May 2019. This final dividend is in addition to an interim
capital (special) dividend of 2.00 pence paid on 21 September
2018.
If approved by shareholders, this forthcoming final dividend
will bring total dividends paid in respect of the year ended
31 December 2018 to 7.00 pence (2017: 16.00 pence) per share,
bringing cumulative dividends paid since inception in 2004 to
118.80 pence (2017: 111.80 pence) per share.
The Company's target of paying a dividend of at least 4.00 pence
per share in respect of each financial year has been exceeded
in each of the last nine years. While the Board still believes
in the attainment of the dividend target, the gradual move of
the portfolio to younger growth capital investments may make
it harder to achieve from income and capital returns alone ('ordinary
dividends') in any given year.
To the extent that dividends have been, or continue to be, paid
from special distributable reserves ('special' above), either
to enhance dividends or to enable the Company to comply with
its regulatory requirements, shareholders should note this will
reduce the Company's NAV per share.
A full dividend history is contained in the Performance Data
appendix in the Annual Report and on the Company's website.
Investment portfolio
The portfolio was valued at GBP48.20 million (2017: GBP41.52
million) at the year end representing 103.1% of cost (2017: 98.3%).
During the year, GBP7.24 million was invested in five new growth
capital investments and five existing portfolio companies (analysed
in the Investment Adviser's Review and explained within Note
8 to the Financial Statements).
The new growth capital investments totalling GBP3.10 million
were made into the following companies:
-- Proactive Investors, a provider of investor media services;
-- Super Carers, an online platform connecting people seeking
home care;
-- Hemmels, a restorer of classic cars;
-- Rotageek, a provider of workforce management software; and
-- Grow Kudos, a digital platform for dissemination of research.
In addition, five follow-on growth capital investments totalling
GBP4.14 million were made into:
-- MPB, an online marketplace for used camera and video equipment;
-- Tapas Revolution, a leading Spanish restaurant chain in the
casual dining sector;
-- MyTutor, a digital marketplace connecting people seeking online
tutoring;
-- Preservica, a seller of proprietary digital archiving software;
and
* Biosite, a provider of biometric access control and
software-based workforce management solutions for the
construction sector.
We expect these follow-on investments to continue to be a feature
of the growth capital investments as they achieve scale.
Cash proceeds totalling GBP2.94 million for the year were received
from portfolio companies that were either sold, repaid loans
or settled other capital proceeds. Of this total, GBP2.13 million
was received as cash proceeds from the sale of Fullfield (trading
as Motorclean), Hemmels and Lightworks, with a further GBP0.81
million being received as loan, share capital repayments and
deferred consideration.
For the year under review, the portfolio generated a net loss
of GBP0.13 million on investments realised. Within this, the
principal gains were from the sale of Lightworks (which was realised
at a profit over opening valuation of GBP0.78 million) and receipts
from companies realised in a prior year, which were more than
offset by losses incurred from the sale of Fullfield (trading
as Motorclean) (GBP0.78 million) and Hemmels (GBP0.33 million).
The loss on the sale of Hemmels is explained further in the Investment
Adviser's Review. It serves to remind shareholders that an inherent
risk of investing in relatively early stage smaller companies
(as required by the terms of the new VCT regulations), is that
not all companies will succeed.
The portfolio also achieved a net increase of GBP2.80 million
on investments still held, with positive increases from Plastic
Surgeon, EOTH (Rab and Lowe Alpine) and CGI Creative Graphics,
partially offset by valuation falls at BookingTek, Wetsuit Outlet
and Veritek.
Review of longer-term performance
Shareholders who invested in 2004 at the launch of the Company
have seen a NAV cumulative total return of 184.05 pence per share
compared with their initial investment cost of 100 pence per
share, or a net cost of 60 pence per share (after initial income
tax relief of 40 pence of their investment). As part of this
return 113.80 pence per share has been paid to shareholders in
dividends. This represents an average annual yield on the initial
100 pence investment of 8.0% and 13.3% on the adjusted investment
cost of 60 pence. The balance of the total return is the closing
NAV of 70.25 pence per share.
The Board also regularly reviews the Company's total (income
and capital) return performance on both a NAV and Share Price
basis compared to its peer group. Based on the statistics prepared
by Morningstar at 31 December 2018, the Company was ranked 8th
on a NAV total return basis and 4th on a Share Price total return
basis out of 37 generalist (including planned exit) VCTs monitored
by the Association of Investment Companies ("AIC") over the last
five years. The Company was ranked 3rd on a NAV total return
basis and 13th on a Share Price total return basis out of 32
generalist (including planned exit) VCTs monitored by the AIC
over the last ten years. The Board believes this to be a satisfactory
performance.
Industry and regulatory developments
During the year under review, a number of additional changes
to the VCT Scheme were introduced with the enactment of the Finance
Act 2018 on 15 March 2018. These changes were 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 money to work more quickly. They
also place further restrictions on the way investments are able
to be structured. A summary of current VCT regulation is included
in the Annual Report.
Share buybacks
During the year ended 31 December 2018, the Company made six
purchases of its shares, buying back a total of 1,715,113 shares,
allowing shareholders who wanted to sell their shares to do so.
The buybacks represented 1.8% of the issued share capital of
the Company at the beginning of the year. Further details are
included in the Strategic Report in the Annual Report. The shares
bought back were subsequently cancelled.
Shareholder Event
This year's annual shareholder event was held on Tuesday, 5 February
2019 at the Royal Institute of British Architects in Central
London. Separate day time and evening sessions included presentations
on the Mobeus advised VCTs' investment activity and performance.
We have received positive feedback from many of the circa 350
people who attended the event and were pleased to hear that overall
they found the day informative and worthwhile. The next shareholder
event will be held in the first quarter of 2020.
Annual General Meeting
The next Annual General Meeting of the Company will be held at
2:00 p.m. on Wednesday, 8 May 2019 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. Shareholders are encouraged to attend and to ask questions
of the Board and the Investment Adviser. The Notice of the meeting
and an explanation of the resolutions to be proposed can be found
in the Annual Report.
Outlook
Your Board considers that your Company is well positioned to
take advantage of the strong demand for growth capital investment,
although currently entry valuations can be quite full for the
most interesting opportunities. While the new growth capital
element of the portfolio is still young, both your Board and
the Investment Adviser will seek to assess, balance and diversify
the risks within the growing proportion of the overall portfolio
that these investments will represent. Your Board cautions that
investing in such earlier stage companies does involve increased
risk and those that succeed often take longer to achieve scale.
Returns may, therefore, take longer to emerge and may be more
volatile. Unfortunately, the least successful investments are
likely to emerge before the most successful. Thus, we might anticipate
a slower rate of financial progress in the earlier years for
the growth capital portfolio, hopefully offset by more significant
longer-term gains.
Meanwhile, the portfolio retains a solid foundation of investments
made before the 2015 rule change, the majority of which are mature
and profitable companies providing attractive income returns,
and some of which may be realised at a worthwhile profit in the
future when circumstances permit.
The Board and Investment Adviser have carried out an analysis
of the possible impact of Brexit on the investment portfolio.
This will be kept under review.
The successful fundraising in 2017/18 provides the Company with
sufficient funds to meet its cash needs and to continue the current
investment rate in the short to medium-term. Your Board is also
pleased to note that the Investment Adviser continues to expand
and strengthen its investment team to source and manage investments
that complement the portfolio.
Finally, I would like to take this opportunity once again to
thank all Shareholders for their continued support.
Clive Boothman
Chairman
INVESTMENT POLICY
The Company's policy is to invest primarily in a diverse portfolio
of UK unquoted companies. Investments are generally structured
as part loan and part equity in order to receive regular income,
to generate capital gains upon sale and to reduce the risk of
high exposure to equities. To spread the risk further, investments
are made in a number of businesses across different industry sectors.
The Company's cash and liquid resources are held in a range of
instruments which can be of varying maturities, subject to the
overriding criterion that the risk of loss of capital be minimised.
The Company seeks to make investments in accordance with the requirements
of VCT regulation. The full text of the Company's Investment Policy
is available in the Strategic Report section of the Annual Report.
Investment ADVISER'S Review
Demand for growth capital investment remains strong and there
is a significant pipeline of investment opportunities. It is expected
that the current pace and quantum of new and follow-on investments
will continue in the short to medium-term.
Portfolio review
The portfolio's activity in the year is summarised as follows:
2018 2017
GBPm GBPm
----------------------------- ------- ---- --------
Opening portfolio value 41.52 51.68
New and further investments 7.24 2.34
Disposal proceeds (2.94) (17.18)
Net realised (losses)/gains (0.13) 5.25
Valuation movements 2.51 (1) (0.57)
----------------------------- ------- ---- --------
Portfolio value at 31
December 48.20 41.52
----------------------------- ------- ---- --------
(1) This figure is less than Unrealised gains/(losses) on investments
per the Income Statement due to an amount of deferred consideration
of GBP0.28 million now recognised, from an investment realised
in a prior year which no longer forms part of the portfolio -
see Note 8 of the Notes to the Financial Statements for further
details.
This has been a year of further solid progress building the growth
capital portfolio with five investments into new growth businesses
totalling GBP3.10 million and five existing growth portfolio companies
receiving follow-on funding totalling GBP4.14 million. Net cash
proceeds of GBP2.94 million were received, primarily from three
realisations.
Since the change in the VCT rules in 2015, the Company has invested
GBP16.30 million in younger growth capital investments, bringing
the proportion of the portfolio held in growth capital investments
made after the rule change in 2015 to 34.3% by value at the year
end.
Details of these movements for each investee company are provided
at the end of this Investment Adviser's Review.
The portfolio's contribution to the overall results of the VCT
is summarised as follows:
Investment Portfolio 2018 2017
Capital Movement GBPm GBPm
----------------------------- ------- ---- -------
Increase in the value
of unrealised investments 6.37 3.74
Decrease in the value
of unrealised investments (3.86) (4.31)
----------------------------- ------- ---- -------
Net increase/(decrease)
in the value of unrealised
investments 2.51 (1) (0.57)
----------------------------- ------- ---- -------
Realised gains 0.98 5.25
Realised losses (1.11) -
----------------------------- ------- ---- -------
Net realised (losses)/gains
in the year (0.13) 5.25
----------------------------- ------- ---- -------
Net investment portfolio
movement in the year 2.38 4.68
----------------------------- ------- ---- -------
(1) This figure is less than Unrealised gains/(losses) on investments
per the Income Statement due to an amount of deferred consideration
of GBP0.28 million now recognised, from an investment realised
in a prior year which no longer forms part of the portfolio -
see Note 8 of the Notes to the Financial Statements for further
details.
Valuation changes of portfolio investments still held
Within the valuation increases of GBP6.37 million, the principal
contributors were Plastic Surgeon GBP849k, EOTH (Rab and Lowe
Alpine) GBP780k and CGI Creative Graphics GBP439k. Plastic Surgeon
continues to trade strongly having now achieved three years of
profit growth. EOTH achieved a record year of profitability, underpinned
by continued growth in its Rab brand. CGI Creative Graphics has
seen an improvement in trading, principally arising from the growth
in the UK and European caravan market.
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, in some cases, also due to the underlying investee
company performance.
Within total valuation decreases of GBP(3.86) million, the main
reductions were BookingTek (GBP833k), Wetsuit Outlet (GBP802k)
and Veritek Global (GBP679k). BookingTek has experienced delays
to the roll out of its software which has resulted in turnover
being lower than budget. Wetsuit Outlet has had a disappointing
year post investment, with growth in profitability not being achieved
as envisaged. Management has since implemented several measures
to restore margins. Finally, Veritek has experienced a challenging
trading environment in its sector but is restructuring its operations
accordingly.
Realised gains and losses from sales of investments
The largest gain was (GBP0.78) million from the sale of Lightworks
to Siemens PLM Software, a business of Siemens AG.
The largest loss was GBP0.78 million from the sale of Fullfield
(trading as Motorclean) back to management, whilst a loss of (GBP0.33)
million resulted from the sale of Hemmels to its largest customer.
Although the Hemmels loss was modest, it was unexpected, arising
shortly after the initial investment, and illustrates the inherent
higher risk of investing in early stage growth companies.
The Company also realised a gain in the year from deferred consideration
receipts of GBP0.20 million arising from past realisations during
the year.
Investment portfolio yield and capital repayments
During the year under review, the Company received the following
amounts in loan interest and dividend income:
Investment Portfolio Yield 2018 2017
GBPm GBPm
------------------------------ ------ ------
Loan interest received
in the year 2.32 2.72
Dividends received in
the year 0.70 0.36
------------------------------ ------ ------
Total portfolio income
in the year(1) 3.02 3.08
------------------------------ ------ ------
Portfolio value at 31
December 48.20 41.52
------------------------------ ------ ------
Portfolio Income Yield
(Income as a % of Portfolio
value at 31 December) 6.3% 7.4%
------------------------------ ------ ------
(1) Total portfolio income in the period is generated solely from
investee companies within the portfolio. See Note 3 of the Financial
Statements for all income receivable by the Company.
The Company also received loan stock repayments of GBP0.42 million
and preference share repurchases of GBP0.19 million, both at cost.
New investment in the year
A total of GBP3.10 million was invested into five new investments
during the year as detailed below:
Company Business Date of investment Amount of new investment
(GBPm)
Investor media January, June
Proactive Investors services and October 2018 0.93
------------------------- -------------------- -------------------------
Proactive Investors specialises in timely 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. The
investment
will enable Proactive to expand its services into the US market, which is the largest
global
market for investor media services. 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.
Super Carers Online care platform March 2018 0.58
------------------------- -------------------- -------------------------
Super Carers provides an online platform connecting people seeking
home care, typically for their elderly relatives, 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 2018 show revenues of GBP0.38 million and a loss
before interest, tax and amortisation of goodwill of GBP(1.28)
million.
Hemmels Classic car restoration March 2018 0.60
------------------------- -------------------- -------------------------
Hemmels commenced trading in September 2016 and specialised in
the sourcing, restoration, selling and servicing of high value
classic cars. Hemmels focused on classic Mercedes-Benz and planned
to expand into the Porsche marque under a separate brand. The
investment was made to enable Hemmels to proceed with its expansion
plans and secure sufficient development stock. After a short period
following the completion of the investment, it became clear that
the company's financial situation and prospects were significantly
at variance to expectations and the investment has since been
realised at a loss, as reported within 'Realisations during the
year', below.
Workforce management
Rotageek software August 2018 0.57
------------------------- -------------------- -------------------------
Rotageek is a provider of cloud-based enterprise software to help
larger retail and leisure organisations predict and meet demand
to schedule staff effectively. This investment will be used for
further technology development and to grow sales from enterprise
clients. The company's unaudited accounts for the year ended 31
December 2017 show revenues of GBP0.90 million and a loss before
interest, tax and amortisation of goodwill of GBP(1.57) million.
Platform for
the dissemination
Grow Kudos of academic research November 2018 0.42
------------------------- -------------------- -------------------------
Grow Kudos is an online platform which provides and promotes academic research
dissemination.
The Kudos product was developed to allow researchers to increase the impact and
readership
of their work and to track and analyse distribution both within academia and across
broader
audiences. The investment will be used principally to increase its head count to
support sales
growth. The company's unaudited accounts for the year ended 31 December 2017 show
revenues
of GBP0.53 million and a loss before interest, tax and amortisation of goodwill of
GBP(0.59)
million.
Further investments in existing portfolio companies in the year
The Company made further investments totalling GBP4.14 million
into five existing portfolio companies during the year under review,
as detailed below:
Company Business Date of investment Amount of new investment
(GBPm)
Online marketplace February, October
for used camera and December
MPB Group and video equipment 2018 0.57
----------------------- -------------------- -------------------------
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. Having doubled its sales over
the last year, this investment will give the company sufficient
capital to achieve its next phase of expansion. The company's
latest audited accounts for the year ended 31 March 2018 show
turnover of GBP21.71 million and a loss before interest, tax and
amortisation of goodwill of GBP(2.00) million.
Tapas Revolution Restaurant chain March 2018 0.55
----------------------- -------------------- -------------------------
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 seven 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 England. The company's latest unaudited accounts
for the year ended 31 October 2017 show turnover of GBP5.84 million
and a GBP(0.68) million loss before interest, tax and amortisation
of goodwill.
MyTutor Online tutoring May 2018 0.99
----------------------- -------------------- -------------------------
My Tutor 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 GBP2bn UK tutoring market, grow My
Tutor'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 GBP(1.40)
million.
Seller of proprietary
digital archiving
Preservica software September 2018 1.20
----------------------- -------------------- -------------------------
Preservica has developed market leading software for the long-term
preservation of digital records ensuring that digital content
can remain accessible, irrespective of future changes in technology.
Previously a division of the Company's former portfolio company
Tessella, Preservica was demerged prior to the sale of Tessella
in December 2015. The investment provided additional growth capital
to finance the development of the business. The Company's latest
audited accounts for the year ended 31 March 2018 show turnover
of GBP2.85 million and a loss before interest, tax and amortisation
of goodwill of GBP(1.93) million.
Workforce management
and security
Biosite services October 2018 0.83
----------------------- -------------------- -------------------------
Based in the Midlands, Biosite is a provider of biometric access
control and software-based workforce management solutions for
the construction sector. The business is growing significantly
and this investment will support the further development of software
and hardware products. The company's latest unaudited accounts
for the year ended 31 July 2017 show turnover of GBP6.38 million
and a loss before interest, tax and amortisation of goodwill of
GBP(0.45) million.
Realisations during the year
The Company realised its investments in Fullfield (trading as
Motorclean), Hemmels and Lightworks during the year, generating
an aggregate net realised loss of GBP(0.33) million. Net cash
proceeds received from the sale of these investments totalled
GBP2.13 million, as detailed below:
Company Business Period of investment Total cash proceeds
over the life of
the investment/
Multiple over cost
Fullfield Vehicle cleaning July 2011 to GBP3.38 million
(Motorclean) and valet services August 2018 1.2 x cost
------------------------- --------------------- --------------------
The Company sold its investment in Fullfield (trading as Motorclean)
back to management in August 2018, receiving cash proceeds of
GBP0.92 million (realised loss in the year: GBP(0.78) million).
This realisation contributed to a return of 1.2 times the original
investment cost and an IRR of 5.0% in the seven years that this
investment was held.
Hemmels Classic car restorer March 2018 to GBP0.29 million
September 2018 0.5 x cost
------------------------- --------------------- --------------------
The Company sold its investment in Hemmels to the business's largest
customer for GBP0.27 million in September 2018, resulting in a
realised loss of GBP(0.33) million on the original investment
cost over the six months the investment was held. The investment
was realised six months after the original investment, for reasons
already explained under new investments.
Lightworks Provider of software March 2011 to GBP0.96 million
for CAD and CAM vendors September 2018 21.7 x cost
------------------------- --------------------- --------------------
The Company sold its investment in Lightworks to Siemens PLM Software
for GBP0.94 million (realised gain in the year: GBP0.78 million)
in September 2018, generating a realised a gain over the life
of the investment of GBP0.92 million. This equates to a multiple
of 21.7 times the investment cost of GBP0.04 million and an IRR
of 56%.
The Company also received loan repayments totalling GBP0.42 million
(notably Plastic Surgeon: GBP0.28 million), deferred consideration
from investments realised in a previous year of GBP0.20 million
and preference share repurchases of GBP0.19 million.
Net realised losses on the three disposals above of (GBP0.33)
million, partially reduced by deferred consideration gains of
GBP0.20 million, equal the total loss for the year of (GBP0.13)
million, as shown at the start of this review.
Mobeus Equity Partners LLP
Investment Adviser
Market Date of Total book Valuation Like for % value % of
sector investment cost like valuation of net equity
increase/ assets held
GBP'000 GBP'000 (decrease) by funds
over year advised
by Mobeus
Qualifying investments
-------------------------------------- ------------- ----------- ---------- --------------- -------- -----------
Unquoted investments
----------------------------------------------------- ----------- ---------- --------------- -------- -----------
Tovey Management
Limited (trading
as Access IS)
Provider of data Electronic
capture and and
scanning electrical
hardware equipment Oct-15 2,979 3,699 9.2% 4.9% 43.4%
--------------------- --------------- ------------- ----------- ---------- --------------- -------- -----------
ASL Technology
Holdings Limited
Printer and
photocopier Support
services services Dec-10 2,942 3,542 13.6% 4.7% 47.5%
--------------------- --------------- ------------- ----------- ---------- --------------- -------- -----------
Virgin Wines
Holding Company
Limited
Online Wine General
retailer retailers Nov-13 2,439 2,997 9.1% 4.0% 42.0%
--------------------- --------------- ------------- ----------- ---------- --------------- -------- -----------
Preservica Limited
Seller of
proprietary Software digital archiving and computer software services Dec-15 2,099 2,756 26.6% 3.6% 48.4% --------------------- --------------- ------------- ----------- ---------- --------------- -------- ----------- EOTH Limited (trading as Equip Outdoor Technologies) Branded outdoor equipment and clothing (Rab General and Lowe Alpine) retailers Oct-11 1,000 2,373 40.7% 3.2% 8.0% --------------------- --------------- ------------- ----------- ---------- --------------- -------- ----------- Pattern Analytics Limited (trading as Biosite) Workforce management and security services for Software the construction and computer industry services Nov-16 1,584 2,341 33.4% 3.1% 23.9% --------------------- --------------- ------------- ----------- ---------- --------------- -------- ----------- Turner Topco Limited (trading as Auction Technology Group (formerly ATG Media)) SaaS based online auction marketplace platform Media Oct-08 2,494 2,053 (2.9)% 2.7% 17.1% --------------------- --------------- ------------- ----------- ---------- --------------- -------- ----------- Vectair Holdings Limited Designer and distributor of Support washroom products services Jan-06 138 2,018 18.8% 2.7% 24.0% --------------------- --------------- ------------- ----------- ---------- --------------- -------- ----------- Manufacturing Services Investment Limited (trading as Wetsuit Outlet) Online retailer in the water General sports market retailers Jul-17 2,174 1,372 (29.2)% 1.8% 27.5% --------------------- --------------- ------------- ----------- ---------- --------------- -------- ----------- Vian Marketing Limited (trading as Red Paddle Co) Design, manufacture and sale of stand-up paddleboards and windsurfing Leisure sails goods Jul-15 1,189 1,823 (2.7)% 2.4% 31.5% --------------------- --------------- ------------- ----------- ---------- --------------- -------- ----------- MPB Group Limited Online marketplace for used photographic General and video equipment retailers Jun-16 1,324 1,798 37.1% 2.4% 25.1% --------------------- --------------- ------------- ----------- ---------- --------------- -------- ----------- CGI Creative Graphics International Limited Vinyl graphics to global automotive, recreational vehicle and aerospace General markets Industrials Jun-14 1,808 1,795 32.4% 2.4% 26.9% --------------------- --------------- ------------- ----------- ---------- --------------- -------- ----------- Master Removers Group Limited (trading as Anthony Ward Thomas, Bishopsgate and Aussie Man & Van) A specialist logistics, storage and removals Support business services Dec-14 614 1,712 21.5% 2.3% 20.1% --------------------- --------------- ------------- ----------- ---------- --------------- -------- ----------- The Plastic Surgeon Holdings Limited (formerly TPSFF Holdings Limited) Supplier of snagging and finishing services to the domestic and commercial property Support markets services Apr-08 39 1,695 64.8% 2.3% 38.0% --------------------- --------------- ------------- ----------- ---------- --------------- -------- ----------- My Tutorweb Limited Digital marketplace connecting school pupils seeking Support one-to-one tutoring services May-17 1,534 1,534 - 2.0% 30.8% --------------------- --------------- ------------- ----------- ---------- --------------- -------- ----------- Ibericos Etc. Limited (trading as Tapas Revolution) Spanish restaurant Travel chain and leisure Jan-17 1,245 1,353 15.5% 1.8% 25.0% --------------------- --------------- ------------- ----------- ---------- --------------- -------- ----------- Media Business Insight Holdings Limited A publishing and events business focused on the creative production industries Media Jan-15 2,518 1,380 12.5% 1.8% 67.5% --------------------- --------------- ------------- ----------- ---------- --------------- -------- ----------- Tharstern Group Limited Software based management Software information and computer systems services Jul-14 1,377 1,350 (23.6)% 1.8% 52.5% --------------------- --------------- ------------- ----------- ---------- --------------- -------- ----------- Proactive Group Holdings Inc. Provider of media services and investor conferences for companies primarily listed on secondary General public markets financial Jan-18 926 1,301 40.5% 1.7% 11.4% --------------------- --------------- ------------- ----------- ---------- --------------- -------- ----------- Blaze Signs Holdings Limited Manufacturer and installer Support of signs services Apr-06 492 1,040 48.1% 1.4% 52.5% --------------------- --------------- ------------- ----------- ---------- --------------- -------- ----------- Rota Geek Limited Workforce management Support software services Aug-18 571 895 56.7% 1.2% 17.1% --------------------- --------------- ------------- ----------- ---------- --------------- -------- ----------- Buster and Punch Holdings Limited Industrial inspired lighting and General interiors retailer retailers Mar-17 668 866 29.6% 1.2% 20.0% --------------------- --------------- ------------- ----------- ---------- --------------- -------- ----------- RDL Corporation Limited Recruitment consultant for the pharmaceutical, business intelligence Support and IT industries services Oct-10 1,558 746 (24.3)% 1.0% 45.2% --------------------- --------------- ------------- ----------- ---------- --------------- -------- ----------- Redline Worldwide Limited Provider of security services to the aviation industry Support and other sectors services Feb-16 1,088 677 (41.8)% 0.9% 30.0% --------------------- --------------- ------------- ----------- ---------- --------------- -------- ----------- Super Carers Limited Online platform that connects people seeking home care from experienced independent Support carers services Mar-18 580 435 25.0% 0.6% 18.7% --------------------- --------------- ------------- ----------- ---------- --------------- -------- ----------- Kudos Innovations Limited Online platform that provides and promotes academic research Support dissemination services Nov-18 421 421 New investment 0.6% 14.6% --------------------- --------------- ------------- ----------- ---------- --------------- -------- ----------- BookingTek Limited Direct booking Software software for and computer hotels services Oct-16 771 193 (81.2)% 0.3% 14.9% --------------------- --------------- ------------- ----------- ---------- --------------- -------- ----------- Jablite Holdings Limited Manufacturer of expanded polystyrene Construction products and materials Apr-15 503 163 (46.7)% 0.2% 40.1% --------------------- --------------- ------------- ----------- ---------- --------------- -------- ----------- Veritek Global Holdings Limited Maintenance of Support imaging equipment services Jul-13 2,045 13 (98.1)% 0.0% 50.8% --------------------- --------------- ------------- ----------- ---------- --------------- -------- ----------- CB Imports Group Limited (trading as Country Baskets) Importer and distributor of artificial flowers General and floral sundries retailers Dec-09 350 - - 0.0% 23.2% --------------------- --------------- ------------- ----------- ---------- --------------- -------- ----------- Racoon International Group Limited Supplier of hair extensions, hair care products Personal and training goods Dec-06 1,214 - - 0.0% - --------------------- --------------- ------------- ----------- ---------- --------------- -------- ----------- Total qualifying
investments 40,684 44,341 59.0% ----------------------------------------------------- ----------- ---------- --------------- -------- ----------- Non-qualifying investments --------------------- --------------- ------------- ----------- ---------- --------------- -------- ----------- Media Business Insight Limited As above Media Jan-15 764 876 - 1.2% 67.5% --------------------- --------------- ------------- ----------- ---------- --------------- -------- ----------- Hollydale Management Limited Company seeking to carry on a Company business in the preparing food sector to trade Mar-15 938 586 - 0.8% 50.0% --------------------- --------------- ------------- ----------- ---------- --------------- -------- ----------- Manufacturing Services Investment Limited (trading as Wetsuit Outlet) General As above retailers Jul-17 571 571 - 0.8% 27.5% --------------------- --------------- ------------- ----------- ---------- --------------- -------- ----------- EOTH (trading as Equip Outdoor Technologies) General As above retailers Oct-11 298 324 - 0.4% 8.0% --------------------- --------------- ------------- ----------- ---------- --------------- -------- ----------- Backhouse Management Limited Company seeking to carry on a Company business in the preparing motor sector to trade Apr-15 787 303 - 0.4% 50.0% --------------------- --------------- ------------- ----------- ---------- --------------- -------- ----------- Barham Consulting Limited Company seeking to carry on a Company business in the preparing catering sector to trade Apr-15 787 303 - 0.4% 50.0% --------------------- --------------- ------------- ----------- ---------- --------------- -------- ----------- Creasy Marketing Services Limited Company seeking to carry on a Company business in the preparing textile sector to trade Apr-15 787 303 - 0.4% 50.0% --------------------- --------------- ------------- ----------- ---------- --------------- -------- ----------- McGrigor Management Limited Company seeking to carry on a business in the Company pharmaceutical preparing sector to trade Apr-15 787 303 - 0.4% 50.0% --------------------- --------------- ------------- ----------- ---------- --------------- -------- ----------- Tovey Management Electronic Limited (trading and as Access IS) electrical As above equipment Oct-15 285 285 - 0.4% 43.4% --------------------- --------------- ------------- ----------- ---------- --------------- -------- ----------- Hemmels Limited Company specialising in sourcing, selling and servicing of high price Automobiles classic cars & parts Mar-18 27 - (100.0)% 0.0% - --------------------- --------------- ------------- ----------- ---------- --------------- -------- ----------- Newquay Helicopters (2013) Limited (in liquidation) Helicopter service Support operator services Jun-06 18 - - 0.0% - --------------------- --------------- ------------- ----------- ---------- --------------- -------- ----------- Turner Topco Limited (trading as Auction Technology Group (formerly ATG Media)) As above Media Oct-08 7 - - 0.0% 17.1% --------------------- --------------- ------------- ----------- ---------- --------------- -------- ----------- Total non-qualifying investments 6,056 3,854 5.2% ----------------------------------------------------- ----------- ---------- --------------- -------- ----------- Total investment portfolio 46,740 48,195 - 64.2% ----------------------------------------------------- ----------- ---------- --------------- -------- ----------- Current asset investments and cash at bank 26,492 26,492 35.3% ----------------------------------------------------- ----------- ---------- --------------- -------- ----------- Total investments 73,232 74,687 99.5% ----------------------------------------------------- ----------- ---------- --------------- -------- ----------- Other assets 794 1.0% ----------------------------------------------------- ----------- ---------- --------------- -------- ----------- Current liabilities (403) (0.5)% ----------------------------------------------------- ----------- ---------- --------------- -------- ----------- Net assets 75,078 100.0% ----------------------------------------------------- ----------- ---------- --------------- -------- -----------
For further information on the Investment Portfolio, please see the Annual Report and Financial Statements
PRINCIPAL RISKS, management and regulatory environment
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. The
principal risks identified by the Board, a description of the
possible consequences of each risk and how the Board manages
each risk are set out below:
Risk Possible How the Board manages risk
consequence
Economic Events such as
the impact * The Board monitors (1) the portfolio as a whole to
of the EU ensure that the Company invests in a diversified
Referendum vote portfolio of companies; and (2) developments in the
and the macro-economic environment such as movements in
subsequent exit interest rates.
negotiations, an
economic
recession, a
movement in
sterling or in
interest
rates, could
affect trading
conditions for
smaller
companies and
consequently
the value of the
Company's
qualifying
investments.
----------------- -------------------------------------------------------------
Loss of A breach of the
approval VCT Rules, * The Company's VCT qualifying status is continually
as a Venture which change on reviewed by the Board and the Investment Adviser.
Capital a frequent
Trust basis, may lead
to the * The Board receives regular reports from its VCT
Company losing Status Adviser who has been retained by the Board to
its approval monitor the VCT's compliance with the VCT Rules.
as a VCT, which
would inter
alia result in:
(1) qualifying
shareholders who
have not
held their
shares for the
designated
period having
to repay the
income tax
relief they
obtained; (2)
future dividends
paid by
the Company
being subject
to tax; and (3)
the Company
losing its
exemption from
corporation tax
on capital
gains.
----------------- -------------------------------------------------------------
Investment Investment in
and unquoted * The Board regularly reviews the Company's Objective
strategic small companies and Investment Policy.
involves
a higher degree
of risk * Investments are made across a number of diverse
than investment sectors to mitigate risk. Investee companies are
in fully carefully selected by the Investment Adviser for
listed recommendation to the Board. The investment portfoli
companies. o
Smaller is reviewed by the Board on a regular basis.
companies often
have limited
product lines,
markets
or financial
resources
and may be
dependent for
their management
on a smaller
number of key
individuals.
----------------- -------------------------------------------------------------
Regulatory The Company is
required * Regulatory and legislative developments are kept
to meet its under review by the Company's solicitors, its VCT
legal and Status Adviser and the Board. Please see the
regulatory Chairman's Statement for the latest details of the
obligations as a impact of recent VCT legislation.
VCT, a
listed company
and its
own AIFM.
Failure to
comply
might result in
suspension
of the Company's
Stock
Exchange
listing,
financial
penalties, a
qualified
audit report or
loss of
its VCT status.
----------------- -------------------------------------------------------------
Financial Failure of the
and systems * The Board carries out an annual review of the
operating at any of the internal controls in place and reviews the risks
third-party facing the Company at each quarterly Board meeting
service and receives reports by exception.
providers that
the Company has
contracted * It reviews the performance of the service providers
with could lead annually.
to inaccurate
reporting or
monitoring.
Inadequate
controls could
lead to the
misappropriation
or insecurity of
assets.
----------------- -------------------------------------------------------------
Market Movements in the
valuations * The Board receives quarterly valuation reports from
of the VCT's the Investment Adviser.
investments
will, inter
alia, be * The Investment Adviser alerts the Board about any
connected adverse movements.
to movements in
UK Stock
Market indices.
----------------- -------------------------------------------------------------
Asset The Company's
liquidity unquoted * The Board receives reports from the Investment
investments Adviser and reviews the portfolio at each quarterly
cannot be board meeting. It carefully monitors investments
realised where a particular risk has been identified.
in a short
timescale.
Under-performing
unquoted
investments may
be difficult to
realise
on any
timescale.
----------------- -------------------------------------------------------------
Market As a result of
liquidity the limited * The Board has a share buyback policy which seeks to
secondary market mitigate market liquidity risk. This policy is
in VCT reviewed at each quarterly Board meeting.
shares,
shareholders may
find it
difficult to
sell
their shares at
a price
which is close
to the net
asset value.
Whilst demand
has always been
met to
date, it may not
be possible
for the Company
to buy
back large
percentages
of the share
capital, other
than over
several years.
----------------- -------------------------------------------------------------
Counterparty A counterparty
may fail * The Board regularly reviews and agrees policies for
to discharge an managing these risks. Further details can be found
obligation under 'credit risk' in Note 15 to the Financial
or commitment Statements in the Annual Report.
that it has
entered into
with the
Company.
----------------- -------------------------------------------------------------
Key staff A partner or key
member * The Board maintains regular dialogue with the
of staff at the Investment Adviser to ensure that (1) the team is
Investment adequately resourced; and (2) Partners and staff are
Adviser may well-incentivised and trained.
leave the
organisation
or the
Investment
Adviser
may fail to
maintain
adequate
levels of
experience and
expertise in its
team.
This may have an
adverse
effect on the
standard
of service that
the Company
receives from
the Investment
Adviser and
therefore the
performance of
the Company.
----------------- -------------------------------------------------------------
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 of the Company for that period.
In preparing these Financial Statements, the Directors are required
to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and 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 Director's Report and
Directors' 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
the Annual Report and Accounts, taken as a whole, is 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.
For and on behalf of the Board
Clive Boothman
Chairman
FINANCIAL STATEMENTS
Income Statement for the year ended 31 December 2018
Year ended 31 December Year ended 31 December
2018 2017
Notes Revenue Capital Total Revenue Capital Total
GBP GBP GBP GBP GBP GBP
Unrealised
gains/(losses)
on investments 8 - 2,796,306 2,796,306 - (572,662) (572,662)
Realised
(losses)/gains
on investments 8 - (129,014) (129,014) - 5,248,859 5,248,859
Income 3 3,219,294 - 3,219,294 3,131,481 - 3,131,481
Investment
Adviser's
fees 4a (390,531) (1,171,593) (1,562,124) (350,079) (1,050,237) (1,400,316)
Other expenses 4c (387,232) - (387,232) (385,417) - (385,417)
Profit on
ordinary activities
before taxation 2,441,531 1,495,699 3,937,230 2,395,985 3,625,960 6,021,945
Taxation on
profit on
ordinary activities 5 (331,416) 222,603 (108,813) (392,180) 202,170 (190,010)
Profit for
the year and
total comprehensive
income 2,110,115 1,718,302 3,828,417 2,003,805 3,828,130 5,831,935
Basic and
diluted earnings
per ordinary
share 7 1.98p 1.62p 3.60p 2.52p 4.82p 7.34p
The revenue column of the Income Statement includes all income
and expenses. The capital column accounts for the unrealised
gains/(losses) and realised (losses)/gains on investments and
the proportion of the Investment Adviser's 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 December 2018
31 December 31 December 2017
Notes 2018
GBP GBP
Fixed assets
Investments at fair
value 8 48,195,051 41,515,308
Current assets
Debtors and prepayments 793,953 3,976,235
Current asset investments 9 23,310,315 21,803,276
Cash at bank and in
hand 9 3,181,475 3,027,719
------------------------------------------------------ ------------------------------- ----------------------------- --------------------------------------
27,285,743 28,807,230
Creditors: amounts
falling due within
one year (402,812) (422,761)
------------------------------------------------------ ------------------------------- ----------------------------- --------------------------------------
Net current assets 26,882,931 28,384,469
------------------------------------------------------ ------------------------------- ----------------------------- --------------------------------------
Net assets 75,077,982 69,899,777
------------------------------------------------------ ------------------------------- ----------------------------- --------------------------------------
Capital and reserves
Called up share capital 1,068,659 974,257
Capital redemption
reserve 32,191 15,040
Share premium reserve 43,644,698 35,856,430
Revaluation reserve 5,285,632 2,786,782
Special distributable
reserve 12,681,614 19,058,094
Realised capital reserve 8,818,475 8,147,387
Revenue reserve 3,546,713 3,061,787
------------------------------------------------------ ------------------------------- ----------------------------- --------------------------------------
Equity shareholders'
funds 75,077,982 69,899,777
------------------------------------------------------ ------------------------------- ----------------------------- --------------------------------------
Basic and diluted net
asset value per ordinary
share 70.25p 71.75p
------------------------------------------------------ ------------------------------- ----------------------------- --------------------------------------
Statement of Changes in Equity for the year ended 31 December
2018
Distributable Reserves Non-Distributable Reserves
Called Capital Share Revaluation Special Realised Revenue Total
up redemption premium reserve distributable capital Reserve
share reserve reserve reserve reserve (Note
capital (Note (Note b)
a) b)
GBP GBP GBP GBP GBP GBP GBP GBP
At 1 January
2018 Comprehensive
income for
the year 974,257 15,040 35,856,430 2,786,782 19,058,094 8,147,387 3,061,787 69,899,777
Profit/(loss)
for the
year - - - 2,796,306 - (1,078,004) 2,110,115 3,828,417
----------------------- ------------- -------------- ----------------- ------------ --------------- ------------ ------------ ------------------------
Total comprehensive
income for
the year - - - 2,796,306 - (1,078,004) 2,110,115 3,828,417
----------------------- ------------- -------------- ----------------- ------------ --------------- ------------ ------------ ------------------------
Contributions
by and distributions
to owners
Shares issued
under Offer
for Subscription
(note c) 111,553 - 7,788,268 - (82,001) - - 7,817,820
Shares bought
back (note
d) (17,151) 17,151 - - (1,058,135) - - (1,058,135)
Dividends
paid - - - - (3,242,978) (541,730) (1,625,189) (5,409,897)
----------------------- ------------- -------------- ----------------- ------------ --------------- ------------ ------------ ------------------------
Total contributions
by and distributions
to owners 94,402 17,151 7,788,268 - (4,383,114) (541,730) (1,625,189) 1,349,788
----------------------- ------------- -------------- ----------------- ------------ --------------- ------------ ------------ ------------------------
Other movements
Realised
losses transferred
to special
reserve
(note a) - - - - (1,993,366) 1,993,366 - -
Realisation
of previously
unrealised
appreciation - - - (297,456) - 297,456 - -
----------------------- ------------- -------------- ----------------- ------------ --------------- ------------ ------------ ------------------------
Total other
movements - - - (297,456) (1,993,366) 2,290,822 - -
----------------------- ------------- -------------- ----------------- ------------ --------------- ------------ ------------ ------------------------
At 31 December
2018 1,068,659 32,191 43,644,698 5,285,632 12,681,614 8,818,475 3,546,713 75,077,982
Note a: The purpose of this reserve is to fund market purchases
of the Company's own shares, to write off existing and future
losses and for any other corporate purpose. All of this reserve
arose from shares issued before 5 April 2014. The transfer of
GBP1,993,366 to the special reserve from the realised capital
reserve above is the total of realised losses incurred by the
Company in the year.
Note b: The realised capital reserve and the revenue reserve
together comprise the Profit and Loss Account of the Company
shown on the Balance Sheet.
Note c: Under the 2017/18 Offer for Subscription, 11,155,262
ordinary shares were allotted raising net funds of GBP7,817,820
for the Company. This figure is net of issue costs of GBP204,683.
Note d: During the year, the Company purchased 1,715,113 of
its own shares at the prevailing market price for a total cost
of GBP1,058,135, which were subsequently cancelled. This differs
to the figure shown in the Statement of Cash Flows of GBP982,450
by GBP75,685 due to GBP122,542 included in creditors at the
year end, offset by GBP46,857 which was a creditor from the
previous year.
Statement of Changes in Equity for the year ended 31 December
2017
Distributable Reserves Non-Distributable Reserves
Called Capital Share Revaluation Special Realised Revenue Total
up redemption premium reserve distributable capital reserve
share reserve reserve reserve reserve
capital
GBP GBP GBP GBP GBP GBP GBP GBP
At 1 January
2017 755,975 9,440 19,463,849 3,523,180 35,605,335 2,733,792 1,057,982 63,149,553
Comprehensive
income for
the year
(Loss)/profit
for the
year - - - (572,662) - 4,400,792 2,003,805 5,831,935
----------------------- ------------- -------------- ----------------- ------------ --------------- ------------ ------------ ------------------------
Total comprehensive
income for
the year - - - (572,662) - 4,400,792 2,003,805 5,831,935
----------------------- ------------- -------------- ----------------- ------------ --------------- ------------ ------------ ------------------------
Contributions
by and distributions
to owners
Shares issued
under Offer
for Subscription 223,882 - 16,392,581 - (91,557) - - 16,524,906
Shares bought
back (5,600) 5,600 - - (374,695) - - (374,695)
Dividends
paid - - - - (15,231,922) - - (15,231,922)
----------------------- ------------- -------------- ----------------- ------------ --------------- ------------ ------------ ------------------------
Total contributions
by and distributions
to owners 218,282 5,600 16,392,581 - (15,698,174) - - 918,289
Other movements
Realised
losses transferred
to special
reserve - - - - (849,067) 849,067 - -
Realisation
of previously
unrealised
appreciation - - - (163,736) - 163,736 - -
----------------------- ------------- -------------- ----------------- ------------ --------------- ------------ ------------ ------------------------
Total other
movements - - - (163,736) (849,067) 1,012,803 - -
----------------------- ------------- -------------- ----------------- ------------ --------------- ------------ ------------ ------------------------
At 31 December
2017 974,257 15,040 35,856,430 2,786,782 19,058,094 8,147,387 3,061,787 69,899,777
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 recent
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 or impairment of investments
(excluding transaction costs), and 75% of the Investment Adviser
fee expense, and the related tax effect, are transferred from
the realised capital reserve to this reserve. This reserve will
also be charged any facilitation payments to financial advisers,
which arose as part of the Offer for Subscription.
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 fee expense 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 Cash Flows for the year ended 31 December 2018
Year ended Year ended
31 December December 2017
2018
GBP GBP
Cash flows from operating activities
Profit after tax for the financial
year 3,828,417 5,831,935
Adjustments for:
Net unrealised losses on investments (2,796,306) 572,662
Net gains on realisations of investments 129,014 (5,248,859)
Tax charge for current year 5 108,813 190,010
Decrease/(increase) in debtors 12,155 (197,500)
(Decrease)/increase in creditors (14,106) 92,991
Net cash inflow from operations 1,267,987 1,241,239
Corporation tax paid (190,374) (109,090)
Net cash inflow from operating
activities 1,077,613 1,132,149
Cash flows from investing activities
Acquisitions of investments 8 (7,238,337) (1,649,533)
Disposals of investments 8 6,396,046 13,821,745
(Increase)/decrease in bank deposits
with a maturity over three months (130) 1,715
Net cash (outflow)/inflow from
investing activities (842,421) 12,173,927
Cash flows from financing activities
Shares issued as part of Offer
for subscription 7,817,820 16,524,906
Equity dividends paid 6 (5,409,897) (15,231,922)
Share capital bought back (982,450) (327,838)
Net cash inflow from financing
activities 1,425,473 965,146
Net increase in cash and cash
equivalents 1,660,665 14,271,222
Cash and cash equivalents at start
of year 23,825,443 9,554,221
Cash and cash equivalents at end
of year 25,486,108 23,825,443
Cash and cash equivalents comprise:
Cash equivalents 9 22,304,633 20,797,724
Cash at bank and in hand 9 3,181,475 3,027,719
Notes to the Financial Statements for the year ended 31 December
2018
1 Company Information
Mobeus Income and Growth VCT plc is a public limited company
incorporated in England, registration number 5153931. The registered
office is 30 Haymarket, London, SW1Y 4EX.
2 Basis of preparation of the Financial Statements
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. All accounting policies are included
within an outlined box at the top of each relevant note.
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') 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
in the Financial Statements in 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 December 2018 has been
classified as capital and has been included within gains on
investments.
2018 2017
GBP GBP
------------------------------------------------------------------------- ----------------------------- ----------------------------------------------------
Income from bank deposits 23,663 17,793
Income from investments
* from equities 699,029 358,684
* from OEIC funds 132,832 23,657
* from loan stock 2,321,462 2,723,814
* from interest on preference share dividend arrears 40,205 337
------------------------------------------------------------------------- ----------------------------- ----------------------------------------------------
3,193,528 3,106,492
Other income 2,103 7,196
------------------------------------------------------------------------- ----------------------------- ----------------------------------------------------
Total income 3,219,294 3,131,481
Total income comprises
Dividends 831,861 382,341
Interest 2,385,330 2,741,944
Other income 2,103 7,196
------------------------------------------------------------------------- ----------------------------- ----------------------------------------------------
3,219,294 3,131,481
Total loan stock interest due but not recognised in the year
was GBP905,181 (2017: GBP389,352). The increase over the year
is due to the provision of interest of one investee company
and another investee company utilising an agreed payment holiday
for part of the year.
4 Investment Adviser's fees and Other expenses
All expenses are accounted for on an accruals basis
a) Investment Adviser's fees and performance fees
25% of the Investment Adviser's fee is 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,
as it is based upon the achievement of capital growth.
Revenue Capital Total Revenue Capital Total
2018 2018 2018 2017 2017 2017
GBP GBP GBP GBP GBP GBP
Mobeus Equity
Partners LLP
Investment Adviser's
fees 390,531 1,171,593 1,562,124 350,079 1,050,237 1,400,316
Under the terms of a revised investment management agreement
dated 20 May 2010, Mobeus Equity Partners LLP
("Mobeus") provides investment advisory, administrative and
company secretarial services to the Company, for a fee of 2%
per annum of closing net assets, paid in advance, calculated
on a quarterly basis by reference to the net assets at the end
of the preceding quarter, plus a fixed fee of GBP134,168 per
annum, the latter inclusive of VAT and subject to annual increases
in RPI. In 2013, Mobeus agreed to waive such further increases
due to indexation, until otherwise agreed with the Board.
The Investment Adviser's fee includes provision for a cap on
expenses excluding irrecoverable VAT and exceptional items set
at 3.6% of closing net assets at the year end. In accordance
with the Investment Management Agreement, any excess expenses
are borne by the Investment Adviser. The excess expenses during
the year amounted to GBPnil (2017: GBPnil). With effect from
1 April 2018, the Investment Adviser's fee upon the net funds
raised from use of the over-allotment facility of GBP10 million
under the 2017/18 offer has been reduced from 2% to 1% per annum
for one year.
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 line with common practice, Mobeus retains the right to charge
arrangement and syndication fees and directors' or monitoring
fees to companies in which the Company invests. The Investment
Adviser received fees totalling GBP402,777 during the year ended
31 December 2018 (2017: GBP377,188), being GBP128,406 (2017:
GBP118,381) for arrangement fees and GBP274,371 (2017: GBP258,807)
for acting as non-executive directors on a number of investee
company boards. These fees attributable to the Company are in
proportion to the Company's investment directly in each investment
held by the four Mobeus VCTs, and they are charged directly
to the investee companies. Hence, they are excluded from these
financial statements.
Incentive Agreement
Under the Incentive Agreement dated 9 July 2004, and a variation
of this agreement dated 20 May 2010, the Investment Adviser
is entitled to receive an annual performance-related incentive
fee of 20% of the dividends paid in a year in excess of a "Target
Rate" comprising firstly, an annual dividend paid in a year
target which started at 6.00 pence per share on launch (indexed
each year for RPI) and secondly a requirement that any shortfall
of cumulative dividends paid in each year beneath the cumulative
annual dividend target is carried forward and added to the Target
Rate for the next accounting period. Any excess of cumulative
dividends paid above the cumulative annual dividend target is
not carried forward, whether an incentive fee is payable for
that year or not. Payment of a fee is also conditional upon
the daily weighted average Net Asset Value ("NAV") per share
throughout such year equaling or exceeding the daily weighted
average Base NAV per share throughout the same year. The performance
fee will be payable annually.
At 31 December 2018, the annual dividend target is 7.84 pence
per share, but cumulative dividends paid of 5.00 pence were
2.84 pence less than the target. Also, the average NAV per share
was 70.04 pence for the year, which was less than the average
base NAV per share for the year of 91.76 pence. Accordingly,
no performance incentive fee is payable for the year.
b) Offer for subscription fees
2018 2017
GBPm GBPm
Funds raised across the four Mobeus
VCTs 19.64 60.36
of which the funds raised by MIG VCT
were 8.10 16.90
Offer costs payable to Mobeus at 3.25%
of funds raised by MIG VCT 0.26 0.55
Under the terms of an Offer for Subscription, with the other
Mobeus advised VCTs, launched on 6 September 2017, Mobeus was
entitled to fees of 3.25% of the investment amount received
from investors. This amount totalled GBP638,236 for the final
two allotments during the year across all four VCTs, out of
which all the costs associated with the allotment were met,
excluding any payments to advisers facilitated under the terms
of the Offer.
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 GBP8,002 (2017: GBP8,110)) -
note a) 113,002 113,110
IFA trail commission 81,025 87,580
Broker's fees 14,400 14,400
Auditor's fees - Audit of Company (excluding
VAT) 24,088 23,832
- Audit related assurance services
- note b) (excluding VAT) 4,613 4,562
- tax compliance services - note b)
(excluding VAT) 1,922 1,358
Registrar's fees 55,030 48,045
Printing 28,084 27,299
Legal & professional fees 10,422 7,918
VCT monitoring fees 9,000 9,000
Directors' insurance 7,630 8,153
Listing and regulatory fees 29,526 30,114
Sundry 8,490 10,046
Other expenses 387,232 385,417
Note a): See analysis in the Directors' Remuneration Report
in the Annual Report, which excludes the NIC above. The key
management personnel are the three non-executive Directors.
The Company has no employees.
Note b): 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, while iXBRL services are carried
out by the auditor, the majority of compliance tax services
are carried out by another firm, so are included within legal
and professional fees.
5 Taxation on profit/(loss) 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 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.
Tax relief relating to Investment Adviser fees is allocated
between revenue and capital where such relief can be utilised.
The Company is an Investment Trust and Investment Trust companies
are exempt from tax on capital gains if they meet the HMRC criteria
set out in section 274 of the ITA.
2018 2018 2018 2017 2017 2017
Revenue Capital Total Revenue Capital Total
GBP GBP GBP GBP GBP GBP
a) Analysis
of tax charge:
UK Corporation
tax on
profits/(losses)
for the year 331,416 (222,603) 108,813 392,180 (202,170) 190,010
Total current
tax charge/(credit) 331,416 (222,603) 108,813 392,180 (202,170) 190,010
----------------------- ------------- --------------------------------- ------------ --------------- ------------ --------------------------------------
Corporation
tax is based
on a rate
of 19% (2017:
19.25%)
b) Profit
on ordinary
activities
before tax 2,441,531 1,495,699 3,937,230 2,395,985 3,625,960 6,021,945
Profit on
ordinary
activities
multiplied
by main company
rate of corporation
tax in the
UK of 19%
(2017: 19.25%) 463,892 284,182 748,074 461,227 697,997 1,159,224
Effect of:
UK dividends (132,816) - (132,816) (69,047) - (69,047)
Unrealised
(gains)/losses
not taxable - (531,298) (531,298) - (110,237) (110,237)
Realised
losses/(gains)
not taxable - 24,513 24,513 - (1,010,404) (1,010,404)
Unrelieved
expenditure 9 - 9 - - -
Underprovision
in prior
period 331 - 331 - - -
Actual current
tax charge 331,416 (222,603) 108,816 392,180 (202,170) 190,010
----------------------- ------------- --------------------------------- ------------ --------------- ------------ --------------------------------------
Deferred taxation
No provision for deferred taxation has been made on potential
capital gains due to the Company's current status as a VCT under
section 274 of the ITA and the Directors' intention to maintain
that status.
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 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 ITA, 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:
Dividend Type For year Pence per Date Paid 2018 2017
ended share
31 December
GBP GBP
Second
Interim Capital 2016 6.00p* 31 Mar 2017 - 4,535,848
Interim Capital 2017 9.00p* 13 Sep 2017 - 6,796,071
Second
Interim Capital 2017 4.00p* 8 Dec 2017 - 3,900,003
Final Capital 2017 1.50p 17 May 2018 1,625,190 -
Final Capital 2017 0.50p 17 May 2018 541,730 -
Final Capital 2017 1.00p* 17 May 2018 1,083,459 -
Interim Capital 2018 2.00p* 21 Sep 2018 2,159,518 -
5,409,897 15,231,922
Proposed distributions to equity holders
at the year end:
Date Payable
Final Income 2017 1.50p 17 May 2018 1,628,715
Final Capital 2017 1.00p* 17 May 2018 1,085,810
Final Capital 2017 0.50p 17 May 2018 542,905
Final Income 2018 1.75p 17 May 2019 1,870,153 -
Final Capital 2018 3.25p* 17 May 2019 3,473,140 -
--------------------- --------------- -------------- ----------------- ----------------------------- ------------ --------------------------------------
5,343,293 3,257,430
--------------------- --------------- -------------- ----------------- ----------------------------- ------------ --------------------------------------
*These dividends were and will be paid out of the Company's
special distributable reserve.
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 259 of the ITA concerning the Company not retaining
more than 15% of its income from shares and securities, is considered.
Recognised income distributions in the financial statements
for the year:
Dividend Type For year Pence per Date paid/payable 2018 2017
ended share
31 December
GBP GBP
Revenue available for distribution by way
of dividends for the year 2,110,115 2,003,805
Final Income 2017 1.50p 17 May 2018 - 1,628,715
Final Income 2018 1.75p 17 May 2019 1,870,153 -
Total income dividends for the year 1,870,153 1,628,715
7 Basic and diluted earnings per share
2018 2017
GBP GBP
Total earnings after taxation: 3,828,417 5,831,935
Basic and diluted earnings per share (note a) 3.60p 7.34p
---------------------------------------------------------- ------------ -----------
Revenue earnings from ordinary activities after taxation 2,110,115 2,003,805
Basic and diluted revenue earnings per share (note b) 1.98p 2.52p
---------------------------------------------------------- ------------ -----------
Net unrealised capital gains/(losses) on investments 2,796,306 -572,662
Net realised capital (losses)/gains on investments -129,014 5,248,859
Capital Investment Adviser fees less taxation -948,990 -848,067
---------------------------------------------------------- ------------ -----------
Total capital earnings 1,718,302 3,828,130
---------------------------------------------------------- ------------ -----------
Basic and diluted capital earnings per share (note c) 1.62p 4.82p
---------------------------------------------------------- ------------ -----------
Weighted average number of shares in issue in the year 106,350,801 79,475,780
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 earnings after
taxation divided by the weighted average number of shares in
issue.
c) Capital earnings per share is the total capital earnings
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 per share.
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
2018. 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.
Purchases and sales of unlisted investments are recognised when
the contract for acquisition or sale becomes unconditional.
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 where the terms of the 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 true 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
at each measurement date in accordance with appropriate valuation
techniques, which are consistent with the IPEV guidelines:
(i) Each investment is considered as a whole on a 'unit of account'
basis, i.e. that the value of each portfolio company is considered
as a whole, alongside consideration of:
The price of new investments made, if deemed to be made as part
of an orderly transaction, are considered to be at fair value
at the date of the transaction. The inputs that derived the
investment price are calibrated within individual valuation
models and at subsequent measurement dates, are reconsidered
for any changes in light of more recent events or changes in
the market performance of the investee company such that the
valuation bases used are the following:
* 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, or revenue, or gross profit (the
ratio used being based on a comparable sector but the
resulting value being adjusted to reflect points of
difference identified by the Investment Adviser
compared to the sector including, inter alia, a lack
of marketability).
or:
* where a company's underperformance against plan
indicates a diminution in the value of the investment,
provision against the price of a new investment is
made, as appropriate.
(ii) Premiums, to the extent that they are considered capital
in nature, and that they 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.
(iii) Where a multiple or the price of recent investment 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 the
price of recent investment, 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.
Accounting standards classify methods of fair value measurement
as Levels 1, 2 and 3. This hierarchy is based upon the reliability
of information used to determine the valuation. All of the unquoted
investments are Level 3, i.e. fair value is measured using techniques
using inputs that are not based on observable market data.
Movements in investments during the year are summarised as follows:
Unquoted Unquoted Unquoted Loan Total
ordinary preference stock
shares shares
GBP GBP GBP GBP
Cost at 31 December
2017 18,094,736 27,744 24,109,079 42,231,559
Net unrealised
gains at 31 December
2017 243,148 718,633 1,825,001 2,786,782
Permanent impairment
in value of investments
as at 31 December
2017 (3,503,033) - - (3,503,033)
Valuation at 31
December 2017 14,834,851 746,377 25,934,080 41,515,308
Purchases at cost 4,509,556 - 2,728,781 7,238,337
Sale proceeds (note
a) (note b) (1,143,994) (185,711) (1,613,449) (2,943,154)
Net realised gains/(losses)
on investments
(note a) 827,043 - (956,057) (129,014)
Net unrealised
gains/(losses)
on investments
(note c) 3,136,799 (1,459) (621,766) 2,513,574
Valuation at 31
December 2018 22,164,255 559,207 25,471,589 48,195,051
Cost at 31 December
2018 21,631,195 27,663 25,080,727 46,739,585
Net unrealised
gains at 31 December
2018 4,053,584 531,544 417,772 5,002,900
Permanent impairment
in cost of investments
as at 31 December
2018 (note f) (3,520,524) - (26,910) (3,547,434)
Valuation at 31
December 2018 22,164,255 559,207 25,471,589 48,195,051
Note a) Disposals of investment portfolio companies during the
year were:
Investment Disposal Valuation at Realised gain
cost proceeds 31 December in year
Type 2017
GBP GBP GBP GBP
Fullfield
Limited
(Motorclean) Full Exit 1,625,672 917,491 1,703,367 (785,876)
Lightworks
Software
Limited Full Exit 222,584 941,737 160,446 781,291
Partial
Exit and
Hemmels permanent
Limited(1) impairment 571,568 271,792 598,478 (326,686)
The Plastic Loan
Surgeon repayments
Holdings and
Limited repurchase
(formerly of
TPSFF Holdings preference
Limited) shares 153,589 465,957 465,957 -
Loan
MPB Group repayment 143,920 143,920 143,920 -
Other 12,977 202,257 - 202,257
2,730,310 2,943,154 3,072,168 (129,014)
Net unrealised gains above of GBP2,513,574 differ from that
shown in the Income Statement of GBP2,796,306. The difference
of GBP282,732 is the estimated fair value of contingent consideration
due in relation to the sale of Entanet Holdings in the prior
year, recognised at the balance sheet date which has been included
within other debtors in note 10 to the financial statements.
The GBP282,732 contingent consideration also explains the difference
between unrealised gains at 31 December 2018 above of GBP5,002,900
and that shown within the Revaluation Reserve on the balance
sheet of GBP5,285,632. A further sum of GBP314,146 is potentially
payable on 1 August 2019. 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.
(1) New investment in year.
Note b) Investment proceeds shown above of GBP2,943,154 differs
from the sale proceeds shown in the Statement of Cash flows
of GBP6,396,046 by GBP3,452,892. This difference arises because
of proceeds relating to the disposal of Gro Group Holdings Limited
that were held in debtors at the start of the year.
Note c) The major components of the increase in unrealised valuations
of GBP2,513,574 in the year were increases of GBP849,191 in
The Plastic Surgeon Holdings Limited (formerly TPSFF Holdings
Limited), GBP779,549 in EOTH Limited, GBP438,945 in CGI Creative
Graphics International Limited, GBP423,681 in ASL Technology
Holdings Limited, and GBP378,668 in Pattern Analytics Limited
(trading as Biosite). This increase was partly offset by falls
of GBP(833,001) in BookingTek Limited, GBP(802,114) in Manufacturing
Services Investment Limited (trading as Wetsuit Outlet), GBP(679,012)
in Veritek Global Holdings Limited, GBP(488,271) in Redline
Worldwide Limited and GBP416,641 in Tharstern Group Limited.
The decrease in unrealised valuations of the loan stock investments
above reflects the changes in the entitlement to loan premiums,
and/or in the underlying enterprise value of the investee company.
The decrease does not arise from assessments of credit risk
or market risk upon these instruments.
Note d) During the year, permanent impairments of the cost of
investments have increased from GBP3,503,033 to GBP3,547,434.
The increase of GBP44,401 is due to the impairments of two investee
companies, offset slightly by the disposal of a company that
had previously been impaired.
9 Current asset investments and Cash at bank
Cash equivalents, for the purposes of the Statement of Cash
flows, comprises bank deposits repayable on up to three months'
notice and funds held in OEIC money-market funds. Current asset
investments are the same but also include bank deposits that
mature after three months. Current asset investments are disposable
without curtailing or disrupting the business and are readily
convertible into known amounts of cash at their carrying values
at immediate or up to three months' notice. Cash, for the purposes
of the Statement of Cash Flows is cash held with banks in accounts
subject to immediate access. Cash at bank in the Balance Sheet
is the same.
2018 2017
GBP GBP
OEIC Money market funds 22,304,633 20,797,724
--------------------------------------------------------------------------------------- ----------------------------- --------------------------------------
Cash equivalents per Statement of Cash
Flows 22,304,633 20,797,724 Bank deposits that mature after three months but are not immediately repayable 1,005,682 1,005,552 --------------------------------------------------------------------------------------- ----------------------------- -------------------------------------- Current asset investments 23,310,315 21,803,276 --------------------------------------------------------------------------------------- ----------------------------- -------------------------------------- Cash at bank 3,181,475 3,027,719 --------------------------------------------------------------------------------------- ----------------------------- -------------------------------------- 10 Post balance sheet events On 31 January 2019, The Plastic Surgeon Holdings Limited (formerly TPSFF Holdings Limited) carried out a repurchase of preference shares in which GBP0.09 million of proceeds were received by the Company. On 7 February 2019, GBP0.31 million of contingent consideration was received in relation to the sale of Entanet Holdings in August 2017. 11 Statutory information The financial information set out in these statements does not constitute the Company's statutory accounts for the year ended 31 December 2018 but is derived from those accounts. Statutory accounts will be delivered to the Registrar of Companies after the Annual General Meeting. The auditors have reported on these accounts and their report was unqualified and did not contain a statement under section 498(2) of the Companies Act 2006. 12 Annual Report The Annual Report will be published on the Company's website at www.migvct.co.uk shortly and shareholders who have not requested a hard copy of the report will shortly receive notification from the Company on how to download a pdf of the Report from the website. Shareholders and members of the public who wish to receive a hard copy of the Annual Report, may request a copy by writing to the Company Secretary, Mobeus Equity Partners LLP, 30 Haymarket (4th floor), London SW1Y 4EX or by email: vcts@mobeus.co.uk. 13 Annual General Meeting The Annual General Meeting of the Company will be held at 2.00 p.m. on Wednesday, 8 May 2019 at The Clubhouse, 8 St James's Square, London, SW1Y 4JU. Contact details for further enquiries: Robert King or Robert Brittain of Mobeus Equity Partners LLP (the Company Secretary) on 020 7024 7600 or by e-mail to vcts@mobeus.co.uk. Mark Wignall at Mobeus Equity Partners LLP (the Investment Adviser) on 020 7024 7600 or by e-mail to info@mobeus.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
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(END) Dow Jones Newswires
March 27, 2019 13:52 ET (17:52 GMT)
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