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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Mobeus Income & Growth 4 Vct Plc | LSE:MIG4 | London | Ordinary Share | GB00B1FMDH51 | 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% | 68.00 | 66.50 | 69.50 | 68.00 | 68.00 | 68.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Trust,ex Ed,religious,charty | -12.69M | -15.17M | -0.1373 | -4.95 | 75.18M |
From Apr 2019 to Apr 2024
TIDMMIG4
RNS Number : 3564I
Mobeus Income & Growth 4 VCT PLC
20 March 2018
Mobeus Income & Growth 4 VCT plc ("MIG4" or the "Company" or the "VCT")
Annual Results Announcement for the year ended 31 December 2017
INVESTMENT OBJECTIVE
Mobeus Income & Growth 4 VCT plc, ("MIG4", the "Company" or the "Fund") is a Venture Capital Trust ("VCT") advised by Mobeus Equity Partners LLP ("Mobeus"), investing primarily in established, unquoted companies.
The Objective of the Company is to provide investors with a regular income stream by way of tax-free dividends and to generate capital growth through portfolio realisations which can be distributed by way of additional tax-free dividends, while continuing at all times to qualify as a VCT.
DIVID POLICY
The Company seeks to pay dividends at least annually out of income and capital as appropriate, and subject to fulfilling certain regulatory requirements.
FINANCIAL HIGHLIGHTS
Annual results for the year ended 31 December 2017
Net assets: GBP58.41 million
Net Asset Value ("NAV") per share: 86.57 pence
Hot Features
Premium
-- Net Asset Value ("NAV") Total Return per share
of 6.5% for the year.
-- Share Price Total Return per share of 7.2% for
the year.
-- Shareholders received a total of 28.00 pence
per share in dividends during the year. Cumulative
dividends paid to date now stand at 101.20 pence
per share.
-- GBP4.27 million(1) was invested into four new
and two existing growth capital investments
during the year.
-- A total of GBP12.98 million cash proceeds was
received primarily from two profitable realisations
and loan stock repayments.
(1) Includes GBP2.09 million previously held
in companies preparing to trade.
Cumulative total shareholder return per share (NAV basis)*
The longer term trend of performance on this measure is shown in the chart below:-
As at Net assets Net asset Cumulative Cumulative
value dividends total shareholder
(NAV) paid per return per
per share share share (NAV
basis)*
------------- ----------- ----------- ------------ -------------------
(GBPm) (p) (p) (p)
------------- ----------- ----------- ------------ -------------------
31 December
2017 58.41 86.57 101.20 187.77
------------- ----------- ----------- ------------ -------------------
31 December
2016 52.76 107.57 73.20 180.77
------------- ----------- ----------- ------------ -------------------
31 December
2015 57.01 117.89 62.20 180.09
------------- ----------- ----------- ------------ -------------------
31 December
2014 50.29 118.21 52.20 170.41
------------- ----------- ----------- ------------ -------------------
31 December
2013 42.12 119.92 34.20 154.12
------------- ----------- ----------- ------------ -------------------
*Cumulative total shareholder return (NAV basis) is net asset value plus cumulative dividends paid since 1999 to 31 December 2017.
The net asset value (NAV) per share as at 31 December 2017 was 86.57 pence.
The table above shows the recent past performance of the original funds raised in 1999. The original subscription price was 200p per share before the benefit of income tax relief. Subscription prices from subsequent fundraisings and historic performance data from 2008 are shown in the Performance Data on the Company's website, www.mig4vct.co.uk, where they can be downloaded by clicking on "table" under "Reviewing the performance of your investment" on the home page.
On 31 July 2006, Mobeus became sole Investment Adviser to the Company. The cumulative NAV total return at this date was 122.51 pence.
CHAIRMAN'S STATEMENT
I am pleased to present the annual results of Mobeus Income & Growth 4 VCT plc for the year ended 31 December 2017.
Overview
This has been another year of solid performance by the Company. Returns to shareholders have again been positive due to profitable portfolio investment realisations as well as a good income return. Further comment can be found under the 'Performance' section below and in the Investment Review in the Annual Report.
The Company and the Investment Adviser have responded well to the significant changes to the VCT Rules introduced by the Finance (No 2) Act 2015, having completed twelve growth capital investments that reflect the change in the Company's investment policy in May 2016. The Investment Adviser has continued to recruit experienced growth capital investors into the team and reports a healthy pipeline of investments.
Most recently, additional changes to VCT legislation were proposed in the 2017 Autumn Budget. Your Board has no reason to believe that the changes will materially affect the Company's existing strategic objectives. Further details can be found under the 'Industry and Regulatory Developments' section of my Statement below.
Performance
The NAV total return per share for the year was 6.5%. (2016: 0.6%) (being the closing NAV plus dividends paid in the year, divided by the opening NAV) while the share price total return was up to 7.2% (2016: 3.3%). As a result of this performance, the NAV cumulative total return per share (being the closing NAV plus total dividends paid to date) rose during the year by 3.9% from 180.77 pence to 187.77 pence. The NAV at 31 December 2017 was 86.57 pence. For details of these calculations, please refer to the Strategic Report.
The rise in NAV total return over the year was primarily due the realisation of two investments (Entanet and Gro-Group) as well as a strong income return.
For more details on the performance of your investment in the Company, please consult the Investor Performance Appendix on the Company's website.
Fundraising
As announced in my Half-Year Statement, the Company launched an Offer for Subscription on 6 September 2017 to raise up to GBP15 million. I am pleased to report that the Offer closed on 13 March 2018 having raised the full amount.
A total of 16,658,350 shares were allotted to shareholders under the Offer at prices ranging between 85.54 pence and 94.30 pence. The Board appreciates the continued support from existing shareholders and welcomes new shareholders.
Dividends
The Board has declared two interim dividends in respect of the year ended 31 December 2017. The first was 18.00 pence per share and was paid on 11 September 2017. The second was 3.00 pence per share and was paid on 21 December 2017. This brought dividends paid in respect of the year ended 31 December 2017 to 21.00 pence (2016: 9.00 pence) per share and cumulative dividends paid since inception to 101.20 pence (2016: 73.20 pence) per share. Given the size of these interim dividends, no final dividend is being proposed.
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 seven years. While the Board still believes in the attainment of the dividend target, the steady move of the portfolio to growth capital investments is likely to result, at least in the medium term, in lower dividends than have been paid in the recent past.
A chart showing the dividends paid in respect of each of the last five years and cumulative dividends on the same basis is included in the Strategic Report.
Investment Portfolio
For the year under review, the portfolio as a whole achieved a net increase of GBP4.14 million on investments realised but a decrease of GBP0.79 million on investments still held. Investment realisations produced GBP3.98 million in capital gains over the original investment costs. On a like for like basis (adding back realisations and excluding new investments) the portfolio produced a positive return of 8.6% over the year. Including companies preparing to trade, the portfolio under management at the year-end was valued at GBP31.48 million (2016: GBP38.93 million) representing 94.9% of cost.
During the year GBP4.27 million, GBP2.09 million of which was previously held in companies preparing to trade, was invested in four new companies and two existing portfolio companies. The new growth capital investments included: GBP0.58 million into Tapas Revolution, a leading Spanish restaurant chain; GBP0.53 million into Buster + Punch, a London based interiors retailer; GBP0.47 million into MyTutorweb, an online tutoring business; and GBP2.33 million into Wetsuit Outlet, a leading online retailer in the water sports market. In addition, two follow-on investments were made into existing portfolio companies; GBP0.14 million into BookingTek, a provider of enterprise software to major hotel groups and GBP0.22 million was invested into MPB, an online marketplace for used camera and video equipment.
Shortly after the year-end GBP0.34 million was invested into Proactive Investors, a provider of investor media services, GBP0.52 million was invested into Hemmels, a classic car restorer, GBP0.49 million was invested into SuperCarers, an online carer matching service and a further GBP0.34 million was invested into MPB.
It is important to note that several of these growth investments are loss-making, as one would expect from most early stage investment opportunities. Early receipts from dividends or interest payments are therefore likely to be limited while the companies build long term value. Also, some valuations are now revenue based rather than earnings based.
Cash proceeds totalling GBP12.98 million were received; GBP7.65 million from the realisation of two investments; GBP4.68 million from loan repayments; and other receipts of GBP0.65 million. Of the realisation total, GBP4.89 million was received as cash from the disposal of Entanet Holdings Limited, (realising a gain of 5.48 pence per share) generating a return on the original investment of 2.5 times at completion. This may increase upon receipt of potential deferred consideration. A further GBP2.76 million was received following a profitable disposal of Gro-Group realising a gain of 1.76 pence per share representing a return on the original investment of 2.2 times.
Full details of the investment activity during the year and a summary of the performance highlights can be found in the Investment Review in the Annual Report.
Industry and regulatory developments
As referred to in my Half-Year Statement, the UK Government has undertaken a Patient Capital Review ("the Review") to identify and tackle factors considered to be adversely affecting the supply of longer term capital to small and developing firms. The consultation period closed on 22 September 2017 and strong representations were made on behalf of the VCT industry by Mobeus as Investment Adviser, the Venture Capital Trust Association and the Association of Investment Companies.
The 2017 Autumn Budget Statement outlined the key findings from the Review including a number of legislative changes to the VCT scheme, the earliest of which came into effect from 15 March 2018. These changes are designed to exclude tax-motivated investments where capital is not at risk (that is, transactions principally seeking to preserve an investor's capital) and to encourage VCTs to put their money to work faster.
Your Board notes the initiatives behind these changes. Whilst some of these changes place further restrictions on the way investments may be structured, the Board has no reason to believe that they will materially affect the Company's existing investment policy or strategic objectives.
A summary of the current VCT regulations and those proposed in the Autumn Budget is included in the Annual Report.
Share buybacks
During the year ended 31 December 2017, the Company bought back 1.1% of the issued share capital of the Company which was subsequently cancelled. Further details of the purchases are included in the Directors' Report in the Annual Report.
Shareholder Communications
The annual shareholder event was held on Tuesday 30 January 2018 at the Royal Institute of British Architects in central London. This annual event included presentations on the Mobeus advised VCTs' investment activity and performance including presentations from investee companies. There were separate day-time and evening sessions, and feedback from those who attended, circa 300, found it to be informative and worthwhile. The next shareholder event will be held in February 2019.
Annual General Meeting
The Annual General Meeting of the Company will be held at 11.30 am on Friday, 11 May 2018 at The Clubhouse, 8 St James's Square, London SW1Y 4JU. Both the Board and the Investment Adviser look forward to welcoming shareholders to the meeting which will include a presentation from the Investment Adviser on the investment portfolio and provide an opportunity to ask questions of the Board and the Investment Adviser. The Notice of the meeting is included in the Annual Report and an explanation of the resolutions to be proposed can be found in the Directors' Report in the Annual Report.
Future prospects
Your Board has carefully monitored how Mobeus has expanded its investment team to adapt to the new rules for VCTs and believe that your Company is well positioned to find advantageous investments in this new environment.
Your Board would again like to caution investors that investing in earlier stage companies involves increased risk as such companies need longer to achieve scale. Returns may take longer to achieve and will be less predictable. On the other hand the new more adventurous investment policy imposed on the Company may result in some investments producing much higher returns and the success of the recent fundraising means that cash and investment requirements will be covered for the medium term. The twelve growth capital investments already completed reflect exciting business opportunities and the pipeline for future investments is active.
Apart from the vagaries of being in a transition period for VCTs there are obvious uncertainties facing the UK particularly, and the world economy. Statistically the current investment cycle is well advanced. There is much one could comment on regarding the UK's unsatisfactory, indeed at times embarrassing, political situation but this is amply covered elsewhere. All UK investment, not just the VCT sector, could suffer if improved delivery cannot be achieved.
The Board's and Mobeus's response is to concentrate on those investment disciplines which have served investors well to date and will, in the Board's view, continue to do so in the future. Investment in the unquoted sector is not a short term exercise.
Finally, I would like to express my thanks once again to shareholders for their support.
Christopher Moore
Chairman
20 March 2018
Investment Review
Portfolio Review
This has been a year of continued progress within the portfolio with the addition of six new growth capital investments totalling GBP3.91 million, two existing investments receiving follow-on funding totalling GBP0.36 million, and two significant, profitable disposals. One disposal (Entanet) generated net proceeds of GBP4.89 million resulting in a 2.5 times multiple over cost over the three and a half year life of the investment, while the second (Gro-Group) generated net proceeds of GBP2.76 million representing a 2.2 times multiple over cost over the period of the investment. Total cash proceeds were GBP12.98 million, comprising the two realisations above, loan repayments of GBP4.68 million and GBP0.65 million of other receipts.
The investment and divestment activity completed during the year has increased the proportion of the growth capital element of the investment portfolio to 39%. Within this, at the year-end the Company holds growth capital investments valued at GBP8.34 million that were invested since the introduction of the VCT regulations in 2015.
The valuations of the existing portfolio decreased by GBP0.79 million during the year under review. This net decrease in value was primarily due to reductions in the valuations of Veritek Global, Media Business Insight and Virgin Wines which outweighed uplifts achieved elsewhere in the portfolio such as Master Removers Group and Biosite (a growth investment). A small number of new, growth investments have shown initial uplifts from cost, due in large part to the structure of the company investment, but also due to the underlying investee company performance. On the whole, we are encouraged by the early performance of investment in the growth portfolio.
Demand for growth capital investment remains strong and there is a large pipeline of investment opportunities. We also expect that follow on funding into existing companies to support growth plans will be a significant feature over the coming months and year.
New Investments
We are pleased to have made six investments in the year, totalling GBP4.27 million. This comprised new investments into Tapas Revolution, Buster + Punch, MyTutorweb and Wetsuit Outlet, as well as follow on investments into BookingTek and MPB, existing portfolio growth companies. After the year-end, a few investments have been made with a total value of GBP1.69 million. Further details are set out below.
Principal new investments in the year
Company Business Date of Amount of
Investment new investment
(GBPm)
-------------------- ------------------- ------------- -----------------
January
Tapas Revolution Restaurant 2017 0.58
-------------------- ------------------- ------------- -----------------
Based in London, Ibericos Etc. Limited (which trades
as Tapas Revolution) is a leading Spanish restaurant
chain in the casual dining sector focussing on shopping
centres sites with high footfall. Having opened
its first restaurant in Shepherd's Bush Westfield,
the business has since opened a further six restaurants.
The investment provided growth capital to a high-calibre
team with significant restaurant rollout experience
which has spent the past five years building and
refining its offer and is now well placed to capitalise
on a strong pipeline of new sites. The company's
latest accounts for the year ended 25 October 2016
shows a turnover of GBP4.25 million and loss before
interest, tax and amortisation of goodwill of GBP0.25
million.
---------------------------------------------------------------------------
March
Buster + Punch Retailer 2017 0.53*
-------------------- ------------------- ------------- -----------------
Buster and Punch Holdings Limited (formerly Chatfield
Services Limited) is a London-based interiors brand
founded in 2012 by architect and industrial designer
Massimo Buster Minale. Buster + Punch (www.busterandpunch.com)
started in a small garage in East London, where
it built the "world's first designer LED light bulb"
(the Buster Bulb) and made its name with its industrial-inspired
lighting. Its products are now sold in over 50 countries,
both directly to end-consumers, designers and architects,
and through well-known retailers including John
Lewis, Harvey Nichols and Harrods. The investment
will support the business's international expansion
plans and the broadening of its product range. The
company's latest accounts for the year ended 31
March 2017 show turnover of GBP3.43 million and
profit before interest, tax and amortisation of
goodwill of GBP0.40 million.
---------------------------------------------------------------------------
* - GBP1.13 million previously held in Chatfield
Services Limited, a company preparing to trade,
was used for this investment into Buster + Punch.
This resulted in a net repayment to the company
of GBP0.60 million. The Company subsequently changed
its name to Buster and Punch Holdings Limited.
---------------------------------------------------------------------------
My Tutorweb Online tutoring May 2017 0.47
-------------------- ------------------- ------------- -----------------
My Tutorweb Limited is a digital marketplace that
connects school pupils who are seeking private one-to-one
tutoring with university students. The business
is satisfying a growing demand from both schools
and parents to improve pupils' exam results to enhance
their academic and career prospects. This investment
supports an opportunity to consolidate the sizeable
GBP2bn UK tutoring market, grow My Tutorweb's market
presence and drive technological development within
the company. The company's latest accounts for the
year ended 31 December 2016 show turnover of GBP0.21
million and a loss before interest, tax and amortisation
of goodwill of GBP0.79 million.
---------------------------------------------------------------------------
Wetsuit Outlet Retailer July 2017 2.33*
-------------------- ------------------- ------------- -----------------
B2C Holdings Limited (trading as Wetsuit Outlet)
has established itself as a leading online retailer
in the water sports market, stocking an impressive
brand portfolio including Musto, Billabong, Rip
Curl, O'Neill, Red Paddle (an existing Mobeus VCT
investment) and Gul. The investment is to fund working
capital and growth in the existing activity and
enter two new markets. Established in 2005, the
company, has developed into a successful and profitable
business with revenues of GBP11.51 million and GBP1.77
million net profit before interest, tax and amortisation
of goodwill in the financial year ended 31 March
2017.
---------------------------------------------------------------------------
* - GBP2.02 million held in Manufacturing Services
Investment Limited, a company preparing to trade,
was used for the investment into Wetsuit Outlet.
This resulted in a net repayment to the Company
of GBP0.46 million. A further GBP0.77 million was
invested directly by the Company into Wetsuit Outlet.
---------------------------------------------------------------------------
New investments post year end
Company Business Date of Amount of
investment new investment
(GBPm)
--------------------- ------------------------- ------------- ----------------
Investor media January
Proactive Investors services 2018 0.34
--------------------- ------------------------- ------------- ----------------
Proactive Investors specialises in up-to-the-minute
multi-media news provision, events organisation,
digital services and investor research. Proactive
provides breaking news, commentary and analysis
on hundreds of small-cap listed companies and pre-IPO
businesses across the globe, 24/7. The investment
will enable Proactive to expand its services into
the US market, which is the largest global market
for investor media services in the world. The company's
accounts for the year ended 30 June 2017 show turnover
of GBP3.99 million and a profit before interest,
tax and amortisation of goodwill of GBP0.53 million.
---------------------------------------------------------------------------------
March
SuperCarers Limited Online care provision 2018 0.49
--------------------- ------------------------- ------------- ----------------
SuperCarers provides an online platform connecting
people seeking home care, typically family members
seeking care for their elderly parents, from 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 in a less rigid and formal fashion.
The company's accounts for the year ended 31 March
2017 generated revenues of GBP0.18 million and a
net loss before interest, tax and amortisation of
GBP0.72 million.
---------------------------------------------------------------------------------
March
Hemmels Limited Classic car restoration 2018 0.52
--------------------- ------------------------- ------------- ----------------
Hemmels specialises in the sourcing, restoration,
selling and servicing of high value classic cars.
Hemmels currently focuses on classic Mercedes Benz,
but plan to expand into the Porsche marque under
a separate brand, RYKRR. The investment will enable
Hemmels to proceed with their expansion plans and
secure sufficient development stock. Hemmels generated
GBP1.21million of revenues and (GBP0.28 million)
net loss before interest, tax and amortisation for
the year ended 31 December 2017, surpassing revenue
forecast by GBP0.11 million.
---------------------------------------------------------------------------------
Further investment into existing portfolio companies in the year
Company Business Date of Amount
investment of new
investment
(GBPm)
------------ ------------------------------ ---------------- ------------
A provider of direct-booking March
systems to major 2017/November
BookingTek hotel groups 2017 0.14
------------ ------------------------------ ---------------- ------------
London-based BookingTek provides software that enables
hotels to reduce their reliance on third-party booking
systems through an enterprise-grade, real-time booking
platform for meeting rooms and restaurant reservations.
BookingTek's existing clients include two of the
world's top 10 hotel groups and the UK's largest
hotel group. The company's latest accounts for the
year ended 31 July 2016 shows turnover of GBP2.03
million and a loss before interest, tax and amortisation
of goodwill of GBP0.29 million.
----------------------------------------------------------------------------
Online marketplace September
for used camera 2017/December
MPB Group and video equipment 2017 0.22*
------------ ------------------------------ ---------------- ------------
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. The investment is to provide expansion
of its platform globally, with launches into both
the US and German markets. The company's latest
audited accounts for the year ended 31 March 2017
show turnover of GBP13.20 million and loss before
interest, tax and amortisation of goodwill of GBP0.45
million.
----------------------------------------------------------------------------
*A further GBP0.34 million was invested into MPB
on 27 February 2018 following the year end.
----------------------------------------------------------------------------
Realisations
There were two realisations during the year under review, namely: Entanet Holdings Limited and Gro-Group Holdings Limited as set out below:
Company Business Period Total cash
of investment proceeds
over the
life of
the investment/Multiple
over cost
---------- ------------------------- --------------- -------------------------
Entanet Wholesale voice February GBP5.53
and data communications 2014 to million
provider August 2.5 times
2017 cost
---------- ------------------------- --------------- -------------------------
The Company sold its investment in Entanet to AIM
quoted CityFibre Infrastructure Holdings Limited
for GBP4.89 million in August 2017. Deferred consideration
of up to GBP0.50 million is potentially payable
over the next two years. Excluding this deferred
consideration, the Company has so far realised a
gain over the life of the investment of GBP3.36
million, a multiple of 2.5 times cost and has returned
an IRR of 39% to date - an excellent outcome.
---------------------------------------------------------------------------------
Gro-Group Baby sleep products March GBP3.48
2013 to million
December 2.2 times
2017 cost
---------- ------------------------- --------------- -------------------------
The Company sold its investment in Gro-Group for
GBP2.76 million in December 2017. Deferred consideration
of up to GBP0.09 million is potentially payable
over the next year. Excluding this deferred consideration,
the Company has so far realised a gain over the
life of the investment of GBP1.90 million, a multiple
of 2.2 times cost and has returned an IRR of 21%
to date.
---------------------------------------------------------------------------------
Funds available for investment
As a result of the successful fundraising (GBP13.63 million raised in 2017), divestments referred to above (GBP4.89 million) and loan stock repayments of GBP4.68 million cash and other liquid investments amounted to GBP24.34 million. Of this GBP2.85 million is held as cash in bank accounts, and the balance is placed in AAA rated money market funds. The returns on these funds remain very low, but the Board retains its policy of seeking above all to preserve capital for its uninvested funds.
Investment Portfolio Summary
at 31 December 2017
Total Total Total % of % of
Cost at Valuation Valuation equity Portfolio
31 Dec at 31 at 31 held by value
2017 Dec 2016 Dec 2017
GBP GBP GBP
--------------------------- ----------- ----------- ----------- -------- -----------
Mobeus Equity
Partners Portfolio
--------------------------- ----------- ----------- ----------- -------- -----------
Tovey Management
Limited (trading
as Access IS)
Provider of
data capture
and scanning
hardware 2,469,013 2,601,197 2,758,626 9.7% 8.7%
--------------------------- ----------- ----------- ----------- -------- -----------
Manufacturing
Services Investment
Limited (trading
as Wetsuit Outlet)(1)
Online retailer
in the water
sports market 2,333,102 2,016,900 2,333,102 6.4% 7.3%
--------------------------- ----------- ----------- ----------- -------- -----------
Virgin Wines
Holding Company
Limited
Online wine
retailer 1,930,813 2,685,675 2,173,407 9.7% 6.9%
--------------------------- ----------- ----------- ----------- -------- -----------
ASL Technology
Holdings Limited
Printer and
photocopier
services 1,933,591 2,082,980 2,049,558 9.5% 6.5%
--------------------------- ----------- ----------- ----------- -------- -----------
Media Business
Insight Holdings
Limited
A publishing
and events business
focused on the
creative production
industries 2,722,760 2,218,152 1,663,142 15.7% 5.3%
--------------------------- ----------- ----------- ----------- -------- -----------
Vian Marketing
Limited (trading
as Red Paddle
Co) Design,
manufacture
and sale of
stand-up paddleboards
and windsurfing
sails 899,074 1,188,439 1,416,746 7.1% 4.5%
--------------------------- ----------- ----------- ----------- -------- -----------
EOTH Limited
(trading as
Equip Outdoor
Technologies)
Distributor
of branded outdoor
equipment and
clothing 951,471 1,197,945 1,405,478 1.7% 4.5%
--------------------------- ----------- ----------- ----------- -------- -----------
Tharstern Group
Limited
MIS & Commercial
print software
solutions 1,091,886 1,217,396 1,401,361 12.2% 4.5%
--------------------------- ----------- ----------- ----------- -------- -----------
Turner Topco
Limited (trading
as ATG Media)
Publisher and
online auction
platform operator 1,529,075 1,330,326 1,292,718 3.8% 4.1%
--------------------------- ----------- ----------- ----------- -------- -----------
Fullfield Limited
(trading as
Motorclean)
Vehicle cleaning
and valet services 1,131,444 1,459,525 1,185,517 9.8% 3.8%
--------------------------- ----------- ----------- ----------- -------- -----------
Master Removers
Group Limited
(formerly Leap
Newco Limited
(trading as
Anthony Ward
Thomas, Bishopsgate
and Aussie Man
& Van))
A specialist
logistics, storage
and removals
business 511,855 734,387 1,173,348 4.3% 3.7%
--------------------------- ----------- ----------- ----------- -------- -----------
CGI Creative
Graphics International
Limited
Vinyl graphics
to global automotive,
recreation vehicle
and aerospace
markets 1,449,746 1,311,572 1,087,900 6.6% 3.5%
--------------------------- ----------- ----------- ----------- -------- -----------
Pattern Analytics
Limited (trading
as Biosite)
Workforce management
and security
services for
the construction
industry 640,171 640,171 960,257 4.8% 3.0%
--------------------------- ----------- ----------- ----------- -------- -----------
Preservica Limited
Seller of proprietary
digital archiving
software 679,617 679,617 929,117 8.6% 3.0%
--------------------------- ----------- ----------- ----------- -------- -----------
Redline Worldwide
Limited
Provider of
security services
to the aviation
industry and
other sectors 838,377 838,377 897,989 6.7% 2.9%
--------------------------- ----------- ----------- ----------- -------- -----------
BookingTek Limited
Software for
hotel groups 652,137 512,137 867,257 3.5% 2.8%
--------------------------- ----------- ----------- ----------- -------- -----------
Bourn Bioscience
Limited
Management of
In-vitro fertilisation
clinics 1,132,521 864,082 818,429 7.7% 2.6%
--------------------------- ----------- ----------- ----------- -------- -----------
TPSFF Holding
Limited (formerly
The Plastic
Surgeon Holdings
Limited)
Snagging and
finishing of
domestic and
commercial properties 190,467 902,329 809,939 8.7% 2.6%
--------------------------- ----------- ----------- ----------- -------- -----------
MPB Group Limited
Online marketplace
for used photographic
equipment 695,604 471,216 777,331 5.3% 2.5%
--------------------------- ----------- ----------- ----------- -------- -----------
RDL Corporation
Limited
Recruitment
consultants
for the pharmaceutical,
business intelligence
and IT industries 1,000,000 926,025 632,005 9.1% 2.0%
--------------------------- ----------- ----------- ----------- -------- -----------
Ibericos Etc.
Limited (trading
as Tapas Revolution)
Spanish restaurant
chain 580,469 - 580,469 5.8% 1.8%
--------------------------- ----------- ----------- ----------- -------- -----------
Veritek Global
Holdings Limited
Maintenance
of imaging equipment 1,620,086 1,283,041 547,806 11.9% 1.7%
--------------------------- ----------- ----------- ----------- -------- -----------
Buster and Punch
Holdings Limited
(formerly Chatfield
Services Limited)(2)
Industrial inspired
lighting and
interiors retailer 530,392 1,134,000 530,392 4.5% 1.7%
--------------------------- ----------- ----------- ----------- -------- -----------
My Tutorweb
Limited
Digital marketplace
connecting school
pupils seeking
one-to-one online
tutoring 466,639 - 466,639 4.5% 1.5%
--------------------------- ----------- ----------- ----------- -------- -----------
Hollydale Management
Limited
Company seeking
to carry on
a business in
the food sector 701,120 1,095,500 438,200 11.0% 1.4%
--------------------------- ----------- ----------- ----------- -------- -----------
Vectair Holdings
Limited
Designer and
distributor
of washroom
products 24,732 183,729 303,233 2.1% 1.0%
--------------------------- ----------- ----------- ----------- -------- -----------
Omega Diagnostics
Group plc(3)
In-vitro diagnostics
for food intolerance,
auto-immune
diseases and
infectious diseases 200,028 291,682 274,849 1.3% 0.9%
--------------------------- ----------- ----------- ----------- -------- -----------
Jablite Holdings
Limited
Manufacturer
of expanded
polystyrene
products 376,083 606,998 229,783 9.1% 0.7%
--------------------------- ----------- ----------- ----------- -------- -----------
Backhouse Management
Limited
Company seeking
to carry on
a business in
the motor sector 589,680 1,134,000 226,800 11.3% 0.7%
--------------------------- ----------- ----------- ----------- -------- -----------
Creasy Marketing
Services Limited
Company seeking
to carry on
a business in the textile sector 589,680 1,134,000 226,800 11.3% 0.7% --------------------------- ----------- ----------- ----------- -------- ----------- McGrigor Management Limited Company seeking to carry on a business in the pharmaceutical sector 589,680 1,134,000 226,800 11.3% 0.7% --------------------------- ----------- ----------- ----------- -------- ----------- Barham Consulting Limited Company seeking to carry on a business in the catering sector 589,680 680,400 226,800 11.3% 0.7% --------------------------- ----------- ----------- ----------- -------- ----------- Blaze Signs Holdings Limited Manufacturer and installer of signs 190,631 280,944 193,997 5.7% 0.6% --------------------------- ----------- ----------- ----------- -------- ----------- Lightworks Software Limited Provider of software for CAD and CAM vendors 9,329 34,926 33,847 4.2% 0.1% --------------------------- ----------- ----------- ----------- -------- ----------- BG Training Limited City-based provider of specialist technical training 10,625 14,167 5,313 0.0% 0.0% --------------------------- ----------- ----------- ----------- -------- ----------- Racoon International Group Limited Supplier of hair extensions, hair care products and training 484,347 38,771 - 8.0% 0.0% --------------------------- ----------- ----------- ----------- -------- ----------- Newquay Helicopters (2013) Limited (in creditors' voluntary liquidation) Helicopter service operator 7,617 - - 2.5% 0.0% --------------------------- ----------- ----------- ----------- -------- ----------- CB Imports Group Limited (trading as Country Baskets) Importer and distributor of artificial flowers, floral sundries and home décor products 175,000 - - 5.8% 0.0% --------------------------- ----------- ----------- ----------- -------- ----------- Watchgate Limited Holding company 1,000 - - 33.3% 0.0% --------------------------- ----------- ----------- ----------- -------- ----------- Disposals in year --------------------------- ----------- ----------- ----------- -------- ----------- Entanet Holdings Limited Wholesale communications provider - 2,254,135 - 0.0% 0.0% --------------------------- ----------- ----------- ----------- -------- ----------- Gro-Group Holdings Limited Baby sleep products - 1,361,293 - 0.0% 0.0% --------------------------- ----------- ----------- ----------- -------- ----------- Total 32,519,542 38,540,034 31,144,955 - 98.9% --------------------------- ----------- ----------- ----------- -------- ----------- Former Elderstreet Private Equity Portfolio --------------------------- ----------- ----------- ----------- -------- ----------- Cashfac Limited Provider of virtual banking application software solutions to corporate customers 260,101 288,932 339,098 2.9% 1.1% --------------------------- ----------- ----------- ----------- -------- ----------- Sparesfinder Limited Supplier of industrial spare parts online 250,854 64,067 - 2.0% 0.0% --------------------------- ----------- ----------- ----------- -------- ----------- Sift Group Limited Developer of business-to-business internet communities 135,391 33,401 - 1.3% 0.0% --------------------------- ----------- ----------- ----------- -------- ----------- Total 646,346 386,400 339,098 - 1.1% --------------------------- ----------- ----------- ----------- -------- ----------- Investment Adviser's Total 33,165,888 38,926,434 31,484,053 - 100.0% --------------------------- ----------- ----------- ----------- -------- -----------
Notes
1 GBP2,016,900 held in Manufacturing Services Investment Limited, a company preparing to trade, was used for the investment into Wetsuit Outlet. This resulted in a net repayment to the Company of GBP456,400. A further GBP772,602 was invested directly by the Company into Wetsuit Outlet.
2 GBP1,134,000 held in Chatfield Services, a company preparing to trade, was used for the investment into Buster and Punch. This resulted in a net repayment to the Company of GBP603,608. The company subsequently changed its name to Buster and Punch Holdings Limited.
3 Quoted on AIM.
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. Further details of these are contained in the corporate governance section of the Directors' Report on pages in the Annual Report. The principal risks identified by the Board are set out below:
Risk Possible consequence How the Board manages
risk
------------------------ ---------------------------- -------------------------------------------------------------
Economic Events such as
an economic recession * The Board monitors the portfolio as a whole to (1)
and movement in ensure that the Company invests in a diversified
interest rates portfolio of companies and (2) ensure that
could affect trading developments in the macro-economic environment such
conditions for as movements in interest rates are monitored.
smaller companies
and consequently
the value of the
Company's qualifying
investments.
------------------------ ---------------------------- -------------------------------------------------------------
Loss of approval The Company must
as a Venture Capital comply with section * The Company's VCT qualifying status is continually
Trust 274 of the Income reviewed by the Investment Adviser.
Tax Act 2007 ("ITA")
which allows it
to be exempted
from capital gains * The Board receives regular reports from its VCT
tax on investment Status Adviser who has been retained by the Board to
gains. Any breach monitor the VCT's compliance with the VCT Rules.
of these rules
may lead to the
Company losing
its approval as
a Venture Capital
Trust (VCT), qualifying
shareholders who
have not held their
shares for the
designated holding
period having to
repay the income
tax relief they
obtained and future
dividends paid
by the Company
becoming subject
to tax. The Company
would also lose
its exemption from
corporation tax
on capital gains.
------------------------ ---------------------------- -------------------------------------------------------------
Investment Investment in unquoted
small companies * The Board regularly reviews the Company's investment
involves a higher strategy.
degree of risk
than investment
in fully listed
companies. Smaller * Careful selection and review of the investment
companies often portfolio on a regular basis.
have limited product
lines, markets
or financial resources
and may be dependent * The Investment Adviser has provided a growing
for their management pipeline of compliant investment opportunities
on a smaller number following a continuing strengthening of its
of key individuals. investment team.
This may lead to
variable investment
returns.
Following the introduction
of the VCT Rules
in 2015 the Company
is no longer permitted
to invest in MBOs.
The focus of investment
has therefore moved
to providing capital
development investment
to younger companies.
------------------------ ---------------------------- -------------------------------------------------------------
Regulatory The Company is
required to comply * Regulatory and legislative developments are kept
with the Companies under review by the Company's solicitors and the
Act, the listing Board. Please see the Chairman's Statement in the
rules of the UK Annual Report for the latest details of the impact of
Listing Authority recent VCT legislation.
and United Kingdom
Accounting Standards.
Changes to and
breach of any of
these might lead
to suspension of
the Company's Stock
Exchange listing,
financial penalties
or a qualified
audit report.
------------------------ ---------------------------- -------------------------------------------------------------
Financial and operating Failure of the
systems at any * The Board carries out an annual review of the
of the third party internal controls in place and reviews the risks
service providers facing the Company at each quarterly Board meeting
that the Company and receives reports by exception.
has contracted
with could lead
to inaccurate reporting
or monitoring. * It reviews the performance of the service providers
Inadequate controls annually.
could lead to the
misappropriation
or insecurity of
assets.
------------------------ ---------------------------- -------------------------------------------------------------
Market Movements in the
valuations of the * The Board receives quarterly valuation reports from
VCT's investments the Investment Adviser.
will, inter alia,
be connected to
movements in UK
Stock Market indices. * The Investment Adviser alerts the Board about any
adverse movements.
------------------------ ---------------------------- -------------------------------------------------------------
Asset liquidity The Company's investments
may be difficult * The Board receives reports from the Investment
to realise. Adviser and reviews the portfolio at each quarterly
Board meeting. It carefully monitors investments
where a particular risk has been identified.
------------------------ ---------------------------- -------------------------------------------------------------
Market liquidity Shareholders may
find it difficult * The Board has a share buyback policy which seeks to
to sell their shares mitigate market liquidity risk. This policy is
at a price which reviewed at each quarterly Board meeting.
is close to the
net asset value
given the limited
secondary market
in VCT shares.
------------------------ ---------------------------- -------------------------------------------------------------
Counterparty A counterparty
may fail to discharge * The Board regularly reviews and agrees policies for
an obligation or managing these risks. Further details can be found
commitment that under 'credit risk' in Note 15 to the accounts.
it has entered
into with the Company.
This may lead to
financial loss
for the Company.
------------------------ ---------------------------- -------------------------------------------------------------
The risk profile of the Company has changed as a result of changes to VCT legislation. As the Company is required to focus its new investment activity on development capital investments in younger companies it is anticipated that investment returns will be more volatile and have a higher risk profile. The Board remain confident that the Investment Adviser has the resources to adapt to these changing investment requirements, although the early stage investment process remains unproven. The combination of high liquidity levels in the Company and the challenge of new VCT rules may also result in continuing high liquidity which may be a drag on performance. The Board continues to manage excess liquidity through dividend distributions where appropriate. These issues will be monitored by the Board during the year.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Financial Statements for each financial year and the Directors have elected to prepare the Financial Statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss for the Company for that period.
In preparing these financial statements, the Directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether the Financial Statements have been prepared in accordance with the United Kingdom
accounting standards, subject to any material departures disclosed and explained in the Financial Statements;
-- prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that
the Company will continue in business;
-- prepare a Strategic Report, a Directors' Report and Directors' 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, gave 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 Financial Statements, taken as a whole, as fair, balanced and understandable and that it provides the information necessary for shareholders to assess the Company's performance, business model and strategy.
Neither the Company nor the Directors accept any liability to any person in relation to the Annual Report except to the extent that such liability could arise under English law. Accordingly, any liability to a person who has demonstrated reliance on any untrue or misleading statement or omission shall be determined in accordance with section 90A and schedule 10A of the Financial Services and Markets Act 2000.
The names and functions of the Directors are stated in the Annual Report.
For and on behalf of the Board:
Christopher Moore
Chairman
20 March 2018
FINANCIAL STATEMENTS
Income Statement
for the year ended 31 December 2017
Year ended 31 December 2017 Year ended 31
December
2016
Notes Revenue Capital Total Revenue Capital Total
GBP GBP GBP GBP GBP GBP
------------------- ------- ------------ ------------ --------------- ------------ ------------ ---------------
Unrealised losses
on investments 8 - (792,838) (792,838) - (377,677) (377,677)
Realised gains on
investments 8 - 4,142,375 4,142,375 - 381,087 381,087
Income 3 2,381,649 - 2,381,649 2,019,579 - 2,019,579
Investment
Adviser's
fees 4a (293,312) (879,937) (1,173,249) (304,628) (913,884) (1,218,512)
Other expenses 4d (422,206) - (422,206) (370,899) - (370,899)
------------------- ------- ------------ ------------ --------------- ------------ ------------ ---------------
Profit/(loss) on
ordinary activities
before taxation 1,666,131 2,469,600 4,135,731 1,344,052 (910,474) 433,578
Taxation on
profit/(loss)
on ordinary
activities 5 (286,870) 169,388 (117,482) (212,864) 182,776 (30,088)
------------------- ------- ------------ ------------ --------------- ------------ ------------ ---------------
Profit/(loss) for
the year and total
comprehensive
income 1,379,261 2,638,988 4,018,249 1,131,188 (727,698) 403,490
------------------- ------- ------------ ------------ --------------- ------------ ------------ ---------------
Basic and diluted
earnings per
ordinary
share 6 2.60p 4.99p 7.59p 2.32p (1.49)p 0.83p
The revenue column of the Income Statement includes all income and expenses. The capital column accounts for the unrealised losses and realised 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") and updated in January 2017, 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 2017
31 December 31 December
Notes 2017 2016
GBP GBP
Fixed assets
Investments at fair value 8 31,484,053 38,926,434
Current assets
Debtors and prepayments 3,166,996 860,011
Current investments 21,494,921 9,511,810
Cash at bank 2,847,849 3,662,074
------------------------------ ------- ----------- -----------
27,509,766 14,033,895
Creditors: amounts falling
due within one year (582,179) (205,173)
------------------------------ ------- ----------- -----------
Net current assets 26,927,587 13,828,722
------------------------------ ------- ----------- -----------
Net assets 58,411,640 52,755,156
------------------------------ ------- ----------- -----------
Capital and reserves
Called up share capital 674,751 490,430
Share premium reserve 29,895,865 13,540,891
Capital redemption reserve 14,589 9,342
Revaluation reserve 517,952 1,152,007
Special distributable reserve 20,029,787 31,646,338
Realised capital reserve 6,346,235 4,702,557
Revenue reserve 932,461 1,213,591
------------------------------ ------- ----------- -----------
Equity shareholders' funds 58,411,640 52,755,156
------------------------------ ------- ----------- -----------
Basic and diluted net asset
value per ordinary share 86.57p 107.57p
Statement of changes in equity
for the year ended 31 December 2017
Non-distributable Distributable
reserves reserves
Called Share Capital Special Realised Revenue
up
share premium redemption Revaluation distributable capital reserve
capital reserve reserve reserve reserve reserve Total
GBP GBP GBP GBP GBP GBP GBP GBP
-------------- --------- ------------ ---------- ----------- -------------- ------------- ------------- ------------
At 1 January
2017 490,430 13,540,891 9,342 1,152,007 31,646,338 4,702,557 1,213,591 52,755,156
Comprehensive
income for
the year
(Loss)/profit
for the year - - - (792,838) - 3,431,826 1,379,261 4,018,249
-------------- --------- ------------ ---------- ----------- -------------- ------------- ------------- ------------
Total
comprehensive
income for
the year - - - (792,838) - 3,431,826 1,379,261 4,018,249
-------------- --------- ------------ ---------- ----------- -------------- ------------- ------------- ------------
Contributions
by and
distributions
to owners
Shares issued
via Offer
for
Subscription
(note c) 154,721 13,570,259 - - (94,364) - - 13,630,616
Dividends
re-invested
into new
shares 34,847 2,784,715 - -- - - -- 2,819,562
Shares bought
back (note
d) (5,247) - 5,247 - (408,125) - - (408,125)
Dividends
paid - - - - (10,403,513) (2,339,914) (1,660,391) (14,403,818)
-------------- --------- ------------ ---------- ----------- -------------- ------------- ------------- ------------
Total
contributions
by and
distributions
to owners 184,321 16,354,974 5,247 - (10,906,002) (2,339,914) (1,660,391) 1,638,235
-------------- --------- ------------ ---------- ----------- -------------- ------------- ------------- ------------
Other
movements
Realised
losses
transferred
to special
reserve (note
a below) - - - - (710,549) 710,549 - -
Realisation
of previously
unrealised
appreciation - - - 158,783 - (158,783) - -
-------------- --------- ------------ ---------- ----------- -------------- ------------- ------------- ------------
Total other
movements - - - 158,783 (710,549) 551,766 - -
-------------- --------- ------------ ---------- ----------- -------------- ------------- ------------- ------------
At 31 December
2017 674,751 29,895,865 14,589 517,952 20,029,787 6,346,235 932,461 58,411,640
-------------- --------- ------------ ---------- ----------- -------------- ------------- ------------- ------------
Notes
a) The Special distributable reserve also provides
the Company with a reserve to absorb any existing
and future realised losses and, when considered by
the Board to be in the interests of shareholders,
to fund share buybacks and for other corporate purposes.
All of this reserve originates from funds raised
prior to 6 April 2014. The transfer of GBP710,549
to the special reserve from the realised capital
reserve above is the total of realised losses incurred
by the Company in the year.
b) The realised capital reserve and the revenue reserve
together comprise the Profit and Loss Account of
the Company.
c) Under the 2017/18 Offer, 15,472,097 shares were
allotted between September and November 2017, raising
net funds of GBP13,630,616 for the Company.
d) During the year, the Company purchased 524,730
of its own shares at the prevailing market price
for a total cost of GBP408,125, which were subsequently
cancelled.
Statement of changes in equity
for the year ended 31 December 2016
Non-distributable Distributable
reserves reserves
Called Share Capital Special Realised Revenue
up
share premium redemption Revaluation distributable capital reserve
capital reserve reserve reserve reserve reserve Total
GBP GBP GBP GBP GBP GBP GBP GBP
-------------- ------- ---------- ---------- ----------- ------------- ------------ ------------ ------------
At 1 January
2016 483,562 12,629,944 6,827 1,545,364 32,622,021 8,422,420 1,297,644 57,007,782
Comprehensive
income for
the year
Profit for
the year - - - (377,677) - (350,021) 1,131,188 403,490
-------------- ------- ---------- ---------- ----------- ------------- ------------ ------------ ------------
Total
comprehensive
income for
the year - - - (377,677) - (350,021) 1,131,188 403,490
-------------- ------- ---------- ---------- ----------- ------------- ------------ ------------ ------------
Contributions
by and
distributions
to owners
Shares issued - - - - - - - -
via Offer
for
Subscription
Dividends
re-invested
into new
shares 9,383 910,947 - - - - - 920,330
Shares bought
back (2,515) - 2,515 - (244,575) - - (244,575)
Dividends
paid - - - - - (4,116,630) (1,215,241) (5,331,871)
-------------- ------- ---------- ---------- ----------- ------------- ------------ ------------ ------------
Total
contributions
by and
distributions
to owners 6,868 910,947 2,515 - (244,575) (4,116,630) (1,215,241) (4,656,116)
-------------- ------- ---------- ---------- ----------- ------------- ------------ ------------ ------------
Other
movements
Realised
losses
transferred
to special
reserve - - - - (731,108) 731,108 - -
Realisation
of previously
unrealised
appreciation - - - (15,680) - 15,680 - -
-------------- ------- ---------- ---------- ----------- ------------- ------------ ------------ ------------
Total other
movements - - - (15,680) (731,108) 746,788 - -
-------------- ------- ---------- ---------- ----------- ------------- ------------ ------------ ------------
At 31 December
2016 490,430 13,540,891 9,342 1,152,007 31,646,338 4,702,557 1,213,591 52,755,156
-------------- ------- ---------- ---------- ----------- ------------- ------------ ------------ ------------
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 Dividend
Investment Scheme or reduced due to shares bought
back by the Company.
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 and the Company's Dividend Investment
Scheme.
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.
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. The cost of any IFA facilitation
fee payable as part of the Offer for Subscription
is also charged to this reserve.
Realised capital reserve - The following are accounted
for in this reserve:
* Gains and losses on realisation of investments;
* Permanent diminution in value of investments;
* Transaction costs incurred in the acquisition of
investments;
* 75% of the Investment Adviser's fee expense and 100%
of any performance incentive 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 dividends
paid that are classified as revenue in nature.
Statement of cash flows
For the year ended 31 December 2017
Year ended Year ended
Notes 31 December 31 December
2017 2016
GBP GBP
------------------------------ ------ --------------------- ---------------------
Cash flows from operating
activities
Profit for the financial
year 4,018,249 403,490
Adjustments for:
Net unrealised losses
on investments 792,838 377,677
Net gains on realisations
of investments (4,142,375) (381,087)
Tax charge for the current
year 117,482 30,088
Increase in debtors (128,689) (22,813)
Increase/(decrease) in
creditors 289,612 (102,175)
------------------------------ ------ --------------------- ---------------------
Net cash inflow from
operations 947,117 305,180
Corporation tax paid (30,088) -
------------------------------ ------ --------------------- ---------------------
Net cash inflow from
operating activities 917,029 305,180
Cash flows from investing
activities
Sale of investments 8 10,217,251 2,402,008
Purchase of investments 8 (1,603,629) (2,883,610)
Decrease in bank deposits
with a maturity over
three months - 85,130
------------------------------ ------ --------------------- ---------------------
Net cash inflow/(outflow)
from investing activities 8,613,622 (396,472)
Cash flows from financing
activities
Share issued as part
of Offer for Subscription
(net of issue costs) 13,630,616 -
Equity dividends paid 7 (11,584,256) (4,411,541)
Purchase of own shares (408,125) (243,995)
------------------------------ ------ --------------------- ---------------------
Net cash inflow/(outflow)
from financing activities 1,638,235 (4,655,536)
Net increase/(decrease)
in cash and cash equivalents 11,168,886 (4,746,828)
Cash and cash equivalents
at start of year 11,173,884 15,920,712
------------------------------ ------ --------------------- ---------------------
Cash and cash equivalents
at end of year 22,342,770 11,173,884
Cash and cash equivalents
comprise:
Cash at bank and in hand 9 2,847,849 3,662,074
Cash equivalents 9 19,494,921 7,511,810
NOTES TO THE ACCOUNTS
for the year ended 31 December 2017
1 Company Information
Mobeus Income and Growth 4 VCT plc is a public limited company incorporated in England, registration number 03707697. The registered office is 30 Haymarket, London, SW1Y 4EX.
2 Basis of preparation
A summary of the principal accounting policies, all of which have been applied consistently throughout the year are set out next to 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') (updated in January 2017) issued by the Association of Investment Companies. The Company has a number of financial instruments which are disclosed under FRS102 s11/12 as shown in note 15 of the Annual Report.
3 Income
Dividends receivable on quoted equity shares
are brought into account on the ex-dividend
date. Dividends receivable on unquoted equity
shares are brought into account when the Company's
right to receive payment is established and
there is no reasonable doubt that payment will
be received.
Interest income on loan stock is accrued on
a daily basis. Provision is made against this
income where recovery is doubtful or where it
will not be received in the foreseeable future.
Where the loan stocks only require interest
or a redemption premium to be paid on redemption,
the interest and redemption premium is recognised
as income or capital as appropriate once redemption
is reasonably certain.
When a redemption premium is designed to protect
the value of the instrument holder's investment
rather than reflect a commercial rate of revenue
return, the redemption premium is recognised
as capital. The treatment of redemption premiums
is analysed to consider if they are revenue
or capital in nature on a company by company
basis. Accordingly, the redemption premium recognised
in the year ended 31 December 2017 has been
classified as capital and has been included
within gains on investments.
-------------------------------------------------------
2017 2016
GBP GBP
------------------------------------ --------- ---------
Income from bank deposits 28,578 48,157
------------------------------------ --------- ---------
Income from investments
- from equities 176,448 106,043
- from overseas based OEICs 25,097 47,986
- from loan stock 2,145,824 1,817,393
- from interest on preference share
dividend arrears 92 -
------------------------------------ --------- ---------
2,347,461 1,971,422
Other income 5,610 -
------------------------------------ --------- ---------
Total income 2,381,649 2,019,579
------------------------------------ --------- ---------
Total income comprises
Dividends 201,545 154,029
Interest 2,174,494 1,865,550
Other Income 5,610 -
------------------------------------ --------- ---------
2,381,649 2,019,579
Total loan stock interest due but not recognised
in the year was GBP257,512 (2016: GBP446,862).
4 Investment Adviser's fees and other expenses
All fees and expenses are accounted for on
an accruals basis.
-------------------------------------------
a) Investment Adviser's fees
25% of the Investment Adviser's fees are charged
to the revenue column of the Income Statement,
while 75% is charged against the capital column
of the Income Statement. This is in line with
the Board's expected long-term split of returns
from the investment portfolio of the Company.
100% of any performance incentive fee payable
for the year is charged against the capital
column of the Income Statement, as it is based
upon the achievement of capital growth.
-------------------------------------------------
2017 2016
Revenue Capital Total Revenue Capital Total
GBP GBP GBP GBP GBP GBP
Mobeus Equity Partners LLP 293,312 879,937 1,173,249 304,628 913,884 1,218,512
======== ======== ========== ======== ======== ==========
Under the terms of a revised investment management agreement dated 12 November 2010, Mobeus Equity Partners LLP ("Mobeus LLP") (formerly Matrix Private Equity Partners LLP ("MPEP") provides investment advisory, administrative and company secretarial services to the Company, for a fee of 2% per annum of closing net assets, calculated on a quarterly basis by reference to the net assets at the end of the preceding quarter, plus a fixed fee of GBP115,440 per annum, the latter being subject to indexation, if applicable. In 2013, Mobeus agreed to waive such further increases due to indexation, until otherwise agreed with the Board.
The Investment Adviser fee includes provision for a cap on expenses excluding irrecoverable VAT and exceptional items set at 3.4% 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 (2016: GBPnil).
The Company is responsible for external costs such as legal and accounting fees, incurred on transactions that do not proceed to completion ("abort expenses") subject to the cap on total annual expenses referred to above.
In line with common practice, Mobeus Equity Partners LLP retain 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 GBP285,904 (2016: GBP219,348) during the year ended 31 December 2017, being GBP99,523 (2016: GBP62,480) for arrangement fees, and GBP186,381 (2016: GBP156,868) for acting as non-executive directors on a number of investee company boards. These fees attributable to MIG4 VCT are based upon the investment allocation to MIG4 VCT which applied at the time of each investment. These figures are not part of these Financial Statements.
b) Incentive fee agreement
Under the terms of a separate agreement dated 1 November 2006, from the end of the accounting period ending on 31 January 2009 and in each subsequent period throughout the life of the company, the Investment Adviser will be entitled to receive a performance related incentive fee of 20% of the dividends paid in excess of a "Target Rate" comprising firstly, an annual dividend target of 6% of the Net Asset Value ("NAV") per share at 5 April 2007 (indexed each year for RPI) and secondly a requirement that any cumulative shortfalls below the 6% hurdle must be made up in later years, while any excess is not carried forward, whether a fee is payable for that year or not. Payment of a fee is also conditional upon the average NAV per share for each year equalling the average Base NAV per share for the same year. The performance fee will be payable annually. No incentive fee is payable to date.
c) Offer for subscription fees
2017 2016
GBP(m) GBP(m)
Funds raised by MIG4 VCT 13.96 -
----------------------------------- ------- -------
Offer costs payable to Mobeus at 0.45 -
3.25% of funds raised by MIG4 VCT
----------------------------------- ------- -------
Under the terms of an Offer for Subscription, with the other Mobeus advised VCTs, launched on 6 September 2017, Mobeus is entitled to fees of 3.25% of the investment amount received from investors. This amount totalled GBP1.96 million for the first five allotments which took place between September and November 2017 across all four VCTs, out of which all the costs associated with the allotments were met, excluding any payments to advisers facilitated under the terms of the Offer.
d) 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.
---------------------------------------------------------
2017 2016
GBP GBP
----------------------------------------------------- -------- --------
Directors' remuneration (including
NIC of GBP8,313 (2016: GBP8,327) (note
i) 98,813 98,827
IFA trail commission 86,124 73,779
Broker's fees 12,000 12,000
Auditor's fees - Audit of Company
(excluding VAT) 23,832 21,525
- audit related assurance services
(excluding VAT) - note ii) 4,562 4,203
- tax compliance services (excluding
VAT) note ii) 1,358 3,752
Registrar's fees 65,302 40,518
Printing 42,480 38,171
Legal & professional fees 7,174 10,686 VCT monitoring fees 9,600 9,600 Directors' insurance 8,152 8,350 Listing and regulatory fees 53,507 40,680 Sundry 9,302 8,808 ----------------------------------------------------- -------- -------- Other expenses 422,206 370,899 ----------------------------------------------------- -------- --------
Note i): See analysis in Directors' Remuneration table in the Report and Accounts, which excludes the NIC above. The key management personnel are the three non-executive directors. The Company has no employees.
Note ii): The Directors consider the Auditor was best placed to provide the audit related assurance services disclosed above relating to the audit of the Financial Statements of the Half Year Report. The Audit Committee reviews the nature and extent of these services to ensure that auditor independence is maintained. In this regard, compliance tax services, with effect from the current year, are to be 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
capital reserve - realised 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.
--------------------------------------------------------------------
2017 2016
Revenue Capital Total Revenue Capital Total
GBP GBP GBP GBP GBP GBP
-------------------------------- ----------- ----------- ----------- ----------- ----------- ---------
a) Analysis of tax charge:
UK Corporation tax on
profits for the year 286,870 (169,388) 117,482 212,864 (182,776) 30,088
-------------------------------- ----------- ----------- ----------- ----------- ----------- ---------
Total current tax charge 286,870 (169,388) 117,482 212,864 (182,776) 30,088
-------------------------------- ----------- ----------- ----------- ----------- ----------- ---------
Corporation tax is based
on a rate of 19.25% (2016:
20%)
b) Profit/(loss) on ordinary
activities before tax 1,666,131 2,469,600 4,135,731 1,344,052 (910,474) 433,578
Profit/(loss) on ordinary
activities multiplied
by company rate of corporation
tax in the UK of 19.25%
(2016: 20%) 320,730 475,398 796,128 268,810 (182,095) 86,715
Effect of:
UK dividends not taxable (33,966) - (33,966) (21,209) - (21,209)
Unrealised losses/(gains)
not taxable - 152,621 152,621 - 75,535 75,535
Realised gains not taxable - (797,407) (797,407) - (76,216) (76,216)
Losses brought forward - - - (34,737) - (34,737)
-------------------------------- ----------- ----------- ----------- ----------- ----------- ---------
Unrelieved expenditure 106 - 106 - - -
-------------------------------- ----------- ----------- ----------- ----------- ----------- ---------
Actual tax charge 286,870 (169,388) 117,482 212,864 (182,776) 30,088
-------------------------------- ----------- ----------- ----------- ----------- ----------- ---------
Tax relief relating to Investment Adviser fees is allocated between revenue and capital where such relief can be utilised.
No asset or liability has been recognised for deferred tax in relation to capital gains or losses on revaluing investments as the Company is exempt from corporation tax in relation to capital gains or losses as a result of qualifying as a Venture Capital Trust.
There is no potential liability to deferred tax (2016: GBPnil). There is no unrecognised deferred tax asset in 2017 (2016: GBPnil).
6. Basic and diluted earnings per share
2017 2016
GBP GBP
Total earnings after taxation: 4,018,249 403,490
Basic and diluted earnings per share
(note a) 7.59p 0.83p
-------------------------------------- ---------- ----------
Net revenue from ordinary activities
after taxation 1,379,261 1,131,188
Basic and diluted revenue returns per
share (note b) 2.60p 2.32p
-------------------------------------- ---------- ----------
Net unrealised capital losses (792,838) (377,677)
Net realised capital gains 4,142,375 381,087
Capital expenses (net of taxation) (710,549) (731,108)
-------------------------------------- ---------- ----------
Total capital return 2,638,988 (727,698)
Basic and diluted capital return per
share (note c) 4.99p (1.49)p
-------------------------------------- ---------- ----------
Weighted average number of shares in
issue in the year 52,973,939 48,793,978
Note a) Basic earnings per share is total earnings after taxation divided by the weighted average number of shares in issue.
Note b) Revenue earnings per share is the revenue return after taxation divided by the weighted average number of shares in issue.
Note c) Capital earnings per share is the total capital profit after taxation divided by the weighted average number of shares in issue.
Note 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 returns.
7. Dividends paid and payable Dividends payable are recognised as distributions in the financial statements when the Company's liability to pay them has been established. This liability is established for interim dividends when they are paid, and for final dividends when they are approved by the shareholders, usually at the Company's annual general meeting. A key judgement in applying the above accounting policy is in determining the amount of minimum income dividend to be paid in respect of a year. The Company's status as a VCT means it has to comply with Section 259 of the Income Tax Act 2007, which requires that no more than 15% of the income from shares and securities in a year can be retained from the revenue available for distribution for the year. --------------------------------------------------
Amounts recognised as distributions to equity shareholders in the year:
For year Pence Date 2017 2016
per Paid
ended share
Dividend Type 31 December GBP GBP
------------ ------------ -------------- ------- ----------- ------------- ----------
Final Income 2015 1.50p 25/05/2016 - 725,346
Final Capital 2015 7.50p 25/05/2016 - 3,626,735
Interim Income 2016 1.00p 08/09/2016 - 489,895
Interim Capital 2016 1.00p 08/09/2016 - 489,895
Second
Interim Income 2016 1.00p 17/03/2017 490,434 -
Second
Interim Capital* 2016 6.00p 17/03/2017 2,942,602 -
Interim Income 2017 1.00p 11/09/2017 497,394 -
Interim Capital 2017 2.00p 11/09/2017 994,788 -
Interim Capital* 2017 15.00p 11/09/2017 7,460,911 -
Second
Interim Income 2017 1.00p 21/12/2017 672,563 -
Second
Interim Capital 2017 2.00p 21/12/2017 1,345,126 -
------------ ------------ -------------- ------- ----------- ------------- ----------
14,403,818** 5,331,871
---------------------------------------- ------- ----------- ------------- ----------
* - 6.00p of the dividend paid on 17 March 2017, and 15.00p of the dividend paid on 11 September 2017, were paid out of the Company's special distributable reserve.
** - GBP14,403,818 (2016: GBP5,331,871) disclosed above differs to that shown in the Statement of Cash Flows of GBP11,584,256 (2016: GBP4,411,541) due to GBP2,819,562 (2016: GBP920,330) of new shares issued as part of the DIS scheme.
Distributions to equity holders after the year end:
For year Pence Date 2017 2016
ended per share Payable
Dividend Type 31 December GBP GBP
---------- --------- -------------- ---------- ----------- ----- ----------
Second
Interim Income 2016 1.00p 17/03/2017 - 490,434
Second
Interim Capital 2016 6.00p 17/03/2017 - 2,942,602
---------- --------- -------------- ---------- ----------- ----- ----------
- 3,433,036
----------------------------------- ---------- ----------- ----- ----------
Any proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these Financial Statements.
Set out below are the total income dividends payable in respect of the financial year, which is the basis on which the requirements of section 274 of the Income Tax Act 2007 are considered
Recognised income distributions in the financial statements for the year
For year Pence Date 2017 2016
ended per paid/
Dividend Type 31 December share payable GBP GBP
---------- -------- -------------- ------- ----------- ---------- ----------
Revenue available for distribution
by way of dividends for the year 1,379,261 1,131,188
---------------------------------------------------------- ---------- ----------
Interim Income 2016 1.00p 08/09/2016 - 489,895
Second
Interim Income 2016 1.00p 17/03/2017 - 490,434
Interim Income 2017 1.00p 11/09/2017 497,394 -
Second
interim Income 2017 1.00p 21/12/2017 672,563 -
---------- -------- -------------- ------- ----------- ---------- ----------
Total income dividends for the year 1,169,957 980,329
---------------------------------------------------------- ---------- ----------
8. Investment 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 "fair value through profit and
loss" ("FVTPL") and measured in accordance with the
International Private Equity and Venture Capital
Valuation ("IPEV") guidelines, as updated in December
2015. This classification is followed as the Company's
business is to invest in financial assets with a
view to profiting from their total return in the
form of capital growth and income.
For investments actively traded on organised financial
markets, fair value is generally determined by reference
to Stock Exchange market quoted bid prices at the
close of business on the balance sheet date. Purchases
and sales of quoted investments are recognised on
the trade date where a contract of sale exists whose
terms require delivery within a time frame determined
by the relevant market. Purchases and sales of unlisted
investments are recognised when the contract for
acquisition or sale becomes unconditional. Were the
terms of a disposal state that consideration may
be received at some future date and subject to the
conditionality of the amount of deferred consideration,
an estimate of the fair value, discounted for the
time value of money may be recognised through the
Income Statement. In other cases, the proceeds will
only be recognised once the right to receive payment
is established and there is no reasonable doubt that
payment will be received.
Unquoted investments are stated at fair value by
the Directors in accordance with the following rules,
which are consistent with the IPEV guidelines:
All investments are held at the price of a recent
investment for an appropriate period where there
is considered to have been no change in fair value.
Where such a basis is no longer considered appropriate,
each investment is considered as a whole on a 'unit
of account' basis, alongside consideration of:
(i) Where a value is indicated by a material arms-length
transaction by an independent third party in the
shares of a company, this value will be used.
(ii) In the absence of i), and depending upon both
the subsequent trading performance and investment
structure of an investee company, the valuation basis
will usually move to either:-
a) a multiple basis. The shares may be valued by
applying a suitable price-earnings ratio, revenue
or gross profit multiple to that company's historic,
current or forecast post-tax earnings before interest
and amortisation, or revenue, (the ratio used being
based on a comparable sector but the resulting value
being adjusted to reflect points of difference identified
by the Investment Adviser compared to the sector
including, inter alia, a lack of marketability).
or:-
b) where a company's underperformance against plan
indicates a diminution in the value of the investment,
provision against cost is made, as appropriate.
(iii) Premiums, to the extent that they are considered
capital in nature, and that 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.
(iv) Where a multiple or cost less impairment basis
is not appropriate and overriding factors apply,
a discounted cash flow, net asset valuation or realisation
proceeds basis may be applied.
Capital gains and losses on investments, whether
realised or unrealised, are dealt with in the profit
and loss and revaluation reserves, and movements
in the period are shown in the Income Statement.
All investments are initially recognised and subsequently
measured at fair value. Changes in fair value are
recognised in the Income Statement.
A key judgement made in applying the above accounting
policy relates to investments that are permanently
impaired. Where the value of an investment has fallen
permanently below cost, the loss is treated as a
permanent impairment and as a realised loss, even
though the investment is still held. The Board assesses
the portfolio for such investments and, after agreement
with the Investment Adviser, will agree the values
that represent the extent to which an investment
loss has become realised. This is based upon an assessment
of objective evidence of that investment's future
prospects, to determine whether there is potential
for the investment to recover in value.
The methods of fair value measurement are classified
into hierarchy based on the reliability of the information
used to determine the valuation.
Level 1 - Fair value is measured based on quoted
prices in an active market.
Level 2 - Fair value is measured based on directly
observable current market prices or indirectly being
derived from market prices.
Level 3 - Fair value is measured using valuation
techniques using inputs that are not based on observable
market data.
------------------------------------------------------------------
Movements in investments during the year are summarised as follows:
Traded Unquoted Unquoted Loan stock Total
on equity preference
AIM shares shares
GBP GBP GBP GBP GBP
GBP
-------------------------- --------- ---------------- ------------- ------------ -------------
Cost at 31 December
2016 200,028 13,111,998 15,144 25,036,502 38,363,672
-------------------------- --------- ---------------- ------------- ------------ -------------
Unrealised gains/(losses)
at 31 December
2016 91,654 (2,887,001) (728) 3,948,082 1,152,007
Permanent impairment
in value of investments
as at 31 December
2016 - (20,110) (1,649) (567,486) (589,245)
-------------------------- --------- ---------------- ------------- ------------ -------------
Valuation at 31
December 2016 291,682 10,204,887 12,767 28,417,098 38,926,434
Purchases at cost
(Note b) - 1,657,673 - 526,425 2,184,098
Sale proceeds (Note
c) - (4,515,316) (1,810) (8,458,890) (12,976,016)
Reclassification
at value (Note
d) - 393,851 98 (393,949) -
Net realised gains
in the year - 2,445,389 - 1,696,986 4,142,375
Unrealised (losses)/gains
in the year (Note
e) (16,833) 465,891 443,034 (1,684,930) (792,838)
-------------------------- --------- ---------------- ------------- ------------ -------------
Valuation at 31
December 2017 274,849 10,652,375 454,089 20,102,740 31,484,053
-------------------------- --------- ---------------- ------------- ------------ -------------
Cost at 31 December
2017 200,028 14,062,390 13,432 18,890,038 33,165,888
Unrealised gains/(losses)
at 31 December
2017 74,821 (1,274,615) 440,657 1,277,089 517,952
Permanent impairment
in value of investments
at 31 December
2017 (Note f) - (2,135,400) - (64,387) (2,199,787)
-------------------------- --------- ---------------- ------------- ------------ -------------
Valuation at 31
December 2017 274,849 10,652,375 454,089 20,102,740 31,484,053
-------------------------- --------- ---------------- ------------- ------------ -------------
Note a) Details of investment transactions such as disposal proceeds, valuation movements cost and carrying value at the end of previous year are contained in the Investment Portfolio Summary in the Annual Report.
Major movements in investments
Disposals of investment portfolio companies during the year were:
Type Investment Disposal Valuation Realised
Company cost proceeds at 31 December gainin
2016 year
GBP GBP GBP GBP
--------------------- -------------------- ---------- ------------ ---------------- -------------- ---
Entanet Holdings
Limited Realisation 2,167,662 4,892,454 2,254,135 2,638,319 (1)
Gro-Group Holdings
Limited Realisation 1,577,977 2,758,765 1,361,293 1,397,472
Manufacturing
Services Investment
Limited Share buyback 456,400 456,400 456,400 -
Chatfield Services Share buyback
Limited and loan repayment 603,608 603,608 603,608 -
Backhouse Management
Limited Loan repayment 544,320 907,200 544,320 - (2)
Barham Consulting
Limited Loan repayment 272,160 453,600 272,160 - (2)
Creasy Marketing
Services Limited Loan repayment 544,320 907,200 544,320 - (2)
McGrigor Management
Limited Loan repayment 544,320 907,200 544,320 - (2)
Hollydale Management
Limited Loan repayment 394,380 657,300 394,380 - (2)
Others 276,735 432,289 325,705 106,584
------------------------------------------- ---------- ------------ ---------------- -------------- ---
7,381,882 12,976,016 7,300,641 4,142,375
------------------------------------------ ---------- ------------ ---------------- -------------- ---
Note (1) ) Deferred contingent consideration of GBP0.50 million is potentially payable over the next 12-18 months. There are conditions attached to this deferred consideration such that the amount receivable is uncertain and so has not been recognised in the current year's financial statements.
Note (2) ) The gain on the loan repayments above of GBP1,533,000 has been set off against an equivalent permanent impairment in the equity instrument of the investments in these companies (see note c). Thus, no gain or loss resulted.
Reconciliation of investment transactions to Statement of Cash flows
Note b) Purchases above of GBP2,184,098 are more than that shown in the Statement of Cash Flows of GBP1,603,629, by GBP580,469. This relates to the Tapas Revolution investment that completed on 4 January 2017. These funds were shown as part of opening debtors at the beginning of the year.
Note c) The cash flow from investment proceeds shown above of GBP12,976,016 differs from the sale proceeds shown in the Statement of Cash flows of GBP10,217,251, by GBP2,758,765. These are funds due from the disposal of Gro-Group and are held in debtors at the year end.
Other explanatory notes
Note d) During the year, two investee companies were reorganised whereby loan stocks held at a value of GBP393,949 were reclassified as ordinary shares, and ordinary shares of value GBP98 were reclassified as preference shares.
Note e) The major components of the decrease in unrealised valuations of GBP792,838 in the year were decreases of GBP735,235 in Veritek Global Limited, GBP555,010 in Media Business Insight Holdings Limited, and GBP512,268 in Virgin Wines Holding Company Limited. This fall was partly offset by increases of GBP438,961 in Master Removers Group Limited (formerly Leap New Co), GBP320,086 in Pattern Analytics Limited (trading as Biosite), and GBP249,500 in Preservica 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 increase does not arise from assessments of credit risk or market risk upon these instruments.
Note f) During the year, permanent impairments of the cost of investments have increased from GBP589,245 to GBP2,199,787. The increase of GBP1,610,542 is due the impairments of equity of five investee companies referred to in note 2 to note a) above, and the impairment of GBP77,542 of another company's remaining investment cost.
9. Cash at bank and current investments
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.
-------------------------------------------------------
2017 2016
GBP GBP
OEIC Money market funds 19,494,921 7,511,810
Cash equivalents per
Statement of Cash Flows 19,494,921 7,511,810
Bank deposits that mature
after three months 2,000,000 2,000,000
---------------------------- ----------- ----------
Current asset investments 21,494,921 9,511,810
---------------------------- ----------- ----------
Cash at bank 2,847,849 3,662,074
---------------------------- ----------- ----------
10. Post balance sheet events
On 18 January 2018, the Company invested GBP0.34 million into Proactive Investors
On 24 January 2018 and 13 March 2018, 1,186,253 ordinary shares were allotted under the Company's Offer for Subscription, raising net funds of GBP1.00 million for the Company. Having received applications totalling GBP15 million, the full amount sought, the Offer is therefore closed to new applications.
On 28 February 2018, the Company invested a further GBP0.34 million into MPB, an existing portfolio company.
On 7 March 2018, the Company invested GBP0.49 million into SuperCarers.
On 13 March 2018, the Company invested GBP0.52 million into Hemmels Limited.
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 2017, prepared in accordance with section 435 of the Companies Act 2006, 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 for the year ended 31 December 2017 will shortly be made available on the Company's website: www.mig4vct.co.uk and shareholders will be notified of this by email or post or sent a hard copy in the post in accordance with their instructions. Copies will be available thereafter to members of the public from the Company's registered office.
13. Annual General Meeting
The Annual General Meeting of the Company will be held at 11.30 am on Friday 11 May 2018 at
The Clubhouse, 8 St James's Square, London, SW1Y 4JU.
Contact details for further enquiries:
Robert Brittain of Mobeus Equity Partners LLP (the Company Secretary) on 020 7024 7600 or by e-mail to vcts@mobeusequity.co.uk.
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 company news service from the London Stock Exchange
END
ACSJMMRTMBJTBTP
(END) Dow Jones Newswires
March 20, 2018 13:39 ET (17:39 GMT)
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